Adopt a Broad-Base Appraisal Policy to Control Attrition

Why do employees leave? 

Answers are plenty but they do not provide complete solutions as different individuals have different needs and requirements. Some employees prefer to leave a job because they don’t like the work culture. Some may not be satisfied with the salary or appraisals. Some are not happy with their co-workers while some may have some other problems.

Say for instance, you hire a new employee and his training period runs for six months. During these months, he simply adds to the cost-to-the-company as he is not fully involved in the production. 

If the same employee leaves after 2-3 months of being confirmed then this investment turns into a loss for the company as it fetches the company virtually no returns.

Attrition to some extent is good for the organization as it helps you get rid of non-performing resources. However, it becomes a real problem when it goes beyond the desired limit or draws away your performing workers. 

In this blog, we will discuss the major reason of attrition – the lack of motivation – which in turn, results in employee dissatisfaction. 

Controlling attrition is not just about retaining employees. In fact, it is the act of retaining the resource you actually want to retain or in other words, identifying workers who are actual assets to the company! 

‘How to motivate employees’ is an oft-repeated question. Is appraisal a foolproof method? But then, you can’t appraise every employee equally. Then how do you recognize the deserving person? 

According to an article by Josh Bersin, published in Forbes, “tenure-based rewards systems have virtually no impact on organizational performance”. 

The article further states, “companies that scored in the top 20% for building a “recognition-rich culture” actually had 31% lower voluntary turnover rates (this is when good people leave on their own).”

Make the appraisal system more flexible and broad

Most companies recognize and reward their employees on the basis of productivity numbers, which however, should not be the only criteria for appraisal. You can satisfy and motivate some employees by evaluating and rewarding them under these criteria. 

But going simply by numbers and output to judge performance may make you ignore other deserving employees, who have say expertise in client handling or trouble-shooting during crisis, as such qualities are not exactly quantifiable. When such performances go unnoticed, it suppresses their skill and desire to work in the company. 

Recognize employees who are result-oriented as well as self-motivated and most importantly, well-behaved. You can reward an employee when he deals with customers efficiently at the time of a particular problem.

This way, you can satisfy and motivate a broad set of employees who are specialized in one or other domain.

Ignoring Customers Complaints can be Disastrous for Business

“The goal as a company is to have customer service that is not just the best but legendary.”

                 ~ Sam Walton, Founder of Wal-Mart

No matter how big or small your enterprise is, customer complaints are something you can’t avoid completely. From minor to the serious, these are pinpricks you must work towards reducing to the barest minimum.

Recently, Tim Cook, CEO of Apple Inc., had to apologize for warranty issues in China. The apology came in response to the complaints of Chinese customers that U.S. customers receive full replacement for faulty phones while the Chinese customers only get their faulty sets repaired with replacement parts.

According to Apple Insider “Apple on Monday published an open letter from Chief Executive Tim Cook in which he formally apologized for what were described as "misunderstandings" over the company's warranty policies, and revealed new changes that aim to better serve iPhone customers.”

Now check out the changes that Apple Inc. made to its existing polices to retain their customers in China.

·        Modified repair policies for the iPhone 4 and iPhone 4S

·        Published a "concise and clear" statement on its website pertaining to repair and warranty policies

·        Improved supervision and training of Apple Authorized Service providers

·        Now, there is a new feedback service to help customers conveniently contact the company regarding issues or complaints

It gives a clear idea about how bad servicing or customers’ dissatisfaction can lead to dire consequences even for established and strong players like Apple. It is very important for a business to handle dissatisfied customers effectively.  

Here are some vital tips to deal with customer complaints effectively:

·        Listen to the customer’s complaint carefully. Don't give lame excuses. It will only frustrate him more.

·        Enquire about the problem in a concerned and caring manner. Ask for more details. Don’t jump to conclusions.

·        Think from customer’s point of view. As a business owner, you should pacify your customer if you want to retain him. Make him feel that you are on his side and provide some instant solution.

·        Don’t hesitate to apologize. It could be anybody’s mistake but being the leader and face of the company, it’s your responsibility to apologize. You can take some lessons from Apple’s CEO, Tim Cook. It makes big impact when the apology comes from the top of the hierarchy.

·        Consider customer’s suggestion in providing an acceptable solution. Choose the idea that closely matches the one suggested by customer. It will calm down the customer and will send across a positive message to other customers.

·        The most important aspect of handling customer’s complaint is providing a prompt solution that is accepted to the customer. As in Apple’s case, company immediately rectified their repair policies defying which they may lose around 50% percent of their customers in China.

For more insights into this area, you can join a CEO peer group or a CEO association where you will get important guidance and advice regarding every aspect of the business ranging from starting a business, to dealing with issues of customer complaints and even exit planning.

Remember, in business, making mistakes can be dangerous but when you do not rectify mistakes it can be fatal.

7 Tips to Consider while Nominating & Electing Board Members

In my previous blog “Significance and Functions of a Board of Members” I discussed the importance of having board members in an enterprise.  

Here are some suggestions to consider while you look for board members for your company:

Prefer Quality over Quantity

Ability and skills always score over numbers at the board level. Prefer experience and expertise when it comes to choosing board members.

For privately-held start-up enterprises, the number of nominated candidates should range between 3 and 7. Entrepreneurs can reserve one or two seats for investors if they are looking to raise equity from venture capital funds or from private investors.

Seek balanced board experience

Make sure you have a perfect blend of multiple talents and skills when it comes to picking directors for your company. You should prefer individuals with a wide range of specializations – finance, product development, sales, business continuity and employee engagement marketing etc.

It is always advantageous to have board members who have served in one or more for-profit boards.

Hire legal help as needed

It is helpful to have corporate lawyers on board who can attend board meetings as acting secretaries or non-voting corporate counsel.

Get aligned

Make sure all the nominated candidates are aware of company’s business goals, financing objectives, product development priorities and distribution strategies. A candid discussion can help ensure that all nominated members are on the same page and do not have any issues pertaining to the policies of the enterprise.

Use ‘em or lose ‘em.

It’s the founding entrepreneur who can utilize each board member’s skills and specialization to the maximum effect. When great business brains join a board, they need freedom of thought and action to put their knowledge to maximum use.

Let them explore their productive ideas for the growth of company albeit things should never go beyond your own vision and control.

New businesses need experienced advisers

 It is a mandate for new business and small businesses to have astute business advisers as their board members. Their experience and sharp business acumen will play a vital role in improving company’s operating direction.

Corporate Executive Coaching

Corporate Executive Coaching at a CEO club helps you identify your needs when form a Board of Members. As you get to meet different experienced and knowledgeable leaders at CEO associations, you can get insight into basics of nominating and electing eligible board members.  Join a reputed CEO peer group especially if you are starting-up a new business and need practical tips on how to build a performing, useful Board of Directors.

Significance and Functions of Board of Directors

According to a research study conducted by PwC, “Ninety-one percent of directors find new members through director recommendations, suggesting a preference for referrals by someone they know and trust. However, 67% use search firms.”

The constitution of company is never complete without a Board of Directors. At the start, it can be a single person – the lone founder – who represents the board. But it cannot go on like this for long as you will not be able to avail the benefits that are associated with having a board.

A board of directors plays an indispensable role in constitution and governance of most enterprises. The board is responsible for the firm's financial decisions and ensures smooth running for different legal procedures. The board has the authority to select, compensate and replace key executives, when necessary.

The major functions of boards members include:

·         Analyzing and facilitating corporate strategy and major plans of action

·         Reviewing and guiding annual budgets, business plans and  risk policy

·         Setting performance objectives & ensuring their execution

·         Monitoring corporate performance

·         Overseeing major capital expenditures, divestitures and acquisitions

A nominating entity – usually the founder – first nominates the members for the Board of Directors. The nominated members are then elected by shareholders through voting. It is important to select experienced and responsible board members who can contribute efficiently in the growth of the company.

If you are looking for some effective guidance on selecting the right set of board members, you can seek some useful advice from CEO peer groups. The stalwarts and industry leaders from non-competitive organizations meet at a CEO conference and share their experiences and knowledge with a candid, honest, no-holds-barred approach.

CEO groups act as a great platform for aspiring entrepreneurs to seek help and counseling to build a successful business entity.

In this blog I have discussed the importance and functions of a Board of Members. In my next blog I will suggest some tips that you should consider while nominating directors for your enterprise. Watch this space!