Two childhood friends start a business. Over the course of five years, the business has grown but the revenue has plateaued. Overhead and revenue have increased each year; but, not in step with the original ratio of overhead to revenue. Both owners are frustrated as this has stymied their long-term goal which is to own multiple businesses. The owners spent a year cutting overhead and reducing staff. The removal of staff caused the revenue to decrease significantly as panic set in among the staff. The staff was sharing their concerns with vendors and referral partners effectively paralyzing new and current business.
Solution:
A dedicated planning process involving staff and ownership led to a shared understanding of the long-term goals of both partners. The owners’ goals were put into a written format that could be shared with the entire company. A meeting was called that included all employees and owners to share the goals and enroll staff in the new vision for the company. The staff was also able to vent frustrations and concerns about the decisions of the past year.
The staff and owners chose a committee to represent all departments of the company in the strategic planning process. The first day of the process all of the employees and owners are present to define and agree on a “Mission and Vision” statement that will radiate throughout the entire plan. Over the next 45 days, owners and staff met twice a week for a full day. First we determined the strength, weakness, opportunities and threats of the business. Second, each department developed an operational development plan including organizational charts, key result areas for each employee and key performance indicators. Last, a training manual format and chapters became the focus of the next sessions which allowed for discussions and implementation of organizational development strategies.
Result:
The owners noticed a change of attitude in the staff the very afternoon of the first staff meeting. That owners’ relief was evident over the next 45 days as the planning committee relayed information to the staff and found that the owners and staff had a very similar agenda and expectations including hours worked and pay increases. As the sessions carried on a restructuring of the owners duties began to take shape and a board of directors was established allowing one owner to focus on the growth goals and the other to manage the day to day operations.
Lessons Learned:
Through strategic planning, the owners were able to clearly share their vision for the company and how important each employee is in the process. The employees are more productive knowing their role in the future of the company and having the ability to measure their performance without guessing if the owners felt the individual employee is effective. Staff also began to share their belief in the company to customers, vendors and referral partners. This communication increased sales and attracted talented staff to add to the team as the revenue increased. Before the official roll out of the final plan, the company had turned its sales around for the year and the second quarter became the highest grossing revenue to date. It’s impossible to put a revenue number on the value of a happy staff; but, it’s significantly higher than an unhappy staff.
