Magnus Penker

Came across this interesting book the other day, one of the few comprehensive books in the field of talent management, recommended reading for all entrepreneurs and executives.

The book covers:

• Attract new talent and keep the ”Superkeepers”
• Design career plans that boost employee morale and support organization needs
• Improve performance through a personal value exchange
• Coach, develop, and inspire raw talent and prepare the CEOs of the future
• See positive results with smarter performance reviews
• Create a culture of innovation and sustainability

Mike Southon and Cris West are the guys behind the Beermat concept and as everything is done on Cobra Beermat’s Lord Karan Bilimoria the founder of Cobra Beer is of cause endorsing their work cool work. Basically they suggest keeping everything short as possible and never large in print than a Cobra Beermat. Start in the pub, work out an elevator pitch, get a mentor and the first customer. When you have done that, set up a founding team with people you know and people how is complementing you also driven by passion, courage, hard work, solidity, personal skills and are doers.

The founding team shall be an entrepreneur keeping up the flame and complemented by people (not necessary full time) being

• Technical Innovator
• Delivery Specialist
• Sales
• Finance

To this you add the mentor or mentors – serial entrepreneurs with past experience of breakdowns, a lot of contacts and knowhow to run a business and when to kill the king (=when to leave as an entrepreneur).

For you who want to read more have a look at all freebies on http://www.mikesouthon.com/free-stuff/downloads/

Today, when everybody from politician to journalists talk about entrepreneurship and entrepreneurs I feel obligated to put attention on what it real is and what the differences is compared with small business owners. If we start with the first question, who are the typical entrepreneur? Statistically you find proportionally more of them among minorities and dyslectics. Often entrepreneurs are outsiders, people having the capacity to see possibilities and actually trying to convert them into a solution. The question is of cause, are you born to be an entrepreneur? Maybe? Maybe not? Regardless it is a person willing to take a risk, driven by solving and fixing something and having a high degree of persistence. Entrepreneurs see failures as a set-back and is never satisfied and if they are they move on to the next venture…

So what is the difference between an entrepreneur and a small business owner? According to the research a small business owner is driving the business for the sake of personal funding and needs while an entrepreneur is driving for growth and profit using all possible managerial tools, insights and strategically thinking in combination with finding the best people involving and rewarding them financially as well as emotionally.  Serial entrepreneurs often leave the company when it is up and running, remaining a part owner, continuing as non-executive director and eventually doing an exit.

If you want to figure out if you are an entrepreneur, do the test at http://www.bizmove.com/other/quiz.htm

Today Hey Group release their Global Top 20 companies for leadership, top five at the list was:

1. General Electric
2. Procter & Gamble
3. Intel Corporation
4. Siemens
5. Banco Santander

Two European firms formerly outside the 2009 top 20 – Siemens and Banco Santander – have jumped straight into the 2010 top 5. BASF is a new arrival from Europe too. Some intressting key findings was

• 90% of the Best Companies expect employees to lead, regardless if they have a formal position of authority.
• 90% of the Best Companies collect best practices for leadership development from subsidiaries and share them across the organization.
• Cultural diversity has allowed 95 per cent of the Best Companies to be more effective at responding to the challenges of competing in a global economy.
• 100% of the Best Companies have programs designed to develop leaders who can bring together resources across the organization.

Just the other day A Great Place to Work also released their list 2011 FORTUNE’S 100 BEST COMPANIES TO WORK FOR® which is based upon a deeper cultural audit and as far as I can see much more reliable. Their Top 5 on the Fortune list 2011 is:

1. SAS
2. Boston Consulting Group
3. Wegmans Food Markets
4. Google
5. NetApp

At the moment the competition takes place around Europe… I get back on that when released the 26th of May. In the mean time have a look at the Swedish list

PR has, generally spoken, changed over time and become more complex as the possibilities of interacting and building relations has exponential increased over time. Old truth might still be truth but often simplified approaches not possible to apply other than as isolated events.

Today building relationship impacting specific target groups is a holistic challenge, not a isolated task. All stakeholders have to be mapped, outlined, and analyzed based on previous actions, current beliefs and values and future expectations. Due to Internet and a flattened world the speed and number of possible point of connections has dramatically increased and continue to increase meaning that PR become a complex discipline whereas relations, primary and secondary stakeholders interest, power, urgency and legitimacy has to be understood over time, not as a snap shot. Transparency, social and environmental issues are also interlinked in all analysis today – as most people see responsibility as a prerequisite doing business.

As PR become more complex, faster, as well as integrated, holistic approaches as well as dynamic tools is required doing a good job. One of the recently awarded PR blogger having this approach is Doktor Spinn, have a look at his blog http://www.doktorspinn.se/

Michael E. Porter Harvard University professor, explains in an new video post, why business leaders must focus on shared value – creating products and services that benefit not only the company but also society. Or as like to put it, make the pie bigger… Responsible and smart entrepreneurs understand to create value through actions beneficial for all, without a working society and environment there is not much business to do. It is time for a new definition of CSR who has been focused on the wrong ideas instead of seeing the real rational behind a sustainable world the focus has been doing good without understanding why – a lose cannon without a captain. No good out of that… See the movie and enter a new dimension of why to do good, how to do it, and what it will lead to.Click on the picture to see the video post cast from Harvard  Business Review…

Today I will share a recent happening but before that some words about trust. Trust can be one-dimensional, two-dimensional or transformational meaning that ether you have trust or not in your business partners (one-dimensional) or you can have both trust and distrust at the same time (two-dimensional) and an evolving trust, the transformational trust theory, meaning that trust is build up in three steps:

1. Calculating whether do to business or not with a person or an organization
2. Developing knowledge about your business associate
3. Developing mutual identification

Recently I used odesk.com (the world’s leading network for freelancers, very competitive pricing) to find skilled people for a project. We applied game theory by asking +20 people giving them a chance to do a micro-delivery before selecting three of them going further with the larger project. The same project, the same task. This way we mitigated the risks, reduced the costs (even if three person did the same job) and finally increased the capacity being able to scale up with higher speed. At the first thoughts  it seemed crazy to ask three people to do the exactly same task. However, this way we

1. could in a secure way select the right people (without knowing them, taking references or even being sure who they were)
2. do it faster (quicker to find and start up than other free lancers) with less risk of delays or bad quality (=game theory applied on development)
3. deliver cheaper than if it was made locally in-house or by sub contractors or freelancers

Basically what we did was to add game theory to the existing trust theories – meaning:

1. Instead of only play with safe cards, take a chance of finding new possibilities on the global arena. Skilled and motivated people in other parts of the world, ready to take chance.
2. Make it in small portions with redundancies (three persons doing the same task) to mitigate the risks (= give the same small task to several people in the same time. Still cheaper since the fees are approx 10% of equivalent local services)
3. Evaluate, motivate, build trust and relationship
4. Build common a ground and eventually identity

By the way, ODesk freelancers actually get better paid that if you go through offshoring companies paying less salary (classical offshoring companies cut approx 70-80% of the fee, while ODesk take 10%). Moreover the freelancers constantly get ranked by their clients building the freelancers reputation and brand towards better assignments and finally increased compensations still profitable for all involved.

Having a board might by some be motivated with the legal reasons, by others to control or be able to offer tabouret seats to important people. By many entrepreneurs also motivated by having people buying and reselling their products and services. However, there are many and important reasons having a board and non of them is about power, buying or reselling products and services.

Every time I get the honor to be asked for a board assignment I always ask why and what I can do for the shareholders. If the answer is helping them selling or open up my network for selling the answer is always no. I will explain why by first I will provide some theoretical foundation:

Agency Theory: This is about aliening the interest of the CEO (in a public company with an employed CEO, not founder or owner) with the shareholders. By making sure the CEO has the same interest he or she will act in the interest of the shareholders and not in other personal interest. The trouble is of cause in large corporations where the CEO has a second layer in order to control, whereas personal interest might influence. However, by appying modern corporate governance rules and regulations the second layer can easily be controlled. This theory does not reduce the board to a control function rather explaining the importance of aligning the interest of the CEO with the shareholders. However, the question is then raised; what role does the CEO play in the board and shall the CEO be in the board at all?

Stakeholders Theory (my interpretation of Freeman’s theories): It is a theory practiced in Japan, continental Europe and Germany where all large interest groups get a seat on the board, e.g. employee groups and large shareholders. The idea is that all stakeholders shall be considered, however regardless of small entrepreneurial companies or large public companies this only work for easy decisions rather then complicated and hard-to-make decisions where interest groups only will focuses their interest instead of  long term wins. An alternative is having a committee of board election presenting a board to the annual meeting for voting. This give a possibility form a strong and balanced board securing all interest as well as competencies, relations, reputation as well as network and integrity. This can be lead by the chairman or by an external part appointed by the major shareholders.

Stewardship Theory: It is based on the assumption that decisions shall be motivated by something greater than the personal interest, a theory based on utilitarianism (the greatest good for the greatest number of people). I a board this means always acting in the greater good for the society and world as a whole, typical what you migh expect from a non-executive director.The criticism to this approach is that there is a fuzzy interlinkage between end and means, and that everything is a goal and then nothing becomes a goal.

Shareholder value Theory. This theory is utilitarianism but for the one with the greatest number of shares, i.e. the greatest good for the greatest number of shares. However, it is not an easy task to decide what is best for the shareholders as this might rapidly change over time and in accordance with number of shares and financial power. Just think of a entrepreneurial company owned by the founders, used to decide by them self. One day they run into an opportunity, and grab that but need a capital injection. The project does not pay off early enough and the company desperately needs money, they get it but diluted to minority owners. Now the new majority owners decide what best for them at that are to sell out the profitable parts of the business then close it down. The era is ended, people lost their jobs and the entrepreneurs are out of business. How is right or how is wrong? If the entrepreneurs were allowed to act in their favor as majority owners, why should not the financiers have the same favor? The problem is the same as for the stewardess. Is everything allowed just because it is good for the greatest number of shares? This impact the way a board work and outline future options.

Other aspects of board work is that owners, founders and other stakeholders might want to strengthen the strategic work and view upon the board work in order to develop the business long term as well as short term. Short term discussions normally means balancing power, interest, point of views, as well as providing second thoughts and options. Long terms are more of strategic skills, knowledge and thinking. Other reasons might be expert knowledge in a certain area or a general expert in the company laws. It is also common to dress up the board with famous names or inviting business people with extensive networks.

My advice five to all of you that are running small and mid size privately held companies, especially entrepreneurial companies, when rethinking your board strategy:

1. Find a balance between executive directors (working in the company) and non-executive directors (from outside) to balance interest and power as well as helping you with long term planning as well as short term prioritizations. Blend experienced board professionals with experts in certain areas and if possible with different gender and backgrounds. Typically 1/3 executive directors and 2/3 non-executive directors. Make sure each board member knows what and how to supposed and contribute.
2. Appoint a strong external chairperson with integrity and ownership in the business. Make sure the dialogue between the Chairperson and the CEO works fine and is both demanding and developing.
3. Make sure that the CEO, if not the founder, is shareholder (preferably step by step, but with well defined criteria’s from day one) aligning the interest.
4. Define the owners instructions in written, containing risk level, expectation of return, exit potential strategies, social and environmental ambitions and goals, personal ambitions, governance and control function. Make sure to defined and enroll the board´s rules of procedure as well as the CEO Instructions.
5. Elect a committee of board election. Lead by someone one trust and integrity, preferable the chairperson or the majority owner.

It is a lot of focus on Talent Management at the moment, and if you ask me it is possible the most important source of success in a globalized world full of possibilities and treats. Today the world is highly competitive, less borders and super-fast mechanisms for transmissions of best practice, knowledge and competences. Innovation and sourcing of skills, knowledge, capabilities and financial funding are the corner stones in today’s world.

As up today Talent Management has been pretty much driving the process of attracting, retaining, develop and transitioning (next move including exit and alumni) human capital. However, by linkage Talent Management to reputation management and Raison d’être the four-phase-model of Talent Management can be the most powerful weapon existing in today’s business eco system:

1. Attract: Build the Employer Brand and link it to Raison d’être, trust, shared values and transparence as well as balance in effort and benefits. Make sure you never break the brand promise anywhere in the chain of brands (firm, employer, products)
2. Retain: Secure that all employees are treated fair, understand the rules, feel a balance in what they give up and get (the equity theory), as well as consistent communication and messages to all people in the organization. Make sure there are a clear link the performance management and reward strategies as well as acting in accordance with the over-all brand promises and communicated values.
3. Develop: Constantly coach for result, skills, capabilities, knowledge and personal development. Plan the next step, short term and long term. Support and coach for stating personal missions and visions and how they are aliened and supported by the firms riason d’tere.
4. Transition: Suppport and plan for your peoples work-life; short/long term goals, internally/externally. The relations internally as well as externally are what is building up your total brand equity, or in other words the potential future cash flow.

The Talent Market (Recruitment Market + Internal Market) is two out of six markets and shall be as much interlinked into all business decisions as the other markets (Customer Market, Influence Market, Referral market, Supplier Market)

There are several new and fresh consultancy companies growing up around this new mega trend, as well as a bunch of old recruitment and staffing companies trying to transform themselves with mixed success. One of the most progressive and newly started consultancy agency I have found on the Scandinavian market is Area Of Excellence, definitely worth a visit (www.aoex.se)