What a High Unemployment Rate Really Means

What a High Unemployment Rate Really Means

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Alberta is no stranger to extreme business cycles. But what’s been happening in the last few years is something new; it feels like a new reality is setting in. 

We’re lagging behind Canada in unemployment. Some businesses are forging ahead, and some are hunkering down. 

If you’re hiring, you’re probably awash in applicants. If you’re downsizing, you’re deciding on your core team and the strategy to pull you through. 

Here’s a little myth-busting about what high unemployment rates can mean for your business.

 

Turnover  

It’s all double-edged swords. When you’re dealing with peoples’ jobs, that’s always the case. 

High unemployment is an “employer’s market.” Expect hundreds of applicants from a single ad and get ready to wade through the resumes. 

However, a lot of resumes don’t necessarily equate to better applicants. The expense implicit in hiring and training demands due diligence (even more than usual, given the volume). 

It’s tempting to think that in periods of high unemployment, existing employees should show up earlier, be a little more eager, and jump into projects with a bit more gumption. But it rarely works like that, and it’s up to you to decide if they want to introduce an element of fear into the workplace. 

If you’ve been nervous about replacing someone who should have been shown the door some time ago, high unemployment rates (and a lot of candidates to choose from) might be the motivator you need. But, if it looks like you’re pushing out someone opportunistically, it could backfire badly and injure the team’s morale. 

Times like these can also mean less natural turnover. People who would have moved on, for whatever reason, may be inclined to stay. Here’s where you need to consider what’s best for the business: letting people go might be exactly what your business needs for a natural and healthy evolution. 

 

Customer Expectations

If fewer people have jobs, then fewer people are spending. Bad headlines amplify the effect by scaring people to hunker down and sock their money away.

Down cycles affect industries differently. Liquor and discount stores tend to do well, while higher-end goods and services suffer the most.

Now is a good time to “take stock” and start asking what Alberta-based businesses, many of whom having built their internal processes around delivering higher-end products, are asking: How flexible are you in your offerings? Could a lower-cost offering fit into your business model? Down cycles are a great time to get creative about how to fix what’s not working in your business.

 

Watch your Startup Flank

When they can’t find a job, some people will reach down deep and make a job. New businesses and startups peak during high unemployment, as opportunity is thrust upon those who have been laid off. 

We know what happens to most new businesses. Failure rates are astronomical BUT some of them flourish and they can be real disruptors. They approach their industry from other angles and often blast holes in the old paradigms that established businesses rely on. 

Are you still innovating and staying fresh? These aren’t just buzzwords. In this economy, it’s more likely than ever that a startup will come from behind and compete in unexpected ways.

The job market is ever-changing, and today’s high unemployment rate is all part of that cycle of change. What we’ve seen, time after time, is that people and businesses are usually more resilient than we expect. Let your business decisions rest on your goals, not the current state of the market, and you’ll be better positioned for when the tables inevitably turn.

What is Your Why?

What is Your Why?

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“People don’t buy what you do; they buy why you do it.”
– Simon Sinek

We’ve heard it before: find your “why.” But what does it really mean, and why does it matter now more than ever? 

We know Simon Sinek from his ridiculously popular TED Talk: “How Great Leaders Inspire Action.” Let’s start there, and continue below on why moving from “what” to “why” might be your business’s most important strategic move.

 

What

You know what you do. You build houses. You make widgets. You fix teeth. If you didn’t know what you do, you wouldn’t be in business.

Chances are, your business started with “what.” “What” can be:

Sinek’s thesis is that we start with “what,” and only seek the “why” once we’ve become established. By then, finding our “why” is often an exercise that we don’t take seriously, even though our “why” exists to serve the pre-existing “what.”

 

How

“How” comes from the big team meetings: the ones where you get out of the office and try to achieve the 30,000-foot view. The “how” is:

Our businesses mature when we define our “how.” These are valuable tools to achieve a higher market share. 

But don’t be fooled; this is not your “why.” Your “how” may have been driven by vision, but it’s still ultimately about money and making more of it.

We’re surrounded by efforts to sell us things. Millennials especially have been so inundated with “features and benefits” chatter since the crib that they’re immune to it. Whether you give them the “what” (“We sell cheap widgets, wanna buy some?”) or your “how” (“We have better widgets than the competition, because we have a process they don’t have!”), your pitch will usually fall flat. 

If you want to engage with your customers on a more meaningful level than winning a purchase from them, you need to change the conversation. Stop talking about your widgets and how they’re special, and start talking about what matters. 

 

Why

Purpose matters. Millennials have taken over the buying-power throne, and the idea of a “purpose-driven customer” will become less of a buzzword and more of a reality as we go forward. 

Very few businesses have articulated their “why” in an honest way. Even fewer, with exceptions like Apple, started with it.

I say “honest way” because if you define your “why” to serve the interests of a pre-existing “what,” it’s an illusion that your customers will see right through. Your “why” should exist autonomously of your product, with the “what” just happening to serve that vision. 

You can identify a “why” statement when it follows a formula that goes something like this; “To [blank] so that [blank].” The statement should resonate with your customers on an emotional level. 

Sinek articulates his “why” statement as “To inspire people to do the things that inspire them so that, together, we can change our world.” Perhaps for our widget company, our “why” would look something like this: “To create time-saving widgets so that our customers can focus on the things that matter most.”

His thesis is that the “why” biologically speaks to us. Not being about a “what” means that it’s not about money, and so it’s not the message people expect to hear from a business. 

“Why” is the only thing that will build trust and, ultimately, loyalty. Build a business on “what” or “how,” and there will always be a cheaper widget with a better process. Put the vision first and make the widget a detail, then you’re competing in a space that your competition can’t reach.

So, I invite you to think about the spark driving your business. Forget your products, and forget what makes you unique. Clear the slate and ask yourself what unites all that you do. It’s the biggest question you can ask in business, and arguably the most important. 

 

How to Save Your Business in Alberta’s Downturn

How to Save Your Business in Alberta’s Downturn

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“It’s only after you’ve stepped out of your comfort zone that you begin to change, grow, transform.”
– Roy T. Bennett

A lot of struggling business owners and managers insist that this year, this decade will be different—and yet, they aren’t making the systemic changes that will make it happen. If your business is struggling, you may need some real change to emerge.

This new year, let’s get some perspective together and look at how real change could look for your business.

 

Achieve Distance 

It starts when you zoom out. Are you in a position to honestly evaluate your company’s position, or are you too immersed in the day-to-day to see clearly? 

A little voice will start to chirp, “Wait for the economy to turn around!” That’s a dangerous voice to listen to. 

A proper recovery could take years. If you’re going to make more money, it’s up to you to do it. And if that’s what you’re trying to accomplish, get some distance from your organization’s internal machinery. It could be an afternoon walk or a weekend retreat, just make the time step back to reflect on the hard, honest questions that will get you through this.

Here are three scenarios, with three sets of questions:

 

3 Types of Change

You can’t make the change you need unless you feel the urgency in your bones. Fortunately, if you were honest with yourself about your situation, you’re halfway toward the mindset you need. 

Inspired leaders inspire their teams, and whether you have a team of 2 or 200, you need them to make this happen. Don’t let yourself think that they can’t sense what’s happening: they know and they’re waiting for leadership.

You can make 3 kinds of change:

 

An economic downturn is a tough storm to weather, and inaction isn’t an option if you want to come out the other side unscathed. Consider this a rite of passage in business, and lean into the challenge. Stay realistic, get a plan in place, and hang in there.

The 3 Lifestyle Choices of a Lean Leader

The 3 Lifestyle Choices of a Lean Leader

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“Knowing is not enough; we must apply. Wishing is not enough; we must do.”
– Johann Wolfgang Von Goethe

If you want to lose 30 pounds, you know you won’t do it in a day. Or a month. You have to make it a project. 

And if you want to keep that 30 pounds off, you know that you can’t declare victory after a year and then hit the Taco Bell drive-thru. It’s a commitment, and it has to be more than a project. You have to make it a lifestyle choice.

That’s Process Improvement. If you treat it like a project, you’ll lose the 30 pounds (or start to see more profit on your bottom line), and then it will fall apart. Process Improvement is a shift in your professional lifestyle.

 

Lead by Example

Every lifestyle change, business or personal, starts with you. Change your context all you want, but if you don’t focus on your behaviour then the change is DOA.  

What’s your management style? If questions like that make you defensive, you’ll need to park that impulse for the sake of your company.

 

Support Others 

If you commit to Process Improvement alone, you’ll fail. You need your team. 

As an extension to leading by example, lead to support. You hired them (hopefully) to be more than process followers. To succeed, some of them need to be process interrogators, disruptors, and re-inventors. 

A Lean Leader doesn’t have all the ideas. Mostly, he or she has curated the ideas of others to align with the business’s overarching goals. 

Create a culture of openness and listening, where your team’s ideas matter and you prove that through action. Changing a business lifestyle requires a cultural shift. It will fail if your team isn’t on board, and your team won’t be on board if you don’t support them.

 

Embrace Data 

Process Improvement is about numbers. It’s about finding numbers wasted, tweaking to fix that, and adding numbers to the bottom line—and into the bank account.

Lean Leaders follow the numbers. Gut feelings can be a good red flag, but don’t make decisions on them.  

You’ll probably need to build a way of evaluating the metrics so you can better follow the numbers. This will feel like a waste of time, but make it a priority. You can’t make informed decisions without data, and you can’t be confident enough to inspire others without informed decisions.

 

If you’ve already failed a crash diet (or five), you know how hard it is to get back “on the wagon” after you give up. In the context of your leadership, you’re dealing with more than a few pounds—your reputation as a leader is on the line. So, don’t base decisions on what will make you look good for now. Make the choice to become the Lean Leader you want to be, and stick with it.

Engaging Your Millennial Employees

Engaging Your Millennial Employees

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“I hire people brighter than me and then I get out of their way.” – Lee Iacocca

Complaining that younger generations don’t want to work, are entitled, and don’t fully commit to their jobs is a Baby Boomer pastime. 

But complain as we might, the younger generation is our workforce now, and they have more to offer than we think. So for the sake of our businesses, let’s bracket out the stereotypes and talk about how to get this new generation of workers committed and engaged.

 

Talent Waste

Talent is the hardest deadly waste to quantify because it’s not money we lose, but money we aren’t able to get. It’s a waste that happens when your employee has a spontaneous idea that they choose not to share, or new efficiencies that they sit on for one reason or another.

If you run your workplace with a do-your-job-and-only-your-job flow, people will feel like they’re paddling upstream to share an idea. There’s resistance before they open their mouths.

But, if you foster creativity and openness, and make people feel like they’re part of something bigger than themselves and everyone is in this together, then the current changes. New ideas are seen as valuable and articulating them feels natural: it’s keeping silent that feels against the flow. 

But how can you send that message to the younger people on your team?

 

Change the Mindset

We need to stop trying to shoe-horn Millennials into our work habits. Older generations “got the job done,” often staying until 9, choosing work over seeing our kids, and committing as much time as we needed.

Work-life balance is the reality now—in many cases, it’s a much bigger deal than offering a “competitive salary”. Your younger employees will want to be home for dinner at six and available for Saturday soccer practice. 

If you let talent walk away because you won’t be flexible, your competition will scoop them up. The essential first step to stemming talent waste is to hire the right people, and then give them a competitively-structured work environment.

 

What You Can Do 

Rather than thinking they’ll be “taken advantage of” or that they’ve “given into entitlement”, today’s top companies actively foster work-life balance. Here are some tips from some of these innovators: 

These are easy steps that will change the current of your workplace culture and increase flexibility and loyalty across the team – rookie Millennials and veteran employees alike. In return, your people will be motivated to help the business that’s helping them. 

 

Let’s Change How We Think About Inventory

Let’s Change How We Think About Inventory

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“The more inventory a company has, the less likely it is that they have what they need.” – Taiichi Ohno

We look at inventory stacked up and think of it as money in the bank. It’s time to start recognizing it for what it is—frozen cash that is far from an asset. It’s a necessary part of doing business, but we want as little of it as possible. 

 

Inventory as an Asset 

According to your Balance Sheet, inventory is equal to money in the bank. Appearing right next to cash in “Current Assets”, the visual implies that inventory is reliable revenue but it glosses over this tiny detail: inventory needs to be sold before it does you any real good.

As any business person knows, however, selling inventory is no small detail. It goes rotten, becomes obsolete, breaks, gets lost, gets stolen, gets wet, has defects, oversaturates the market, and goes out of style. 

The practice of Balance Sheets is hundreds of years old, and speaks to a time when buying and selling was a simpler game. Now the complexity increases every year.

Inventory is a current asset when it’s sold. Until then, it’s a block of ice with all your cash frozen inside of it. In that sense, it’s not an asset at all, but a potential liability. The difference between those two is a razor’s edge. 

 

Things to Consider 

It’s true that you can’t sell from an empty shelf. We can’t do business without inventory, and the more we have, the more we can make. 

You buy inventory with working capital (ie. cash). Cash is the oil in the engine of your business; without it, the system seizes. 

 

 

The Key to Making Inventory an Asset

Think of it this way; inventory is an asset up to a certain degree, at which point it starts to become a liability. It’s a question of how fast you can sell it.

 

Turning your inventory is what makes it an asset. The faster your turns, the more flexible you are. 

But fast turns take discipline. It’s about keeping your hand on the wheel and your eyes on the road ahead.

Buy less, sell it faster, buy more, and repeat. It’s how to keep inventory as an actual current asset, and not let it turn into boxes of frozen cash getting dusty in the back storeroom. 

It sounds easier than it is, but there’s often low-hanging fruit. Re-evaluate those volume incentives you’re offered, or how long it takes to sell the last 25% of product—and whether you’re getting all your money for it. Numbers don’t lie, so let them talk you through the solution to your inventory problems.