The biggest single expense of running a business is often labor, anywhere from 15 to 45 percent, depending on the industry according to azcentral, a member of the USA Today network. Add in benefits and taxes, and that number can run even higher. The right compensation strategy and structure can help us both hire and retain great talent.
There’s a quote that I love attributed to Mary Kay Ash, founder of the Mary Kay Cosmetics empire: “A company is only as good as the people it keeps.” In some form, this statement has been made many times and in many different ways. Elon Musk, CEO of Tesla, Inc., has a perspective that also rings true. “A company is a group organized to create a product or service, and it is only as good as its people and how excited they are about creating.”
The rapid advance of technology has had a seismic impact on the ways companies do business—probably the equivalent of a 9.0 on the Richter scale. Just consider the impact of Wi-Fi, smartphones, tablets, laptops, and social media, and the ways they have not only dramatically changed business operations but also business culture.
Reaching the top of an organization doesn’t necessarily mean someone is prepared and skilled for the job. Executives may not be ready for the high-level strategic leadership required to be a member of the C-suite or a vice president — which is where executive development programs come in. In fact, research by Training Industry has found that providing training to senior leaders has, in the executives’ own opinion, a significant impact on their ability and desire to lead.
Executives considering any type of merger or acquisition do their due diligence. They pore over balance sheets, scrutinize operational procedures, evaluate budgets and forecasts, and conduct numerous other analyses. But how often do they pause to consider the people. Bringing together two companies also brings together two sets of people. And the corporate cultures within which these people operate may be significantly different.
Historically, succession planning has been focused on key leadership roles. For example, when Jack Welch was the CEO of GE, the rule of thumb was three replacements for his role. In other words, there should be three people with the potential to replace him at any given time. This concept has been adapted and proven to be effective by a number of organizations. One that comes to mind is McDonalds, which survived the unexpected loss of two CEOs in a nine-month period.
For companies that are looking to grow, it’s essential to be fully aware of the risks and rewards of global expansion and to appreciate that company culture is a more important consideration than ever.
The U.S. is a complex and diverse blend of races, ethnicities, religions, genders, sexual orientations, and generations. When your corporate culture embraces diversity, your company is in sync with your market and more likely to succeed.
Companies may have great products, outstanding service, or phenomenal, disruptive technology, but it is people who make all those things happen. Culture and talent are the only true differentiators, and there is no doubt that HR has a huge impact on both.