Category Archives: Business Practices

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How To Measure Economic Performance With Added Value

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With all of the metrics available to a business owner or leader today, how are you supposed to know which ones are the most important? Which are the best indicators of your economic performance as the leader of your business? I do not believe you can completely boil all possibilities down to one measurement that tells the whole story. At the same time, by measuring the economic added value to your business from year to year, I think you can get most of the picture.

added value

Added Value

This is the third post in a series on the C12 Group‘s Tri-Value model for measuring the performance of the leadership in a business. In the first post, I did an overview of the Tri-Value model and its purpose. In the second post, we looked at Team Value Added component of the model. Here, in the third post, we will focus on Economic Value Added (EVA) component.

Simply put, EVA measures whether the business’ value is being sufficiently increased or spent by the leadership responsible. Let’s start by taking a look at the formula itself:

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Operating Profit – Taxes – Cost of Capital Employed = EVA

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Breaking It Down

Operating Profit is easy to define: Gross Sales – (Cost of Goods Sold + Selling, General & Administrative Costs). Taxes are also easy to understand and quantify. It is the true Cost of Capital that causes a little more confusion.

The first response is usually to consider the cost of capital as what is paid to borrow it. This is not necessarily incorrect, but it only tells a small part of the story. We really need to dig a little deeper to get the rest of the story.

This description from the C12 material says it better than I can:

The total of all the invested capital tied up in the business (i.e. real estate, equipment, inventory, working capital, assets of all kinds) should be producing a return equal to or greater than the same amount if used to purchase another investment of equal risk.

While it is not critical that we go into too much detail about the risk, it is generally agreed that a conservative risk return is 10% for most businesses. I would argue that it should be higher, but you really need to settle on a number that is comfortable for you.

The Risk

Quite simply, if you sold the business and everything you have invested in it, how much cash would you have? If you invested that cash, over a long period of time in a similar-risk investment, what return would you expect to receive? Go with that number here. Why would you accept less? (There are arguments here, but we will save those for later!)

Taking that number (we will use 10%), along with the total market value of your business, you should be able to finish the equation. To make it easier to follow, I will use sample numbers assuming the following:

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(Market Value = $500,000) X (Return = 10%) = Cost of Capital $50,000

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added value

Now, in this example, the leadership produced $20,000 in added value. If Operating Profit had been less than $80,000 for the year, then they would have actually spent value, rather than adding it.

Of course, this is not the ultimate measurement. C12 still recommends benchmarking the performance of your business against comparable businesses in your industry. You also need to know your own critical metrics for your business – those numbers that drive the health and performance of the company.

How did your business do in this exercise?

Are you showing added value or spent value?

If you are spending value, what needs to change?

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How To Measure Team Performance with Added Value

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In my last post, I gave you a brief overview of the C12 Group’s model for measuring the performance of a company’s leadership. As business owners and leaders, we need to make sure we are building added value in our organization. As Christian business owners and leaders, we need to make sure we are doing this from an eternal perspective. Used as a part of our own annual assessment of our performance, the C12 Tri-Value model helps us to do this.

team performance

The Tri-Value component we will tackle in this post is Team Value Added (TVA). TVA is concerned with our team performance as a whole as well as how each individual member of our team operates within our business. Now, how you define “team” here is up to you. For me, with 100 employees, 18 managers, and 4 members of my Leadership Team (Inner Circle), I choose to evaluate the Leadership Team.

For you, the “team” may be your entire company. It may just be your management team or the department you supervise. Regardless, I would try not to pick a group that is too big. While there is not a recommended number in the C12 material, I would suggest you stick with a max of seven or eight. If you go any larger than that, the individual evaluations become difficult.

Team Dimension

To start, let’s look at the team dimension of TVA. In looking at our team as a whole, we want to look at the synergy of the team. Below are some questions we want to answer from year to year (or a frequency of your choice) on a scale from 1-10, watching the trends to see if the team value is increasing or decreasing….

    1. Is your team positive, supportive, and complimentary to each other?
    2. Are they setting and meeting ‘stretch’ targets that require teamwork?
    3. Are they innovating and pushing the envelope?
    4. Are they developing their replacements?
    5. Are they participating in the ministry dimension more fully?
    6. Are they thankful or becoming complacent?
    7. How is their attendance and work ethic?
    8. Is loyalty high and turnover low?

Individual Dimension

Next, we want to look at our team as individuals. Consider your individual team members and answer the following question for each of them, also on a scale from 1-10. If more valuable, note what they did to achieve that, using the choices listed below.

    Is this person more or less valuable to the business this year?
    A. Taking training
    B. Skill development
    C. Extra work or effort to ministry goals
    D. New innovations
    E. More dependable or loyal
    F. More input
    G. Attitude improvement
    H. Other

Now that you have evaluated their added value, now it is time to rate your role in that added value. Answer the following “How” question for each individual on your team, on a scale of 1-10. Then answer the “What” portion of the question with the choices listed below.

    How and what have I done to facilitate their added value this year?
    A. Personal encouragement
    B. Modeling / mentoring
    C. Recognition
    D. Rewards
    E. Training
    F. Other

Finally, we will take a look at how your individual team members are doing at developing their own team members or direct reports. Using the same scale from 1-10, score each individual member of your team on the following question. Again, note the “How” using the choices below.

    Is my staff adding value by developing their direct reports?
    A. Personal encouragement
    B. Modeling / mentoring
    C. Recognition
    D. Rewards
    E. Training
    F. Other

That is all there is to the actual evaluation of your Team Value Added. Obviously, the next step in this process is to take your scores and look for the opportunities to improve. Congratulate yourself and your team on your areas of strength and continue to work hard there. At the same time, take the steps necessary to bring your lower scores up over the next year. With intentional planning, you should be able to see significant progress!

[box]Email me HERE for a sample TVA Assessment document.[/box]

How did you and your team do?

What were your strengths? Your weaknesses?

What is the next step you need to take to improve?

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Added Value: A Good Measure Of Your Performance?

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As the owner or leader in your business, one of your main functions is to create added value in the organization. How do you measure your performance in this area?

If you are in corporate America, there are a number of metrics that analysts use to gauge your performance. If you are in a small business or non-profit organization, these metrics are likely different. Being a Christian business owner or leader adds a twist to this issue.

added value

Perspective

Adding value to your business can be defined differently, depending on your perspective. We are going to look at this method from the perspective of a Christian business owner or leader.

The C12 Group has a model for measuring this added value in the Christian business. However, the main difference between the C12 model and almost all other models is the perspective. While most businesses measure success or performance on a monthly, quarterly, or annual basis, the C12 model is very different.

Tri-Value Model

In stark contrast to most other business added value models, C12’s Tri-Value model considers the eternal perspective. Rather than judging a business’ leadership based on short-term performance only, this model takes a more balanced approach. The Tri-Value model is certainly not the final word on measuring performance. Instead, it is designed as a tool to keep us focused on the truly important areas of our jobs as well as to facilitate accountability in those areas.

In this post, I will give you a brief overview of this model. In the following three posts, we will look at each of the three components in more detail.

added value

Overview

The first component of the Tri-Value model is Team Value Added (TVA). This measurement deals with how well we are creating added value within the team of people that work in our company. There are two main categories in TVA. The first looks at how well the team is operating as a whole. The second category considers the development of the individuals on the team.

The second component is Economic Value Added (EVA). EVA measures whether the business is worth more in solid equity from year to year. It is a simple formula that helps us determine if we are adding to our company’s value or spending it.

Finally, the third component of the Tri-Value model is Spiritual Value Added (SVA). If we are truly looking at our company from an eternal perspective, and I cannot think of a single good reason why we would not, then this is our most important measurement. SVA attempts to measure the eternal fruit our company is producing.

Disclaimer

Please do not think that I am saying that all performance can be measured with numbers. Nor can we quantify all spiritual aspects of ministry in business. That is simply not possible. There are some aspects of business success that are impossible to put into a formula. Certainly, the Holy Spirit works in ways we cannot even understand, much less measure!

Instead, this type of model is intended to be a tool to elicit discussion and create conversation around our performance as it compares to our vision. The Tri-Value model should be used as a part of an ongoing planning and assessment process in your leadership of the business. If so, it can provide clear accountability for your leadership while helping you to remain true to your eternal vision.

Make sure to follow along all week as we break this model down into its components and look at how to use it!

What tools are you currently using to measure your performance in your business?

Do you feel these tools are effective at gauging your performance from the eternal perspective?

What benefits do you see in the Tri-Value model?

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Three Steps To Develop Your Inner Circle – Part 3

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inner circleThis is the fifth post in a series on developing your own inner circle of leadership in your business. We are on step three of Dave Anderson’s three-step process from his book, How to Run Your Business by The Book. The first steps in developing your inner circle dealt with choosing, investing, and empowering them. In this post, we will discuss holding them accountable for results.

Higher Expectations

While it is common business sense to hold individuals accountable for results on a day-to-day, project-by-project basis, this concept goes even further with your inner circle. If you, as the business owner or leader, are going to carefully select, invest in, and empower a few of the higher-potential members of your team, then you are certainly going to expect a higher degree of “fruit-bearing” from them.

Jesus’ Example

Your goal should be multiplication of impact through your inner circle, just as it was Jesus’ goal with His disciples. Jesus did not expect His disciples to just go around winning people one at a time. He taught them to multiply themselves. That is why they delegated the feeding of the widows to the deacons in Acts 6:1-7.

This idea is also illustrated in the story of Jesus’ encounter with the fig tree in Matthew 21:18. Most people notice that it says Jesus was hungry and was therefore upset at the fig tree with no fruit to eat. But have you ever thought of the other God-given purpose of the fig’s fruit? The fruit of the tree is where the seeds are – its God-given system of multiplication! Could it be that Jesus was more upset about this than His hunger? What are the possible parallels here?

The fig tree was accountable to Jesus for fruit. As a result of its lack of fruit, Jesus cursed the tree and it died.

The lesson of the vine (John 15:1-8) is another example of Jesus holding us accountable for our fruit when He said the branches not producing fruit would be thrown in the fire. While I do not recommend this exact punishment to be inflicted on members of your inner circle, it certainly shows us a clear example of accountability!

Your Inner Circle

So how do we apply this to your inner circle? I think there are several things to consider in holding your inner circle accountable.

    1. Where did they start? If you began with really green members of your inner circle then your expectations are going to be different than if you started with tenured and experienced leaders. You need to refer back to Part 1 of this series when I told you to look at where your group is right now and determine the gap.
    2. The key is progress. Regardless of where you started with your group, are they making progress? Are they growing as a result of the development efforts you are making? Look at them both as a group and as individuals. Are they moving forward together? Is any one individual holding up the progress of the group?
    3. Address shortfalls. If there are shortfalls in their progress – either as a group or as individuals – you must address it. Find out what obstacles are in their way and remove them. Help them see the gap between your expectations and where they are. Then help them close that gap.
    4. Cut the fruitless branches. In the event you chose poorly or if outside influences have taken one of the members of your inner circle off course, you are to try to correct that. But if your efforts to do this have been ineffective and the gap remains, then you must act. It is better for you, the team, and the company as a whole, to cut this member from your inner circle than to continue trying in vain to bring them along. While this is certainly a decision that requires prayer and a lot of thought, it must be made.

Are you holding your inner circle accountable?

If so, are you pleased with their progress (and yours)?

If not, what are you missing? What do you need to do next?

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Three Steps To Develop Your Inner Circle – Part 2

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This is the fourth post in a series about developing your own inner circle of leadership in your company. I am following the three-step process outlined in Dave Anderson’s How to Run Your Business by The Book. In my last post, we discussed how to identify your inner circle and how to intentionally invest in their development. Now we will turn our attention to the next step in the process – Give up power to go up higher!

inner circle

You Cannot Do It Alone

If you have been in business for long, you already know that you cannot do it all alone! If you want to grow and expand your business (and the eternal impact that comes as a result), then you must learn to get more done through others rather than doing it all yourself.

Giving up control is tough for most business owners and leaders – even when it is a simple task. So asking them to give up real power and authority to anyone else is almost incomprehensible! Unfortunately, this very issue causes many entrepreneurs to fail (worst case) or stunts their growth (best case).

Give Up Power To Your Inner Circle

If we are going to avoid this issue, we must learn to give up power in order to grow. In the context of our inner circle of leadership, this is going to require us to give up more than just day-to-day tasks to them. We must be able to let go of some of the more executive tasks as well.

Of course, this is not a step to be taken lightly. Nor is it a step that should be taken quickly. We must slowly and methodically grow into this or we could run into serious trouble.

Examples From The Bible

Let’s take a look at a couple of examples of giving up power from the Bible. First, consider Acts 6:1-7. The early church ran into a situation where there was too much for the twelve disciples to do alone so they were forced to delegate some of the daily tasks to others.

Note verse 7 in particular – “So the preaching about God flourished, the number of the disciples in Jerusalem multiplied greatly, and a large group of priests became obedient to the faith.” As a result of their wise delegation, the church saw tremendous growth!

What about Jesus’ actions in Luke 10:1-12? Here He sent out 70 disciples and gave them power over demons and power to heal the sick. He gave them clear instructions about what He wanted done and how He wanted it done. What was their response when they returned to Jesus in verse 17? “They returned with joy!” What about Jesus’ response in verse 21? “In that same hour, He rejoiced in the Holy Spirit…” It looks to me like it was a success!

Practical Tips

What can we learn from Jesus’ example here? Here are some practical tips we can pick up from this passage.

    1. Give clear instructions and expectations – Jesus was very specific in His instructions to the disciples. When delegating to your inner circle, don’t expect them to know what you are thinking. Make clear your vision of the process and the expected results. This will help you to avoid many problems!
    2. Have them report back – Jesus did not just send them out and hope they did what He asked. He had them report back to Him with their results. We don’t know if there was a specific time frame for this reporting back, but that certainly would be helpful if it makes sense. This puts urgency in the process.
    3. Coach them upon their return – Jesus was clearly pleased with their results (v.21), but He also took the opportunity to coach them in verses 18-20. This is critical for their development and future growth.
    4. Celebrate success and build them up – As we see from verses 21, Jesus was excited about their progress. He praised God and “rejoiced in the Holy Spirit” when they returned. He also took an extra moment to build them up and strengthen their confidence in verses 22-23. Don’t miss this step if you want your inner circle to continue to grow!

What else can we learn from Jesus in developing our inner circle?

Are you willing to give up some of your power in order to grow?

What is the first step for you to take?

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Three Steps To Develop Your Inner Circle – Part 1

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In my last two posts, I described why you need to develop an inner circle of leadership. We looked at several compelling reasons you need an inner circle, including the example that Jesus set for us. I also identified and answered several common objections to this idea. Now that you are convinced that you simply must have an inner circle, let’s take at look at how you do it!

inner circle

In this, and the next two posts, I am going to break this process into three simple steps using material from Dave Anderson’s book, How To Run Your Business By The Book.

The first step in developing your inner circle is to:

1. Identify and invest more into those with the highest upward potential

Identify Your Inner Circle

Let’s start with identifying the people with the highest upward potential. So, exactly how do you go about doing this? Well, first and foremost, I would pray about it. I would pray for wisdom and discernment as I reviewed my employees for prospects. Ask for Him to reveal qualities and characteristics that you may not already be aware of. Pray for patience as well. Jesus prayed all night!

Next I would look at your current leadership structure. The easiest people to choose are already in your key leadership positions. Hopefully, assuming you have these positions, the people you have here are trustworthy and have the potential you are seeking. Mutual trust is mandatory.

For me, it was fairly clear because I had been fortunate enough to have people in my key management positions that fit this role perfectly. Not only did they have the highest potential, but they also shared the same values and beliefs and were quickly bought in to the mission as I presented it.

Your situation may not be the same. If not, you may have to spend more time on this step. You also may see that you are not positioned well with your key people. While that is likely not something you can change quickly, it is certainly something you need to address over time.

Here are three keys to choosing these people:

    Ready – The people you choose must be ready to take on the additional learning and responsibility. Regardless of where they are now in their leadership growth process, they cannot be immature, unstable, or short-sighted. They need to be ready to take on the challenge you will place in front of them.
    Willing – Another requirement is that they must be willing, even eager to join this group. You do not want someone that you are constantly having to sell on the idea! They need to see the opportunity you are presenting and value it.
    Able – The actual level of each members’ ability to take this on depends on the general ability level of the group. While every member of the group does not necessarily have to be on equal ground with all of the others, they need to be close. If you have one potential member that trails the others by a significant amount, you may want to consider another path for them. Otherwise, they will likely hold back the progress of the group.

One note, it is my opinion that you may need to start with only one individual that IS the right fit rather than trying to force two or three others that are NOT a good fit. Think quality over quantity! Personally, I have a total of five. I am not sure there is a magic number, but I would not have many more than this. Intimacy is also important for this group.

Invest In Your Inner Circle

This step will be different for each leader, depending on the level of the members of the inner circle. Depending on your industry or your company’s mission, you may already have a ready-made path for leadership development. If not, you may have to create your own. The key here is to be intentional about their development.

Here are some simple steps to consider:

    Determine the gap – Look at where they are as a group right now. Look at where you see them in x number of years after you have invested in their development. Now try to plot out a path to close that gap!
    Gather material – Choose material that will reinforce your mission while moving them down the path you have chosen. Make sure it is not too far above or below their ability to absorb. Obviously, the internet is an almost infinite source of material! Consider joining a C12 group as one source!
    Schedule time alone with them – Jesus spent time with the crowds, but He also carved out time just for His twelve. He then carved out other time for the three. You have to do the same.
    Monitor your progress – Take time along the way to stop and check your progress. Document what you are doing. This will give you a sense of how far you have come as a group.
    Celebrate growth – Take time to celebrate your progress! While there is a lot of work to be done in this process, you need to enjoy the fruit of it as well!

Are you ready to choose your members?

What are your challenges here?

What is your next action step?

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Common Objections To Developing An Inner Circle

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In my last post, I told you why you need to develop an inner circle of leadership in your company. If you have not read that post, stop now and go back and do so. You really need to be committed to doing this if it is going to be effective.

Now that you know why you SHOULD develop an inner circle of leadership around you, let’s address some common objections to doing so.

inner circle

It Is Not Fair!

One of the first objections that arises at this point is, “But it is not fair to everyone!” The idea here is that those you choose for this inner circle will have unfair advantages and opportunities over the rest of your group. Folks, as Andy Stanley put it in his session at Catalyst recently, “Fair ended in the Garden of Eden!”

It is not your responsibility to give everyone in your organization equal and fair opportunities with your time and energy. Jesus did not pass around a sign-up list to those in the crowd, giving everyone an opportunity to be in His small group of twelve disciples. Nor did He give those twelve equal opportunity to be in His inner circle of three.

Instead, it appears that each time He intentionally chose those with more potential than the rest. Just like the master in the parable of the talents (Matthew 25:14-30), you should give of your time and energy “to each according to his ability.”

I Don’t Have Anyone Qualified For An Inner Circle

What if you feel you really do not have anyone qualified to be in your inner circle? Well, there are several ways I could answer this.

First I will assume you have enough people from which to choose, but you do not see any clear stand-outs. In this case, remember you are looking for those with the most upward potential. You may have to start very small and do a lot of developing. You may have your standards too high or you may need to relook at your hiring process! Regardless, it will be worth it.

What if you truly do not have anyone with even a remote hint of potential for this type of group? What if you are such a small company that an inner circle would have to include all of your employees to be considered a group? In these cases, I would advise two things. First, find someone else to mentor you and help you develop as you grow your organization. Second, keep this inner circle in mind as you hire. Do not hire people that could not eventually be considered for this opportunity.

But I Am Not An Expert!

Another argument may be that you do not yet feel like an expert yourself. You do not feel worthy or qualified to gather an inner circle around you for furthering their development. Good point. You are not. Unfortunately, you will never be qualified! If you wait until you are, it will never happen!

To again quote Andy Stanley, he said “It is not your responsibility to ‘fill their cup’, only to empty yours!” You are not an expert, and as long as you keep learning, you never will be! But you do not have to know everything there is to know about your job or role in order to teach them what you do know. Empty your “cup” of all you know – that is your only responsibility here.

Lack of Time

You may object to developing an inner circle by saying you do not have the time to pour into them. This could be a legitimate short-term argument because some leaders truly do not have the time right now to spare for something like this. However this argument virtually ignores the long term necessity and benefits of doing so.

Instead of accepting your current situation, you need to take immediate action to work towards creating this time in your schedule through delegation and elimination of less-critical tasks. By replacing these less-critical tasks with leadership development of an inner circle, you will actually free up more time in the long run than you can imagine!

Do you already have an inner circle? Is it working?

If not, are you now convinced to start working on it?

What is your next action step? Have you prayed about it?

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Why Do You Need An Inner Circle?

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On two separate occasions during a 24-hour period last week, I had two members of my inner circle of leadership hold me personally accountable on mission-related issues. In both cases, they were “spot on” with their comments and delivered their message with perfect sincerity.

I needed the nudge in both cases, but was not exactly excited to accept their recommendations. At the same time, I knew they were right and I was glad they were comfortable telling me.

inner circle

My Thoughts

As I thought about these situations, I simply thanked God for the privilege of being able to work with people of this caliber and the mutual trust we have established. I have had an inner circle in place for over five years and continue to see benefits!

Of course, my next thought was that I really needed to share this on my blog! So as a result, I am going to give you my reasons for having an inner circle. In the next post, we will look at some common objections people bring up when discussing this topic. I am also going to dedicate the next several posts after that to laying out HOW to develop your own inner circle. I will include some recommendations for additional reading material for further help.

Jesus’ Example

So, we will begin addressing the WHY by doing my favorite thing…looking at the Bible! Let’s consider how Jesus managed His three-plus year ministry on earth. We have to assume that He knew He was operating with limited time to establish an ongoing ministry that would continue after His death (and resurrection!). We can also assume that He would have the wisdom to know the best way to make that happen, right? So how did He do it?

Choosing Twelve

Well, He started with a crowd that was following Him from place to place for various reasons. In Luke 6:12-13, we see that He spent all night praying about who to choose for his small group of twelve disciples. It does not appear that He took this task lightly! The next morning, He chose His small group of twelve disciples from among the crowd.

His Inner Circle

Next, we notice in Mark 5:37, Luke 9:28, and Mark 14:33 that he called out three of the disciples from the small group to go deeper with Him. On several occasions, we notice that He spent additional time with these three, exposing them to opportunities that the other nine did hot have.

Benefits

I may be simple-minded, but I am one who believes if Jesus saw enough value in the process, then I should as well. However, in case there are some of you out there who need more convincing, I will keep going!

Let’s take a look at some of the benefits of developing this inner circle.

    You will learn in the process! – As you go through the steps I will lay out for you over the next several posts, you will realize that this process will teach you as you go through it. Not only will the members of your inner circle benefit from the increased development, you will also learn as you take the time to pour into them. If you are one who does not feel you need to learn, then please stop reading and click on the little red “X” at the very top right of your screen.
    You will raise the bar for all of your leaders! – Not only will those in your inner circle become better leaders, those outside of the inner circle will respond to the higher expectations. They will work to improve their performance and potential because you have shown them this is the way to get your attention.
    You will all gain strength! – While you may think your team members are all on the same page right now, by drawing a small number of them into your inner circle, you will increase the effect of their combined focus. Just like Ecclesiastes 4:12 says, “A cord of three strands is not easily broken.”
    You will gain accountability! – Just as I described in the introduction, we have established such a mutual trust in my inner circle that they feel comfortable enough to call me out. Whether we like it or not, we all need accountability!
    You will perpetuate your mission! – Just as Jesus did through his small group of disciples and, to a greater extent through his inner circle of three, you will exponentially increase the odds that your mission will continue long after you are gone.

Do you already have an inner circle? What benefits do you see?

If so, how could you improve it?

If not, what are you waiting for? Why not start now?

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After the Exit Interview, Now What?

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In my last post, Ten Reasons for an Exit Interview (with Purpose), I described why you should always execute an exit interview with departing employees.  So, you did the exit interview and got some feedback.  What are you supposed to do now?

First of all, you may actually receive positive feedback from the departing employee!  Don’t be shocked!  If you are doing some things right, be excited and appreciative for the compliments.  However, for the sake of this discussion, let’s focus on the not-so-positive feedback.  What do you do with that?

  • Do nothing at all.

    I am just kidding!  (Just out of curiosity, did you find that to be ridiculous advice in this context?)  Unfortunately, that is exactly what most people do with this information.  If they even complete an exit interview at all, it is most likely done to complete a checklist of termination paperwork.  Then the potentially valuable information is discarded as unworthy of their time!  Or maybe the feedback was painful and difficult to face head-on.  Regardless of the reasons, this is NOT a recommended step to take!  Read on…

  • Validate the feedback.

    Sometimes you will simply get sour grapes from a disgruntled employee.  While this is sometimes true, it is a mistake to assume it will always be that way.  Take what you heard, sift through the emotions (yours and theirs!), and find the nuggets.  If you have not observed the issues yourself, consult other employees that you know to be objective.  Get their perspective.  Simply put, do your homework and find out if there is validity to what you heard.  Pray for wisdom and discernment as you do this!

  • Determine if there is a pattern.

    What if you find the issue(s) to be true?  Okay, so something went wrong or a part of your business did not meet your standards.  Maybe you received negative feedback about you or your style.  What next?  Find out if it was a one-time problem or, more likely, a pattern.  Is it the result of a broken process or an isolated personality conflict?  Don’t gloss this over.  Dig through the rubble or smoke and determine the root.  If it is an isolated situation, move on to the next issue.  If it is a pattern, read on…

  • Find the best solution(s) and correct the problem.

    While this sounds simple, it is too often left undone.  Even if you remained objective through this whole exit interview process, it is possible that remaining employees may not.  They may be holding the sour grapes!  Whatever the situation, if the issue you have uncovered is legitimate, you need to push through to correct it and make sure it does not reappear.

  • Follow up with the ex-employee – thank them!

    Why not?  Do not allow pride or busyness keep you from thanking them for their productive feedback.  Let them know of your appreciation as well as your efforts to take action.  You do not have to go into detail about what you found.  Just let them know that their words did not fall on deaf ears.  They will appreciate it and you will be blessed as a result.

  • Commit to 100% execution of exit interviews in the future!

    Assuming you followed the whole process from beginning to end, then you can see the benefits of completing exit interviews with every departing employee.  If your company is too big for you to do them personally, then assign the responsibility to someone else, but make sure they grasp the value of the process.  Communicate to them the importance you place on the feedback.  Set up the process to make sure there is accountability in its execution!

What is your experience?

Are there any steps you would add?

Have you committed to exit interviews?

Posted on

10 Reasons for an Employee Exit Interview (with Purpose)

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I called a friend the other day and asked him out to lunch.

While that may not seem unusual, consider that this friend had worked for our company up until that week and was terminated for non-performance.  Now are you interested?

I told him that my offer to buy his lunch had two main purposes.  First, I wanted to take the opportunity to learn from him whether there was anything he thought we could do better as a company.  He is also a Christian and could give me insight about that aspect of our company.  While I think I have a good feel for what happens from day to day in my business, I always hear something in an exit interview that surprises me.  If I am open to it, I can always learn something from an ex-employee.

My second purpose was to take the opportunity, with his permission, to offer advice to him.  I had observed him for close to a year and I felt I had a perspective that could help him.  If I am truly in this business for an eternal impact, why would I not intentionally mentor another Christian when I have the chance?  I felt we had a good enough relationship that he would give me that chance.

I learned about a couple of things that we could improve on immediately.

We had a great lunch and it went just as I expected.  He gave me some honest and thoughtful feedback.  As always, I learned about a couple of things that we could improve on immediately.  Also, as I expected, he was open to my feedback on his performance and future work opportunities.  With our company, he was not in a job that fit his strengths.  We discussed another job he is already considering as well as some he has not considered, based on my assessment of his strengths.  All in all, we both profited from the meeting.

Typical Reasons to Conduct an Exit Interview…

    1. Gain a new perspective about your own business (or department, team, etc.).
    2. Learn what you are doing well…or not so well.
    3. Confirm what you may already know (but have not verified) to be true.
    4. Uncover real reason for leaving company (if voluntary termination)
    5. Make peace with an ex-employee

Additional Reasons from a Christian Perspective…

    1. Gather frank accountability feedback on your witness
    2. Give them frank accountability feedback on their witness (if they are a believer)
    3. Offer advice, mentoring for their future.
    4. If applicable, recommend resources for help (substance abuse, financial distress, etc.).
    5. If appropriate (your witness is intact and ex-employee is non-believer), share the Gospel!

What are your thoughts on this list?

Are there any reasons you would add or remove?

Does your company execute exit interviews?  If not, should you?

If so, do you have a success story to share?