Leadership, the key to our business success
Regular readers of my articles would know that I’ve been prattling on for some time, that as small to medium enterprises operators (SME’s), our task is made all the more harder by bad press and bad government.
But is that the only reason?
Like it or not, but the drop in trade can also be attributed to something much closer to home… you.
I have touched on this in the past, but it is worth mentioning again.
Our own reaction to the state of our business prospects directly affects our staff, and to a lesser extent, our client base.
Peter Birtles is managing director and CEO of Super Retail Group (SRG), the company that owns the brands Supercheap Auto, Rebel Sports, Amart Sports, BCF, Ray's Outdoors, FCO, and Goldcross Cycles.
Granted SRG are hardly an SME as, according to the website smartcompany.com.au, their sales grew by 51.4% in 2011-12 to a whopping $1.65 billion.
Birtles however is a man that sees a huge significance in a team approach.
He is quoted as saying "You should never be inconsistent in the way you deal with people. Team members must understand you and know how you will react. You should always be truthful and that can mean, in some cases, you have say to someone I can't tell you that piece of information."
His comments on leadership resemble thoughts I have made in the past. He also shares the view that (retail) leaders who are openly negative about their industry are actually hurting their own staff.
He told Leading Company, an online management magazine, that "Leaders who have publicly talked about how retail is so difficult and challenging, and how this is the worst time for the last three years, need to remember that it is not just the media and public who listen; it is your employees,"
But he doesn’t stop there. He goes on to say "If you send a message out saying life is hard, it is very difficult for your staff to come to work saying, 'I can really make a difference'. An important part of leadership is to give your team a sense of, 'Hey this is how we will work through the difficult times’ and to ask them, 'What are your ideas about it?'”
Smart Company report that according to research company IBIS World, the $124 billion consumer goods retail sector employs 695,000 people across 90,900 businesses, and has had annual growth of -0.9% in the five years from 2008. Super Retail Group sales however have grown 131% from $715.4 million in 2008 to $1.65 billion in 2012. The growth has been steady, year on year.
So, I hear you say, how does this apply to my own SME? Our Industry doesn’t come anywhere near those figures in terms of growth and turnover, so surely it doesn’t apply.
Well, I think it does.
We may be talking apples v oranges in a trading sense, but one thing that is consistent in his business model is the ‘principle’.
Birtles has highlighted a good business ‘value’ that can be applied to a multinational, a two bit hamburger joint, or indeed our own business in a competitive industry.
Few industries are as competitive as the consumer goods retail sector. The owners of Crazy Clarks and Sams Warehouse, who have gone back into administration this week, realised this too late, resulting in huge losses.
The business owner, Jan Cameron, creator of the Kathmandu retail chain, made a serious error of judgement by all accounts in letting others run the business while she, according to her critics, tried to save the rainforests of Tasmania.
Another issue within SME’s that is often dismissed as inconsequential is staff turnover rates, and the actual treatment of the employees.
Unlike Birtles, Cameron has been accused by her critics of putting a new broom through the staff and moving in her own crew to underline a new beginning. It is in itself an understandable approach. The change however was a radical one and the employees were not kept in the loop at all. This just made the staff that stayed, bitter. By all accounts, the business was lacking a strong leadership and was relying on new blood rather than an environment where staff felt encouraged, secure and valued.
Cameron told The Australian Newspaper “There has been a high level of resistance to change within the company; an unwillingness or inability to deliver the radical change that has been required”.
You can read into that whatever you like, but social media has been full of claims that the staff was treated very poorly, unappreciated and certainly not to blame for the poor decisions of management as Cameron would want you to believe. It is not helped by the fact that her first senior manager, the man tasked with leading the brand(s) back from the wilderness, was dismissed for alleged sexual harassment. She was on the back foot right from the start.
Cameron’s experience highlights how important having employees ‘onside’ can help in running a business, small or large.
I have talked to employees from within our own industry, both from wholesalers and sign staff, and several expressed the thought that they would probably move on when an opportunity presented itself.
I assumed it was about money.
No, they all said it was about job satisfaction. Comments like ‘They didn’t feel appreciated by the business owners/management’ , ‘They are shown no respect’ , ‘They are not encouraged to become involved in making suggestions on the way a job could be improved or even the way the work environment could be improved’ was a pretty common theme. None said money was the issue.
In just about every instance, these employees had been with their employers for fair a number of years. Their bosses, it appears, have started taking them for granted. It’s not until they leave that the company realises how smooth the place had run.
I’m the first to agree that no one is irreplaceable, but you have to consider at what cost.
SRG also acknowledge that the turnover rate of staff is an integral cost to sales. It was one of the first thing Birtles addressed when he came to the company. SRG’s staff retention rate is now sitting at over 70%, up from 59% six years ago.
Losing well trained and experienced staff is expensive, resulting in even more outlay training new starters, who may not last the distance either. It also risks contributing to a cycle of discontent among other long term staff. Of course, the unhappy experienced employees that leave then have more value to your competitors because they have inside knowledge on how you operate.
Simple economics would indicate that it’s better to make them part of the team, and retain them, than to be continually changing.
Looking at the principles of leadership and how Birtles operates within his hugely successful organisation can help us, as smaller SME’s, to develop good leadership skills to make our own business more successful. Conversely, Cameron’s experience is a good example in not taking staff for granted, or not appreciating their considerable contribution to the overall success of your business.
It’s worth a try, don’t you think?