The primary business goal for small and midsize businesses (SMBs) heading into 2020 is growth—that means growing revenue, a customer base, a product line, you name it.
However, SMBs face significant challenges in trying to achieve their growth goals, including:
- Using the right technology
- Hiring the right people
- Motivating and retaining staff
So, how can SMBs overcome these challenges and increase their output without increasing input by the same amount? By improving employee effectiveness.
Improving labor productivity can help SMBs achieve growth without increasing the number of people employed or the number of hours worked.
Without significant improvements in employee effectiveness, we estimate that 40% of SMBs in the U.S. won’t meet their growth goals.
See “Part One” for a deep dive into our research.
In this article, we’ll introduce a strategic roadmap for SMBs to follow to improve employee effectiveness at their organization. This effort is called “process with a purpose.”
This roadmap can help small businesses create a culture of performance where employees have the right tools to maximize productivity and receive training and skills development that separates high performers from average workers.
The key is nurturing a leadership mindset that embraces change, and then focusing on continuous improvement of internal processes to ensure they enhance—not hinder—performance.
Why is this important? Motivating and retaining employees is one of the top three challenges SMBs face when trying to achieve growth goals. When employees aren’t motivated and engaged at work, they are less productive.
What’s the solution? High performers don’t appear out of nowhere, and small businesses must create the right environment that is conducive to productivity. Creating policies that provide direction and structure for your company culture will help you find and retain the right workers, whereas a lack of mindful processes will drain productivity.
How to get started: Build a workplace that is conducive to employee effectiveness by empowering employees and enabling them to be their best.
- Invest in tools to improve productivity. Over 60% of an employee’s time is spent on non role-specific tasks (e.g., answering email and searching for information). Tools that streamline these functions can lead to productivity gains of 20 to 25%.
- Improve resource utilization. The sweet spot for productivity is around 80% utilization, however most small businesses try to operate closer to 100%, which negatively impacts performance.
- Evaluate workplace processes. Put together a cross-departmental team of management and business leaders and work together to define your company culture and supporting processes.
Consider the following in your evaluation:
- Physical workspace: Open office or cubicles?
- Remote teams: Do you have a remote worker policy or do you require employees to come into the office?
- Work hours: Should you enforce a strict 8 a.m. to 5 p.m. workday or allow flexible work hours?
- Communication: Do you have a communication plan and tool hierarchy so workers know which tool to use for which type of communication?
- Management style: What’s the right balance between management oversight and worker performance so you can keep them engaged and motivated?
Why is this important? Formal PM skills are scarce in SMBs. It’s likely that most small businesses have just a few certified project managers employed.
Despite a lack of formal training and certification, many people (from team leads up to business leaders) will find themselves leading projects at one time or another. These are “accidental project managers.”
What’s the solution? Effective management of people and projects is essential to achieve growth goals. To successfully deliver project value despite a lack of formal PM skills, small businesses need to develop and support these “accidental project managers.”
How to get started: Foster a leadership culture that promotes accidental project managers who can drive operational change with the following four actions:
- Encourage emergent leadership and innovation. Static leadership and processes leave organizations ill-equipped to respond to changing market conditions, but encouraging individuals to challenge the status quo will improve morale and employee effectiveness.
- Recognize “informal” PM efforts (that lack a designated project manager and specialized tool set) as equal to formal ones, and provide adequate resources. This includes not only the people and budget required to get the job done, but also ad hoc tools to manage documentation, encourage collaboration, and increase transparency.
- Account for the functional responsibilities of the accidental project manager when planning timelines and schedules. Remember that accidental project managers need to juggle their regular day-to-day responsibilities on top of coordinating the project.
- Provide opportunities for employees to develop next-level soft skills. These are necessary skills for managing people, coordinating with stakeholders, and working on cross-functional teams. Facilitate development through mentorship programs, on-the-job training, or succession planning.
Why is this important? Issues stemming from poor stakeholder management are some of the leading causes of project failure. If projects fail, then businesses cannot achieve their growth goals.
Stakeholders are any person, department, or organization that has a role in completing a project and is investing time and/or resources in the process. Stakeholder management means knowing how to successfully communicate with those involved, deal with change, maintain engagement throughout, and bring the project to delivery.
What’s the solution? Improving stakeholder management will increase project success rates and lay the foundation to help SMBs achieve their growth goals.
Leadership gains a better understanding of the capabilities and limits of staff members, as well as their their capacity for change. This way, they’ll be better positioned to manage their workers through that change.
How to get started: Understand key stakeholders and what success means to them to ensure employees are focused on doing the right things by taking these three actions:
- Identify stakeholders and their priorities. Remember that stakeholders are any person, department, or organization that has a role in delivering the project.
- Analyze stakeholder influence and interest. Understand each stakeholder’s claim on the project and their level of interest and support. High influence/high-interest stakeholders are “key stakeholders,” and their engagement should be prioritized over the course of the project.
- Develop communication strategies. Tailor communication to the needs of your stakeholders. Identify appropriate tools, set up communication plans, and create (and maintain) a communication schedule.
Why is this important? Most SMBs are still developing change management skills, and have not mastered change leadership tactics.
Traditional change management, however (typically a top-down method wherein leadership dictates how and when to change), can actually increase resistance and change fatigue (resulting in employee ineffectiveness).
What’s the solution? Change leadership (aka open source change) is a more effective method for facilitating change because it involves inspiring and engaging employees to action.
Implementing change leadership tactics can increase the probability of change success from 34% to 58% and increase employee productivity (employees will spend nearly 13 fewer hours per week on change).
How to get started: Build a leadership team that knows when it’s time to change, what the right type and amount of change is, and how to motivate people through that change. These three actions will help you build that team:
- Transition to change leadership. Gartner recommends using the ESCAPE model to move beyond change management to change leadership. This model uses six steps—envision, share, compose, attract, permit, and enable—to inspire and engage employees through change (full report available to Gartner clients).
- Focus on talent management. Sixty-six percent of change success factors are related to talent. Manage and track employee capabilities and individual adoption styles to communicate change in a way that targets each employee’s change readiness.
- Understand your workers’ capacity for change. If workers are resistant to change, take steps to understand why. Provide them with the right tools, training, and timeline to effectively deal with change.