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  Assuming that there is such a seat—and most of the time, there is—the problem is solved once you move this person. Unfortunately, sometimes there is no seat available. In this case, you have to make a very difficult choice. You have to make decisions for the greater good of the business, and you don’t have the luxury of keeping people around simply because you like them. If this is the case, you must let them go. This will be one of the toughest issues you will have to face. Once the change is made, the company is always better off, and usually the person is happier in the long run.

  WRONG PERSON, RIGHT SEAT

  In this case, the person excels at what he or she does, is extremely productive, and is clearly in his or her Unique Ability®. What makes this person the wrong person is that he or she doesn’t share your core values. While this obstacle may seem like something you can live with in the short term, that person is killing your organization in the long run. He or she is chipping away at what you’re trying to build, in little ways that, most of the time, you don’t even see. It’s that wry comment in the hallway, the dirty look behind your back, and the dissension that this person spreads.

  Early in the process, one client had a wrong person, right seat issue. The company’s top salesperson was a man without integrity. While he was very friendly, professional in his approach, and knowledgeable, he constantly shaded the truth to make sure he had the successful quote. His new business growth was 20 percent per year, and his clients never complained. Because the leadership team had not identified their core values yet, they let the situation drag on for 12 months. As they realized how he was building the business, they faced a seemingly difficult decision. Only after letting him go did their employees and vendors open up about their feelings and concerns. He was damaging the company’s reputation the entire time he worked for it. Their core values were now in writing, and they included integrity. “Never again will we allow an employee to work for us without living this core value,” the owner stated.

  No matter how difficult the issue is, you have to make a good business decision here for the long haul. If you have a wrong person in the right seat, ultimately that person must go for the sake of the greater good.

  Of course, there is a third type of people issue, and that is wrong person, wrong seat. The solution is obvious: That person must go. But the way you reached that point isn’t always obvious. Another client had a CFO for more than 20 years. In the beginning, he shared the core values, was talented, and was absolutely in the right seat. As time went on, the business, industry, and technology changed, and he didn’t change with them. The seat was outgrowing him. His attitude also changed considerably. He became resentful, aloof, and less friendly than he used to be. He was no longer the right person or in the right seat. The owners had not noticed the change until the core values and the right structure were clarified and put in place. They wrestled with the thorny issue for a year and a half, all the while giving their CFO chances to change with the times and adopt the new core values, to no avail. Left with no other choice, they replaced him with a new CFO. The difference was like night and day. Their sessions were considerably more productive, the finance department finally got reorganized, and the company positioned itself to make the next leap ahead.

  Your job is to hire, fire, review, reward, and recognize all of your people around core values and Unique Abilities®. That’s the way to build an organization with all of the right people in the right seats.

  Let’s see how this can be done in practical terms. The following tools will enable you to assess your people and make the right choices. We’ll turn first to Right People and then to Right Seats.

  RIGHT PEOPLE

  With the answer to the first question on the V/TO—“What are your core values?”—you now have the ability to define who the right people are for your organization. It’s important to note that whatever your core values are, they don’t make the people who don’t possess them right or wrong, nor do they make them good or bad. They just don’t fit in your company culture. If they go somewhere that has their values, they’ll be fine and they’ll probably thrive. Keeping in mind your core values, it’s now time to turn to the tool that will show you what you have.

  THE PEOPLE ANALYZER

  I often observed my clients discussing people issues in terms that were very subjective and unproductive. They often never really resolved their people issues, and when they did, the process took twice as long as it should have. Out of necessity, I created a tool to make such discussions much more tangible.

  The People Analyzer is designed to clarify whether you have the right person in place or not. This is one of the top five tools used by all my clients. The concept was actually created by my dad back in the early 1970s for evaluating salespeople, and I have altered it into a tool that helps evaluate an individual’s core values. The People Analyzer template can be downloaded from www.eosworldwide.com/people.

  First, put the names of the people you’re going to analyze in the left column. Then list your core values across the top. Then rate each person according to his or her adherence to the core values. Give one of three ratings:

  + He or she exhibits that core value most of the time.

  +/− Sometimes he or she exhibits the core value and sometimes he or she doesn’t.

  − He or she doesn’t exhibit the core value most of the time.

  You will notice in the preceding example, John is absolutely the right person for your organization, George is very much on the fence, and Sally must go.

  The ideal you’re shooting for in your organization is to surround yourself with 100 percent of the right people, who look just like John does. However, this is only an ideal, so don’t get caught up in perfection. What your leadership team has to do is determine what the bar is. The “bar” is the minimum standard you will accept from the People Analyzer results. The power of setting the bar is that you give all managers absolute clarity on what is acceptable and what is not. Once managers know your expectations, they will hold their people accountable accordingly.

  The recommended bar for a company with five core values is three pluses, two plus/minuses, and never a minus. This is strictly my recommendation based on past experience. I have clients with higher and lower bars, so you must decide for yourself. The key point is that anyone who is at or above the bar is the right person, and your goal is to get 100 percent of the right people in your organization.

  THE THREE-STRIKE RULE

  What do you do if someone is below the bar? Before you make any drastic decisions, I highly recommend that you first communicate the People Analyzer results to the person and give that person the chance to better his or her performance. He or she will improve almost all of the time. The question is, will he or she improve enough to move above the bar? Most people will, some won’t, but you should give them a chance to perform according to the new structure.

  The three-strike rule works as follows:

  Strike One: Discuss the issues and your expectations with the person, and give him or her 30 days to correct the problem.

  Strike Two: If you don’t see improvement, discuss his or her performance again and give him or her another 30 days.

  Strike Three: If you still don’t see improvement, he or she is not going to change and must go. When the termination finally happens, all of those who are the right people will thank you for it and wonder what took you so long.

  In practice, you will discover that you don’t have to fire people most of the time. Once you create an awareness of your core values through your initial speech, quarterly state-of-the-company meetings, the People Analyzer, performance reviews, and the three-strike rule, the people that don’t fit won’t last until the third strike. Some don’t even last until the first. Instead, they’ll leave on their own, because they know they don’t fit.

  What this process does is smoke them out. Consider the following example: One leadership team had a member that was definitely not a fit. He was the VP of sales and marke
ting. In our first two sessions, I watched him sweat through creating their Accountability Chart and squirm through the process of discovering their core values. It was becoming very clear why the company’s sales had stagnated for a few years. By the third session, he begged off, saying he had an important client meeting out of town and could not attend. By the fourth session, he had quit the company and taken another position. He was then replaced with someone who was the right person in the right seat. As a result, the client experienced growth for the first time in three years. This is a perfect example of how someone can muddle through in an organization that lacks clarity over roles, values, and expectations. When these tools are in place, with increased focus and accountability, there is simply no place for them to hide.

  I recommend the four following steps to use with the People Analyzer:

  STEP 1

  After discovering your core values as a leadership team, “people-analyze” each other, as all EOS clients do. This will accomplish two objectives. First, it will validate your core values. If you’re all weak in one particular value, you should question whether or not it truly should be included. Second, you will see if someone on the leadership team is below the bar. While this tough situation does not come up often, you must follow the three-strike rule with this person as well. Most of the time, this person will improve his or her performance. Sometimes he or she will opt out.

  STEP 2

  Have your leadership team people-analyze everyone in the organization and then have each manager share those results in one-on-one sessions. This will bring the tool to life throughout the organization.

  STEP 3

  Use the People Analyzer in your quarterly performance reviews with all team members. Let them analyze you as well. Don’t be afraid to put your money where your mouth is.

  STEP 4

  If your leadership team is struggling with a personnel problem, run the person through the People Analyzer. This will give you a clear perspective on whether it’s a right-person issue. If it is, there is nothing more to discuss and you now know how to solve it. If it isn’t, and it might be the person’s seat, don’t worry—we’ll cover that next.

  RIGHT SEATS

  Once you’re confident you have selected the right people, it’s important to get them in the right seats. That means all of your people are operating in their Unique Abilities® and those abilities are clearly in line with their roles and responsibilities.

  A seat cannot be created until the organization is structured in the right way so as to lift your company to the next level. To create that structure, we’ll use a powerful tool called an Accountability Chart. This is a supercharged organizational chart, and, when completed, it will help owners and leadership team members clearly grasp their own roles and responsibilities. That will, in turn, enable them to do the same for their people.

  THE ACCOUNTABILITY CHART

  This tool does not assume there is only one way to structure an organization. You could read a hundred books on organizational development and find a hundred different opinions on the way to structure an organization. The key question is this: What is the right structure to move your organization forward in the next six to 12 months?

  Next to the V/TO, the Accountability Chart has the most impact of any EOS tool. It forces its users to view their organization in a different way and to address people issues that have been holding them back for years.

  For this exercise to have impact on your company, you’ll need to instill a few ground rules:

  1. You must look forward. You cannot look back or get caught up in the present. It will distort your judgment.

  2. You must detach yourself from the existing business, your current role, and your ego.

  3. You must elevate yourself above the business, look down on it, and make decisions for the long-term greater good of the company.

  The Accountability Chart starts with a fundamental belief that there are only three major functions in any business and those three functions make every organization run, regardless of whether it’s a start-up business or the largest company in the world.

  To illustrate the three major functions, picture three boxes side by side by side. In the box to the left, you have the first major function: sales and marketing. In the middle box is the second: operations. In the box to the right, you have the third: finance and administration. You may call them by different names, but those are the three major functions. Sales and marketing generate business. Operations provides the service or manufactures the product, and takes care of the customer. Finance and administration manage the monies flowing in and out as well as the infrastructure.

  Assuming that three major functions exist in all organizations, the next truth is that they must all be strong.

  I’ve had many debates about whether sales and marketing is the most important function. The argument is always that until somebody sells something, nothing else happens. That’s hard to disagree with. But realistically, all three have to be strong.

  To make the point, let’s consider three scenarios:

  • You have a strong sales and marketing function, a ]weak operations function, and a strong financial function. What’s the net effect? In that scenario, you’re doing a great job selling and bringing in new customers, but you’re losing them right out the back because operations is not delivering what you promised and customers aren’t happy.

  • You have a strong sales and marketing function, a strong operations function, and a weak financial function. What’s the net effect? Again, you’ll bring in a lot of customers and take good care of them, but money is coming in the front door and going right out the back due to a lack of financial controls: $10 million in and $10 million out, or worse, $10 million in and $10.2 million out. This may strike a nerve because many companies fall into a situation where there is no monitoring of spending, nor is individual customer profitability assessed.

  • You have a weak sales and marketing function, a strong operations function, and a strong financial function. What’s the net effect? A bunch of talented people in operations and finance are waiting around for something to happen, and nothing is.

  If any of the three major functions are weak, your organization is not as effective. Given that they are all equally important, it’s time to apply the Accountability Chart. In order to maintain accountability, only one person can ultimately be in charge of any major function within an organization. Only one person oversees sales and marketing, only one person runs operations, and only one person manages finance and administration. When more than one person is accountable, nobody is.

  When leadership teams do this exercise for the first time, they often discover they have two or even three names in a box. This may happen with you as well. If it does, you’ve uncovered a root issue for your company’s lack of growth or chaos, and you must solve it by reducing the number of names to one. The all-for-one and one-for-all approach won’t build a solid company. It may have gotten you here, but only clear accountability will boost you to the next level.

  To take structure a step further, these three functions cannot operate independently of each other. That’s why all great organizations have another major function, a role that I like to call the integrator.

  INTEGRATORS

  The integrator is the person who harmoniously integrates the major functions of the business. When those major functions are strong and you have strong people accountable for each, great healthy friction and tension will occur between them. The integrator blends that friction into greater energy for the company as a whole.

  I use the term “integrator” to cut through all the wonderful titles for this role, such as CEO, president, general manager, king, or queen. It doesn’t matter what you call it, but the bottom line is that the integrator is the person who has the Unique Ability® to run the organization, manage day-to-day issues that arise, and integrate the three major functions. The integrator is the glue that holds the company together.

  That i
s the basic structure of the Accountability Chart. With that understanding, two other very important factors need to be taken into account when creating the right structure for your organization.

  First of all, when customizing the Accountability Chart for your company, the three major functions might split into more functions. For example, sales and marketing sometimes splits into a distinct sales function and a distinct marketing function. Operations sometimes splits into two or three distinct functions such as delivery, project management, or customer service. Finance and administration can split into as many as four: finance, administration, information technology (IT), and human resources (HR).

  Depending on the size and state of your organization, you will end up with anywhere between three and ten major functions on that front line. As long as you stay focused on what the right structure is for your organization, the right number will come. Please remember, though, less is more. Not one EOS client has more than seven major functions.

  The second factor is another major function that is not on the front line. In my experience, when a company creates its Accountability Chart, half the time they realize that besides an integrator integrating the major functions, there’s another very powerful role in the organization. This role shows up above the integrator function, and it’s called the visionary.

  VISIONARIES

  The concept of the visionary within an Accountability Chart is one of my greatest discoveries. I’ve had clients teach this concept at universities to MBAs on my behalf. Understanding and implementing this concept is eye-opening and empowering. Frankly, it has also kept some partners from killing each other.