The Carrot and Stick For Better Business Success

In earlier posts I discussed going outside of the envelope.  As a pilot we would train by leaving the envelope in a spin, and recovering to the normal realm of flight.  There is a step I didn't mention. In military flying, because the training puts you closer to the edge of the envelope so often, and you spend so much time outside of it to gain understanding of aircraft performance, the jets have ejections seats.

If you go into a spin and you get below an altitude that will allow you to recover, you simply eject and save your life.  You can always get a new airplane.

While not a proud moment in my life, having to walk away from a business I spent 8 years building, it was the right thing to do.  The business went into a spin and did not have the finances to recover.  I ejected, regrouped and went back into business.  Most who eject in business will never go back.

Knowing when to bow out of the game is just as critical to success as pushing forward.  Just like being in an airplane there are some indicators that the spin is getting too low and you need to do something differently and quickly or you are going to need to eject out of the business.  A late ejection is called a bankruptcy.

Running a business is a challenge that very few will ever try.  Fewer yet will be successful at it, and a big part of my life has been spent understanding why.  A few will have failed in one business only to succeed in another as I did.  Without doing this I don't think I could have the understanding I have now.

Within the business all of the people have an effect on the outcome.  If you don't believe it, you are looking at your business all wrong.  Paying someone to do nothing at all still takes money away from the bottom line and therefore effects the outcome of your business.

When everyone is clear on what the mission is of the business and is properly trained in their jobs, the owner is only there to make minor course corrections and keep everyone moving forward.  The owner acts more like an interested investor or a coach when the business is set up right.

During the early days of Apple, Microsoft and Cisco, there were a lot of ups and downs. The people that stuck it out made millions on their stock options.  The success of the company created their individual financial success.

As a leader, your job is to make sure that there is a stick, and it is used only when needed.  Too much discipline, unfair attacks or any kind of discrimination just hurt the business.  Failing to enforce the rules  of the business can be worse.   In my successful businesses my employee turnover was near zero.  In my failed venture, I had 80% quarterly turnover of key employees.  The business had a major problem and I couldn't see it until I ejected and could look at it without having the worry of making payroll.

These days I spend way more time hiring and turn away new business when I don't have the people or capital to service the customer properly.  I know how hard it is to turn away good money, but if you can't earn it, you have to turn down the work until you are ready.

Employees, staff and contractors all need to know what the "sticks" are for not making the goals.  A friend of mine just got a promotion at his company because someone falsified some records.  The stick was a swift termination.  This is exactly the right thing for the company to do.  They don't do it often, but when they do find a salesperson falsifying records, the zero tolerance policy is enforced.

Being "nice" has no place in decision making at this level of the game.  If the person is lying on paper, they will lie to you and your customers.  They need to go.

Of even greater importance are the carrots.  The rewards for doing great work must be there.  Just like you need to give yourself rewards, you need to learn what your employees really want.  When you learn that and give it to them as a reward for exceptional performance.  When you do, they will deliver and keep delivering.

Most owners don't take the time to learn about their employees and find out what they really want.  You can't learn what sticks they'll fear and respect so you won't need to use them if you don't know your staff.  Likewise, you can't learn the rewards if you don't know who they are either.

Know where you want your business to go, know what your people really want and don't want to go and you are off to a great start.  There is more but if you don't get this part right the rest won't matter.