That presents its own problems.  Because the market is growing and the activity level is high, there is plenty of competition among companies for scarce resources.  Attracting and retaining talent in the form of qualified employees and managers is a top concern.  Maintaining morale and high productivity is clearly another.  The competition for raw materials or inputs for the business challenges the ability to maintain healthy margins, while all of the uncertainty makes forecasting results very difficult, if not impossible.  Inaccurate forecasting causes inefficiencies and hits productivity and morale, which shows the interconnected nature of today’s challenges.

Organizations that are able to attract the best talent and that have the culture to retain and develop this talent will clearly be the winners over time.  Those that manage in a reactive mode or who focus on the short-term and neglect their people/talent practices will suffer from self-inflicted injuries.  Talent is fairly mobile in China.  Top talent is very mobile, and capable leaders will go where there are both opportunities and their own contributions are valued.

Good talent management and leadership development practices are in their early stages in China, so capitalizing on this area will create a competitive advantage for firms that get it right.  Leaders that can shift from reactive to proactive management will integrate this into their strategic vision and execute relentlessly until they get it right.  The competition for talent in China is already hot, and the temperature is only going to climb in the coming days.

The lack of strategic focus is a leadership issue, even when the leaders of an organization “live and breathe” strategy or see themselves as very strategic (but you might be surprised how many don’t).  Such organizations also find it difficult to hang on to their talent for long.

Here are some of the symptoms:

“Tell me again:  why are we doing this?”

“Strategic plan?  I’ve never seen or heard of one around here.  I think we basically do whatever Big Ed feels like doing.”

“Our competition always seems to be one step ahead of us (or several).  We’re either playing catch-up or reacting to what they’re doing.”

“Yeah, we have a strategic plan.  It’s one of those documents framed in the hallway of executive row next to our mission, vision and values that we did last year.  Or was that two years ago?”

“Balanced scorecard???  This is probably another management fad that will go away in a few months.”

These symptoms are actually signs of some common issues (beginning with the most common):

• No formal strategic planning takes place; no strategy is ever articulated
• Strategic planning is event-centered (it happens once a year, and/or takes place at a leadership or board retreat)
• Strategic planning is static and stale once it’s completed; hardly anyone updates/revisits/revises the strategic plan before the next annual event.
• Strategic plans are not effectively communicated beyond a small group at the top
• Lack of strategic thinking as an ongoing practice across the organization.

How do effective leaders address the need for strategy?  I’d like to hear some of your ideas, and then I’ll share some solutions for these common problems in an upcoming post.

I’ll get to that question in a minute, but first let me share a personal story.  I continue to be surprised by some of the misconceptions that people have about flying.  This past weekend I was in a conversation with a man who had a friend that was a pilot of a small plane.  This man’s friend took off on a trip cross country and not too far along he had an instrument failure.  The plane did not crash, but the man who told me about it obviously felt some dire anxiety for his friend and his “close call”.  I mentioned to the man that I was a pilot and that about half of all pilots do not have an instrument rating.  Even those who do don’t always choose to file an instrument flight plan, especially if they don’t plan to fly through clouds or in bad weather.

The majority of flying in small planes takes place under what are called visual flight rules:  the pilot is responsible to stay clear of clouds and to see and avoid other traffic–any other planes, helicopters, gliders or balloons that share the skies.  In fact, a competent, well-trained pilot of small planes should be able to fly their plane safely without ever having to look at the instruments.

If that’s the case, why do planes have instruments?  In a word: options.  Instruments (or other measurement systems) give us more options, and usually they offer greater accuracy.

Let’s continue our lesson from flying planes.  When a pilot receives flight training in flying by instruments, one of the first things an instructor will do is demonstrate how easy it is to trick or disorient a pilot once you remove visual cues.  Every pilot must face the humbling lesson that they are not the exception to the rule: disorientation can happen pretty easily, and if you fly in clouds or fog or at night in the mountains in a fairly short amount of time you will lose your way and get yourself in a position you don’t want to be in.  Flying by the seat of your pants, or gut instinct may sound macho or reasonable, but it’s not going to keep you alive in bad weather or when visual references are gone.

When you’re responsible for running an organization (or even a division or large team), the same rules apply.  Through years of experience you may have developed pretty good instincts or a seat-of-the-pants intuitive feel for making decisions and exercising leadership.  But what happens when the external environment suddenly changes, or a new generation with different expectations joins the workforce (and your organization), or a game-changing technology threatens your market space?  The old familiar references are gone or obscured, and if you don’t have instruments, measures or a backup system…a happy outcome is NOT very likely.

Let’s deal with another misconception here.  Any non-pilot who has looked in on a cockpit has probably been overwhelmed by the amount of instruments, dials, levers and buttons they see there.  An airliner is the extreme case, but even a small plane cockpit is daunting or mysterious to the non-pilot.  The truth is, even inexperienced pilots get overwhelmed or transfixed by the instruments in the cockpit until they develop some discipline.  There are a few primary instruments that you must use, and the rest give you additional information or other options if you need them.  The most basic–and essential, or useful–flight instruments are a compass, a clock, and your engine gauges.  A compass tells you direction and warns of drift; it is an underrated instrument.  A clock allows you to keep from running out of fuel (more predictably than fuel gauges!), make time/distance/fuel calculations, and time turns (which is important if you get into bad weather).  Engine gauges indicate engine health and performance; they give you warnings of when your plane is about to become a glider (an extremely useful piece of information).

Think about your business.  What metric/measurement helps you stay oriented the right direction?  Which metric/measurement gives the most useful information about performance, telling you you’re making good progress or warning you that you’re running out of gas?  How do you measure and keep time in your business?  Every good manager knows their three critical numbers and the other numbers that give more accuracy and specialized information.

Leaders also have a backup system for when the game suddenly changes.  Being clear on your own vision and values is the essential first step.  A well-considered strategic plan is the next step.  If these are clear, your judgment and decision making in stressful situations will be much better.  Backup systems anticipate contingencies or emergencies:  scenario planning, disaster recovery plans, succession planning, risk management plans and systems, leadership development and employee training are some of the best examples of ways to be prepared when the ground shifts underneath you and taking the right action is critical.

Flying an airplane and running a business or leading a team are not overly complex, though we can certainly make the task more complicated than it needs to be.  With the right orientation, measures and backup systems in place, these can be enjoyable and fulfilling endeavors.

CEO pay at 18 financial companies was down 30%.  No surprises there–they are under lots of pressure from the public and the media.  At the same time, 38 financial service firms on Wall Street paid a collective $140 billion in compensation and benefits, a record number, and up from $123 billion in 2008 and the previous high-water mark of $137 billion in 2007.  What does this all tell us?

Two things:  Wall Street’s approach to compensating top talent has not changed, even as headlines seem to imply that executive compensation is down.  CEO pay may be down, but the all-out effort to retain top talent among traders, money managers and top analysts is still calculated in the simple formula of  more dollars=stay for another day.  The other point is a reflection on leadership.  The top leader (CEO) is a lightning rod for criticism, and they have to take the hit when emotions are stirred.  I expect that these CEO’s are still not going to be hurt too much.  Make-up compensation and deferred bonuses can be paid out at other times and in other ways once the public glare focuses elsewhere.

A real sign of leadership would be finding innovative ways to reward performance, manage risk and produce sustainable results.  Without leadership, you’re simply managing mercenaries and the only obvious solution is to throw ever-increasing amounts of money to the troops.

Do you know how hard your online employees are working?  Did you say you don’t have any employees?  If you have a website, blog, Facebook page, eBay store or any other kind of online commercial presence, I suggest you do have online employees, and it would be in your interest to think of them that way.

I was coaching another consultant today who does not have a website but who said she wanted one and knew she needed one.  She’s not super-savvy on web technology, nor does she care to be.  I suggested that she think of building a website/blog as if she were hiring an employee.  Here’s how the logic works…Most businesses of a certain size have a website already.  Larger businesses also employ one or more full-time people to maintain the website and other forms of online presence.  Several years ago I coached a manager who was on the web team for Avaya, the telephone equipment maker.  They had multiple people on the web team, spending multi-millions every year, using all kinds of outside vendors to run analytics on their site and to implement specific projects.  For large enterprises, it makes sense to think of their web team as a business in its own right.

Smaller businesses, and even solo professionals, don’t have the same kind of resources as a large corporation, but if their business has any reason to be online I recommend that they think of their website, blog, online store, Facebook page, or Twitter account as if they are employees.  Adopting that kind of mindset allows them to make better decisions about their online presence.

First, what’s the job to be done?  Employees are usually hired to perform a job–or several jobs if it’s a small business.  I find that far too many employers don’t think enough about defining the job.  Even written job descriptions are usually inadequate at communicating what the job is; they usually are a listing of tasks and basic qualifications.   For an online presence, what is the job that needs to be done?  Is it essentially marketing, or is there also some selling (e-commerce or online store)?  Do you need your website to perform customer service by giving customers an avenue to communicate with you, ask questions, make complaints, get answers or additional information?  Some websites actually deliver a product or service online via training, webinars, surveys or assessments.  What job do you need your online presence to do for you now and in the next year or two?  Define the job first.

Second, conduct a talent search.  Think of a website or blog as an employee.  You could start with an infant (a blank page in an editor), then by using html, css and php you could create the personality and behavior of your kid-employee.  You could dress up your growing teenager with the right colors, design and site structure.  Then you could train your entry-level employee in the basic courtesies of answering questions (through forms) and check their performance monthly through an analytics package.  Do you get the picture?  This is an apparently “cheap” way to go, but it requires massive work and training on your part and lots of hands-on maintenance.

Maybe you’d like to rent-an-employee.  You can do that through Yahoo, GoDaddy, 1and1, Sitebuilder, or any number of online services that promise an easy website within hours for merely $10-20 a month.  You use their templates, and besides the content (words you provide) it all belongs to the webhost.  If you decide their rent-an-employee doesn’t represent your company well or you outgrow them, there’s not much that you can carry with you except your content (if you kept a good backup copy).  You could also get a smart, self-sustaining employee who will easily assume your look, feel, personality and do lots of small mindless but essential chores in the background (because a smart designer wrote it into their code) and pay a lot, if you want lots of interaction and handholding by a human web designer, or pay a little, if you pick one of the newer platforms with a customized theme or design that you manage and fill in with content.

Third and finally, be willing to state your expectations and to make a reasonable up-front investment in your new employee.  You’re going to have to do some amount of work on the front end getting this employee up to speed, providing content, making decisions about how your online presence will work.  Do you want a one page, long copy sales page?  You have to write (or hire someone to write) the copy.  Do you want an interactive, information rich blog/website?  You still have to provide the content and the decisions about what a typical viewer will do on your site (yes, provide links and instructions that show people where to go next or what to do).  Personally, I want a smart, efficient employee who looks like me and who needs a minimum of supervision.  This ultra-low maintenance online employee still needs me to show up occasionally, to provide some new content for the store, to handle those few difficult customers whose needs are not the routine and predictable ones that I’ve anticipated already.  I also want an employee who provides a minimum 5X ROI (return on investment) within the first six months.  If I’m going to spend $500 on this employee, they need to help generate at least $2500 in additional revenue in the first six months.  I don’t consider that unreasonable.  Some people may expect more, some are willing to settle for less, but I suggest you do consider what ROI you are expecting.  It will help you in your decision-making process.

If you’ll think of your online presence as an asset, or better, as an employee, I think you’ll be more realistic and also happier with the results from your online efforts.  And remember, don’t settle for just any employee; aim to attract, hire and develop top talent!

We start a new year and it’s a great opportunity to do some personal strategic planning.  Well-run companies and organizations take time annually to plan strategically for the future and to set their course of action.  Why not give yourself the same advantage?

I wrote a guidebook to help in the process of personal strategic planning that is available for the asking.  Send an email or request it from me directly and post a comment about how you’re using it.

‘The Irrational Side of Change Management’

Let people write their own story

Employees are what they think and believe in

How can this be?  Productivity is supposed to be a good thing.  Productivity is the measure of how much a business produces divided by the number of workers, so if productivity goes up a business should make more money.  How can this be a talent killer?

Think about the definition again.  One way to “juice” productivity is to lay off workers.  In the short term, productivity goes up (and investors usually cheer as the stock price rises) until the burden of producing weighs too heavily on a workforce that is too lean.  Another way to increase productivity is to sell more, take on big orders, without fully staffing for the increased demand.  This will also lift productivity–for a a short while.  You can cheapen the brand, cut development or innovation, or manage by dictate:  management declares a super-stretch result that leaves everyone scrambling to “hit the number.”

All of these examples (which are far too common) involve a focus on the short-term, some degree of manipulation, and a failure to deal with longer-term consequences.  And those are what is killing good talent practices in business.  How?  By treating people like human resources, not people who can contribute to the company if given the opportunity.  By failing to invest in sustainable gains in revenue, growth and productivity.  By stressing out workers, you give them an incentive to go to your competition.

The path to illusory productivity involves short-term thinking, shifting the burden to workers, or some kind of management shell game that hides the real dynamics–for a while.  These kinds of productivity gains are what is killing good talent in American business.

Not all productivity has to come with these tradeoffs.  There are other ways to grow productivity that promote good talent management:  through more employee engagement; by investing in training and skill development; through analyzing business processes and cutting out the waste and rework; by building a valued brand and unique culture that is hard or impossible to duplicate elsewhere.  The productivity that results from these kinds of practices is sustainable for the business and it tends to engender more loyalty and trust in the workforce.

Which kind of productivity is your company focused on ?  Let me know by leaving a comment.

I owe inspiration for the headline and article to Henry Mintzberg, management professor and contrarian thinker at McGill University in Montreal (see his article in Harvard Business Review July 2007).