Business should look at staffing as its most important investment. Take time to find the right person and then take the time to train that person so he/she can succeed. Hiring the right people from the start, most experts agree, is the single best way to reduce employee turnover. Interview and vet candidates carefully, not just to ensure they have the right skills but also that they fit well with the company culture, managers and co-workers. Keep challenging and motivating them for retention. Turnover is expensive and can be avoided by doing the right things for your employees. Turnover costs include:
- Lowered productivity: the position is vacant and now the tasks are not being performed or other people are filling in which means some of their tasks are not being completed
- Overworked remaining staff: quality of their work will be diminished as does their satisfaction and engagement
- Lost knowledge. it’s not just about putting numbers in a spreadsheet, writing code or selling a product but also knowing the people, the traditions, the location of relevant information, what the boss likes and all the other things that come from working for a company for a long period of time
- Training costs. direct costs (such as a seminar) and indirect costs (such as an existing employee taking time to explain/show him/her what to do) can significantly impact a business’s bottom line
- Interviewing costs. internal time to vet resumes and interviews can be significant in addition to any recruiters hired and travel required
For all jobs earning less than $50,000 per year, or more than 40 percent of U.S. jobs, the average cost of replacing an employee amounts to fully 20 percent of the person’s annual salary. High turnover, lower-paying jobs (those under $30,000 a year) are slightly less expensive to replace, at only 16 percent of annual salary, but that still adds up quickly. As you can see, turnover costs can have a material impact on your business profit.
Risk and uncertainty are concepts involve a situation which involves imperfect and/or unknown information. Both concepts cause fear and anxiety and if not taken into consideration can have a devastating consequence to a business in lost profits or possibly complete failure. There are two types of risk:
- Internal or unsystematic risk: arise from events taking place within the organization
- External or systemic risk: arise from events taking place outside the organization
In essence, these two concepts show there may be consequences to actions or even inactions the business makes. A successful business tries to mitigate these as much as possible through careful planning and execution.
A strategic plan is a document used to communicate within the organization the organizations goals, the actions needed to achieve those goals and all of the other critical elements developed during the planning exercise. Steps in the strategic planning process are:
1. Mission and objectives: the organization’s process of defining its strategy, or direction, making decisions on allocating its resources to pursue this strategy and defining measurable financial and strategic metrics to track the intended outcomes/results
2. Environmental scanning: this includes both an internal and external analysis. The internal analysis can identify the firms’ strengths and weaknesses and the external analysis reveals opportunities and threats; this is also known as a SWOT analysis
3. Strategy formulation: based on the results of the environmental scan, the business should match its strengths to the opportunities it has identified and develop its competitive advantage to attain superior profitability
4. Strategy implementation: the strategy is implemented by means of programs, budgets and procedures through use of the businesses resources. How the strategy is implemented determines how successful it will be
5. Evaluation and control: measurable financial and strategic metrics must be monitored and adjustments made as needed. Do not be afraid to modify your strategy if shifts in the environment become evident
Incorporating innovation in your business can help you save time and money, and give you the competitive advantage to grow and adapt your business in the marketplace. For businesses, this could mean implementing new ideas, creating dynamic products or improving your existing services. The key steps in business innovations are:
- Conduct an analysis of the market environment, your customers wants and needs and competitors. Be open to new ideas and adaptive to change.
- Develop a strategic, responsive plan, which includes innovation as a key business process across the entire business.
- Leadership in innovation – train and empower employees to think innovatively from the top down. Inspirational leadership and motivation is what drives innovation in business.
- Connect with customers and employees to generate ideas for improving processes, products and services both internally and externally.
Innovation can be a catalyst for the growth and success of your business, and help you adapt and grow in the marketplace. Businesses that innovate create more efficient work processes and have better productivity and performance. Large companies are having issues innovating as their processes have become cumbersome and bureaucratic so use it to create a competitive advantage for your organization.