Finding the right people, Virtual Bench, Onboarding must be achievable, Afterpay, NCR and Amazon’s drones
8th August 2021 Evolution Partners Newsletter
“No one has ever left a company because their manager reminded them too often why their job matters and how it makes a difference in someone else’s life.” – Patrick Lencioni
Hope you’re Thriving!
I’ve had a busy week, with almost every meeting covered the subject of people. How to find the right people, how to get people on the right seat on the bus, how to get people to do the right things the right way and how to exit people.
Let’s close out (or begin) the week on the same subject.
Finding the right people
This week saw Australia’s premier international mining conference – the Diggers and Dealers conference — being held in the Western Australian mining town of Kalgoorlie. On the side of the road was a variable message sign, as shown below, that provides an insight into difficulties faced in finding the right people at the moment. And for some companies, finding any people at all would be the right people.
A drillers offsider is a labouring assistant on a mining drilling rig and would only require a 12-day course to achieve competence. They would typically earn about $400 per day on a 10-day rotation, flying into and out of a remote site, known as a swing. Therefore, for context, the advertisement is for an approximate 25% pay increase over the average.
This amount is equivalent to you placing a sign outside your largest industry convention advertising a 25% above-average pay rate.
The good part of this approach is that the company is using marketing to attract candidates. Most companies only use their marketing department to attract customer leads, but they should also creatively attract employee candidates. Granted, using a variable messaging sign isn’t the most creative employer brand-building approach, but it still falls under the marketing banner.
The bad part of this approach is that you will only attract candidates who care about the pay rate. It’s challenging to retain these people or engage them on your company purpose, or in fact anything outside of their wants and needs. Furthermore, if these people come to work for you because of the pay, they will quickly work for someone else for better pay. When Kevin and I discussed the research around the seven hidden reasons people leave in our podcast, the salary wasn’t one of the reasons people leave.
How can you pay your people more than the competition in a commoditised market? If you provide the same product or service as your competitors, with a similar cost structure, then the only way to pay people more is from your profit. Remember ‘revenue is vanity, and profit is sanity.
It makes no sense to win more work at a lower profit margin, especially when customer demand is high.
Of course, it’s easy to say don’t pay people more when you don’t have anyone to do the work in your firm. But far better is the virtual bench, a concept of having a list of vetted, pre-qualified candidates for a job opening that you can draw upon when you need to, that Kevin and I talk about in this week’s podcast. More below on the Virtual Bench podcast, but first, below is how I described the leader’s role relating to the virtual bench in my book Made to Thrive.
The leaders recruiting dream.
“We’ve got a real problem when it comes to recruitment. The problem is that business owners and managers have a dream, and that dream looks a little something like this.
There’s a vacancy because of growth, or a person has resigned.
The leader puts a job advert on an online job board.
The very next day, the perfect applicant applies, can come in straight away, is over-qualified for the role and can start the very next day. But because the salary wasn’t discussed in the interview, the leader finds out that, as it turns out, they’re able to pay that person less than what they expected.
And I put it to you that this dream has never happened once in the history of the world.
The only way to build a great business is with great people, and the only way to get great people is to cast a wide net.
You can’t rely on luck, and that’s what we’re talking about here, building a system for you to communicate with the superstars in your industry so that when a job becomes available, not only can you talk to recruiters, not only can you place a job advert and draw on those other methods, but equally you’re able to communicate and discuss with people you already have an existing relationship with, who are the superstars in the industry, about the opportunity to come and work for your organisation.”
Onboarding must be achievable
I was working with a leader building an onboarding plan this week, and I wanted to mention to you a trap I’ve seen leaders fall into. Sometimes leaders can pack everything that they can think of into the onboarding plan for a new hire. They can accidentally build nine months worth of work into a three-month onboarding plan, plus they expect the new hire to achieve their KPIs.
Instead, when building an onboarding plan for a new hire, ask yourself how long each task would take. For example, if you want the new hire to visit ten customers in the first week, each customer visit might take two hours all up. This means you have just allocated them 20 hours out of a 40-hour workweek.
Every time you allocate a task to an onboarding plan, tally up your estimated hours to avoid overloading the new hire.
Afterpay exits at peak valuation
It was only a couple of weeks ago in this newsletter that I discussed Afterpay and how “Afterpay, whose market cap is AUD 30 Billion, may have innovated to launch the BNPL product, and they may have gained market share, but now that the heavyweights have entered the arena, they don’t have a difference they can preserve.”
This week it was announced that Square, led by Twitter co-founder & CEO Jack Dorsey would be acquiring Afterpay in an implied AUD 39 billion deal, 31% over its market valuation.
Afterpay, which is listed on the Australian Stock Exchange, has never made a profit, has never paid a dividend and has less than $1 billion in net assets. Square, the acquirer, last quarter generated 70 per cent of its revenue from bitcoin. In 2020, Afterpay’s negative free cash flow of $188 million represented the highest in a four-year cash burn.
Afterpay shareholders will receive Square shares, currently priced at 120 times forward earnings.
You may need to reread the last few sentences to absorb some of the absurdity that is 2021.
Given the heavyweights moving in the BNPL arena, one could argue that market share and gross margins will be challenging to maintain, and in fact that Afterpay may have sold at peak valuation (good on them!).
NCR, the company that invented the cash register in 1879, is getting into Bitcoin.
Michael Dell, one of the early Rockefeller Habits users, has quadrupled the value of Dell Technologies and added $50B to his wealth in the process. Here’s how he did it.
After the Government spent millions on vaccine booking websites described as “death by website”, this man solved the problem with an aggregation site built in a weekend for $20.
Half a decade after first conducting UK test flights, the dream of Amazon’s Prime Air drone delivery service is “collapsing inwards”. The slow collapse of Amazon’s drone delivery dream
This week on The Growth Whisperers podcast
The Topgrading virtual bench is a recruiting tactic for executives who need a better way to find additional leaders or key team members.
The virtual bench is important because it builds a list of vetted, pre-qualified candidates for a job opening that you can draw upon when you need to.
In the episode, we explain why it’s important and provide a simple role-play on how you can cold call potential candidates to put them onto your virtual bench.
What is a Topgrading virtual bench and why you need one
Listen to The Growth Whisperers
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