Building Your Own Network When You’re Part of a Family Business

Is It All Really in the Family?

Family businesses: despite what network and cable television would have us believe, they are not all drama, backstabbing, and fighting for succession. In fact, 87% of all American businesses are family owned or controlled. From local Mom and Pop-style restaurants to multi-billion-dollar companies like Fidelity Investments, there are 32.4 million family-owned businesses in America alone. But when second, third, and fourth generations inherit companies from their parents and grandparents, they often also inherit rolodexes and address books full of their parents’ and grandparents’ business contacts. These contacts are valuable of course, but savvy new owners know that if you are going to grow any business, your network must grow with it. This is why a common question that many inheritors of family businesses find themselves asking is “How do I build my own network within the frame of what previous generations have already established?”

It’s a valid question, and not one with an easy answer. Partially, it does depend on whether a business owner wants to continue to operate their new business in a similar manner to what was done previously, whether they want to move the business in a completely new direction, or whether their plans lie somewhere in between those extremes. Either way, if you find yourself the brand-new owner of your family’s business, here are some things to consider when building your network:

1. Utilize Established Relationships

Begin by exploring the existing network your family has built over the years. This includes relationships with clients, suppliers, and other business contacts. By understanding the history and dynamics of these connections, you can identify areas for growth and potential opportunities for collaboration.

2. Seek Peer Support and Education

Reach out to other business leaders who share your commitment to family values and entrepreneurial success. Join peer groups and forums like the EFBC, where you can learn from others’ experiences and share your own insights. Surrounding yourself with like-minded individuals offers fresh perspectives and strengthens your support system.

3. Leverage Technology and Digital Networking

In today’s digital age, technology has become an invaluable tool for building and expanding networks. Here’re some examples:

• Take advantage of social media platforms: LinkedIn is a great platform to connect with professionals in your industry, join relevant groups, and participate in discussions.
• Email Newsletters: Subscribe to industry-specific newsletters to stay informed and connect with contributors
• Online Communities: Join organizations or associations that offer online community forums where members can discuss challenges and share resources.
• Virtual networking events: Attend webinars and online conferences to meet and engage with peers and industry experts.

4. Seek Mentorship

Mentorship is a powerful resource for personal and professional growth. Look for experienced mentors who can offer guidance, advice, and support as you navigate the complexities of family business ownership. Their insights and perspectives can provide valuable perspective and help you build your network effectively.

5. Give Back to the Community

Of course, giving back to the community is always something that sounds like a great thing to do, but for new business owners, especially those inheriting family businesses, the motives for community outreach can go above and beyond altruism. After all, the community in which you are doing business has supported your family for years, and the members of that community will want to know that you continue to be as invested in them as they are in you. In fact, studies show that 85% of consumers have a more positive image of a company that gives back, and 90% of consumers want to know how a company is engaging with their community. Beyond that, giving back can help build or strengthen partnerships, which only serves to build your family’s network, and by extension, your own.

In conclusion, building your own network within a family business is a dynamic process that requires a strategic approach. By utilizing technology, cultivating relationships, seeking peer support as well as mentorship, and giving back to the community, you can create a strong network that supports your personal and professional growth. Embrace the journey, and make the most of the EFBC community for support and guidance along the way.

Review of Sam Silverstein’s Book “The Accountability Advantage”

by B.J. Slater, Education Director

I looked at the dozen members of my team staring back at me and my mouth dried up. The knot in my stomach reflected that I wasn’t sure what to say at this point, and I suspect the look on my face may have said the same. This was the first staff meeting since we had fired a long-time toxic manager, the first time I had really started to take responsibility for the culture within our family’s fertilizer company, and now everyone was looking to me for leadership. That day I took the first step on a long journey of rebuilding and shaping our culture. The Accountability Advantage by Sam Silverstein makes an excellent guidebook for just such a journey. Sam, a leadership accountability expert, will be the featured guest at EFBCs Spring Signature Event on May 16. EFBC members each received a copy of one of Sam’s ten books. In this article I provide my review of one of them, The Accountability Advantage.

During our company’s culture journey we had wins and setbacks and a lot of trial and error. Slowly but surely positive trends emerged. At the time I didn’t understand exactly which of our efforts were effective and which weren’t. The Accountability Advantage offers an explanation of what worked, why it worked, and how to achieve better results in the future. At the time of that staff meeting those years ago, our family’s business had what Sam refers to as a “culture by default,” as opposed to one by design. The early chapters of The Accountability Advantage, spell out, with blunt honesty, the causes and costs of culture by default. Lack of accountability, specifically in leadership, is the root cause of myriad cultural ills within organizations. This lack of accountability stems from leaders’ fears of doing what they know they should do. I appreciate that throughout the book the author calls for a high degree of honest self-reflection.

I feel this fear in leaders which Sam describes as “misguided” and being, “based on false assumptions,” may be particularly relevant in family business environments. Personally I recall situations I felt compelled to behave according to family expectations or hesitated over concerns of what my father’s opinion might be. There are many situations in which holding ourselves accountable as leaders can be difficult or complicated.

When leaders opine on accountability, their remarks often focus on “holding others accountable.” To achieve Culture by Design, Sam argues, this is the wrong approach. Trying to hold others accountable puts them on the defensive and often backfires. Instead, he presents a compelling case for leaders inspiring accountability in others by first demonstrating it impeccably in themselves. While this may at first sound basic, Sam details ten non-negotiable relational commitments he argues form the foundation of being an accountable leader. These ten commitments make prominent appearances in his other books, and are foundational to his approach. It is by making and reliably keeping these commitments to your team that achieving Culture by Design becomes achievable.

The benefits of achieving such change can be massive. Sam outlines numerous organizational “Pains in the Butt” that can be transformed into competitive advantages by reshaping a culture through accountability. The balance of the book is dedicated to laying out a roadmap for achieving a Culture by Design and the advantages it provides. Sam presents this cultural transformation plan in five steps: defining, modeling, teaching, protecting, and celebrating the culture. This forms a logical and sequential progression that was easy to absorb and understand.

Sam begins the segment on defining the culture with a discussion of values, how to define various types of values, and their roles in organizational culture. This is followed by a practical exercise on how to clearly identify your own personal values. The exercise generates great insights and is well worth the time invested. This section of the book in particular contains exercises and conversations that aren’t meant for the reader alone. The above values exercise is meant to be repeated by everyone on the leadership team followed by discussions to share the results.

Once you and your leadership team are clear on their personal values, Sam advises getting your employees all in the same room and conducting a similar exercise with the group of them to identify your company’s values. How many of your employees, you ask? If you have fewer than 50, Sam argues you should just get every one of them in the same room. Like me, you may have second thoughts on this. How do I know this exercise will work?

Well, to me, this is where The Accountability Advantage became truly valuable. What is described are the very exercises Sam and his team at The Accountability Institute have actually run with companies they worked with. The text presents antidotes to common doubts and concerns as well as practical suggestions for skeptical employees. It also provides examples of cultural values developed by past clients that can serve as a guide.

The book walks through the remaining steps in the process presenting clear direction on how leaders should model the cultural values they and their team created in the prior exercises. Considerable guidance is provided on how to build and maintain accountability as a leader, how to build the courage needed to keep relational commitments, and how to avoid pitfalls and common traps leaders often run into during the early phases of cultural transformation.

In later chapters the focus shifts outward from the leadership team modeling cultural values to leaders communicating and teaching those values to others in the organization. An entire chapter is dedicated to the power of communicating values through story. The text again offers practical easy-to-follow tasks, suggestions for avoiding common issues, and plentiful examples of what other companies have done successfully before.

Having discussed designing and building the culture, Sam turns, necessarily, to protecting the culture. The author discusses dealing with very real situations that might derail your high performance culture whether they be a single person, or a merger with another company and different culture. Hiring and separating with employees is addressed also with plentiful real-world examples.

In the final and shortest step, Celebrating the Culture, Sam shares the vital keys to sustaining culture change by recognizing and celebrating excellence. The author argues this is as much a mindset about people as it is a set of practices. I wish there was more on this section, as I believe there is a lot of truth to the idea that this is a key way in which a high-performance culture is nurtured long-term.

In reading this book, and reflecting on our own journey at Plant Marvel, I gained significant clarity over why our most successful initiatives at developing a high performance culture were so effective. I also, humbly, realize how far we have yet to go – how far I have to go. Perhaps the greatest compliment I can give this book is that I left it with renewed clarity and conviction that I can accomplish the needed tasks. I believe this is a valuable guide full of hard-won wisdom from the trenches of organizations. I look forward to putting it to use. The author closes the book with a call-to-action reminding us that all we have, and all we need to make a difference, is this present moment.

The Accountability Advantage offers a tested road map for achieving positive organizational change by implementing accountability. Far from a passive read, the book is full of practical exercises designed to implement the ideas of the book in an actual organization. This is augmented by the author’s advice and wisdom gained from years of performing this same work with organizations. It presents a very powerful tool for organizational leaders of all types.

I am very excited to have Sam Silverstein keynote EFBC’s Spring Signature Event, Unlocking Potential: The Highest Form of Leadership! I hope that you will join us at 4:30pm on May 16th at Sky on Nine in Rosemont as Sam shares more of his wisdom in a special presentation just for the EFBC community. It will be a night to remember!

President’s Letter: Reflecting On Q1 and Future Planning

Dear EFBC Members,

With spring in full bloom and summer just around the corner, there’s a sense of renewal and opportunity in the air. The world around us is blossoming, and with it, new possibilities for our businesses and our community. It’s the perfect time to reflect on the progress we’ve made and set our sights on what’s to come.

May marks a prudent time to review Q1 analytics and make necessary adjustments to ensure a strong forecast for 2024. This is an opportunity to fine-tune sales, material margins, and critical processes. Involving key personnel now, before summer vacations begin, can help solidify your plans for the year. Don’t hesitate to lean on your forum partners or fellow EFBC members for advice and support.

Now, I’d like to share some exciting updates and upcoming events within the EFBC community:

1. Website Launch: We recently launched our redesigned website, featuring a fresh new look and enhanced user experience. This update strengthens our online presence and provides an improved user experience for our members.
2. EFBC CommunityHub: Our new online platform, EFBC CommunityHub, launches tomorrow, May 1st! This platform will serve as a central hub for members to connect, share knowledge, and collaborate. Keep an eye out for the official launch announcement tomorrow morning!

Upcoming events that you don’t want to miss:

• Hybrid Sales & Marketing Roundtable – May 9^th.   – Marcus Newman and Patty Rioux will lead a discussion on AI tools and the subject of motivation. This event promises valuable insights for members and their key employees.

• Signature Event – Unlocking Potential: The Highest Form of Leadership – May 16^th. – Prepare to be inspired by renowned speaker, Sam Silverstein, as he shares his powerful message of “No More Excuses.” This event is not to be missed!

• Fireside Chat – Member Story: June 11^th-Join us at Medinah Country Club for a conversation with EFBC member Jim Armbruster, facilitated by George Karavattuveetil. This chat offers a unique opportunity to learn from Jim’s experiences and journey.

As we embrace the beauty of spring and the promise of summer, let’s continue to nurture our community and support each other in our journeys. I look forward to seeing you at these events and witnessing our collective growth!

Warm Regards,

Dave Horvath
EFBC President 2023-2024

EFBC CommunityHub: Your New Digital Space for Connection and Collaboration

We’re excited to announce that our online platform, EFBC CommunityHub, will officially launch on Wednesday, May 1st! While you’ve already seen the initial announcement in your inbox, we wanted to share the journey that brought this platform to life and give you a sneak peek at what’s in store.

How It All Started

The inspiration behind EFBC CommunityHub began in early September 2023, when our current Vice President, Darrin Shillair, envisioned a space where EFBC members could connect, engage, and collaborate more effectively. With his vision in mind, the EFBC team jumped on board and worked diligently to bring this platform to life.

EFBC team collaborating with Vice President Darrin on the CommunityHub platform

Our team took care of all the technical and design aspects of the platform, ensuring that it caters to the needs and preferences of our community. With the collective effort of everyone involved, the EFBC CommunityHub came to life. This new platform embodies our commitment to fostering a sense of community and belonging among our members.

The Inspiration Behind the Name

The inspiration behind the name “CommunityHub” lies in our commitment to building a strong and supportive network for our members. The name embodies the idea of a central gathering place — a hub — where entrepreneurs and family business owners can come together to share ideas, gain insights, and find support. The platform serves as a virtual extension of our physical community, providing members with a space to engage. CommunityHub represents the essence of EFBC’s mission: 

What You Can Expect from EFBC CommunityHub

As a member of the EFBC CommunityHub, you can enjoy a range of features and benefits, including:

• Networking Opportunities: Connect with fellow EFBC members through 1:1 and group chat options, and access the member directory to find and engage with like-minded individuals.
• Events at Your Ease: Conveniently browse through upcoming EFBC events, register and manage them directly from the platform making it a seamless experience.
• Discussion Boards and Groups: Share ideas, ask questions, and collaborate with peers in various discussion boards and interest-based groups.
• Resources: Access to the extensive EFBC resources, from past event materials to insightful publications and exclusive content, ensuring you never miss out on any learning opportunity.
• Live News Feed: Stay updated with latest news within our community, right at your fingertips.
• Mobile Accessibility: Stay connected on the go with our mobile app. With just a click, you can quickly access EFBC’s services or communicate with members at any time and anywhere. User-friendly for first-time users!

Countdown to Launch

The official launch of EFBC CommunityHub is just around the corner — May 1st! Stay tuned for the launch announcement in your inbox.

We’re excited for you to explore this new digital space and discover all the opportunities it offers for connection, collaboration, and growth. We look forward to seeing you on CommunityHub!

Meet Carolyn Quinn, President at Pike Systems Inc.

Get to know Carolyn, a new member of EFBC!

Pike Systems Inc.
Founded: 1985
Location: Montgomery, IL

1. Tell us about your background & career leading up to where you are now?

I attended Babson College, a specialized institution focusing solely on business education, where approximately 25% of students come from family businesses, creating a unique environment. During my time there, my team and I initiated a business venture that, although ultimately dissolved, provided valuable insights and experiences. We donated all profits to a charity of our choice, reflecting our commitment to social responsibility.

Throughout my college years, I participated in numerous consulting projects for various companies, fostering a strong business-oriented mindset. Following graduation, I joined Goldman Sachs, where I worked on the equity derivatives trading floor in New York City.

However, my desire to return home eventually led me to reconsider my career path. Instead of transferring within Goldman Sachs, I approached my father about returning to work at Pike Systems – our family business. After careful consideration, I made the choice to return.

Initially, my role primarily involved marketing and sales support, but over time, I transitioned into a more sales-focused position, eventually managing my own sales territory. For the majority of my tenure leading up to purchasing the business, I focused on outside sales. Now, as the owner of the Pike Systems for six years, I remain deeply committed to its continued growth and success.

2. What do you like the most about what you’re doing right now?

I really enjoy the variety of challenges that come with my current role. As a business owner, there’s always something new to tackle, which keeps things interesting. Whether it’s solving problems or adapting to changes in the economy, there’s never a dull moment.

3. How did you first hear about EBC?

I first heard about EFBC through an email event invitation, which was quite a while ago, maybe over five years back, if not longer. My dad had just retired, and we attended the EFBC event together that was held at Loyola. It was a movie viewing event showcasing a business owner’s journey in South America. It turned out to be a memorable family bonding experience. At that time, I wasn’t ready to join.

It wasn’t until I crossed paths with another EFBC member, Bob Stahurski. Bob invited me as his guest to the Summer Social & Leadership Award event last August, and it was an amazing experience. At the event, I had the pleasure of meeting the two siblings who are the 4th generation of Italian Village owners. A group of us ended up going to dinner at Italian Village that evening.  The event was filled with such vibrant and engaging people, and it truly left a lasting impression on me.

4. What motivated you to join EFBC?

I joined EFBC (Entrepreneurs and Founders Business Club) for its robust in-person events and networking opportunities. The diverse membership, spanning various industries and sizes, offers unique perspectives and collaborations. Being Chicago-based, EFBC connects me to the local entrepreneurial ecosystem. Despite its premium offerings, EFBC remains affordable, making it an invaluable resource for my professional growth.

5. What do you hope to gain from your membership?

I’m primarily looking to expand my professional network and connect with like-minded individuals in the business community. Building relationships and fostering connections with other members is my top priority at the moment.

A great example of the value I seek from my membership was the recent NIL Fireside Chat event. It wasn’t a topic I was particularly familiar with, but I made a commitment to myself to be more involved and attend more networking events. Leaving the event, I found myself engaged in conversations about a topic that was entirely new to me. It was an eye-opening experience to learn and connect with fellow members, even on topics outside of my usual interests, which I hope to continue experiencing through my membership with EFBC

6. Is there anything else you’d like to share about yourself or your business?

Pike Systems, Inc. specializes in janitorial and sanitation supplies, providing cutting-edge solutions for facility management. Their product range, including cleaning chemicals and equipment, enhances cleanliness and operational efficiency. Committed to sustainability, Pike Systems delivers personalized services for a healthier workplace. Visit Pike Systems Inc. for innovative facility solutions.

Join us in welcoming Carolyn Quinn to the EFBC community! Members can log in and connect with Carolyn via the EFBC Member Directory.

Hiring, Motivating And Retaining Rock Star Marketers

This month, our strategic partners over at ODEA, decided on a new format for their bi-annual whitepaper. After being inspired by the community of members who attended and engaged at the Strategic Partner Night of Knowledge, they decided to record a podcast focused on getting the best possible marketers in the door. Listen as Patty Rioux discusses how she has found success in hiring, motivating, and recruiting truly rockstar employees and what it takes to keep them happy and keept them with her!

LISTEN HERE

-EFBC Strategic Partner ODEA

Incenting the Workforce During Economic Downturns

Incenting the workforce is difficult enough when times are good.  But in economic downturns, it becomes absolutely critical.  As your business struggles to make profits in the midst of reduced customer demand, supply chain challenges and market crises, how do you improve the chances of greater employee performance and retention? 

First, you must decide and communicate what higher performance looks like.  What skills and characteristics will create greater value to the organization and to the market at large?  It may be an improvement in current skills, or it may be an increase in the number of skills.  In either case it’s an improvement in how valuable an employee is to the organization. 

It may be not only skills, but also certain knowledge and characteristics.  Are there knowledge components related to your industry or specific functions that can give individuals and your organization a competitive advantage?  What about characteristics?  Especially during difficult times, adaptability, flexibility, and accountability become “must haves” not just “nice to haves.”  What have you communicated to employees and how will those valuable items be recognized?  Incentivized? 

Second, do you know what will improve the chances of employees developing and exhibiting the identified knowledge, skills, and characteristics?  Is it more money?  Improved benefits?  Flexibility in work hours and/or location?  At the very least, how does all of this compare to what is available in the market?  Does your organization offer at market, below or above market work and compensation packages?  

It’s also about culture.  What does your company have to offer all employees?  But most importantly, your highest performers.  What will improve the chances of them continuing their exemplary work and remaining with your company?  Your most valuable employees want growth opportunities, decision-making authority, recognition for their contributions, and other high performing team members with whom to work.   

The great majority of employees want to do good work.  They just need a culture that defines what good work looks like, provides feedback relative to it and delivers consequences.  Employees want to know that they are cared for and that their organizations are interested in their individual success.  How well are your leaders accomplishing that responsibility?  Do they know the significance of their role in the retention of your most valuable resource? 

During economic downturns, people are looking for what they can count on.  A rock on which they can stand.  It begins with communicating what the high value knowledge, skills and characteristics are.  Then confirming market competitiveness of current compensation and benefits packages.  Finally, ending with culture.  What makes yours attractive, especially to high performing individuals, especially during challenging economic times. 

Get Psyched about recruiting and retaining your most valuable employees! 

-George Karavattuveetil, President, Psyched!

Your Previously Used Employment Forms Need Attention!

On February 21, 2023, the National Labor Relations Board (“NLRB”) issued a decision turning the issue of severance agreements with employees on its head. I am not being dramatic; this was big news for the employment law world for two reasons: First, keep in mind that the NLRB is the body that enforces the National Labor Relations Act (“NLRA” or “the Act”). Second, contrary to public option, the NLRA and, therefore, the NLRB decisions also apply, in many instances, to non-unionized workforces.

The McLaren Macomb decision held that employers violate the NLRA when they offer employees severance agreements that require employees to broadly waive their rights under the Act. By doing so, the NLRB overturned decades of prior precedent to hold that non-disparagement and confidentiality provisions commonly used in severance agreements are broadly unlawful when imposed on employees (as opposed to managers or supervisors.

In addition to obtaining a release of claims, maintaining confidentiality, and obtaining an agreement not to disparage are the main reasons that employers enter into most severance agreements. Employers do not want the terms of a severance agreement broadcasted and also don’t wish to be disparaged by the departing employee.

The McLaren Macomb case involved a hospital in Michigan that permanently furloughed eleven union employees and offered each of them a severance agreement. Each agreement at issue in the McLaren decision contained the following provisions:

• Confidentiality Agreement:“The Employee acknowledges that the terms of this Agreement are confidential and agrees not to disclose them to any third person, other than spouses, or as necessary to professional advisors for purposes of obtaining legal counsel or tax advice, or unless legally compelled to do so by a court or administrative agency of competent jurisdiction.”
• Non-Disparagement:“At all times hereafter, the Employee agrees not to make statements to Employer’s employees or the general public which could disparage or harm the image of Employer, its parent and affiliated entities and their officers, directors, employees, agents, and representatives.”

Historically speaking, these are incredibly common terms to be included in a severance agreement with an employee; Not any longer according to the NLRB. The decision specifically highlighted two things: First, the NLRB noted that the confidentiality provision broadly prohibited employees from disclosing any information regarding the terms of the severance agreement. Thus, the NLRB reasoned that such a provision could prevent an employee from discussing the terms of the severance agreement with co-workers and it could “reasonably tend to coerce the employee from filing an unfair labor practice charge or assisting [an NLRB] investigation into the [employer’s] use of the severance agreement.” Accordingly, the NLRB determined that the inclusion of this provision constituted an unfair labor practice and violated federal labor law. Second, the NLRB held “[p]ublic statements by employees about the workplace that are central to the exercise of employee rights under the [NLRA]” and, therefore, the non-disparagement provision violated an employee’s rights under Section 7 of the Act because it prevented employees from making statements that the employer engaged in unfair labor practices and could potentially discourage an employee from cooperating with an NLRB investigation. Moreover, the NLRB found the provisions to be so onerous and the penalties so severe, that merely proposing a severance agreement containing those terms violates the NLRA, regardless of whether the employee accepts the agreement or not;  Pretty harsh!.

Understandably so, this decision has caused a major shake-up amongst employment attorneys. Realizing the ripple effects of the decision, on March 22, 2023, the NLRB issued detailed guidance for employers. Here are the takeaways that employers should be aware of:

Retroactive

• McLaren has “retroactive application” in that it applies to severance agreements signed before February 21, 2023. In addition, the six-month statute of limitations to bring an unfair labor practice charge relating to an overly broad severance agreement would be construed as a continuing violation by virtue of the employer’s maintaining and/or enforcing a previously-entered severance agreement containing unlawful provisions.

Supervisors

• Supervisors are not protected under the NLRA. Therefore, agreements with supervisory employees may contain these provisions.
• The term “supervisor” means any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing

the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment.

Severability

• Generally, the voidability of a severance agreement with overly broad provisions would be decided on a case-by-case basis. However, the NLRB’s Regional offices generally make decisions based solely on the unlawful provisions and would seek to have those voided out as opposed to the entire agreement.

Employee Request

• These employee protections under the NLRA cannot be waived even if the employee knowingly requests or consents to an overly broad confidentiality or non-disparagement provision.

Confidentiality

• Confidentiality agreements may still be lawful, so long as they are narrowly-tailored to restrict dissemination of proprietary or trade secret information for a period of time based on legitimate business justification.

Non-Disparagement

• Non-disparagement agreements may still be lawful so long as they are narrowly-tailored and limited to employee statements about the employer that meet the definition of defamation as being maliciously untrue, such that they are made “with knowledge of their falsity or with reckless disregard for their truth or falsity.”

The bottom line is that recycling severance agreements that have been attorney-approved in the past is no longer a good practice and could result in potential legal liability on behalf of the employer which could lead to voided out agreements.

-Rachel E. Bossard, a partner at Burke, Warren, MacKay & Serritella, P.C., chairs the Firm’s Labor and Employment law practice group. She represents employers in all aspects of the law including client counseling, training, litigation and benefits. She can be reached at 312-840-7029 or rbossard@burkelaw.com

6 Cost Cutting Tips for Small Businesses

Employers of all sizes are currently searching for ways to reduce expenses and save money in response to the current economic downturn and ongoing labor challenges. Instead of cutting costs randomly or conducting unnecessary layoffs, successful organizations tend to optimize their resources by identifying areas where they can reduce expenses without compromising productivity or future growth. While cutting costs is essential for any organization, it’s especially important for small businesses since they tend to have fewer resources than larger employers.

This article outlines six tips to help small businesses effectively cut costs.

1.      Invest in New Technology

Adopting new technology can bolster efficiency and create savings for small businesses. Investing in technology can help reduce costs by streamlining operations and allowing small businesses to operate more efficiently. Technology enables employers to improve or even automate manual and error-prone tasks. Examples of cost-saving technology include the following:

• Customer relationship management software
• HR management or information systems
• Digital communication
• Virtual recruiting services
• Low-code solutions
• Artificial intelligence
• People analytics technology
• Learning and development software

Additionally, many small businesses are turning to open-source software alternatives as a cost-effective alternative to brand-name software applications.

2.      Strengthen Employee Retention

Prioritizing employee retention can be one of the most effective cost-cutting strategies for small businesses. Replacing workers is often extremely expensive. Employee turnover not only increases an organzation’s recruiting and training costs but also usually results in decreased productivity, lost proficiency and reduced profits.

Small businesses can strengthen employee retention with the following strategies:

• Provide opportunities for career development and advancement.
• Offer benefits to meet workers’ evolving needs.
• Improve employee engagement by encouraging employee feedback, providing flexibility and strengthening workplace efficiency.
• Bolster workplace culture through public recognition and reward programs.
• Be transparent when communicating with employees to help them understand important decisions and establish opportunities for two-way feedback.

3.      Manage Health Care Costs

It’s not a secret that employer health care costs are rising. Finding cost-effective solutions is vital for small businesses to maintain affordable benefits and reduce costs. Solutions may include reevaluating plan designs and offerings, directing employees to cost-effective services and improving employee health care literacy. Employers can leverage their relationship with their insurance brokers to explore cost-saving solutions, like obtaining details on organizational health care spending and educating employees on shopping for health care services. By adopting several cost-cutting strategies, small businesses can better manage health care costs without sacrificing employees’ needs.

4.      Embrace Outsourcing

While performing tasks in-house can often be cost-effective, there are instances when outsourcing nonessential tasks can be more economical. Manual, time-consuming tasks—such as payroll and benefits administration—may be better suited for outsourcing for some organizations. Outsourcing these kinds of tasks can enable employees to focus on more important responsibilities that have a greater and more direct impact on a small business’s bottom line and future growth.

5.      Adopt Flexible Work Arrangements

The expense of having a physical workspace can add up. Each month, employers must pay rent, utilities, cleaning costs and other expenses. While these expenses are often unavoidable, some small businesses are transitioning to home-based businesses or remote and hybrid work arrangements to cut costs. These solutions may not be suitable for all industries or job positions, but small businesses of all kinds can explore ways to offer flexible scheduling and improve benefits, like enhanced leave and paid time off, to lower overhead expenses. If converting to a home-based business or going remote isn’t possible, employers can consider downsizing their facilities to reduce their rent and utility bills. Small businesses can also explore other alternatives, such as co-working arrangements and renegotiating their leases, to reduce rent.

6.      Review Expenses

Poor cash flow can strain and even jeopardize an organization’s longevity. Reviewing expenses regularly can be an effective way to reduce and eliminate unnecessary costs. As part of the review process, employers can negotiate with providers, suppliers and vendors, such as banks and landlords, to potentially defer payments, reduce fees, improve rates and receive additional services to help during difficult times. By establishing and fostering relationships with these individuals and entities, organizations can cultivate allies and acquire strategic partners, which can pay dividends by creating cost-savings solutions and opportunities.

Summary

Effective strategies for cutting costs will likely vary for each small business. However, by planning properly and understanding effective cost-cutting approaches, small businesses can identify and reduce the costs that will have the most impact on their organizations. This can help small businesses bolster their financial stability, optimize their resources and position themselves for future growth.

For more workplace resources, contact Alera Group Mid West today.

-ALERA Group, EFBC Strategic Partner

Organizations Culture of Care

Organizational culture can be defined as the sum total of expectations, rituals and values that integrate employee relationships, behaviors and decisions.  But what constitutes a real culture of care?  For our purpose, a culture of care is defined as one where employees feel that they are truly cared for by their organization. That their respective organizations understand the challenges they face and have implemented policies, practices and supportive resources to effectively respond to employee needs. 

Employees facing family caregiving challenges are especially vulnerable in cultures where care may not be a visible and overtly addressed priority.  The results of caregiving challenges may also be evident to managers of employee family caregivers.  They must deal with unplanned absences, unintentional work disruptions and team frustrations.  Unfortunately, organizations and executive leadership teams are many times less aware of family caregiving impact and therefore ill prepared to most effectively support this growing population. 

By the numbers: 70% of full-time workers are impacted by caregiving.  80% of working caregivers say it impacts their productivity.  25% of caregivers are millennials.  52% of caregivers provide care to more than one person.  On average, caregivers spend 32 hours per week performing care responsibilities.  How is caregiving impacting your employees and your organization? 

So, how do you begin creating a culture of care?  First, create awareness of the growing societal challenge.  Educate leadership and the larger employee population of the facts.  Second, collect data.  Confirm the internal need and gain acceptance of the importance.  Finally, take action.  Get organizational leaders actively involved in the communication of their own caregiving journey.  This is critical to show that it’s okay for employees to share their own experience and that they’re not alone.  Family caregivers, and even more so those that are employees, find it difficult to identify themselves as the caregivers they are.   Having organizational leaders share their own family caregiving stories will go a long way to improve the chances of caregiver self-identification.  Leadership sharing should include executives as well as first line managers as it’s the first line managers most likely to see the effects of family caregiving within their departmental teams.  

Creating a culture of care should also include conversations to understand what benefits and specific policies and practices would be most valuable to employee family caregivers.  What’s of greatest importance to employees and how does it impact their ability to address their caregiving challenges.  Is it more flexible work scheduling?  Or, a better understanding of family medical leave and how it can be appropriately applied in their specific situation?  Caring cultures will have ongoing conversations with employees to stay up to date with their continuously changing needs. 

Clearly, the creation and maintenance of a caring culture requires energy and financial resources.  However, the return on investment is tremendous!  Whether we’re talking employee engagement, physical, intellectual and emotional well-being, or team member productivity, cultures of care are very much worth the time and money.  Get Psyched about caring cultures!  

-George Karavatuveetil, President, Psyched!