For those of you who had the opportunity to attend my winter NAMM talk with the same title as this column, consider this a concise summary. For everyone else, here’s the Reader’s Digest version.
I began my talk by introducing a fictional music retailer, named Barron Key, owner of Harmony Music in Anywhere, USA. And the story begins…
It’s 10:10 and Barron is about to meet with his employees in the conference room to address a serious company-wide problem. You see, Barron wasn’t satisfied with his quarterly revenue. He believes that his team is not executing previously agreed-upon sales goals. He’s not in the best of moods. Before the meeting begins, let me introduce you to his two key managers.
Harmony Key is Barron’s daughter. She’s been working at the store since she was a kid and recently graduated college with a business degree. Harmony is the store’s general manager and really understands the rhythm of the business. Harmony has the best relationships with her staff, and she is trusted. Barron has always dreamed about transferring ownership to his daughter when the time was right.
Win Rich is Barron’s sales manager and top performer. Win is usually the “rock star” of the store, and Barron is troubled because Win seems to be less engaged than in the past. He’s used to Win taking initiative and helping to motivate the rest of the team. Lately it appears he’s been slacking off. In addition to Harmony and Win, Barron has another seven employees in admin and sales to round out his 10- member team.
The staff takes their seats in the conference room. Harmony had never seen the staff look so nervous. The tension in the air was so thick, you could cut it with a knife. She couldn’t remember the last time her dad called a store-wide meeting and everyone was spooked.
Barron goes to the whiteboard and draws a chart of the sales from last quarter. Barron isn’t happy. He says, “Sales are down. Some of our top sales people have left to work for our competitor and it’s taking too long to get the new people up to speed. No one seems to be engaged anymore, and I want to know what’s going on. How do we go from all this noise back to the Harmony that I know we can create? We are not functioning like a team anymore. We have a real numbers problem. The room goes silent.
All eyes are now on Harmony, Barren’s daughter. Harmony goes to the whiteboard.
“Dad, I agree with everything you said except your last point. We don’t have a numbers problem; We have a culture problem. And what I mean by culture is a common set of core values shared by the group.
Harmony continues: “I learned in my leadership class that it’s not only about providing us with quarterly performance feedback and dreaded annual performance reviews, which is all numbers-centric. Employees are looking for things like purpose, opportunities to develop, ongoing conversations, a coach rather than a boss, and a manager who leverages our strengths instead of obsessing over our weakness. In the end, a strong culture will result in stronger performance. Remember, dad: to unlock the top performance in your employees, don’t lead with compliance; lead with the relationship.”
Win approaches the white board and takes it one step further. “The way I see it, we pay most of the attention to managing our inventory, and just about ignore our non-financial assets which are 80 percent people and 20 percent technology. Remember, Barron: behind every number are people. Just this awareness will go a long way.”
By now, Barron’s face had turned red. He recognized that he screwed up. He’s been ignoring his most valuable assets – people. He now understands the cause of his problems: 1)He wants to create a culture of caring implemented through one on one caring conversations; 2) He now understands that he needs a way to develop and measure his non-financial KPIs; and 3) develop an improved performance management process.
Why it pays to create a ‘Culture of Caring’
According to Kotter and Heskett, authors of Corporate Culture and Performance, corporate culture can have a significant impact on a firm’s long-term economic performance. They found that firms with cultures that emphasized all the key constituencies – owners, employees, managers, customers – outperformed firms that did not have those cultural traits by a huge margin. Over an 11-year period, the former increase revenues on average of seven times versus two times for the latter.
Don’t know how to develop your non-financial KPIs [key performance indicators – Ed.]? It’s simpler than you think. Just find the answers to your questions which needs to be measured. Here are three examples. How well are we sharing our knowledge? How do our customers perceive us? To what extent do people feel passionate about working for our organization?
Three Tips for Improving Performance Management
- Change your mindset. Move from contract-based to relationship- based.
- Make feedback less painful.
- Think about the “Employee Experience.”
Free resources to get it done.
- How to develop non-financial KPIs. www.cgma.org
- Zoho Survey. Customer satisfaction. www.zoho.com
- What are your pain points? www.jaimieblackman.com
Jaimie Blackman – a former music educator & retailer– is a licensed Financial Advisor and Succession Planner. Blackman helps music retailers accelerate business value now and maximize value when it’s time to exit. Blackman is a frequent speaker at NAMM’s Idea Center and writes The Sound of Money, a monthly column for MMR. Visit jaimieblackman.com to preview his value- creation tools and to subscribe to Unlocking the Wealth newsletter and webinars.
