Value Driver 4: Leveraging Human Resources

Value Driver 4: Leveraging Human ResourcesWe have been discussing the various methods home care owners use to build valuation in their companies to achieve their exit planning goals.  Foremost in this process is creating a written value-building plan, which includes four important value drivers:

Value Driver 1:  Business fundamentals

Value Driver 2:  Strategic Planning

Value Driver 3:  Systemizing Internal Operations

Value Driver 4:  Leveraging Human Resources

Today we will discuss Value Driver 4-how owners build business value by improving employee productivity, efficiency, and quality.  We will focus on three key areas:

*Reorganization and Revenue Generation

*Employee Activity and Company Success

*Employee Empowerment

First, we examine the connection between reorganization and revenue generation.  Most home care owners understand the primary target for all company activities, plans, and responsibilities should be revenue generation.  However, many owners organize their businesses around a simple seniority model wherein the importance and complexity of a given task governs its reporting structure, with senior employees being assigned the most vital activities.

But if our focus is revenue generation, it makes more business sense to map the course from employee activity to revenue. In this way, we can direct our resources more efficiently towards those tasks that drive strong valuations.  Our decision making process focuses not on the task and the employee but on the business impact of the task.

Next, we must understand that employee success means company success.  Do you regularly and directly communicate to your employees their essential roles in creating business value?  Few owners can offer a convincing “Yes!” to this question.  And when employees don’t understand the connection between their activities and overall business success, they become frustrated, unmotivated, and inefficient.  In other words, employees who don’t know their own value will contribute to a company that operates below its own potential value.

Finally, we look at how responsibilities can be transferred to create employee empowerment.  Many home care owners stubbornly cling to the old-fashioned adage that if you want something done right, you must do it yourself.  It’s difficult to find, hire, and train excellent employees who will locate, pursue, and generate sales.  But we know that valuable employees, empowered employees, create company value.  You simply can’t do everything yourself, and your unique skills and experiences are better utilized when you mentor employees and transfer key responsibilities.

Remember that brokers and buyers are interested not in you but in your business, and that in most valuable businesses the owner is not the most critical aspect for continued success. Put yourself in the home care broker’s or potential buyer’s position. Would you purchase a company if all its value, all its knowledge, skills, and relationships existed solely in the owner?

Stay tuned for next week’s installment:  Value Driver -5: Financial Measurement and Management for Home Care Businesses

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About Risa Baker

Risa is Managing Director of PARTNERS 31. Her natural enthusiasm and years of industry experience will successfully guide your business, whatever its size or specialty, through every aspect of exit planning, from strategy to sale.

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