Lesson #333: How COVID-19 Has Changed Staffing Decisions Forever

COVID-19 has impacted the business world in many ways.  Some industries thrived (e.g., healthcare) and other industries got clobbered (e.g., hospitality).  But, one thing that was consistent across most companies, is many of them were forced to have their employees work from their homes for the first time.  And, a very interesting thing happened . . . it worked!!  Both for the employers in hitting their goals and for the employees looking for more flexibility in their jobs.  But, this is just the beginning of what should become a long term trend towards continued teleworking and increased outsourcing and offshoring even when COVID-19 is behind us.  Allow me to explain.

Teleworking Success During COVID-19 Has Opened the Eyes of Employers 

In the wake of COVID-19, employers are dramatically rethinking their staffing decisions.  In the "old days", most companies would think with a "home office" mentality, looking for staff in their headquarters or regional office locations.  But, COVID-19 forced many companies to experiment with teleworking for the first time--allowing their staff to work from their homes.  And, once they learned it was pretty much "business as usual" in terms of getting work done and driving revenues, they quickly started thinking "do we even need staff to return to the office".  A long term teleworking model would require a lot less home office space.  And, for staff that does need an occasional office, it can be provided with a "hoteling" model where you can reserve a desk for the day (not have your own dedicated desk), helping to reduce your monthly rental expense.  Additionally, they are starting to see the benefit from being able to recruit talent from any location, opening up a much larger talent pool of candidates for them to choose from, far beyond the constraints or limitations of their home office location.

This Has Also Opened Employers' Consideration to Alternative Solutions Like Outsourcing

But, this is just the beginning.  According to my colleague Jeremy James, a Partner at the outsourcing firm Staff Street (who helped me research the topics of this post), now that employers' "beaks are wet" with this concept, they are now giving the idea of outsourced staffing models much higher consideration than they have in the past. Why?  Because it is a similar "out of the office" solution that can help them expand their bottom line with lower-cost talent sources (save as much as 55% according to the Bureau of Labor Statistics), they can handoff secondary roles in order to enhance their core business functions, and it can help them accelerate their recruiting needs with "on-demand" talent to keep up with their growth demands without having to internally recruit or train those same roles.  Companies are starting to rethink every aspect of their talent needs--with a bias towards hiring employees for your core competencies (e.g., hire accountants for accounting firms, hire engineers for automotive manufacturing), with the flexibility of letting those employees work from wherever they want (at home or the office), and outsourcing everything else.  According to the BLS, around 45% of all jobs in the U.S. can be done remotely.  Not good news for the corporate real estate market!

The World is Quickly Becoming an Employers' Oyster . . . Literally!!

With employer's becoming more amenable to teleworking and outsourcing, it really raises a bigger question of where the talent needs to be located.  In many cases, the best solution may not be in the United States.  Hiring offshore and nearshore talent can often be the most effective and budget-friendly solution for your needs.

Offshoring is when outsourcing companies find solutions, whether it’s recruitment or program development, outside of the country their client is incorporated in. Many think the decision to offshore is solely concerned with being able to save costs or expand their bottom line. But offshoring doesn’t just mean cheap labor. Educating the world over has improved in the last 20 years and the global labor force has only grown in talent as well as in the competition for that talent. By finding the right offshoring strategy, companies are able to tap into that global talent pool and benefit from the general advantages of outsourcing, such as making fixed capital more variable and your organization more flexible and nimble, as well as the diversity and expertise in skills and ideas of globally competent workforce. Jeremy has found that the best outsourcing talent pools are based in the Philippines, Mexico and Eastern Europe. The Philippines and Mexico primarily specialize in customer service and back office support, working during American hours of operation.  And, the firms in Eastern Europe are phenomenal with technical tasks such as web and app development.   All at a fraction of the price of U.S. based talent.

Nearshoring is similar to offshoring in that companies find their solutions in other countries. But while offshoring companies look to the labor force in places like India, the Philippines, and Ukraine, or other places across the world, nearshoring’s competitive advantage is working in countries that are in the similar time zones and geocultural zones as the countries the outsourcing companies are incorporated in. They navigate the common problems that arise from conflicting time zones or cultural differences, things that can compromise company cohesion and agility.  For example, there is a large and cost effective technology coding community in Costa Rica that perfectly aligns with the time zones in the United States, making it easier to do business and collaborate on calls during the same working hours.

There is literally an offshoring or nearshoring solution for most any talent need you have.  Each with a different: (i) industry expertise; (ii) role focus; (iii) talent location; and (iv) costing model.  So, do your homework to find the partner that has the best mix of the above to meet your needs.  

How To Decide The Best Path for You??

The first real step to choosing the right talent strategy for your operating or growth needs is to have a clear organizational map and a clear growth objective. A good grasp of organizational needs and strengths helps companies and businesses determine which functions can be done in-house and which can be outsourced. It also helps you find the right outsourcing company to work with based on competencies in strategies and staffing solutions, as it can be a really confusing and daunting process for finding that right outsourcing partner.  So, map out your talent pool of options, figure out your core competencies, figure out how remote/outsourced staff will impact the business or culture and set a recruiting or outsourcing plan from there.

Closing Thoughts

So, now that we are starting a new year.  This would be a good time to rethink everything you are doing from a staffing perspective and figure out which of the above strategies would work best for your companies long term.  If you embrace the above concepts, that our home office is no longer a requirement for employment, there are surely better efficiencies to be had in helping you hit your sales targets and talent goals, with a materially better cost structure.  Which leaves more money in your pockets to grow your companies with.  Thanks Jeremy for helping me with this post.  Feel free to reach out to Jeremy's team at 213-537-8804 with any questions from here.

For future posts, please follow me on Twitter at: @georgedeeb.

Red Rocket's Best Startups of 2020

Red Rocket gets introduced to hundreds of startups each year, in the normal course of doing business, or via our involvement with various startup groups or events.  We wanted to honor the best of these startups that we met in 2020, in Red Rocket's 9th Annual "Best Startups of the Year".  This list is not intended to be an all-encompassing best startups list, as there are many additional great startups that we are not personally exposed to each year.  And, this list is not intended to be only for businesses that launched in 2020, it is open to startups of any age, that they or their advisors had some personal interaction with us in the last 12 months.  The business simply needed to have a good idea, good team or good traction, that caught our attention.  Congrats to you all!!

THE BEST STARTUPS OF 2020 (in alphabetical order):


BioSurplus (CEO, Bill Vandeweghe) - B2B used lab equipment marketplace

Cartogram (CEO, Will Clausen) - B2B indoor mapping & wayfinding platform

Castango (CEO, Chekesha Van Putten) - B2B online platform for casting and booking models

Charlie Health (CEO, Justin Weiss) - B2C telehealth for personalized teen mental health

EcomWizz (CEO, Nikita Danilov) - B2B platform for researching trending products

Get Boat (CEO, Ilya Veller) - B2B yacht booking platform

Greenlight (CEO, Nadeem Mazen) - B2B platform and community for micro-influencers

Lonerider Brewery (CEO, Sumit Vohra) - B2C craft beer brewery

Media Capital Technologies (CEO, Christopher Woodrow) - B2C movie financing marketplace

OneCare (CEO, Tom Glaser) - B2C remote health data monitoring from smart watches

Phone Wagon (CEO, Ryan Shank) - B2B call tracking software

PopShop (CEO, Nathan Franco) - B2B marketplace for finding shared retail space

Sapphire (CEO, Walter Larkins) - B2B accounts receivable collections for hospitals

Torre (CEO, Alexander Torrenenegra) - B2B professional social network for finding remote work

And, don't forget to check out the 2012 winners, 2013 winners, 2014 winners, 2015 winners, 2016 winners, 2017 winners, 2018 winners and 2019 winners, many of whom continue to be doing great things.


Congratulations to you all!!  Keep up the good work.


For future posts, please follow us at: @RedRocketVC

Lesson #332: One Bad Employee Can Tarnish Your Entire Brand

 

In business, a company's reputation can often come down to the lowest common denominator, the actions of one specific individual, especially in small companies.  Look at the image on this post--do your eyes gravitate to all the beautiful green apples, or does it focus on that one rotten apple, that spoils an otherwise perfect picture.  It is often the same thing in business, where the bad actions of one, can overshadow the otherwise perfect actions of others.  Allow me to explain with this case study.

The Situation

At one of our clients' companies, they had a employee that had been with the company for many years.  She was largely a rock star for most of those years.  She had been the company's best selling salesperson, she gave her customers terrific customer service, and they loved her for it.  And, they kept coming back year after year, loyal to the company and that specific salesperson.

But, about a year ago, something started to change.  Her sales started to plummet.  Instead of being the highest-ranked salesperson, she dropped to the lowest-ranked salesperson.  And, her service levels also started to drop off, where many customer calls were going unanswered and tasks were no longer getting done.  When the company's owners investigated further with this employee, she admitted that she had been having health problems. where she could not focus on her work or organize herself.

The Initial Attempt to Resolve

Given the employee's long tenure of success with the company, the owners wanted to try and help her through these difficult times.  They helped consult the employee on where to find medical assistance, which she took them up on.  The doctors and therapists quickly diagnosed the condition as adult ADHD, prescribed medications and other treatments, and suggested things would be better and back to normal in a couple months.  So, the owner's of the business patiently waited for the employees' health and performance to return back to historical levels.

The Damage Done in the Interim

The resulting damage from this employee's poor work performance really started to pile up.  Firstly, the company was losing revenues from the unconverted leads that were sent her way.  Many of these leads vocalized their frustrations to the company, willing to give the business another chance with a different salesperson.  But, the vast majority did not, and decided to take their business elsewhere.  And, secondly, the operational mistakes really started to pile up, with customers having major problems with their orders.  This caused the company to have to offer refunds as a mea culpa, and really started to tarnish the company's brand and reputation, and negative customer reviews started to flood into the website.  And, that didn't even talk about the fellow employees that were witnessing this poor behavior, and wondering what was going on, and how the owners were going to resolve it.

The Second Attempt to Resolve

After many months of patience (and continued lost sales and service breaks), the employee's performance never improved back to historical levels.  The employee even suggested that the owners create some financial disincentives for undesired performance, which they did without any success or change in behavior.  The owners really had no choice, but to cut ties with the former "golden girl", as the parties came up with a mutually acceptable separation.  Which to the owners, was like saying goodbye to a loved family member, you were never going to see again.

The Key Takeaway Here

Cutting ties with employees you like personally and professionally, is very hard to do.  The owners kept hoping that old "rockstar" would walk back into the room, and that never happened despite a year of trying.  But, the damage done to the company's brand in the meantime was immense.  The company got a lot of egg in its face, had to make lots of apologies and refunds, and turned away dozens of prospective customers that would never be coming back to the company.  And, it doesn't matter if those customers had originally started with a different salesperson that would have served them brilliantly.  At this point, that one "bad apple" had spoiled the entire "bushel" from a brand perspective in how they perceived the entire company.  Which is unfortunate, as the company really does deliver incredible customer service, other than this isolated situation.

So, during times like this, sometimes you have no choice but to rip off the Band-Aid, regardless of how painful it may be.  If you can't quickly resolve the situation with your employee, you need to make changes quickly that will best serve your customers.  If you wait too long, you may never get those loyal customers and lost leads back.  Which at that point, that outcome would be a self-inflicted wound by the owners for not acting fast enough in correcting a known material issue inside the company.  Don't let that be you.

For future posts, please follow me on Twitter at: @georgedeeb.

[VIDEO] George Deeb Discusses Mergers & Acquisitions Strategies (on ASBN)

 

I was recently interviewed by the Atlanta Small Business Network (ASBN), an online "television network" serving the small business community, about mergers and acquisitions strategies for small businesses, both as a buyer and a seller.  I thought this video turned out great, and I wanted to share it with all of you, to help you learn how to grow your business through M&A.  I hope you like it!!

 

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above, or feel free to watch it on the ASBN website.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

The 5 Steps to Selecting the Best Advertising Agency

If you are investing material dollars in marketing campaigns, more often than not, you have considered engaging, or have engaged, an advertising agency to assist you with those efforts. Those decisions whether or not to manage your marketing campaigns with in-house teams versus third-party agencies are typically not easy. And if you decide to outsource to an agency, the selection process can be overwhelming. This post will help make those decisions easier for you.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

Why Google's Search Page Redesign is the Death of SEO

I have been a digital marketer for more than 20 years, which seems like an eternity at this point. Google has always been a staple of any good digital marketing strategy, especially for search engine optimization (SEO), to attract free organic traffic based on the quality of the content on your page. But, when we recently started to see our SEO traffic start to decline, we asked our SEO consultant to investigate the root cause. He said it was due to a recent Google Search page redesign, moving the free organic links to the bottom of the search results page. Even more troubling was his answer on how to fix the situation.

"Start spending more money advertising with Google to get back up to the top of the page,” he said. That's a very strange thing for an SEO expert to say because his services aren't needed in that scenario. This means SEO as a strategy for ecommerce-driven companies is dying, and paid search marketing has become your primary way to gain an audience through the search engines, at least through industry-leading Google. Allow me to further explain.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.