By David Rose
Welcome to the March edition of VIN-sight – delivering small business advice to our clients on a regular basis that moves beyond the accounting foundations we already provide and focuses on business strategies that help automate, simplify and advance systems, procedures and profits.
In this issue we will:
- Share five tips to aid in the development of appropriate leadership strategies for owners;
- Highlight the importance of selecting insurance policies that best suit the needs of your business and the benefits of engaging an independent insurance broker; and
- Expand on last month’s article on performance reviews by discussing how to handle a tough discussion and instigate a performance management process.
As always, please contact your usual Vincents advisor if you would like more information on any of the issues raised in this edition of VIN-sight.
One of the most rewarding challenges businesses face is the development of appropriate leadership strategies. Research has indicated that well-led organisations are 12% more productive and up to 3 times more profitable – so to overlook the importance of this development would be a misstep on the road to business success.
There are many ways that effective leadership can be achieved – however the following are five tips to help get you started:
1. Identify the Purpose of Your Business
It is important that a leader identifies what the purpose of the organisation is, what its values are and what direction it should take. Ask yourself these questions:
- What was it that you set out to achieve when you started the business?
- What is the identity of your organisation?
- What does it mean to your customers?
- What does it mean to your staff?
- What does it mean to the wider community?
2. Excel in Communication
Good leaders need to be able to communicate clearly and excite their colleagues with their ideas and visions for the future direction of the organisation. Being able to paint the “big picture” can help educate and convince staff what the goals are for the business – and how they are attainable.
3. Continually Learn
It is important for all business leaders keep themselves abreast with modern developments applicable to their business and industry. This includes undertaking self-development courses in a range of skills, including:
- Use of Technology
- Interpersonal Relationships
- Customer Service
4. Create An Empowered Management Team
Good leaders delegate! They then ensure that the persons to whom they have delegated in turn delegate to others so that everyone in the organisation is accountable for its success. To achieve this, good leaders have established portfolio descriptions for every conceivable duty within an organisation. It is also important that the management team assigned to this portfolio meets regularly to facilitate ongoing communication, the sharing of ideas and development progress.
5. Create a Succession Plan
Holistic business leadership also requires preparing for the day its leaders step away from the business. A succession plan is vital for the organisation on both a short and long term basis. Consider the following:
- Where are the business’ secrets (intellectual property, trademarks and competitive advantage)
- Have they been written down or are they kept in the heads of the owners?
- Have they been deposited with someone independent?
- Who would take over the company?
- What advice has been left with the management team as to the leader’s thoughts on succession?
If you would like access to more information on how to start on the effective leadership path, please contact your Vincents advisor.
Insurance for SMEs
A properly constructed insurance portfolio is vital for the stability of any small business. There are numerous types of insurance policies available and it is fair to say that if a business insured itself for every possible contingency, it would be liable for a considerable premium.
Various businesses are more prone to particular risks than others. To best navigate the multitude of insurance covers for small business, together with the possible pitfalls of each – it is often best to engage the services of an independent insurance broker.
Insurance brokers are a very important member of the “insurance system” for small businesses. The insurance broker represents you as the small business operator. You need to tell your broker everything about your business so that they clearly understand any applicable risks. The insurance broker will give you advice – you need to remember that insurance companies are not required to give you advice.
The main insurance policies for small/medium enterprises identified by insurance brokers include:
- Public Liability
- Professional Indemnity
- Product Liability
- Worker’s Compensation
- Employment Practices Cover
- Directors and Officers Cover
When reviewing your insurance policies, look very closely at the exclusions and make sure you’re happy with the items excluded.
When signing up for an insurance cover, you have a duty of disclosure, which includes:
- details of any insurance that has been declined or cancelled
- information as to whether the applicant has ever been declared bankrupt
- information on whether any claims have been made by the applicant in the past
- details of any exceptional circumstances relative to the risks which may affect the insurer’s decision as to whether to offer the insurance cover to the applicant
The more information you give, the more likelihood of “less perceived risk”, which will lower the insurance premium.
The premium can be determined on things such as:
- the nature of your business
- claims history
- the location of your business
- types of cover your business requires
- size of your business
- sums for which your business is insuring
If you would like more information on insurance options for your small business, please contact your Vincents advisor who can put you in touch with the necessary legal and broker contacts to help you protect your business.
Performance Management – Meaningful Conversations
In our February edition of VIN-sight we discussed performance reviews and touched on the need for business owners to have frank and fair discussions about employee performance. This month we will expand on this by discussing how to handle a tough discussion and instigate a performance management process.
Many of us find it difficult to advise an individual that they are not performing in the expected way. People respond differently to feedback, particularly if it is not consistent with their self-perception. Their initial response may be acceptance, if they are reasonably self- aware – however they may alternatively respond with tears, anger, denial or blame.
The key to discussing performance expectations is to strive to understand the personal drivers of the individual and seek to understand why they are not delivering as expected. The feedback needs to be provided clearly with reassurance that you’re here to help them improve.
Here are 10 steps to follow to help ensure meaningful performance management:
- Review the individual’s performance objectively to define where the concerns lie. This would also involve confidential consultation with other leaders or supervisors who have worked with the individual to ensure your assessment is fair and unbiased.
- Note relevant examples where performance has been lacking and use these as part of the discussion so the individual has recent work-related instances to reflect on.
- Schedule a time to meet the individual to allow them to prepare. Advise them the purpose is to discuss their performance and how you can help them improve. Advise them that they may also have a support person (such as a close work colleague or another Manager) with them if they choose. Be clear it is not a warning; it’s a performance discussion.
- Enter the meeting calmly and ready to engage in a fair and honest conversation. Reiterate at the meeting that you’ve invited them to talk about improving their performance. Outline the duties they are great at and then the areas of specific concern. Use the examples you have noted. Ask them if there is anything going on that you may not be aware of that is inhibiting their performance.
- Discuss any issues raised and ideas on how to overcome problems, seek agreement on how to improve and initiate plans on how to achieve and manage change.
- Set a further review meeting, ideally between 2 and 4 weeks later. Choose a suitable period of time for the individual to implement proposed changes.
- Explain that the meeting will be summarised in writing and the employee will be asked to review it and sign their acknowledgment.
- Reassure the employee of your assistance and that ongoing constructive feedback will also be provided on-the-job. Such feedback needs to be timely, don’t wait for the next meeting; set aside time to address improvements as you see them.
- Ensure the follow up meeting is held, giving positive feedback where it is due and being honest about where further improvements are still required.
- Set a further follow up meeting and repeat Steps 7 to 10 until you feel the employee is fully competent and delivering on their performance objectives in a positive way. If, after two or three meetings there has been little or no improvement – then the discussions should inform the employee that without improvement they’ll be subject to a formal warning and ultimately their position may be terminated.
If you would like more information on the performance management process, please contact your Vincents advisor.
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.