What You Reward is What You Value
Perhaps the greatest challenge for practices wishing to grow their people, profitability and professional standards is determining what behaviour to reward. And what you reward must be a reflection of what you really value in your business, right?
Why is it that so many firms reward nothing more than a sales result then? Yet they say they care about their people, good processes, professional image, profitability, community involvement…..and so on. There are many things that a great professional practice stands for and cares about in fact, but which are rarely reflected in what they reward.
Figuring out what one should reward is the first step to getting your compensation & motivation package right. Because there should be a “compensation & motivation package” – the two go hand in hand if a remuneration structure is well designed. Remuneration should be more than what, or how, we pay someone. It should be a combination of benefits from salary and/or commissions or bonuses, investment in personal development of the staff member, internal and external recognition of their achievements, policies around time off and community involvement…and their contribution to the professional standing of the practice.
At it’s most simple: the compensation “package” should provide the motivation to do the things which the practice most values.
It follows that the very first step to getting your people doing the things you most value is to define what it is that you actually most value. If I was choosing to zero in on what it is I most value from “my people” today I would be looking at the following in order of their importance to me as the practice principal:
- Client satisfaction & retention.
- Adherence to process.
- Challenging of process.
- Profitability contribution
- Peer Opinion
That may seem an odd list perhaps, especially the order of them. My rationale to support it is that the thing which will matter most to the ongoing success of the business is that the people who pay the bills – our clients – feel that they are getting what they need from the professional relationship. Furthermore, it isn’t enough that clients feel “satisfied” at any moment in time, but that they are satisfied enough to retain our services on an ongoing basis. If we can get that right across the entire business then we have the foundation for a commercially viable business which can continually seek to be better.
In these days of regulation and litigation it is critical that our people understand that our processes – all of our processes, not just the compliant advice process – are there for a reason. They are there for protection of all – including clients – and to help drive efficiency within the business. “Efficiency” in this context means ensuring that our people are able to focus upon their part in the business with confidence, knowing what elements that everyone else contributes, and ensuring we minimise confusion and repetition.
However, I want people to understand that “process” is not set in concrete. It should by a dynamic and ever-evolving aspect of the business. Change will be driven by regulation and evolving best practice standards for sure, but it should also be driven by client-demand and our own awareness of areas of inefficiency or recognition of where new technology can drive a better outcome for everyone involved.
There is no conflict between these last 2 points in my mind either: the first stipulates that “everyone does things the way that we do them around here”. There are no prima donna’s who are free to make their own rules simply because they are hitting some numbers out of the park or whatever. But the second says “we want to be continually alert to doing it better, faster and more efficiently too – so it is always up for debate and suggestion. Things can be cone better“.
Generating revenue – especially just new business revenue – today is not good enough by itself. The cost of acquisition matters, as does the ongoing servicing cost per account, as does business retention. To be blunt: there is little point bringing in (say) $300,000 in new revenues if $200,000 of it doesn’t last 6 months, or if the servicing cost from additional resources required exceeds the amount generated.
The last one is potentially contentious, but if one is to build a practice which is efficient and consistent in its service delivery levels, then everyone has to pull their weight and contribute. One of the challenges for professional services firms leaders is that they often are blissfully unaware of what is happening in the trenches. We think that someone is doing a fine job, but there is always the potential that the individual is just doing a fine job of convincing the Principal that they are doing a fine job. Their peers know the truth though. To counter the productivity issue and enhance everyone’s understanding of the need for teamwork I would consider part of the reward structure being based upon a 360 degree assessment from within the firm. That has the additional benefit of each member of the team feeling that they have an avenue and an opportunity to express views honestly if it is done well.
So if these are the values that one wishes to reward, and a compensation structure is designed accordingly, is the job of rewarding the right behaviours done?
Not at all.
Creating the right “reward” was just the first component. There are a couple of other aspects to making it work, which largely revolve around being consistent in the attention to the right values by actively managing them. So we need:
- Reward. The right compensation & motivation package, as we’ve discussed, is the first element only.
- Routine. We need to sure that the right behaviours are implemented into the daily routines of the practice. They feature in workflows, tasks, projects and reporting. They become a part of the pulse of the practice.
- Reminders. Apart from building management oversight into the daily routine of the practice there needs to be constant reminders about why things matter, and the relevance to the individual staff. “Regular” doesn’t mean daily….but during team meetings or performance appraisals or planning days there needs to be a constant drawing of attention back to the big behaviours and values that you have determined represent how the business will work, and what each individuals place is within that.
Get all 3 components right and you are almost certainly going to be getting the behaviour and work effort that you do actually value.
Rosie the Robot, Amazon, and the Future of RAAI
Written by: Travis Briggs, CEO at ROBO Global US
It’s tough to find a kid out there who hasn’t dreamed about robots. Long before artificial intelligence existed in the real world, the idea of a non-human entity that could act and think like a human has been rooted in our imaginations. According to Greek legends, Cadmus turned dragon teeth into soldiers, Hephaestus fabricated tables that could “walk” on their own three legs, and Talos, perhaps the original “Tin Man,” defended Crete. Of course, in our own times, modern storytellers have added hundreds of new examples to the mix. Many of us grew up watching Rosie the Robot on The Jetsons. As we got older, the stories got more sophisticated. “Hal” in 2001: A Space Odyssey was soon followed by R2-D2 and C-3PO in the original Star Wars trilogy. RoboCop, Interstellar, and Ex Machina are just a few of the recent additions to the list.
Maybe it’s because these stories are such a part of our culture that few people realize just how far robotics has advanced today—and that artificial intelligence is anything but a futuristic fantasy. Ask anyone outside the industry how modern-day robots and artificial intelligence (AI) are used in the real world, and the answers are usually pretty generic. Surgical robots. Self-driving cars. Amazon’s Alexa. What remains a mystery to most is the immense and fast-growing role the combination of robotics automation and artificial intelligence, or RAAI (pronounced “ray”), plays in nearly every aspect of our everyday lives.
Today, shopping online is something most of us take for granted, and yet eCommerce is still in its relative infancy. Despite double-digit growth in the past four years, only 8% of total retail spending is currently done online. That number is growing every day. Business headlines in July announced that Amazon was on a hiring spree to add another 50K fulfillment employees to its already massive workforce. While that certainly reflects the shift from brick-and-mortar to web-based retail, it doesn’t even begin to tell the story of what this growth means for the technology and application firms that deliver the RAAI tools required to support the momentum of eCommerce. In 2017, only 5% of the warehouses that fuel eCommerce are even partially automated. This means that to keep up with demand, the application of RAAI will have to accelerate—and fast. In fact, RAAI is a key driver of success for top e-retailers like Amazon, Apple, and Wal-Mart as they strive to meet the explosion in online sales.
From an investor’s perspective, this fast-growing demand for robotics, automation and artificial intelligence is a promising opportunity—especially in logistics automation that includes the tools and technologies that drive efficiencies across complex retail supply chains. Considering the fact that four of the top ten supply chain automation players were acquired in the past three years, it’s clear that the industry is transforming rapidly. Amazon’s introduction of Prime delivery (which itself requires incredibly sophisticated logistics operations) was only made possible by its 2012 acquisition of Kiva Systems, the pioneer of autonomous mobile robots for warehouses and supply chains. Amazon recently upped the ante yet again with its recent acquisition of Whole Foods Market, which not only adds 450 warehouses to its immense logistics network, but is also expected to be a game-changer for the online grocery retail industry.
Clearly Amazon isn’t the only major driver of innovation in logistics automation. It’s just the largest, at least for the moment. It’s no wonder that many RAAI companies have outperformed the S&P500 in the past three years. And while some investors have worried that the RAAI movement is at risk of creating its own tech bubble, the growth of eCommerce is showing no signs of reaching a peak. In fact, if the online retail industry comes even close to achieving the growth predicted—of doubling to an amazing $4 trillion by 2020—it’s likely that logistics automation is still in the early stages of adoption. For best-of-breed players in every area of logistics automation, from equipment, software, and services to supply chain automation technology providers, the potential for growth is tremendous.
How can investors take advantage of the growth in robotics, automation, and artificial intelligence?
One simple way to track the performance of these markets is through the ROBO Global Robotics & Automation Index. The logistics subsector currently accounts for around 9% of the index and is the best performing subsector since its inception. The index includes leading players in every area of RAAI, including material handling systems, automated storage and retrieval systems, enterprise asset intelligence, and supply chain management software across a wide range of geographies and market capitalizations. Our index is research based and we apply quality filters to identify the best high growth companies that enable this infrastructure and technology that is driving the revolution in the retail and distribution world.
When I was a kid, I may have dreamed of having a Rosie the Robot of my own to help do my chores, but I certainly had no idea how her 21st century successors would revolutionize how we shop, where we shop, and even how we receive what we buy - often via delivery to our doorstep on the very same day. Of course, the use of RAAI is by no means limited to eCommerce. It’s driving transformative change in nearly every industry. But when it comes to enabling the logistics automation required to support a level of growth rarely seen in any industry, RAAI has a lot of legs to stand on—even if those “legs” are anything but human.
To learn more, download A Look Into Logistics Automation, our July 2017 whitepaper on the evolution and opportunity of logistics automation.
The ROBO Global® Robotics and Automation Index and the ROBO Global® Robotics and Automation UCITS Index (the “Indices”) are the property of ROBO who have contracted with Solactive AG to calculate and maintain the Indices. Past performance of an index is not a guarantee of future results. It is not intended that anything stated above should be construed as an offer or invitation to buy or sell any investment in any Investment Fund or other investment vehicle referred to in this website, or for potential investors to engage in any investment activity.
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