I travel a lot. Everywhere I go, I talk with people about their business. What I hear and observe concerns me. There is a quiet performance crisis taking place in many businesses that their customers may not be able to see.
One retail shop that I frequent just hired its fifth manager in three years. Just as keeping a manager is a problem for this store, so is retaining staff. It is a community-wide problem for many of the businesses in our small, affluent resort town. Cost of living makes it difficult to find affordable housing, even for management level employees.
These local issues, however, do not seem to factor into how the regional office applies its corporate performance expectations. The transient, seasonal nature of the business cycle here makes a standardized staffing approach difficult. As each of the managers has told me, they have little latitude to operate differently than their counterpart stores in much larger cities in the region.
As I talk to people about their situation, I see patterns in the way performance standards are applied. I don’t see it from the regional or corporate perspective, but from a local one, which has the greatest impact on customers.
I see two types of performance pressures exerted in companies. There is pressure from above and pressure from within.
The Pressure to Perform to Global Organizational Standards Locally
Pressure from above comes in a variety of ways, but results in a one-size-fits-all mentality in many companies. This is the efficiency impact of industry standardization. Local context is highly disruptive. Or, shall we say that it is at the local level that real diversity is realized. Yet, this local advantage can make or break an organization if they expect all their locations to operate the same.
One of the former store managers told me about his lack of staffing flexibility. He described the difficulty in scheduling for the summer seasonal crush of customers. Four million tourists will literally walk or drive past his store in our town of 12,000 residents.
I’ve been in the store when a line of a dozen people or more could be waiting to place an order. As he told me, “I see people walk in the door, react to the line, turn around and walk out.” There is no metric to account for this reality.
Another manager told me that this situation is a mixture of two problems:
- Not having enough staff for those crunch times
- Insufficient equipment to quickly serve everyone
It is during times like these that the performance pressures from above show itself to the customer, and it affects their decision to wait or walk.
The seasonal nature of our community also means that there are also weeks where there are very few tourists in town, which impacts the numbers. The standardized approach means that this store will always be at a disadvantage compared to those in large urban and suburban areas.
Within a block, three local stores provide the same products and services. No wonder managers get worn out and leave. The metric for the cost of replacing managers must be a major concern for this company.
The store described above stands in contrast to one of the other three stores that I frequent.
Right across the street is a locally owned and operated boutique grocer with a café. It is the closest grocer to where I live. I visit it almost every day.
The general manager of the company, his store manager and I have frequent conversations about their business. They want to know what I think, just as I want to know how they see their dynamic situation. They go out of their way to show me new products that they are stocking. I have given them my opinion on several occasions, and they have implemented my recommendations.
Both stores mentioned here have pressure from above. One store’s performance pressure comes from a corporate office where there is little latitude for addressing unique local situations. The other comes from the owners who live in the community. The store manager and her staff do an exemplary job serving the same people the other store does, yet with probably five times the number of products to sell.
In a world which is constantly changing at an accelerating rate, one-size-fits-all rules of operation inhibit a business from being market/customer-focused.
The corporate stores that I visit have products for sale that other similar locally-owned stores have and staff who are just as capable and engaging with me as a customer. One difference between them is the corporate marketing dollars used to create a brand signature for all stores. I appreciate that consistency, as well as like their products. But that one-store-is-like-all-stores approach hides the pressure that managers feel when the one-size-fits-all rules work counter to the store’s performance.
The Local Pressure to Perform in Global Organizations
In locally-based stores, the greater pressure to manage what is not a standardized operation, but a unique one for the local community can be just as daunting. This circumstance is particularly true when the owner is both the manager and one of the salespeople. The relational dynamics of a store where there is little sense of a management hierarchy requires the owner/manager to be very clear about performance expectations. Clarity of purpose and how the store operates is essential to managing in a dynamic local environment.
How should we understand these performance pressures in a business when the product is managerial burn-out? The Circle of Impact provides useful insight here.
Let’s take the staffing problem that many businesses face. It is never just about having the right number of staff on the floor when you need them. It is also about hiring staff who want to work and can relate well to customers.
Even with that, there are some jobs that people are just not equipped to perform. Local employers always face the challenge of having to hire from the available pool of workers, regardless of their quality or availability.
It is therefore important that the business has a clear set of values and understanding of its purpose. This is a structure issue born out of a specific understanding why the business exists and how that purpose is measured. Listen to retailers and the recruiting and retaining of good employees is a constant battle. This is one of the performance pressures that manifested from within the business.
Even if the business’ purpose is clear, its structure must be designed to fulfill that purpose, and, staffed with capable people. This reality is why every business is a local business, even if the corporation has many locations in the same city. It is here that flexibility and the capacity to adapt to change becomes so crucial. This capacity is dependent upon the alignment between the structure, people, and ideology of the business that enables the manager or owner to be able to assess quickly situations that arise that require change.
Every Business Is A Local Business
To understand the pressures of operating a business we need to understand that every location is a local setting with its own particular needs and opportunities. And these pressures are intensified when the person in conversation with the customer does not have the leverage to do what is right for them.
I was in a situation like this recently where an electronic product that I had purchased a year and a half ago had failed. The warranty information from the company online and from the customer service person on the phone was not the same. Because she had the latitude to make it right, she honored the two-year warranty and replaced the product. This is the kind of local control which builds loyal customers.
The performance pressures that we face, whether from above or within, are typically products of how an organization is structured. The greater the agility an organization has to serve the customer’s best interest, the more likely those pressures will rarely rise to a crisis level.
If there is a performance crisis unfolding in businesses, the solution is to rethink what it means for every organization to be a local operation, regardless of its place within the hierarchy of the business.