The Bottom Line - Banking on People
Banking On People
Building a stronger and more effective organization—one person at a time
We spend a lot of time thinking about our people here. We talk, we meet, and we plan, always looking for the best ways to keep them engaged, inspire higher performance and reinforce that they are valued and appreciated.
We try to remind ourselves as often as we can that great human capital management—performance management—is what makes monetary capital management possible and successful. Organizational studies (and common sense) show time and again that happy and engaged employees provide higher-quality service, create more positive customer experiences and go the extra mile in their work.
First and foremost, it’s good for you, our customers, but it also leads to a more virtuous cycle of innovation, productivity and profitability that benefits us all.
At its core, effective performance management is about maximizing the potential of our people. By setting clear expectations, maintaining an open dialogue and staying focused on where we’re headed, we can better ensure that every member of our team is empowered to contribute their best efforts toward our shared goals.
Looking to improve performance management in your organization? Here are the essential elements of our own performance management framework that may give you a few ideas on where to start:
Hire carefully and thoughtfully. Knowledge and education are key hiring criteria, but emotional intelligence levels tell you if a person can work effectively and positively with others. Screen and test for these markers.
Talk about competencies and goals. Regularly scheduled conversations around the work, expectations and goals are crucial for feedback and fine-tuning.
Chart a path and plan. Engaging work experiences come from new challenges, autonomy and variety. Show associates how they can grow and participate in new projects that enhance skills and knowledge.
Be clear about expectations. Make sure organizational and individual goals are aligned and understood, and that metrics for success are achievable.
Cultivate continuous learning. Provide opportunities for associates to gain new skills, knowledge and information on an ongoing basis.
Focusing on the long game with people is a proven strategy for driving value that’s good for any business. It means lower turnover, higher service levels and more successful long-term business relationships.
It’s good for customers, business valuations and long-term shareholder value.
But most of all, it’s good for your people, the most valuable investment you’ll ever manage.
— Toni Walsh, Executive Vice President, Human Resources, Country Club Bank — Member FDIC
Economic Insights
The jobs market continues to defy expectations. Here's why.
The unemployment rate has been below 4 percent for 2 years running, the best such record since the 1960s.
And if you’re looking for any signs of it fading, it certainly doesn’t show in January’s jobs number of 353,000, on the heels of an upwardly revised gain of 333,000 for December. On top of strong numbers, the job gains were also remarkable since they were widespread across the job market, with gains in goods, services and public sector jobs. Just under two-thirds of private-sector industries added jobs last month, a dispersion rate higher than the 2011-19 average. Wage growth was also strong last month, at 0.6 percent for the month and 4.5 percent over the year.
While it all sounds quite positive, these reports still cause concern among economists who feel that a too-strong labor and wage market could heat up employers’ labor costs, sparking more inflation and higher unemployment.
At 3.7%, the unemployment rate in January was higher than the historical low of 3.4% in January of last year, but still in very favorable territory from a macroeconomic perspective.
Which sectors are driving new jobs? The top five include healthcare (+70,000), government (+36,000), retail (+45,000), manufacturing (+23,000) and professional services (+74,000). On the other hand, mining, quarrying and oil and gas extraction declined by 5,000 jobs.
Why aren’t things tighter? There’s not one explanation, but certain trends have helped. Of note, higher interest rates seem to have cooled demand for workers without a big jump in layoffs. Job openings have also declined over the past year, and more workers are staying in their current jobs longer instead of quitting in the hopes of better pay.
Bottom Line: Inflation appears under control, wage growth has slowed and businesses have been able to increase the supply of goods to meet still-high consumer demand. All signs that the economy is on solid footing.
After being hit hard by inflation over the last two years, there are also signs the American consumer is finally starting to feel better about the economy, as consumer sentiment rose by 13% in January, and by 29% since November, the largest 2-month gain since 1991.
Markets have also improved with the S&P 500 up 26% in 2023, rallying the last few months as recession fears faded. The more diversified equal-weighted S&P 500 finished 2023 at +14%.
Investors and consumers alike seem to be on the same page now, more willing to welcome – and truly believe in – a strong economy, given signs that inflation is moderating as planned. And with employers, workers and consumers less exposed to volatility, interest rate reductions should continue to gain support in the coming months.
— Marcus Scott, CFA, CFP®, Chief Investment Officer (CIO) for Country Club Trust Company
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.
The opinions and views expressed herein are those of the author and do not necessarily reflect those of Country Club Trust Company, a division of Country Club Bank, or any affiliate thereof. Information provided is for illustrative and discussion purposes only; should not be considered a recommendation; and is subject to change. Some information provided above may be obtained from outside sources believed to be reliable, but no representation is made as to its accuracy or completeness. Please note that investments involve risk, and that past performance does not guarantee future results.
Client Success Story
Holland 1916: Growth and diversification powered by continuous improvement, accountability — and capital from Country Club Bank
North Kansas City, Mo.-based Holland 1916 has built a diverse portfolio of companies in industrial nameplates, membrane switches and touchscreens and RFID-enabled inspection management software. It’s done this by adhering to its core principles of continuous improvement, accountability, openness and giving back. Holland 1916 CEO Mike Stradinger shares the company’s growth story, commitment to performance management and history of working with Country Club Bank.
Mike Stradinger’s leadership philosophy is driven by the recognition of one universal weakness found in all leaders — and all employees for that matter: we’re all terrible mind readers.
“I’m a bad mind reader, most people are, it just doesn’t work,” Stradinger said. “Which means we have to be very clear about goals, objectives and definitions of success, so our people know what good looks like, and they know when we’ve achieved it.”
Simple, direct, and matter-of-fact, that’s Stradinger. A West Point graduate, with a law degree as well, he’s been methodically solving manufacturing challenges at Holland 1916 since he bought the company in 1996. Daily meetings, dashboards and green light/red light rating systems keep Stradinger and his 72 employees focused on productivity and quality.
Accountability and performance are emphasized using objective metrics that are constantly reviewed, which according to Stradinger fosters clarity and continuous improvement.
“There’s no question as to whether we’re winning or falling short,” Stradinger said. “We can see our performance, make adjustments when necessary and do better going forward.”
The history of Holland 1916 dates back to 1916 when it was founded by Lou Holland as a metal engraving business and became the largest of its kind west of the Mississippi. During World War II, the company began manufacturing industrial metal nameplates that display a manufacturer's name, brand and model number.
Since taking over in 1996, Stradinger has diversified the capabilities of Holland 1916 by moving into membrane switches and touchscreens, and RFID tagging and inspection software. Holland 1916's product portfolio now encompasses a wide range of applications across various industries, including agriculture, automotive, aerospace and more.
New markets also mean the need for new capital. For manufacturing and automation equipment purchases over the years, Stradinger has turned to Country Club Bank for loans, credit lines and a variety of depository solutions.
“You won’t find a more conscientious or nicer group of professionals than Joe Close, Joe James and the Thompson family,” Stradinger said. “They know our business, anticipate our needs and always provide great advice and service.”
Giving back to the community, especially in the area of K-12 educational opportunities, has also become a passion of Stradinger’s and the Holland 1916 team. Students from across the greater Kansas City metropolitan area have the opportunity to tour Holland 1916 manufacturing facilities, learn about automation and lean manufacturing and discover the joy and satisfaction that comes from doing good work that matters.
“We want our young people to see up close what it means to strive for excellence, be successful in what you do, and be happy in your job,” Stradinger said. “Work can be interesting and rewarding in the right environment, and we want to show them and model it so they can create it in their own careers.”
Talent Management Tips
Building a better performance management process
Everyone agrees that performance management is a necessary, yet often underappreciated discipline, that can add real value and improvement to an organization when done right. The key is doing it right.
We spoke recently with Lee Smithson Burd, PhD, a Senior Consultant at CMA Global to talk about the latest trends and best practices in performance management. Burd works with companies nationwide to improve performance management and organizational effectiveness. She says there are a number of reasons that traditional performance management methods don’t work any more:
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Managers and employees are often frustrated by a process they consider to be bureaucratic and cumbersome.
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Performance management ratings can be demotivating even for high performers.
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Annual or bi-annual performance appraisals aren’t enough to account for changes, demands and priorities.
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Research shows that managers do a notoriously poor job of accurately rating performance.
Burd says that performance management, when approached with a growth mindset, can be a pivotal tool for empowering individuals to excel and grow within an organization. New performance management methods, according to Burd, encompass both what is achieved and how it is accomplished. This equation, Performance = Behavior + Results, underscores the importance of considering behaviors and values alongside objectives.
Open dialogue between managers and individuals throughout the year is crucial for setting objectives and discussing values that align with organizational goals. Performance management should involve a continuous cycle of planning, monitoring and reviewing. This begins with the establishment of mutual agreements on responsibilities, goals, behaviors and skills needed for success. These agreements serve as dynamic documents, subject to updates as circumstances evolve.
Monitoring performance involves observing behaviors and results, either through direct observation or 360-degree feedback collection. Progress reviews, conducted informally or formally, provide opportunities for meaningful conversations about achievements, areas for improvement and development needs. These reviews also serve as a platform for managers to reflect on employees' growth and readiness for additional responsibilities or developmental opportunities.
Creating a safe space for these discussions is paramount, where strengths are acknowledged, areas for improvement are addressed and new expectations are set for the upcoming review period. This discussion feeds back into the planning stage, where any necessary adjustments to goals or work plans are made, and actions for performance improvement are agreed upon.
Wondering where to begin? Assess your current performance management system, look at how it fits with your current vision, strategy and long-term goals. Identify gaps and determine whether minor adjustments or a complete overhaul are necessary. The ultimate goal is to create a streamlined, implementable process that drives performance and fosters an environment conducive to employee growth and potential realization.
Talent And Business Valuation
The Talent Factor: Understanding the Importance of People in Business Valuation
In the world of mergers and acquisitions, when valuing a business, there's a tendency to focus primarily on tangible assets, revenue streams and market trends. While these factors undoubtedly play a significant role, there's another critical element that often gets overlooked: the people behind the business.
People are the engine of any organization, driving innovation, productivity, and profitable growth. As such, they are a fundamental component of a company's overall value proposition. Here’s why they matter so much:
Talent and Expertise: Skilled employees bring a wealth of knowledge, experience and specialized skills to the table, enabling the company to operate more efficiently, innovate and stay ahead of the competition. Whether it's a team of engineers developing cutting-edge technology or a group of marketers crafting compelling campaigns, the collective expertise of a company's workforce directly impacts its ability to generate revenue and sustain growth.
Culture and Morale: A positive and inclusive work environment fosters employee loyalty and productivity. When employees feel valued and motivated, they are more likely to go above and beyond to contribute to the company's success. A strong company culture can also be a powerful differentiator in the marketplace, attracting top talent and enhancing the organization's reputation among customers, partners and investors.
Customer Relationships: People are at the heart of building and maintaining strong customer relationships. Sales teams, customer service representatives and account managers play a crucial role in understanding customer needs, addressing concerns and building trust and loyalty. These relationships drive revenue through repeat business and referrals.
Leadership and Vision: Strong leaders set the strategic direction of the company, inspire and motivate employees, and make critical decisions that impact the organization's performance and trajectory. Whether it's a CEO guiding the company through a period of transformation or a team of department heads driving operational excellence, strong leadership is indispensable for maximizing enterprise value.
Innovation and Adaptability: People are the driving force behind innovation, whether it's developing new products and services, implementing process improvements or exploring new markets and opportunities. Companies with a culture of innovation are better positioned to navigate market disruptions, capitalize on emerging trends and drive long-term value creation.
There’s no question that financial metrics and market dynamics play a crucial role in business valuation, but it’s also important to factor in the importance of people and the talented teams that power its operations, drive its innovation and shape its culture. Investing in human capital is not only a sound business strategy for the near term, but also a critical component for maximizing shareholder value in the long run.
If you’d like to talk more about your business valuation and ways to maximize it, you can reach Country Club Capital Advisors at 816.360.8600, or get in touch with us here.
CC Capital Advisors, Inc. Member FINRA, SIPC
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