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The 5 Key Success Factors Of Business – No. 2 – Managing People

Managing people is one of the most important of the 5 Key Success Factors of Business which can ensure your success and stand the test of time. Earlier we provided details on the first Key Success Factor, Strategy or Strategic Focus.

Managing People in the Business Success BookIn addition to the information on this page, you can learn much more about the People success factor in our new book, The Business Success Book: Secrets of Management, Marketing, and Other Key Success Factors to Boost Your Business, available in all formats at amazon using this link.

Today we want to give insights into what the world’s best companies do regarding managing people.

As a reminder, the 5 Key Success Factors are:

  • Strategic Focus (Leadership, Management, Planning)
  • People (Personnel, Staff, Learning, Development)
  • Operations (Processes, Work)
  • Marketing (Customer Relations, Sales, Responsiveness)
  • Finances (Assets, Facilities, Equipment)

Here’s what the world’s best companies do for Success Factor No. 2:
Managing People:

1.  Hire People Based on Talent and Strengths

      In the real world, managers tend to hire people based not so much on their talent and personal strengths but on their job history, their appearance and whether they like them or not. They look at the resume, they look at the person, they check their gut, and think “yes” or “no.” Research has shown that we all tend to develop a “like/don’t like” impression of someone in the first few seconds in which we meet them. That is how the brain is hardwired for “approach/avoid” in the natural world. So you have to intentionally override that first impression and be open to learning more about the candidate.

      Personal strengths can be judged by a wide range of standardized tests. My company used the Myers-Briggs Type Indicator for many years with highly useful results. You don’t hire someone based solely on their personality type of course, but this can be one factor to consider along with their work experience, personal presentation and more. It’s available free online at several sites. The Big 5 Personality Test is a favorite of academicians. Other tests like the VIA Character test and the Clifton StrengthsFinder were referenced earlier in this book and can be found online.

      You might want to do the first round of checking out potential team members just based on interviews, and after you identify one or more finalists, invite them back for the testing portion. Sometimes people can feel a little overwhelmed if they go to an interview, sit down with a stranger, then are asked to take any kind of “test.” Whereas if you invite them back for a second meeting, you can explain that they have made a good first impression and now are advancing to the second round, so it appears to be a positive experience or recognition.

2. Managing People by Organizing Effectively

      Organizational structure tends to evolve over time in a business in a somewhat natural manner as different specializations are needed or different tasks are encountered. In the beginning the founder does everything, but as he or she gets too busy to do it all, some work can be broken off and assigned to someone more specialized. The first person my company hired was a bookkeeper/receptionist because we needed someone to do both.

      But the organization development does not always evolve in a productive manner. One of my clients was a chemical company who had departments for operations, finance, personnel, and strategic management, but not one for marketing. They tried hiring some technical sales people but that did not work. Marketing was never on a par with the other departments in the company.

      The 5 Key Success Factors really are a good way to organize many different kinds of business because they are logical and based on the very nature of business, as noted earlier. They also serve as a good checklist because, if you don’t have one of the factors covered by someone responsible, maybe now is the time to make that change.

3. Promote Personal Development  

      Just as a business must adapt to constant change, so must your people. Google expects its employees to spend 80 percent of their time serving the search engine giant, and 20 percent exploring new possibilities. That led to the development of Gmail, Adwords (paid advertising) and much more.

      Too many companies just expect their people to work, work, work, and if they want to learn some new skills, they can do it on their own time. Others encourage employees to attend professional development meetings and seminars, to take online courses, or to participate in in-house “lunch and learn” events.

      The organization which makes constant learning a part of its very fiber has unlimited growth and success potential. This is why it’s so valuable to not only allow but also encourage your people to be constantly developing their valuable skills and knowledge.

4. Share Strategy while Managing Your People

      It’s a rare company that takes time and effort to explain to its employees the overall business strategy, priority and goals. How can you expect your people to all be pulling in the same direction if they don’t know what the direction is? Note the words above “Be sure your people understand.” Don’t bore them with corporate-speak about shareholder value, competitive benchmarking, business process manage-ment  . . .  blah, blah, blah.

      Put your company story into language they can understand. The ideal scenario is to involve them initially in developing company strategy by asking for their ideas about what customers value most, what internal processes can be improved, and what sort of structural changes might make the company work better. Or give them our Key Success Factor Scorecard[i] so they can rate the company on about 50 different Principles. Then you can explore with them any Principles or areas that got low ratings, and why.

      Within this overall strategy, nothing is more important than making sure each employee understands what is expected of them. People tend to do a job the way they want to, or the way they did it at another company, unless they are given clear instructions and explanations of what is expected of them in this job at this time.

      All too often the employee who seems to be underperforming or drifting may not even realize she is off course because she really does not understand what is expected of her. Regular conversations between each employee and her supervisor can go a long way to minimizing these problems and maximizing success for all concerned.

5. Reward Desirable Performance while Managing People

      Michael LeBoeuf wrote a great little book called, The Greatest Management Principle in the World, and this principle is, “That which gets reinforced gets repeated.” This powerful reinforcement principle of psychology and human behavior was discovered by B.F. Skinner and has been rejected by some people because it applies as much to rats in a cage as it does to humans. And guess what? It works just as well on both (including kids).

      If you want somebody to repeat a behavior, reinforce it with some type of reward that they will appreciate. That might be as simple as saying “Good job!” If you want somebody to stop a behavior, withdraw the reinforcement. This leads (ideally) to what is called extinction. And interestingly, the most powerful way to sustain a behavior is through intermittentreinforcement. If a team member wants something that is not in the firm’s best interests, and you give in just a couple of times, that habit will be more deeply ingrained than if you gave in every time, then suddenly stopped. Consistency is extremely important in shaping people’s behavior.

      There are several other key elements in rewarding desirable performance for effective results:

  • First, performance needs to be measured in some way. We talked earlier about SMART goals and tactics. Some form of measurement needs to be established at the beginning of setting each objective.
  • Then each person and team needs to understand what they can do to meet or exceed the target. For example it may not just be a matter of working hard but also working smart, to be sure effort is applied in the right direction.
  • A reward program needs to be carefully constructed so that positive behavior (quality and not just quantity) gets appropriately noted and recognized. In some cases this might be money, but studies have shown that people appreciate even more being recognized in front of the group.
  • Different strokes for different folks. Because people are fundamentally unique individuals, what one considers a reward, another may consider punishment. This is related to the earlier principle of “motivating” people by focusing on their strengths and giving positive feedback. This is also called the Platinum Rule: Do unto others as they want to be done unto.

6. Managing People by Regularly Surveying Them

      This is almost never done in small businesses, yet it can be so valuable and inexpensive. Management needs to consider employees as internal “customers” whose satisfaction and feedback are just as important as external customers. A simple one-page survey on paper or online can give the option of anonymity or name/email for those who are open to follow-up discussion. A numeric rating for satisfaction on key items such as these we are identifying in the 5 Key Success Factors makes gathering and interpreting relevant data a valuable way to get actionable measurement and feedback. Or perhaps critical issues have been identified in previous strategic planning processes. Be sure to measure what is important and avoid mindless questions like, “What is your favorite color?” Always seek feedback in terms of constructive suggestions.

7. Managing People Means Giving Them Autonomy

      People work more productively when given some freedom to make decisions in the moment, as needed. They don’t want or need to stop every few minutes and ask a supervisor “Is this OK?” or “What should I do now?” But it isn’t practical to give your people too much freedom – that can lead to costly mistakes and wasted time. So the right balance involves making sure they understand the organization’s strategic goals so they can make decisions aligned with those goals.

      This may take some training – just telling someone “Here are our strategic goals” in no way ensures that they will consider those goals each time they make a decision at work. So that gets back to Principle 4, “Be sure your people understand overall company strategy and what is expected of them.”     

8. Motivate People Based on Strengths and Rewards

      Motivation is often misunderstood. Many people think it’s like the football coach giving a rousing pep talk at halftime. But research has discovered that you cannot motivate someone from the outside very effectively. Motivation is internal, or “intrinsic” as it is called. If I am your manager, I have to “ring your chimes” by focusing on your own internal strengths and desires, on what you do best and what you want to do.

      In our organization and some clients we have worked for, each person’s Myers-Briggs Type is known and shared with others. Every type has definite strengths which can be very valuable when used appropriately in the workplace.

      Once you know someone’s natural strengths, you can make an effort to delegate work to them that will be a good fit. Then you can reward them with some type of recognition, from one-on-one to a group setting or financial perks, as a way of cementing your relationship with them and enhancing their job satisfaction.

9. Keep Everyone Informed while Managing People

      As noted in the chapter on Strategy, almost every employee survey my firm has ever done, and this is probably true of many others, found that people on the lower rungs of the ladder feel that upper management does not do a good job of keeping them informed of new developments via frequent communications.

      Now not every management decision-making process can be shared openly while it is going on. Some of these processes involve discussions about specific personnel that need to be kept confidential. Or in the case of a company considering relocating to several competing cities, it would lose leverage and possibly millions of dollars if the search process is shared openly with all personnel while it is going on. You have to use common sense here.

      The point is to be considerate of your people who are not on the inside regarding new developments. Think about how they might be impacted as you work on your decisions. Look for ways to give them a heads-up that a new development is in the pipeline.

      The best way to do that? Small group meetings. Emails and written memos are terrible at answering questions and providing reassurance. Plus they increase the risk that the information will be leaked to outsiders at the wrong time in the wrong way.

10. Managing People by Encouraging Internal Cooperation

      “That’s not my department” is a classic statement you don’t want to hear in your organization. Your people need to understand that customer satisfaction is the top priority, and they need to work together to make that happen.

      This is not natural for everyone. Some people, depending on their Personality Type, tend naturally to focus on their work, their responsibilities and their span of control. They like to work in a logical sequence of steps. So stopping their normal workflow to reach out to another department or worker to satisfy a customer just may not come to mind. This can be especially challenging when confronted by an unhappy customer who makes a complaint. The tightly focused employee may also be conflict-aversive and uncomfortable when someone attempts to lay the company’s failures on their shoulders. “Nope, not my department.”

      Overcoming this natural isolating tendency requires training and retraining employees to think “as one” for the organization as a whole and to think about “lifetime customer value.” A customer complaining about a $10 purchase may take their business elsewhere if not satisfied.      But taking care of their concerns in a positive way – even if they are wrong – can make them a customer for life, resulting in hundreds or thousands of dollars in purchases over time.

      If employees understand the connections between their behavior on behalf of the company as a whole, customer satisfaction, and company profits, each person’s contribution can be multiplied many times over. But people are not born understanding this, so they need to be educated and reminded on a regular basis.

11. Promote Openness to Change

      Some people like change but many people dislike it, especially when they do not have a voice in the change decision. The old familiar routines are so comfortable, and workers like knowing what is expected of them and fulfilling those expectations consistently.

      The ancient Greek philosopher Heraclitus is remembered for claiming, “No man ever steps in the same river twice, for it’s not the same river and he’s not the same man.” The river in this case is world events – constantly changing as do we, men and women, young and old.

      The world we live and work in during the 21st Century and beyond is constantly, rapidly changing. During the 2020s, a Coronavirus pandemic was sweeping the world and killing millions of people, at the same time that a contentious presidential election was ousting one party leader and inducting another, with great conflict along the way. Every day some new technology is announced – some of it beneficial for all of us, some of it threatening our job security.

      Your people need to understand that sticking their heads in the sand and resisting change is counterproductive for them and for the company. If you all don’t embrace change and work to stay on the leading edge, your competitors will outpace you, outperform you, and take away your customers and your income. Serious consequences.

      Change driven by your own strategies are often in response to the external world and competition. Sustaining a competitive advantage means continuously running to keep your edge.

12. Give All People Relevant Decision Input

      Many organizations work top-down, where all major decisions are made by upper management and announced to lower employees on an as-needed basis. This is a prescription for employee disappointment and in some cases dysfunction. Much better results will be attained if people who are going to be affected by a decision have real input into it. In my experience with hundreds of diverse organizations, this rarely happens.

      Management might claim that lower employees do not or cannot understand the complex factors that go into making the right business decision. Or perhaps as the comic strip Dilbert often lampoons, management might make decisions based on whim, without logical reasons, and don’t want to be challenged by the workforce.

      The noted management guru and author Stephen Covey warned, “No involvement, no commitment.” If people are not involved in making a decision, don’t expect them to be committed to implementing it, especially if they think it is a dumb idea.

      Over the years I’ve been involved in a number of situations where employees’ hopes were raised through focus groups or other input, but in spite of our recommendations, management did not act on what people said. Again, you do not have to do what your people suggest. But employee emotions are extremely time sensitive. You lift their hopes when you seek their input, and if you act on that input, you sustain their enthusiasm and energies. If you wait too long or take no action, the emotional peak passes and you will not have another chance like that for a long time.

These are the 12 success principles of Managing People. 

How does your company stack up with these managing-people criteria? Think about it. In our next post, we’ll take a quick but penetrating look at the Operations success factor

Meanwhile, learn all about  managing people and the other 5 Key Success Factors in our new Business Success Book available on amazon at this link.



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