The other day, while waiting for the programme I wanted to watch, I was watching a programme about a guy and his restaurant that he was about to open, and he was at the stage of hiring staff.

He had a major argument with his partner about how to hire staff.

She says…

“Let’s see what expertise candidates have and what value they can bring to the table, we adjust the compensation package accordingly.”

He says…

“I don’t care about expertise and this value bullshit. This is what I’m willing to pay. Take it or leave it.”

Many IT companies are paddling in the same boat.

In their career ads they call themselves industry leaders and are looking for high-calibre professionals with significant expertise and experience, but when it comes to compensation, they can’t even pay industrial averages.

The typical example of Dom Perignon taste and cheap warm beer budget.

And at this point recruiters fall into two categories:

One group are the forward thinkers. They plan for unknown outcomes with rigidly defined resources. Hence, it doesn’t matter what the person can help the company to achieve, the person’s compensation is carved in stone. They shrink their dreams according to their budget.

The other group is the backwards thinkers. They plan for specific outcomes and adjust their resources and tactics as necessary. They expand their budgets to accommodate their their dreams.

The forward thinkers hire competitive(ly cheap) marketing people for $15 per hour, and tell them that their job is to take the company from $20 million annual revenue to $40 million within one year. Of course, at the end of the year, the business owner gets rather disappointed.

The backwards thinkers hire real marketing professionals for real professional compensation and tell them about the company’s the company wants to achieve with the help and support of this person.

No, nothing is guaranteed in this world except death and taxes, but in my experience the backwards thinkers have a better chance to build high-performance organisations than forward thinkers. They simply have higher calibre people to do the work.

In his book, The Politically Incorrect Guide To Capitalism, Dr. Robert P. Murphy uses the example of slavery about compensation…

“According to liberal economist, Ludwig Von Miesses, the price paid for the purchase of a slave is determined by the net yield expected from his employment. Just like the price of a cow is determined by the net yield expected from her utilisation.

If you treat your people like cattle, you can’t expect anything but cattle-like performance. But guarding and feeding a slave is more expensive than guarding and feeding cattle. If you expect human performance, you have to provide human inducements.”

In the case of a business, the upfront investment in the person gives the business owner the right to expect anything of that person at all. Without upfront investment, the owner has the right only to hope but not to expect.

So, what sort of thinker are you?

A forward thinker shrinking your vision and objectives to your current budget?

Or a backward thinker expanding your budget according to your vision and objectives?

The other day I read an interesting entry on Hungarian HR expert, Tamas Kelko’s blog.

He outlines a chronic illness that has penetrated small and medium sized organisations over the years. He refer to the situation in Hungary but the problem is more global.

He points out that in order to increase revenue, business owners must focus on marketing. Many years ago, Peter Drucker outlined the importance of marketing when he said…

“Because its purpose is to create a client, the business has two – and only two – functions… Marketing (you get paid for creating a customer) and innovation (you get paid for creating a new dimension of performance). Marketing and innovation produce results, all the rest are costs.”

So, our business owner hero knows he has to focus on marketing, but he doesn’t really know marketing. After all, he’s a subject matter expert, an IT guru.

So, he runs an ad in the local paper or even Craigslist, in which he’s looking for a marketing guru with a university degree in marketing (possibly MBA) and many years of experience.

No he doesn’t hire a copywriter to write the ad because he thinks any idiot can write a job advertisement. No big deal.

And the applications are flying in…

And since the ad is so vague, by the afternoon, he is knee-deep in applications.

By next morning he’s up to his balls with application printouts.

The applications were piling up so fast that he needs wings not to drown in them.

Then, based on whatever random criteria, he selects a guy with an MBA and four years of experience at an advertising agency and a couple of awards to his name.

“This is what I need.” – Our hero thinks.

He checks the guy’s references. The marketing guy checks out as a good guy.

What our hero neglects to ask is that if this guy has ever produced any revenue. He gets bamboozled by the guy’s awards and smooth and slick agency talk.

So, he offers him good salary, benefits, bonuses, amazing working conditions and even a company car.

Time is ticking by but by the end of the new marketing guy’s first year in the position, still nothing has happened.

What the hell is going on?

Our hero business owner thinks back to the interview process…

He remembers that the candidate was very quick to ask about the budget, but when he asked the candidate about how he had improved the bottom line at his previous employers, the candidate got rather confused…

• I’m not sure what you mean
• Well, I was in marketing not in sales, generating revenue wasn’t my job
• Marketing cannot be measured with money
• Why, was I supposed to generate revenue?

But our hero marketer used to work in an ad agency and his job was to spend the agency’s clients’ budgets to the last penny and win advertising awards.

Creativity and wards meant promotion. It wasn’t about helping clients to generate revenue.

The reality is that out of many applicants, only a few can make positive differences to their employers’ bottom lines. Most of them are lots of smoke and no fire. Big hat and no cattle.

Also, in most universities what they teach is business-to-consumer (B2C) marketing. That is, marketing commodities to the masses. There are only a very few (I know only three) universities in North America that teach business-to-business (B2B) marketing.

So, when most people with marketing MBAs (2 years of B2C Kottler therapy) land in the B2B world, they just stand there like a deer being caught in the headlights.

Here is the other problem.

Marketing, especially with the proliferation of the Internet, is changing very quickly.

But in academia, it can take years to get a new curriculum accepted for teaching. So, if you write a curriculum on Social media in 2009, it won’t be considered and accepted at least before 2012. So, in 2012 you start teaching something that is already obsolete because by 2012 social media won’t be the same as it is today (January 2010).

A few years ago Jeff Walker released his Product Launch Formula, but in academia it’s still not taught.

Social media has been around for a while but academia is still hesitating as to whether or not to recognise it at all.

A few weeks ago I was listening Jeffrey Krames’s audio book, Inside Drucker’s Brain. While Drucker was a guru and a guiding light to the entrepreneurial world (that produces the majority of GDP for most countries), he was a black sheep to academia. Only a very few textbooks refer to his name in the form of very short footnotes. But none of his 39 books is recommended reading at universities, accept at Claremont Graduate University (then known as Claremont Graduate School), where he developed the country’s first executive MBA programs for working professionals.

So What Can Business Owners Do

I suggest two actions.

1. Business owners must understand marketing pretty well. They don’t have to become marketing masters themselves, but must understand the principles, so when they hire marketing consultants for help, they can have intelligent conversations and the owner understands what the marketing consultants is talking about.

It’s hard to hire a competent marketer if you don’t speak marketing English. And this applies to any profession. How can a business owner hire an accountant if he doesn’t know what EBIDTA is?

Yes, the business owner must be a bit of everything. He has to have an oversight on everything, otherwise he gets screwed by unscrupulous “experts” and “gurus” whose number is growing rather fast.

2. Business owners must grow great marketers in-house. This is important because this way the marketer is developed in the company’s specific culture. Marketing knowledge is one thing but the company’s culture and values create the infrastructure within which marketing operates.

For instance, the car industry is famous for its bait and switch marketing methods and dirty, unethical sales practices. It’s not surprising if you consider that the car industry is a typical “cheat, lie, deceive and cover your arse” environment. The motto is to make money whatever (maybe short of murder) it takes.

The overall organisational strategy must be in alignment with marketing strategy. That’s why the business owner must be in charge.

Yes, it’s a good idea to discuss things with a marketing consultant to make the most of your marketing strategy, but the business owner must be in charge.

And once you and your consultant have developed a marketing strategy that is in alignment with your organisational strategy, then you can hire some implementers. Yes, it’s a good idea to keep your consultant on a retainer in case some questions come up around implementation, but you don’t need the consultant permanently on the project.

And for implementers hire good people with drive, energy, enthusiasm and passion for marketing.

Then you can organise an in-house marketing academy for your people.

Give them resources and put each of them on the path of individual professional development.

For instance…

• Joe, by the end of 2010 you go through these materials and become a kick-arse copywriter.
• Jen, by the end of 2010 you go through these materials and become a kick-arse SEO expert.
• Jim, by the end of 2010 you go through these materials and become a kick-arse WordPress expert.

Remember, these people already have an innate talent and affinity to these topics, but you empower and enable them to become masters of their crafts WITHIN your company’s culture.

As they learn their crafts, they also absorb and experience the culture of your company. They become one with your vision and mission.

And these are the people who stay with you through thick and thin.