Improve Your Company’s Bottom Line by Treating Your Employees Right

“It’s just business, it isn’t personal . . .”

We’ve all heard a sentiment similar to this, or possibly even said it ourselves. In our culture, it’s become common to think that being successful in business requires being cutthroat or being willing to do “whatever it takes”.

I don’t know about you but some of the things I’ve experienced from people in business dynamics certainly felt personal, and not always in a good way.

Of course, there are times where it’s important to set firm boundaries, and take an assertive or possibly even aggressive stance in business (and in life). But if you build and run your business correctly, this should be the exception instead of the rule. In my 20 years as a serial entrepreneur, I’ve come to learn that being kind and taking care of the people around you is not only a way to enjoy life and work more but it actually creates more profit.

So many businesses treat their employees like they’re a commodity that can be replaced without a second thought. It’s common to pay as little as possible, to offer minimal benefits, and come down hard on employees when they make mistakes. This approach can create more profit in the short term, but when you look at it from a bigger picture perspective, it’s counterproductive to creating long-term success.

I’ve founded multiple companies throughout my career and have been fortunate to have employees that have stayed with me across multiple ventures and many years. And it’s not just employees. Third-party companies and contractors have changed their policies and sometimes even their business models to accommodate what I need, people who are willing to make strategic business introductions without any compensation and people who are willing to go the extra mile to help me achieve an outcome.

Having this kind of loyalty and support from the people you work with makes work more fulfilling while making it easier to operate profitably. Treating people poorly, disrespectfully, or even neutrally won’t create the kind of loyalty that’s needed to build profitable companies and certainly won’t generate the loyalty needed to build world-changing businesses. To do that, it’s important that the people around you feel genuinely valued. It’s important that they know you have their best interests at heart, so they don’t have to be defensive or offensive. Both ways of being take a lot of energy and that’s energy that could be going into creativity, productivity, innovation, etc.

When you go out of your way to be kind to people, to listen to their needs and concerns, to understand their “side” of things; they want to be around you and they want to support your vision. When they’re not spending their energy watching their back they enjoy working more which ultimately translates to dramatically increased productivity. In addition to increasing productivity and building stronger business relationships, taking care of your team reduces turn-over which has a direct and significant impact on the bottom line.

An employee that’s been doing the same type of work for an extended period will almost always be faster, better, and more accurate than a new employee at the same tasks. This means your business will run smoother, have less down time, and require less managerial oversight. When your business is running well and has competent people, your customers tend to be happier and more loyal which translates to increased revenue. In addition to increasing revenue, reducing turnover saves much more money than you might think. When you actually take the time to calculate the cost of turnover in your business most people are shocked. The time it takes to find, interview and vet new employees, as well as train them, absorb the cost of mistakes, and ride out other bumps in the road adds up quickly.

Bottom line… it pays to be nice to people!

As you go through your day, start to think about all the ways that you can show appreciation for the people you work with. Think about how you can demonstrate that you care and that they matter to you; that they’re not just doing a function that can easily be replaced. After you do this for a while you’ll be amazed at the results. To help kickstart the process, here are a few specific things you can do to optimize your team and your results.

-Provide introductions, support, and advice to other professionals in your space without asking for anything in return. Many people try to get paid for introductions and support which I’ve found to often be short-sighted (unless that’s the nature of your business). Over the years I’ve provided introductions to capital, real estate partners, agencies, etc. As a result of having a regular practice of helping the people around me, any time I need an introduction or advice I’ve found that people go out of their way to help.

-Pay as well as you can. Obviously, if you’re a startup or small business you may not have a lot of money to work with and I’m not suggesting making decisions that aren’t financially sound. With that said, I’ve found that the difference in competency and work output from top-tier professionals compared to others is pretty drastic. Often, being willing to pay a little more than you think you should allows you to attract a level of talent that will accelerate growth and pay for itself many times over. If your business doesn’t have much money you can look at alternative forms of compensating people in addition to cash. Some examples of this could be giving equity in the company, providing profit share or some kind of royalty, providing additional benefits outside of the norm, and providing significant discounts on the products/services that our company provides as well as partner companies.

-Find ways of showing appreciation for your team that is unique to them. Especially for key employees, make it a practice of getting to know them, understanding what they like, what motivates them, etc. This way you can give little gifts or words of appreciation that are specifically meaningful for them. I find that it’s great to do this randomly throughout the year. Many companies will try to give gifts or show appreciation during the holidays but don’t put much effort in throughout the rest of the year. Make it a point to show your care on a continual basis throughout the year. A number of large studies have shown that employee satisfaction is more impacted by how appreciated someone feels than by how much they are compensated.

-Use positive reinforcement as much as possible. If someone makes a mistake or underperforms, it’s often important to talk with them about it, tell them how they need to improve, possibly even write them up. But if this is your primary orientation, it’s likely that the people around you will operate out of fear more than out of inspiration. Fear as a motivator doesn’t tend to last long. But someone who’s inspired by what they’re working on, who they’re working with/for will tend to put in much more effort and inevitably accomplish more. I try to make it a practice to tell people something they’re doing well in the majority of my conversions with them. I’ll also make it a point to give praise to particular people in group meetings so they get acknowledgment not only from me but from their peers as well. In animal training, positive reinforcement works more effectively than negative reinforcement in almost all situations. Humans are just slightly more complicated forms of animals and, in my experience, they also respond better to positive reinforcement than negative.