Employee Goals are Critical to Exit Planning
One of the key things you as an owner can do to increase the value of your business is to set goals for your employees that are in sync with your exit strategy. This may mean many things depending on your objectives and the gaps that need to be closed to achieve those objectives. If you have set goals in the past your thought process may need to change with exit planning:
1. Do the goals set increase cashflow? They should not only increase your bottom line and the money you put in your pocket short-term, but by increasing cashflow you increase the ultimate value of the business which is generally a multiple of cashflow. Cashflow is also critical if you are to transfer to insiders who must rely on it to pay you off.
2. Transfer more responsibility and accountability to your key staff and are they doing the same. These are important factors to a buyer or to have in place if your plan is to transfer to family or employees.
3. Are there weaknesses in your business that need to be addressed?
a. Too much dependence on owner
b. Vendor or customer concentration
c. Lack of investment in infrastructure to support long-term growth
d. Changing cost structures
e. New or growing competitors
According to Marnie E. Green, principal consultant of Management Education Group, Inc. and author of Painless Performance Evaluations: A Practical Approach to Managing Day to Day Employee Performance, there are essentially four types of goals that you as the employer can set with new employees.
1. Essence of the Job Goals: goals that clearly define tasks that will be required to complete the job. These goals should be very personalized to the individual position and employee.
2. Project Goals: activities that the employee should pursue with a clearly defined beginning and end.
3. Professional Development Goals: what the employee will learn in the next six months and a year that will help their professional growth. Itâ€™s important to think beyond skill improvement classes and consider goals that develop not only the employee, but help your organization as a whole.
Remember that these goals should tie directly back to the Annual Business Plan and your Exit Plan. They should be clearly measureable and communicated directly to employees by their direct supervisor and periodically reviewed and adjusted for progress.
These goals should tax your employees and push them to new levels. If you recall my column â€œSwitchâ€ you will remember to Direct the Rider, Motivate the Elephant and Shape the Path. This will help to make stretch goals more palatable for the employee and easier for you to measure and monitor.
Here are a few additional tips, according to George Bradt, the managing director of PrimeGenesis.
1. â€œAssign clear, specific, realistic, and useful goals.â€ The more specific the goals are, the easier they are to measure. Telling an employee to â€œjust do your bestâ€ doesnâ€™t clearly state anything.
2. â€œBe a positive performance role model.â€ One of the most effective ways to get employees to embrace your goal-setting program is for you, the manager, to set and achieve challenging goals for yourself as well. Your positive expectations often set the stage for better performance and create a positive association between you, the performer, and his or her success.
3. â€œBe supportive and express confidence in your workers‘ ability to achieve goals.â€ Allowing your new employee to take personal responsibility for developing strategies and an action plan to reach goals means that the manager understands the employeeâ€™s value. As a boss, be sure to provide specific feedback and develop a positive impression of yourself in new employeeâ€™s eyes, providing them timely and detailed feedback about reaching the goals.
A properly designed Exit Plan should not require additional work on the part of the owner. The idea is to change the work that you are doing and to adjust your focus toward positioning the company and yourself for the inevitable changes that will take place in the future. Will you control how those changes effect you, your family, employees, and customers or will they control you?