Fees, Fees, Everywhere, Fees!

I received the following question from an HR Director in the midwest:

Contingency Fees: What’s the value? It seems that the fee percentage in permanent placement ranges from sometimes less than 20% to 30%+ of the candidate’s first years salary.

So, what’s the diff??

Where’s the value change between the 20% firms and the 30% firms?

Though I do not conduct contingency searches today, I spent many years in the Director/VP desk wondering much the same thing…

The answer, however, isn’t mysterious.

The difference is frequently just timing. If a recruiter or firm’s current production is down, volume low, or revenue a bit off for the week/month/quarter, a firm may take closer to 20% for that particular search, instead of their customary 25-30%.

Perhaps they already have a couple of ringer candidates in the hopper, and they low-ball just to close a quick sale.

Maybe, they’re new at the business, and right now they just need to pay the bills (surely I don’t have to make all the obvious cautions here…).

Maybe, they’re just stupid. I doubt that, but let’s include all possible answers.

Now, having said that…Here’s the part that really gets me:

I spent a good many years in senior-most HR roles. A manager/company that will quibble over 5-10% on a $100K search for a valuable contributor to their organization, is so colossally short-sided and pound-foolish that it takes my breath away.

A hiring company’s bigger concern should not be whether the fee is 20%, 25%, or 30%; or whether the fee includes just base comp, base plus bonus, etc… The hiring company’s sole concern — SOLE concern — should be “Can this firm deliver one or more solid, successful candidates to fill my serious need?”

If not, then 15-20% is certainly no bargain; if yes, then we’re spending way too much time quibbling over a few thousand dollars.

Just my thoughts…

Elon Musk, Twitter and Culture

Elon Musk, Twitter and Culture

Culture is driven 100% top-down.

No matter what BS you hear to the contrary, culture begins – and is perpetuated and maintained – by what occurs at the top of the heap.

Any ideas about driving culture “from below” is an amalgam of wishful thinking and consultant crockery. And only shared by someone trying to sell you something that sounds easier than the real work.

Take Elon Musk, for example.

Now, you can argue that Twitter is an appropriately regulated social media outlet, accurately praised for preventing ne’er-do-wells from propagating hateful messaging and disinformation.

Or, you can see Twitter as moving too far out of its lane, censoring freedom of speech that should promote differences of thought, ideas and opinion.

I’m cool with either. You do you. (See what I did there?)

Musk, if we are to believe media reports, seems to fiercely believe the latter, further contending that the root cause of the problem is the fabric – the very culture – of Twitter today. And he wants that culture changed.

His first official act then? He whacked a bevy of senior-most execs, including the CEO, within hours of closing the long-awaited purchase.

Again, argue whichever current state for Twitter you choose. Float your own boat, amigo. But if Musk wants a radically different culture, he’s going about it in the most expeditious, if not dubiously effective, manner.

What would clearly not work is a conflict or tension at the top of the organization regarding culture direction or emphasis.

Culture, like any major change initiative, is driven (again, from the top for those skimming) most quickly by simple a simple performance approach:

    1. Setting clear expectations,
    2. Managing to those expectations, and
    3. Consequences or rewards for not meeting, meeting, or exceeding those expectations.

Clear expectations are a must. It’s hard enough for folks to follow our vision when everything remains constant; when changing, they have no hope to follow us if they can’t see it, and see it plainly.

Be clear. Give examples of success. Be explicit about what failure looks like. Use English, and small words. If you can’t explain it simply, you don’t understand it well enough (nod to Einstein).

Managing to those expectations is next. Here, we have metrics to help measure success and failure, based on the clear expectations outlined earlier.

Frequent calibrations allow empowered people the opportunity to align their efforts with our desired direction(s).

Specific targets here are again a must. Downrange visibility cannot be cluttered with a lot of bureaucratic bullshit.

Finally, consequences – both positive and negative – must exist so others can personally feel the effects of success and failure. Rewards and penalties. Carrots and sticks. Call ‘em whatever. Just know they are essential, as culture change and reinforcement are driven most quickly via consequences and rewards.

That actionable piece, often skimmed over quickly in glossy culture tomes, is where things really change.

If rewarded for bad behavior, that behavior will continue.

If penalized for positive efforts, future efforts will be less positive.

This is where things can get really interesting, as the law of unintended consequences rears its ugly head.

Rewarding individual performance sounds great but can work against the larger good of a successfully working team.

Rewarding cost savings or cuts can lead to a reticence in appropriate investments, allowing needed positions to go unfilled, terminations without sufficient forethought, or really idiotic spending restrictions.

Unintended consequences.

There will always be some instances of these unintended consequences. The key, then, is to set opposing rewards and consequences to allow for and balance the effects.

Example: Individual performance can be rewarded, but only after team performance triggers and award.

Cost-savings can be rewarded, but only within specific, agreed parameters (profitability, headcount, average SG&A, etc.).

Just a couple of examples – the devil is in the details, and your mileage may vary.

Bottom line for us… whether you or Elon Musk, $54B company or $100M, culture begins and is reinforced from the top of any specific organization.  Ergo (my favorite useless word), Musk whacking the top of the Twitter food chain was a necessity if he firmly believed that the culture needed to be changed drastically. And quickly.

There’s a lesson there for all on top of their pyramid, so read it closely.

Now, it gets a bit complicated when we start discussing where the organization hierarchy actually starts and stops, but that’s for another article.

If Musk can do it, you can too.

Just stay focused, like Elon Musk. Assuming you can call electric cars, boring, brain chips, rockets and social media “focused.”

When does the guy sleep??

Mediocrity Kills…

In my upcoming (tomorrow) newsletter, “At C-Level,” I address this topic in some detail. I’d like to cover some additional points, and since this is my forum, I figured I’d just use this… From leadership and performance perspectives, mediocre performance — particularly among managers or key positions — is certainly a critical situation.

There are three real problems with accepting mediocrity:

First, it slows organizational performance. We know that intuitively, though we frequently feel we can “get past that.” We make processes, even hire people, based on some mediocre log-jam that we seem to accept for no rational reason.

Second, mediocrity breeds mediocrity. In other words, if the prevailing culture accepts substandard efforts (in fact, REWARDS those efforts), then those efforts will continue. A basic tenet of compensation: “That which is rewarded is repeated.” In other words, if bad things don’t come to bad people, you can bet their steadily value-sucking performance will continue.

And third, we cannot even KNOW our capabilities or potential when mediocrity is pervasive in the organization. What we view as a challenge – a ‘stretch goal” – may be child’s play for a high-performing organization, yet we’ve accepted that degree of difficulty as a DIRECT result of our culture of marginal performance. Shame on us — we don’t even have a full grasp of where we could be or how high we could go, merely because we allow mediocrity to add weight to performance scales.

Additionally, mediocrity points to two obvious shortcomings with us in senior leadership:

First, the organization cannot be performing at a significant level with mediocre performers. The financial and productive results, then, are obviously less than the potential. Given today’s scarcity of resources, shame on the organization’s leaders for wasting them this way.

More importantly, the leadership team has proven unable or unwilling to manage performance correctly and effectively for the organization to truly realize its success. We have to ask ourselves, if some members of the leadership team are incapable of eradicating pervasively lackluster performance, what else are they “not” doing? What other gaps do we have, that we may not even realize? How much money has flown through the door unchecked?

Mediocrity, either in terms of absolute performance or at least acquiescence/acceptance, begins at the top.

To borrow from some other cause’s tagline: We can eradicate mediocrity in our lifetimes.

And we should.

Stupid should hurt… Learn from your business mistakes.

stupid mistakes happen

I was recently involved (as a participant) in a strategic planning event; the facilitator, Alan Pue, was discussing many of the ways that planning — and its subsequent implementation — can go wrong.

In part of that commentary, he mentioned as an example a firm’s inability to adapt to a necessary change in the market, and how that inability adversely affected their performance. Alan wasn’t sympathetic to their plight, nor even empathetic. In fact, he made it clear that the problem was their own doing, and the resultant pain was of their own creation. They did it to themselves, have no one else to blame, and these lessons — though valuable — can be painful.

I agree.

When we act so dumb in business that we can’t get out of our own way, the resultant pain is our own doing. Sort of like touching a hot stove, we hopefully learn that we shouldn’t do that again.

Stupid should hurt.

Span of Control

What’s the optimum number of direct reports? How many people should a single manager have working for them? What we are referring to, of course, is “Span of Control,” and though there can be unique situations in some organizations, there are also decent historical guidelines.

Span of control isn’t simply dependent on individuals; it’s a basic limitation of all managers as it describes only their direct reports. Though any manager can control any number of people if there are enough levels in between, not so when it comes to direct reports.

Research (mostly military-based) has shown that a leader can directly control about three to six persons effectively. Additionally, the “relationships” among those supervised are as important as their actual number.

Managing four people who interact constantly might be harder than supervising five or six who work largely independently.

Generally, an executive (someone managing managers) should supervise a maximum of four or five people.

In real practice, you don’t have to be an expert to know if you’re in trouble with span of control. If you have more than half a dozen people reporting to you, it’s probably too many.

Even six could be too many if those six have consistent dealings with each other. The reason of course, is that in addition to managing relationships with each subordinate, managers have to get involved to an extent in their relationships with each other.

In simple terms, going from four to five direct reports, each with four direct reports of their own, potentially doubles your effective workload while increasing your output (productivity) capacity by only 20 percent.

If the people you supervise don’t interact, you can handle more of them.

Remember, too, that I’m discussing managerial span of control — managers managing managers. The numbers can increase significantly when managing individual contributors, particularly if highly skilled.

Just some thoughts…

Yooo-hoooo… Here I am!!

I didn’t disappear, just fell victim to the “wait until the end of the year to do that” disease.

I did, and it hurt. Traveled 6 out of the last 8 weeks out of the year… and remember, I’m one of those that doesn’t even like to travel. Simply brutal.

Further, with the growth of my business, I’ve been in something of a “hiring” mode, and that’s equally difficult to do — personally — while traveling.

Speaking of hiring… now that the new year is upon us, it’s a great time to do some cleaning up. And I mean the really difficult stuff. Have that performance conversation with the under-performing employee; hire that new sales or marketing pro; stop doing those things that don’t create enterprise value, and focus on those things that do.

I’ll be back soon with something to write home to mom about — thanks for tuning in.