The #1 Reason
And How To Fix It
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“How to make anyone do what you want, while they feel extremely happy doing it! Discover the forgotten currency, which is more precious at times than money.”
To my astonishment, I got a B- in my Business Strategy case analysis paper! I am astonished because B- is a bonus for a school slacker like me. I procrastinated til’ the night before the due date to complete the paper.
The professor was disappointed with the class because the average was pretty bad, so he gave the class another chance by allowing everyone to retake the case analysis paper (if students were not satisfied with their grade).
Although I hate traditional schooling, and hate homework assignments, business strategy interests me, especially when I get to analyze, dissect and understand the basis behind half-a-billion dollar companies. So I volunteered to redo my case analysis, this time for another company.
The professor assigned me a company called “Egon Zehnder”! Gosh, I can’t still pronounce the name right. I swear!
Well, for the sake of communication, I’ll call this company EZ, sounds so cool and easy, EZ!
So EZ is an search consultancy firm – fancy way of saying headhunters for extremely high paying jobs. Yet a more fancy way of saying that companies like Pepsi, Apple, Microsoft, Walmart, Pizza Hut etc would hire them to find them a capable CEO, CFO, CIO, Leader, President, etc.
HERE IS THE SNEAKY PART:
EZ (and other players in the industry) would go out and steal these executives from its clients competitors. This way the competition got weak, and the client would get an awesome employee who would know insights about the market place.
Hey, don’t blame EZ for doing this sneaky thing. This is what the business is basically about, stealing the competition’s key players and recruiting them to your firm.
Back to the story, after reading two case studies of EZ, done by Harvard business school and conducting my own research, I realized that the Search Consultancy business was a multi-billion dollar industry.
EZ had grown three times in a decade and was the largest privately held company in the market with annual revenue of over half a billion.
While EZ had prospered over the years, its competitors had either grown a little or had lost loads of business. EZ’s closest competitors were doing $599 million and $414 million in annual sales with an average of 1700 consultants, and public funding.
EZ was doing similar digits with the help of merely 370 consultants and no public funding.
THAT’S $1.35 million revenue per Consultant.
And its closest competitors were not even producing a quarter of the kind of productivity that EZ enjoyed so “ezily”.
This is an AWESOME employee turnover rate by any standard. (Since the biggest asset a consulting firm has is its consultants itself, EZ encourages and rewards long-term loyalty to the firm, which has resulted in less than 2% employee turnover per year.)
EZ attained such phenomenal success as a result of a counter intuitive move made by Egon Zehnder (founder of EZ… duh) himself, when he gave equal partnership share to all of its prime consultants.
WHAT THE HECK!!! REALLY?
I thought exactly the same thing.
“I would never sell shares of my baby to my employees no matter how good they are.”
But I was not being wise at first, Mr. Zehnder understood a primary motivator of humans…
When he let his handful of consultants in the early days become equal partners in his company, he exponentially supercharged the potential EZ had.
Every partner put every ounce of its heart, soul, and mind into the company they equally owned.
Let me ask you a few questions:
What do you take more care of?
I think you get the point. The idea of something being owned by us is so close to us humans that we go out of our way to nurture, grow and take care of it.
Pretty straightforward, and a logical point, but a really really bold and risky decision made by Mr. Zehnder.
Warren Buffet (The world’s richest man) employs a similar strategy in managing leaders of the businesses he owns. Instead of giving outrageous bonuses, Buffet relies on giving recognition and praise to his business managers as a method of motivation, satisfaction and high workplace moral.
And it WORKS.
Make it a ritual to give room for experimentation in your workplace.
Once you instill the idea in someone’s mind that they are responsible for all the success (not failures) that come as a result of a project, they are going to take ownership of that baby. They are going to protect it, nurture it, experiment with it.
They will get excited about it, they’ll come in early and stay late to make it work. Money can never buy such deeply routed motivation that ownership brings to humans.
Did I say it’s easy? No, it’s not easy for entrepreneurs to do that. We want our nose in everything, and we like to micro-manage everything, which simply kills creativity, and organic growth of yourself and your company.
My advice is to Trust your people and just let go and you will begin to see life within your company. Things will begin to workout themselves, because now every person in your organization is working at their full potential.
Which is going to ultimately make you a rich man/woman.
– Aziz Signing out