At our last Texas Executive Link meeting, concerns about getting and keeping good employees came up time and time again. It seems good people are hard to find, and if you do find them, they can be impossible to keep.
The fact is, there are lots of good people, but we tend to offer them bad jobs for low wages with little (if any) security, inadequate training and virtually no supervision. It should be no surprise that we are often dissatisfied with job performance. Here are three ways to overcome the problem.
Find A Clone Of Yourself
Most often what we're really looking for is a younger version of ourselves — or at least our image of ourselves: hard working and honest with lots of initiative. There are good people like that out there. Attracting and keeping them may require some sort of bonus scheme that acknowledges and rewards their performance.
Too often, we tie employee bonuses to profit. Cowboys and managers play a critical role in production and therefore affect income, direct costs and gross margin. But, they usually don't influence the overhead costs much.
Those costs usually account for 60-80% of the total costs of most ranch businesses, and they are the result of your strategic decisions. Rewarding or penalizing your employees for your good or bad decisions is not a good idea.
Employee bonuses should be tied to results that they had a direct hand in achieving. We often recommend tying manager bonuses to gross margin. Bonuses should not be automatic. They are most effective when they generously reward outstanding performance.
It's only right that we reward exceptional performance. Sustainable businesses, however, must not rely on exceptional effort because by definition, exceptional effort is not sustainable. That leads us to the second possibility.
Create Jobs That Work
We tend to value people who work hard. But at the end of the day, it isn't the buckets of sweat, the thickness of calluses or the hours worked that count. It's the results achieved.
Written job descriptions are a good start, but they are inadequate because they only describe what people do. Ranchers should create “effectiveness areas” (EAs). EAs describe the results a position is expected to achieve. Set targets for each EA and use objective measurements to assess performance.
One of several EAs for a manager would probably be healthy livestock. Targets could be tied to maximum acceptable death loss or health costs.
EAs show the areas of accountability associated with each position. Therefore, positions can't share EAs. If two people are responsible for an outcome, neither can be held accountable if the result is not achieved.
The employee's manual on most ranches is an invisible book called “Read The Boss's Mind.” Firms like McDonald's don't depend on exceptional employees or superhuman effort to achieve results. Instead, they created systems that just about anyone could follow to produce the required results. This starts by creating an EA for each position.
Take This Job And… Eliminate It
The ultimate in reducing labor problems is to reduce the need for labor in the first place. Many ranchers who shifted the calving season to be in sync with the forage cycle have drastically reduced or even eliminated the need for hay. Not having to feed hay all winter means not having to irrigate, cut and bale it all summer.
The limiting factor on one client's Nebraska ranch was the number of cows they could calve out. When we looked further, it was the extra effort of calving first-calf heifers that created the real labor headaches. By purchasing bred cows instead of raising replacements and making a few other management changes, they tripled cow numbers without increasing labor requirements.
Professional firms have a rule of thumb that each employee should generate three to four times his salary in gross sales. While it can be hard to assess the direct contribution of an employee to the bottom line, it's a good rule of thumb to follow.
After all, the reason we employ people is (or should be) to make the business profitable. At the same time, we should remember that people don't work for us to make us rich.
Research shows that responsibility, authority and recognition motivate people as much or more than their paycheck. Structure your business so that each employee has:
clear areas of accountability,
objective standards by which their performance is measured
and appropriate rewards for the results they achieve.
This can eliminate a lot of labor problems for you and your employees. It's an important part of ranching for profit.