Never before has the workforce been made up of five different generations. That is right, five different ways of thinking, five different groups of people that have been exposed to different life-defining events, and five different ways of seeing a solution to an issue. This presents many differences for a manager, leader, or business to be aware of, manage, and lead.
We can all admit that we have heard or said that certain generations just "do not get it." There is some truth to that statement, but only to the person who thinks that and the person who does not understand other generations. A generation comprises a group of people who share a certain time frame and specific traits attributed to that group. That is typically where most people stop. They see the age and the traits of that group and leave it there. As a leader, manager or business owner, one has to go further into what a generation is. Managers and leaders have the responsibility to understand each generation, see their value, weaknesses, what traits are shared across other generations, and most importantly, what caused them to have that trait. A more detailed definition of a generation is a group of people who share specific traits that were developed during their formative years, caused by specific life events which were unique to their time. As a leader, you can find the value brought to the table by your team members if you can understand that.
Leading different generations is not an easy task to do. There are many different personalities and viewpoints that have to be managed. It can be frustrating at times, and specific team members may appear to be more of an anchor. It does not have to be this way though. You can have teams of different generations and have great success. Successful leadership is accomplished by being able to lead a team to the desired outcome. That means you have to be able to adapt. You have to have a more extensive skill set than your followers, and you have to be able to identify, pull and mold it all together. Do not take this as you have to accommodate for individuals because as a leader, you challenge and guide them, you do not accommodate.
In today's world, having a more generational diverse team is an asset. Each generation has specific skills and valuable viewpoints. Technology moves parts of your business faster than others, and the younger generations are entuned with the technology. However, the older generations hold knowledge and values that can only come with experience.
How do you make a team that is generationally diverse and will be productive? Before you try to put the team together, make sure that you have your cards in order first. Know your mission, vision, and values. Aligning the team with the company's mission, vision, and values has nothing to do with age or generation. It has to do with the individual. When you build your team, you must build it with members who believe in, buy into, and demonstrate the company's mission, vision, and values. By building a team that shares these common core business practices, you already have pillars for a great team.
Be able to communicate your strategy, know where you are, what you want, and how you plan on getting there. Like the mission, vision, and values, this is a belief that if you can clearly communicate to your potential team members and find the ones that can get behind your strategy, it again will not matter what generation they come from.
Now that you have narrowed down the potential candidates, you have to acknowledge that each generation has something to offer and that you as the leader will need to harness that. You also have to create a culture of mentorship and reverse mentorship. One thing that all generations share is they want to be valued, and they want to learn. The use of mentorship and reverse mentorship opportunities can create an environment that will allow for these valuable tools to be used. It will also give excellent groundwork for developing respect and acknowledgment of other generations and their value. This will allow one generation to see that other generations' ways and skills also have value and are crucial to success.
Traditionalists, the oldest of the workforce, are loyal, grateful to have a job, and believe in top-down decision-making. They believe in the organization, have strong work ethics, and exhibit accountability. They strive for clear communication and collaborative work environments.
Baby Boomers live to work, are loyal, have an attachment to authority, traditions, and culture. They are self-motivated and resilient to change. Success is vital as they are motivated by position, income, and reputation and are willing to sacrifice. Additionally, they have respect for other's autonomy and communication.
Generation X was the first introduced to technology. They are more diverse, self-defined but have a lack of loyalty to employers. They are very willing to conform to social norms and traditional values but are less competitive and more collaborative than other generations. Generation X prefers relationships over authority, and they thrive on challenges and change.
Millennials prefer being pulled together by a leader and have a desire for change. They exhibit more assertiveness, narcissism, and self-esteem. They are very team-oriented, multitaskers, and strong with technology. This generation has a want for learning new skills and thrives on recognition.
Generation Z is the most useful in the technology world than any other generation. They prefer freedom and individualism for their projects and, in turn, are not key on teams. They are very achievement-oriented, highly educated, inexperienced, but very diverse.
As we can see, each generation has its traits, and in general, not all, but many people from these groups have predominant behaviors from the list. Leaders and managers have to see this as what it is, a diverse group of different skills, knowledge, and attributes. A large amount of research has been conducted on this subject. They all agree on one thing. Different generations can disrupt the workplace, but different generations can also be harnessed for the company's good. How we harness it and how it can make your teams and company better are for a different conversation.
Being on the top of a company is not just a power spot or a spot you hold on an organizational chart. It is, more importantly, a strategic spot, an actual place that you position yourself. You are on the top for a reason. Yes, it is because of your title, your accomplishments, and what you contribute. However, it is also a very forgotten mindset of where you need to be when looking at the company, the operations, disruptions, and opportunities. You are on the top because you need to be looking down on the company. As the leader of a company, you need to position yourself so that you are not stuck in the mix of everyday operations. This is a common practice of small and mid-sized operations. These companies' operators, owners, and managers get a mindset or a routine that they have to be in the mix to accomplish anything. However, the truth is that you can only do very little when in that spot. You will end up developing forward sight, meaning that you only see what is in front of you. Resulting in reacting to just that what you see at that moment, in your vision, and making narrow vision choices. If you are looking forward, you are not able to see the entire picture. You cannot see how all the parts are working together or how the problem you see may be a product of something that is not even related to what is in front of you.
By looking forward, we are referring to a familiar role that many small and midsized company owners fall into. It is when they are stuck in the business doing daily operations, putting out fires, making knee-jerk choices, and being reactive to their surroundings and situations. They end up not seeing the entire picture, but only what is in front of them at the moment. This forward-looking is detrimental to the business, the moral of ownership, and eventually the team. Every bit of growth and momentum the business and the owners started stops; it eventually becomes survival mode, every day for everything.
By looking down on the business, you have opened your field of view. You have strategically placed yourself in a decision and problem-solving position and are no longer focused on what is just in front of you. You can see the how's and whys of situations. The opportunities start to present themselves, and solutions for problems begin to be easier to see. Your dream and passion begin to become something that you can now develop into why you are doing what you are doing.
This step up and out, is one of the most challenging developments most owners have to learn. Those that do and master it become leaders of their company and move the business and success forward. Those that don't remain to look forward, resulting in slowed or minimal growth and eventually burnout.
Here are a few steps that can be done to facilitate how you look at the operations
Have and use strong policies and procedures - I am sure that we all have an employee manual, but do you have a managerial manual? Do you have a policy and procedure manual? We get stuck in the daily operations because we hold all the knowledge and have only halfway communicated it to our teams.
Empowerment – You have hired people to do jobs, so let them do their job. This is a hard thing for some owners to do especially as they start to grow and have to focus their attention on issues that are more related to their level as an owner.
Training- Take the time to create and implement a good training program for all positions.
Not knowing your position – As the leader and owner, you were not given or told your position in the company, and it depends on you to find it.
Not knowing your costs or having a budget – Take the time and run your numbers so you can make educated decisions.
Not having strategic thought and planning – Put plans in place that are centered around strategic thinking. If you do not know or understand strategic thinking and planning, learn it.
Use resources- Do not be a know it all, recognize your weaknesses and where you have holes in your abilities, and get help from outside resources.
The steps that we mentioned can all be done, and getting you in the position of looking-down is very attainable. Call us, email us, come by the office to have a quick meeting, and help you see where you are what we need to get you there. Our mission is to create partnerships that use strategic thinking to continue our client's success.
As business owners, executives, directors, or managers, time is our limiting factor. Needed time is too often take away by disruptions or distractions. At times it can feel like everything is getting done, except what is required to get done. It can be exhausting, and it can beat you up mentally. If it is too often a situation, it can create a box you get stuck in, and eventually, you are just trying to get through the day.
At a certain level or some point along your journey, this will happen, and it will either make or break you. You will either learn to handle it and control it, resulting in moving forward or getting stuck and eventually regress. That is where Investing time to make time comes into place. Suppose you are already in the thick of not having time. In that case, this approach will seem like something that will only make things harder, but you will start to see progress and start to get ahold of your time in reality.
Whether the minimum wage increases or not, you need to have a plan in place. Companies prepared for the changes will see less of an effect on their bottom lines. The companies that will see the most significant impact will be small to mid-size operations on whether they will remain sustainable. Larger companies will be affected by the increase but have more depth to absorb the hit.
Every industry is different. Some are more labor-based than others and some are more product-based, but either way, there will be an impact and you must be ready for it.
This example is based on a company with an average pay of $10.00 per hour and is now facing an increase of a new $12.00 min wage. This will be a 20% average hourly increase. We have to acknowledge that the 20% average increase would have to be applied to all hourly staff. If someone was making $9.00 then was overnight bumped to $12.00, what do you do to the person making $12.00? You will have to bump their pay as well. That is why we will say that there will be an increase of 20% for all hourly wages. We will also be increasing management salaries, but only by 9% for this example. Before getting too far ahead and thinking that my company already pays everyone at least $12.00 an hour and this will not affect you, you are mistaken it will. For example, if employee A, who does not receive a pay increase due to already making the new minimum wage can get paid the same or close to the same for doing a less skillful, stressful or easier job, how will you retain them? There will be a cost.
You will see that there is also an increase in COGS. It would be best if you recognized that there would be an increase in this area. Like you, your suppliers have increased their operating costs. To remain sustainable, they will have to increase their prices and pay the difference.
Changes to Labor
As we can see regarding labor, there was an increase of 16% to reach the 20% increase in hourly employees' wages. The 16% is composed of a boost to hourly wages, salaries, and employer-paid benefits.
Changes to COGS
Fixed costs were held constant, like Occupancy Costs and other fixed costs. We should note that it is fair to say there is a strong potential that there would be an increase in these line items.
What does this do to the bottom line?
The company we are using has a top line of $1 million in revenue. Before the increases that we applied, they showed a roughly 9% return after a 25% tax rate. After the increases, we have associated with the change in minimum wages, their new return is only roughly 1%, an amount that is no longer sustainable.
Changes to the Bottom Line
That is where we can help you see what you will need to do to remain sustainable. Remember having a plan and looking at hypothetical situations will set you up to be successful for the future. If you wait for the change to come, it is too late.
Increasing top-line sales are a constant goal for every business, as it should be. As sales increase, the potential for other opportunities become a possible reality. Growth on the top line adds value to the company; it will allow the company to grow, create new departments, expand in marketing, do new R&D, and add to the bottom line.
One of the issues we run across with top-line growth is that the bottom-line does not always grow appropriately. It is a common oversight and can easily be missed if you are too wrapped up in the daily grind. The business does not have depth in your management team or at director levels or you as an owner have not been taught to recognize this. It can come from a lack of vital budgeting, knowledge of costs, P&L analytical thought, foresight, or acting reactionary. The oversight can all be eliminated with strong operations. Operations are the heart of the company and dictate how everything will happen. If the operations are well put together, you will have known all of what we mentioned above. You will also have already had plans in place and forecasted it out.
Let us look at an example of this scenario. This establishment’s fundamental background is that it has successfully operated with profitable growth and a solid business base. The owners are very involved, but involved at the wrong level and are acting more as employees and not as owners. Many critical steps along the way of business development have been missed. However, they have never been a concern because there was always a profitable bottom-line. They made money, so all must be right. Because of their involvement, they never fully completed budgeting, standards, training, or operational manuals. They floated on, “we made money,” so we must be doing great and have everything right. This mindset is common, and if you own a small or mid-sized company, it may be starting to sink in as you are reading that “yep” that is how we do it.” This company’s business starts to grow at a good pace. The top-line is increasing steadily, and so is the bottom-line, and the owners say all must be good with everything. But is it perfect? Is it right? Is the bottom-line reflecting the number that it should be? Are the owners making what they really should be for as hard as they are working? The answer is probably NO. I will get asked, how is this so? Both lines increased, we have more transactions, and we are making more. But the question is, how much more should you be making, and the answer is always “I don’t know.” Another question is, how much money was wasted or opportunities lost in the process of adding to the top line? Lastly, were you as an owner positioned right within the company as this was all happening? Again, usually followed up with another, “I do not know.”
The “I do not know” answer is one that can easily be changed to definitive, data-based answers. One that puts you in the position to lead the company and your teams. You have the answers. You can see the problems. You have the solution and measurables. You see opportunities and are making strategic plans to capitalize on those opportunities. Do not be the “I do not know” owner, and do not be the owner that leaves money on the table. That money cannot be picked up, it is lost forever. The missed opportunities cannot be capitalized on, and they too have passed. Position yourself correctly, set yourself up correctly, and maximize everything that you can in your company. By doing so, as the top-line grows, you ensure that your bottom-line will reflect what it is supposed to.