business

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The Top (Self-Serving) Reason You Need to Keep Your Employees Happy

 

 

Why should I thank my employees for coming to work? Why do we need employee appreciation events like lunches, dinners and parties? I gave them a job, which they are lucky to have these days. Isn’t that enough?

You may have heard these sentiments expressed by CEOs and business owners. Or perhaps you’ve had similar thoughts yourself. Isn’t every two-hour lunch event decreasing your employees’ productivity and costing your business money?

The answer to that is yes. But if these events help keep your employees happy and prevents them from leaving, you are saving money. A lot of money when you consider the high cost of turnover for filling any one of those jobs.

You can find out just how much that cost is with this Turnover Calculator  from The Predictive Index, a workforce assessment company.

This six-step calculator takes into account items such as the cost of covering the position during the time it is vacant, the hiring manager’s time, advertising for the position, resume screening, company time spent interviewing and background checks.

Other costs include the time to onboard the new hire and time for that person to obtain full productivity.  (To obtain the full report on this site, you will have to give your name, company and email at the end. There are other online calculators available as well.)

A study done last year by the Society for Human Resource Management, the 2016 Human Capital Benchmarking Report, concluded the average cost-per-hire is $4,129. And that doesn’t include the additional cost associated with onboarding the new hire.

Whatever the final figure is, it’s indisputable that losing an employee is expensive. So, next time you find yourself concerned about the cost of yet another employee outing or party, remind yourself that if that event helps keep people happy and engaged, it’s a bargain for your business.

The good news is the biggest thing you can do to help retain employees is also the simplest. Show appreciation. Say thank-you. These simple gestures can contribute to your bottom line as well. In an  article in the Wall Street Journal about showing appreciation at the office, it was reported that more than half of human-resource managers say showing appreciation for workers cuts turnover, and 49 percent believe it increases profit.

To read more about how appreciation helps and recognition needs to extend beyond the paycheck, please see my blog Any Time of Year is Good to Express Appreciation.

Here’s some further reading on ways to retain your employees.

How Loyal Employees Contribute to Your Bottom Line
This is a two-part series on the importance of developing and maintaining loyal employees. Part one explores why every company should focus on having loyal employees and how doing so contributes to its revenue. Part two offers tips of how to develop loyal employees.

Work-Life Balance Key to Recruiting, Retention
This two-part series is on the growing importance of offering a work-life balance to employees in your company. Having a work-life balance was ahead of money, recognition and autonomy for more than half the people surveyed in a study done by Accenture in determining whether or not they have a successful career. Part two, Work-Life Balance, the #1 Thing to Offer, discusses the one critical component your workplace must have to keep employees.

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4 Tips to Start Your Own Business

In my line of work I encounter many entrepreneurs, a lot of whom are serial entrepreneurs. I’ll share a few of my key findings based on their experiences starting businesses. As you read these tips, consider the actions you can take to positively impact your own business.

1. Start now

I hear business contacts and friends say things like this all the time:

“I want to start my own business.”

“I have a great idea, I should start a company.”

“I could do this job so much better than my boss, and I don’t like working for others anyway.”

Well, your time is now. People delay taking risks, and they find a dozen reasons to do so. But the main reason is this: they are uncomfortable with uncertainty. They are scared of the unknown. They sometimes are too cautious or lack self-confidence. If you truly have a great idea, bet on yourself. I won’t tell you that you won’t regret it, but I can almost guarantee that not taking a smart risk will be worse. If you want to start your own business, take the first step this week: come up with the company name, register your LLC or take any other concrete step.

2. Have a plan and a contingency plan

Acting on your business idea does not mean that you should act on it without careful consideration of the risks involved, preferably before you get too far along. Find business partners, identify your widget or service exactly, have brainstorming sessions with friends or family members and outline a preliminary business plan. Be prepared for roadblocks and, if you have the time and energy, create a contingency plan. What’s your exit plan if this goes up in smoke? A contingency plan can help if your initial plans face a significant challenge and you are unsure where to turn.

3. Set your timeframe

I see many people get scared in the early stages of a business plan and retreat to jobs at which they feel safe and comfortable, though perhaps less happy. Others are so determined to actualize their ideas that they are unable to objectively evaluate when it is time to stop trying and call the endeavor a good, but failed, learning experience.

Set a time frame – for example, twelve months – for how long you will try your business idea. Make sure to identify specific times (preferably specific dates rather than “every 3 months”) when you will evaluate the time investment and if you’re where you need to be in your business plan. If you give yourself one year, that is not set in stone. If things start picking up in the 11th month, you should probably keep working on the venture for a while and reevaluate the timeline.

4. Create a solid foundation before you focus on growth

Entrepreneurs are ambitious! They also want to show themselves and the world that their business is successful in just a few months. Set your pride aside (also known as checking your ego at the door) and focus on creating a solid foundation on which long-term growth is possible. The wider and better quality the foundation, the more it will be able to hold as you grow vertically.

Are you ready to start your business? Outline three concrete steps that will get you started and try to complete those steps (or set them in motion) in the next seven days.

Do you already own or run a business? Please share your own thoughts and advice.

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13 Fraud Prevention Tips

My last 13 posts have been specific tips designed to help you do a better job preventing fraud at your company. My hope is that by calling your attention to the variety of ways that people commit fraud and by sharing these anecdotes you’ll be proactive in putting in place checks and balances and sticking to the kind of no-nonsense fraud prevention policies that keep businesses healthy and safe.

Let this post serve as a reference for each of the 13 Fraud Prevention Tips I’ve offered, and please feel free to add your own.

1. If Someone Commits Fraud, Have Them Thrown in Jail

2. Leverage the Value of an Informal Fraud Policy

3. Fraud Prevention Tip: Keep Your Security Room Locked

4. Always Have Someone Double Check the Payroll

5. Change the Standard by Which You Check Your Transactions

6. Don’t Rehire People Who Steal From You – Seriously

7. Focus on Checks and Balances that are Rechecked and Rebalanced

8. Take All Shortages Seriously

9. Always Poke Around Your Books

10. Regularly Monitor and Review Monetary Trends

11. Match Your Purchase Orders Against Your Invoices Before Putting the Invoices in Your System

12. Think About the Financial Impact of Rare Events on Your Business

13. Trust Your Instincts

Someone asked me why I did so many posts on Fraud Prevention that they ran right out of March – Fraud Prevention Month – and all the way to the end of April. As I mentioned in my very first post about fraud this year, preventing fraud is a year-round process. You need to be vigilant all the time, building a system that is internally monitored – and that monitors the monitors.

Please let me know what your fraud stories are, what tips you’d add to my list and how you prevent fraud.

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The Relationship Between Your Debt and Your Happiness (P.S. It’s Obvious)

In my last post about happiness, I wrote about 4 ways you can be happier and less stressed in order to run your business more effectively:

1. Do Good Deeds

2. Get Exercise

3. Get Hugged

4. Get a Pet

I want to keep on with this idea of happiness and focus even more closely on the things you can do to increase your happiness as it relates to money and finances, both personally and for your business.

It may come as no secret to you that debt makes people unhappy, but you’d be surprised at how little debt it takes to sour relationships, create tension and stress and ruin a business. Therefore, whenever possible, make sure that you and your company are carrying as little debt as possible.

To tell you to spend money paying down debt that your business doesn’t have might seem foolish, but what’s foolish is spending money that your business doesn’t have in the first place!

TIme and again I am brought in to resolve the problems of businesses with inordinate debt and money owed to a wide variety of lenders and creditors. As I look back to see what debt is really in front of us, who’s owed what and at what interest rate, when loans are coming due, etc., I often uncover a similar pattern.

Those who are in debt need not be in debt – or at least not the kind of debt they’re in.

They are in debt because they didn’t take the opportunity to pay down some of their initial debt when they had the chance. Instead, they sought to use their capital for further investment (or unsavory things), thereby driving themselves further and further into debt when paying that debt off in the beginning would have done wonders for the future of their business. That is to say, they would have been able to keep their businesses.

It is true that sometimes the answer to a cash flow problem is a loan, but I have been in numerous situations where any loan would have been throwing more money at a sinking ship.

That is why it’s important not to take loans to supplement loans. This may seem like obvious advice, but you’d be amazed at how often these are the problems I’m dealing with. When given the opportunity to pay the principal down on a loan or to pay off a credit card you’ve been using to finance your business, do it. Don’t think that buying a new piece of fancy equipment for your factory is the perfect way to grow your business faster or that hiring a new employee will solve all of your problems. Pay your debt down and continue to own your business. It will keep you focused by ultimately keeping you less stressed and helping you avoid crises and debt in the future.

Want to be happy at your job? Then keep your business debt free.

Is your business buried under debt or has it been? What did you do about it?

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Sometimes Winning Isn’t as Important as This One Other Thing

I like winning. And learning that winning is not always the best outcome in a negotiation is one of the hardest lessons I’ve had to learn in my 30 years in business.

My father used to tell me that being successful in making deals is strongly tied to the ability to leave something on the table for your counterpart – even if you are in a position of power.

“But isn’t it always better to pay less for the same items or to make more money on a particular deal?” – you may ask. Not always, because the “buy low, sell high” principle fails to account for a crucial element in business: relationships.

Back in the day I used to be a very tough negotiator, and I wasn’t even aware of it. I was simply unwilling to settle for a deal that I thought could be more advantageous for me or my side. And I got the best deals. But what happens after you close a deal?

Life goes on and other negotiations and business opportunities come around. And, somewhat inevitably, some of these opportunities arise with folks who know you or have heard about you. Following what I considered to be successful deals at the beginning of my career, I was confronted with the ramifications of the experiences of those with whom I had previously negotiated.

That is when I began to truly understand the meaning of win-win solutions in business environments: the benefits of leaving something on the table so people enjoy working with me and feel like they’ve won, too.

Because of my reputation as a fair negotiator for the past few decades, business partners often seek me out even if the deal with me is slightly less financially advantageous for them. Most negotiation counterparts also come to me with fair deals to start (as opposed to starting at extreme positions) which cuts down the negotiation time and leads to more efficient business deals. Saving time and minimizing stress in business situations is often overlooked when evaluating the process of getting to a solution in a case.

Due to the many good relationships I developed in my industry and other fields, business partners trust me. And trust is one of the most valuable assets you can have in business.

Is my “always leave something on the table” advice applicable to all cases and situations? Of course not. You must know when to focus on a mutually advantageous outcome, and when getting the absolute best price or deal is the only objective. But don’t forget, you may not be seeing the last of the person on the other side of the table.

Do you believe in win-win solutions in business? Do you find them challenging to achieve? Share your story in the comments below.

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Different Experiences in the Public and Private Sectors

Over the course of the last few months, I’ve had three organizations/businesses bother me in connection with one product sold by one company that we’ll call Round Pals. I found their intersection to be particularly interesting.

Private Company 1

The first organization was a competitor that we’ll call Big Guys. Big Guys wrote a cease and desist letter to Round Pals for using an image online that legally belonged to Big Guys. The cease and desist letter was very well-worded, firm but polite and said, “We would never intentionally infringe on the copyrighted materials of other companies and we believe that Round Pals wouldn’t either, which is why we know that, having brought this infringement to your attention, you will stop using our intellectual property.”

Round Pals immediately stopped using the material and wrote to tell Big Guys exactly that. All was professional and cordial. No harm. No foul.

Private Company 2

The second company was the manufacturer of a major product sold by Round Pals; we’ll call this manufacturer Safe Co. In trying to negotiate for a better price on Safe Co.’s product, based on purchases of the exact same Safe Co.-manufactured product elsewhere, Safe Co. became concerned.

As it turned out, Safe Co. was not selling the product for what Round Pals was getting it for elsewhere, and Safe Co. wasn’t sure how Round Pals was finding the product for so little. However, Safe Co. handled its concern and correspondence in a professional way, despite believing that this, being a safety product, was a major issue. We all really appreciated the way that Safe Co. (so far – the issue remains unresolved) has handled this issue.

Government Agency

And then there was the government agency. Boy was the government agency and its representatives horrible.

They threatened, they intimidated, they bullied, they badgered.

They were rude. They were manipulative. They were unkind. They were unprofessional.

I’d say I’ve never seen anything like it, but as a turnaround professional, I see this all the time.

It was terrible dealing with this government agency because they didn’t care about time or money wasted – they just cared about ticking things off their check lists and moving on. But only moving on between the hours of 8 a.m. and 4 p.m. In the intervening hours they couldn’t care less.

We repeatedly asked this government agency for documented proof of our errors and supposed wrong-doing. We asked to see the regulations. But they had none. Indeed, they misquoted their own documents and regulations, and sent us a 160+ page document about something other than what we were talking about and doing when we asked for clarification on our alleged error.

It was borderline pathetic.

The Moral of the Story

I’ve said it before and I’ll say it again and again and again. We have got to run government more like a business.

There are plenty of problems with the private sector, yes, but when I have private sector problems, I mostly find myself working in professional environments with mutual respect for time, money and energy. We also usually come to fair and amicable solutions to our problems. Not everyone ends up happy all the time or with what they want (often times this isn’t the case), but it’s amazing how different the approach and attitudes can be. Not always, but frequently enough that I found these three instances all revolving around one product a particularly illustrative case.

Do you have any examples that run notably in favor of or counter to my point?

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Old School Methods Yield Fresh Results

As I sat in front of my computer struggling to express exactly what I wanted to share with you today, I realized that I might be more successful if I tried writing the old fashioned way.

Thus, I broke out a pencil and paper, and instead of sitting in front of my computer, I changed up my environment and began to write. And the words flowed wonderfully.

They flowed so well, indeed, that I decided that what came out wasn’t best shared today – but you’ll get to enjoy it later in an alternate manifestation.

What I do want to share with you is the lesson my experience evoked: the value of changing up your environment when trying to accomplish something that doesn’t seem to be happening – especially when that something happens to require creativity.

This is actually something I do all the time, though the pencil/paper approach was a new take on it. I’ve spoken before of my predilection for the beach in Hilton Head in the context of the value of rest and relaxation. One of the great things I love about the beach is its effect as a creative lubricant. My job involves a great deal of creativity, and I often do some of my most creative work at the beach. The environment isn’t the usual suited, office-furnitured, formal one of every day business, and that allows my mind to loosen and get creative with solutions and opportunities.

I suggest you employ similar approaches in your own life and business. When you find yourself facing a tough situation, a complicated problem or a stalled out day, don’t keep spinning your wheels. Try changing up your tools and your environment. Try bringing fresh perspectives into your conversations. Just don’t do the same old thing if the same old thing isn’t getting you anywhere.

How do you vary things to get the creative juices flowing?

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How Greece and the Stock Market are Conspiring Against You

If you’re a news person or you follow finance then you’re no doubt already aware of the situation in Greece. That country is a mess. It’s debt is astronomical; it has no capacity to repay; the political situation is volatile at best; there are mass protests, and nobody has any idea what to do. That’s my definition of a mess.

Let’s Help or Face the Mess Ourselves

In order to prevent some kind of catastrophic ruin that affects the governments and finances of the rest of Europe – after all, Greece is on the Euro and its economy is intimately tied to the rest of the continent – European leaders have been working on some kind of deal to manage Greece’s debt (a large part of which they’ll just dismiss or fund) and get its economy back on track.

And Greece isn’t the only European country riding this roller coaster. It’s just got it the worst right now and is in the lime light. Spain, Italy and others are also going through quite a bad spot.

With the state of the world’s economic intimacy, we’re all affected by the situations around the world. Hardly a country is free from the ripple effects dealt by other members of our global union. But what’s fascinated me recently is the degree to which that intimacy is more emotional than logical.

Up and Down and Up and Down

As I’ve watched the stock market plummet and rebound over the past month, I’ve seen that movement tied disturbingly to our reactions to Greece’s economic situation.

When news came that Greece was tanking and talks were stalled, the market dropped. Last week, as news landed that Europe had reached an agreement on how to bail Greece out, the market rallied 340 points. Yesterday, the market closed down nearly 300 points. Here’s how CNN explained it:

“New fears about the fate of the European rescue plan reverberated through stock markets in the United States and around the world Tuesday. Following European markets, U.S. stocks ended sharply lower across the board. Bank stocks were hit especially hard. The bad news was propelled by Greek Prime Minister George Papandreou’s surprise announcement that he would put his country’s participation in last week’s European debt plan to a voter referendum.”

Now, I understand that the stock market is not merely a bunch of mercurial people making decisions but an enormous number of trades made on the backs of incredibly complicated financial equations and algorithms, but when it swings so violently back and forth at news about Greece, I can’t help but think that things are getting a little ridiculous. And this is just news, mind you. Nothing is actually happening in any of these instances. A deal was reached but no money moved. A referendum was proposed but no vote actually taken. These may as well be rumors for the bearings they should have!

Don’t Be As Smart As the Last Person You Talked To

This reminds me of the business leaders I’ve dealt with who change their entire course of action every time they talk to someone. As I pointed out in my 5 Foolish Faux Pas of CEOs in Crisis, some CEOs are only as smart as the last person they spoke to. That’s what our economy feels like: as though it’s only as strong or relevant as the last thing it heard.

And I don’t want you to be this way!

Making plans and sticking to them is an important part of being a good leader and developing and growing a sustainable business. It’s especially important when you’re in a crisis. You can’t be flopping all over the place in rough times. Of course you change course when things are going wrong and you actually take the time to evaluate the situation, but if you’re changing plans after every conversation your people will lose faith in you and nothing will ever get done.

How do you keep focused when things around you get topsy turvy?

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If the Shoe Doesn’t Fit, We’ll Make It Fit

We’ve all heard the phrase, “If the shoe fits…” meaning, if you’re accused of something (good or bad) and that deed fits your m.o. then it was probably you, because, well, the shoe fits.

In turnaround, the shoe rarely fits. I’ve either got a size 12 company with a size 8 shoe or a flat-bottomed foot with a big-arched shoe. Either way, the shoe doesn’t fit.

But in turnaround, we do what we can to make it fit.

We get creative with shoes. Perhaps we lop off some toes to make the shoe fit, or maybe we cut the end of the shoe off.

Whatever the case, it’s not the job of a turnaround professional to complain that what they’ve been given doesn’t fit right or work the way it should. If you like things to be neat when you arrive, don’t get into the turnaround business.

It’s our job to make the creative deals and think constructively about how to make things work that don’t appear to work. If you want to start thinking like a turnaround professional to get more working at your business than is already, remember that if the shoe doesn’t fit, you’ll have to make it fit.

Do your shoes fit?

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The CEO’s 10 C’s of Borrowing

Bankers and business owners can have trouble communicating because their mind-sets are different.

As someone who began his career as a banker and who has spent the last 30 years doing interim-CEO turnaround management, I understand the banker’s mindset while having profound insight into what makes businesses run successfully from the top. Most of my day is spent playing “Let’s Make a Deal:” negotiating with lenders, creditors and bankers in order to get CEOs and their businesses new terms that allow continued operations.

In my experience, it’s particularly difficult for these two groups – business leaders and bankers – to understand each other because they’re coming from such different places and have seemingly different priorities.

Part of the process is helping both sides see that they’re in a partnership. Both bankers and business owners want to see the business continue to run because that’s the most likely way for the bank to recoup its loans and eventually see profits, and its the only way that the business will turn from debt to profit.

Thus, as a business owner, you should strive to understand how your banker thinks – and why he thinks that way. This can have a positive effect on your relationship and make it easier to get money when you need it. I present to you, then, “The CEO’s 10 C’s of Borrowing,” which will help you become a better borrower, enhance your relationship with your banker and make money more available when your business needs it most.

1. Character is of the utmost importance to bankers.

Bankers need to know you’ll do the right thing when your company is in distress. If they can’t trust you, they can’t put money in your hands. That doesn’t mean fake good character – it means have and demonstrate good character.

2. Carelessness comes down to poor record keeping.

Carelessness can also hurt your bank by causing it to write-off loans needlessly or even lose its federal loan insurance such as SBA Guarantees. Run your shop well, which includes good book-keeping practices, regular audits, competent comptrollers, and mixing up your monitoring practices. Not being careless also means verifying for yourself the details of your business’s financial situation.

3. Complacency is not an asset.

Banks are interested in how you react to tough situations. Don’t just tell them what you’re legally required to when they ask; keep them updated to avoid surprises. Bankers hate surprises. This is all a part of the larger principle of being proactive rather than reactive. Proactive business owners keep their banks apprised of the situation, which makes their banks more likely not to react to unfortunate circumstances by demanding payment on loans.

4. Contingency Plans are key for orderly succession if something happens to you.

Bankers value stability, and even though many business owners think they’re invincible, history has proven otherwise. If your bank knows what will happen in the event that something bad happens to you – like disability or death (God forbid) – that’s comforting to them. If they know what will happen to your business in the event of various catastrophes, they’ll continue to work with subsequent leadership. It’s also wise to introduce your banker to the future generation of leaders at your company. Have contingency plans. Nothing works out like your spreadsheets suggest.

5. Capital is your net worth (assets minus liabilities).

Bankers want an extra cushion of equity so they can be more flexible with your company in case it has a bad year. A CEO and a banker need to balance one another’s needs in order to maintain sufficient capital. I sometimes find that telling entrepreneurs, owners and CEOs to keep extra capital around is like telling a dog to save part of his dinner for later, but if you can show your banker that you’re capital-wise, he’ll be more likely not to call your loan after a bad year.

6. Collateral is a bank’s leverage and makes bankers feel more comfortable.

Collateral does not repay a loan, as many entrepreneurs think when they pledge their assets, but again, it does ease the banker’s mind.

7. Capacity is your ability to repay.

Bankers check to see if you have champagne tastes but a beer wallet. If you seem like you can repay what you’re asking for – which is to say, a reasonable sum and not your dream loan – you’re more likely to see the money. Shoot for the stars in life, but a bank loan is a different matter.

8. Competition works to your advantage.

Banks are concerned about their competitors’ interest rates, collateral packages and guarantees. You can use this to your advantage by doing your homework when seeking a loan and making that clear to your banker (though no one likes to feel threatened, so be courteous about this). Knowing about your bank’s competition can also let you prepare for a quick capital search should your banker pull out.

9. Controls are your built-in monitors.

Bankers want to know about your company’s controls. Do you have checks and balances for payroll clerks, controllers, CFOs, and inventory personnel? Do you watch the back door? Outline the steps you take in your plans and conversations with your banker; ask for his recommendations. If you find an issue, correct it and then update your banker that you’ve fixed the problem.

10. Communication is essential.

Almost every one of these tips hinges on communication. Don’t keep things from your banker. If he knows what’s happening he can work with you instead of against you. Work with your banker for the best relationship.

With “The CEO’s 10 C’s of Borrowing” in mind you’ll be better equipped to understand where your banker is coming from and not get frustrated when things don’t seem to go your way. Talk with your banker and try to understand him. It will only be to the benefit of your business.

Which of these have you found useful or true in your experience? Let us know in the comments.