Giving employees a chance to feel like part of the team

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A lot of the time employees not being engaged at work is not for their lack of trying. A recent Harris Poll survey of over 23,000 employees showed employees struggle with how their company operates:
• Only 37% of employees clearly knew the company’s goals
• Only 20% were enthusiastic about those goals
• Only 20% could see how they could support those goals
• Only 15% felt like they were enabled to work towards those goals
• Only 20% fully trusted the company they worked for

This survey shows pretty clearly that employers as a whole have done a poor job of communicating with employees about the company goals and how they can help the company achieve those goals. How engaged can an employee be if they don’t see how they can support the company goals or feel like they are enabled to do so. It is no wonder only 20% of employees fully trust the company they work for.
When I was an administrator for a medical group, I would get frustrated when people would not follow the procedure that I had written. I really wanted to let the employee have it for being careless and not doing their job properly and following this great procedure I had written.

Much to my surprise most of the time it was because the procedure wasn’t written very well, hadn’t been explained in detail and I got very little input from the person who was doing the job when I wrote the procedure. In other words, I had set the employee up for frustration and failure. I did a very poor job of getting employee input and by-in on what they were expected to do. Getting employee input and buy-in sets them up to win and feel part of the team. It will also build trust and support for the company goals over all. People do not want to have eight or so hours of their day controlled by someone without having a say in it, but this is the reality for a lot of workers.

Why didn’t I get employee (team member is probably a better term) involvement when I was developing office goals and procedures? I think because I didn’t think they were capable of this level of thinking and they probably wouldn’t develop the procedure in an efficient way. I am sure I had more miss guided thinking, but my point is, I thought I was the boss so I needed to set the rules and they needed to follow them. That is where I was at. Talk about wrong thinking and wrong attitude toward the employees that worked for me. I wasn’t giving the employee much of a chance to feel any real ownership in their job.

From the survey results above, I am not the only business owner / manager who is thinking and acting in ways that don’t promote enthusiasm for the company goals and build trust with employees. Think about that the next time you make a top down decision.

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Do businesses need a CPA and a CFO?

CFO vs CPA

CFO vs CPA

Businesses need a CPA and a CFO – more than likely aren’t the same person.

There are different qualities that make an excellent CPA and there is other qualities that make an outstanding CFO (Chief Financial Officer). There is some overlap but there are some significant differences.

Unless a CPA firm is doing a company audit, they probably don’t ask you probing questions about your business or the data in your financial statements. Like “why is your gross margin moving up and down significantly each month?” What is the job description of that new person you hired? A CFO will dig into the story behind the numbers, the CPA not so much.

There is a difference in the job description between the two and in how they look at things. Let’s take a look at a comparison between them:

CPA CFO
Compiles financial statements from client-provided data Plans, considers and decides how financial transactions will be booked to reach stated objectives and strategies of the business.
Works with historical data – keeps score after the fact. Plans, forecasts, budgets and projects the future financial performance of the company, in light of the company’s objectives, strategies and capacity to perform. Diligently looks for any trends that will impact company objectives.
Delivers financials weeks or months after the close of the accounting period (month, quarter, or year) Focuses on a fast (within days) and consistent month-end closing of process. Generally has daily or weekly real-time numbers and indicators of performance or trouble and how they will impact the company plan and communicates this to management – action oriented.
Compiles financial statements in accordance with statutes and practices consistent with the type of business – GAAP compliance. Generates reports that analyze results in the context of the company’s objectives, strategies, and owners’ intent for the business. Establishes key indicators that provide early warning for management of trouble ahead.
Compiles financial statements that can be relied upon by 3rd parties, such as banks, creditors and investors. Works to maximize the value of the business to the owners, including investors, while remaining within loan covenants, creditor requirements, etc.
Assumes you (the owner or CEO) are going to read and understand the financial statements as delivered. Makes certain you and the management team understand the financials, the trends, drivers and the issues they identify. Reads them to you, if necessary. Helps develop the stories behind the numbers.
Does what he’s hired to do — generally Taxes and Audits — including mid-year tax planning, quarterly estimates, etc. Does what he’s hired to do — help you strategize, plan and operate your business to maximum financial results and build a sustainable business. The CFO helps you co-pilot your business!

In reviewing the above, it’s probably obvious why your CPA probably can’t be your CFO. He’s not in the game. In most cases, he does not have the perspective by which to help you plan, forecast or monitor financial performance. Because you haven’t invited him in (and paid him for this). CPA’s are valuable for what you pay them to do — they really are. CPA firms can be hired to fill the role of a part-time CFO, but normally this is not their expertise. The CFO role is what Franklin Business Works specializing in. Here is good article “How much not having a CFO costing you?” http://www.chiefexecutiveblog.com/2009/02/how-much-is-not-having-cfo-costing-you.html.

Are discretionary bonuses a waste of money?

baseball scoreboard

My goal with this post is to get you to not waste your money on discretionary bonuses. A discretionary bonus is by definition optional. This also means employees don’t know if they will get a bonus or how it is calculated. Of course, who doesn’t like some extra cash that they weren’t expecting?
But the question is – did paying this discretionary bonus motivate the employees or drive company performance? Isn’t the reason to pay a bonus is because of good performance? I don’t believe discretionary bonuses do this.
Look at the chart below. It is interesting that employees who make less than $75K a year by and large only get discretionary bonuses.

Typical Bonus Levels as a Percentage of Salary
Base salary Target bonus (%)
Less than $75,000 0*
$75,000-$99,999 10-15
$100,000-$149,999 15-20
$150,000-$199,999 20-30
$200,000-$299,999 30-40
$300,000-$499,999 40-60
$500,000 or more 60-100
*Bonuses for this range are not typical, and if rewarded, are usually discretionary.
The data was put together by Salary.com.

So let’s think about this. The discretionary bonus is decided after the fact, at the owner’s discretion (or whim). Let’s relate this to baseball. I went to my nephew’s baseball game today and it made me think, how would the teams feel if the rules weren’t known and after the game the umpire got to decide who won the game? That would be pretty discouraging. I don’t think players would be too excited about the game if the winners and losers were chosen at the whim of the ref and the player didn’t know the rules to the game.
In a lot of ways, discretionary bonuses programs are setup that way. It doesn’t have to be that way.
Studies show there is more to motivating people in the work place than just money. But if people weren’t motivated by money why would they come to work at all and why are bonuses for the higher income levels so significant? Obviously companies think money must motivate employees that is why they give them.
So, how should a bonus be given? You need to think about and define the rules or critical numbers (like net profit, cash flow, etc) for winning / receiving a bonus. If you structure the bonus correctly and you include your employees in on how they can earn the bonus, and then let them track progress toward earning the bonus on a regular basis. It will be great motivation tool! More times than not they will be motivated to figure out a way earn the bonus – wouldn’t you?

Next week I will give you some ideas on the specifics of how to structure a performance based bonus program.

Making work a game – seriously!

ImageI think we can all agree that having more fun and excitement at work would be a welcome relief.

People play games for one reason only – they enjoy the experience. Game players get to test and acquire new skills, enjoy the camaraderie of the team (or even competitors), they like to win and the fun of winning. The game itself is often more important than the reward.

For entrepreneurs, business owners and executives, business is essentially a game. They love playing the game and they love to win – i.e. match wits with the competition and crush them! They know the rules! The profit generated by a successful business is part of “keeping the score” and winning.

In the lower ranks, business is not a game. In fact, work is – well – work. You show up, do your job, get paid, and go home. They don’t get to feel the excitement of the game – they don’t know the rules, don’t know the score – the game is hidden. They get the same reward (pay check) every month regardless of how well they do or how well the company does. The score is always the same – the scoreboard is hidden!

Open-Book Management principals teach everybody in the company to be a player. One of the initial concepts is to teach every employee how to read the numbers, what they mean and how it connects in with the big picture of helping the company win.

A game can be setup for any short-term initiative or problem that needs to be fixed or resolved. Games could be setup to raise sales, introduce a new product, lower office supplies expense, improve safety or decrease waste. Just about any company activity you would like improved can be turned into a game. Remember – every good game needs a scoreboard and a reward or payoff if you win. No scoreboard, no reward – no fun!

Keep in mind, games will get old if you don’t show employees the bigger picture of how winning this game will also improve the company results. The employees will start to feel like they are the ones being played and become cynical if you don’t connect the dots and give them a stake in the outcome.

By the way, you don’t have to think up the games yourself, involve your employees in making it happen. Develop a plan on how to show employees the bigger picture, keep educating them on the numbers of the business and how they drive company performance. If you implement playing games with the intention of educating employees and sharing in the improvements generated by the games – you will be successful. If you do it to manipulate your employees to work harder – the fun will be short lived and so will be any company improvements.

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Why Employee Engagement is Critical!

Employee Engagement Building Blocks

Employee Engagement Building Blocks

Gallop’s definition of an engaged employee “Works with passion and feels a profound connection to their company and they drive innovation and move the organization forward.”
But on average only 30% of employees fall into that category. 50% fall into the Not-Engaged group. Here is how not-engaged is described:
“Employees are essentially “checked out.” They’re sleepwalking through their workday and putting in time — but not energy or passion — into their work.” Just by the definition difference between the two you can feel the impact engaged employees would have compared to not-engaged.

What if you could double the number of engaged employees, from 30 % to 60%, what effect do you think that could have on how your customers feel about you and the impact on your bottom line?
Most businesses say “our employees are our most important asset”, but the reality is something different. How much time and effort is really spent on improving engagement – by increased training – by doing surveys to see how much their employees are actually engaged at work? Maybe business owners don’t really think they have much control over their employee engagement – i.e. you either hired a great employee or you didn’t – so there is not much I can do to improve the situation.

This is just not true, businesses can go from not having an engaging work place to a very engaged work place – with the same employees. All they have to do is decide that having a 30% engaged workforce is costing them customer satisfaction, time, unhappy employees, hire turnover, productivity, profit and causing lower quality and higher absenteeism.
Gallop also quantified some of the reasons you want highly engaged employees.
• Businesses in the top 25% of employee engagement do significantly better in productivity, profitability, and customer ratings than the companies in the bottom 25%.
• Companies with 9.3 engaged workers for every actively disengaged, experienced 147% higher earnings compared to competition. In contract, companies with 2.6 engaged workers for every actively disengaged worker experienced 2% lower earnings than the competition.

Do you believe these numbers? It’s pretty obvious that companies that have engaged employees would have superior productivity, profitability and customer ratings. Isn’t it just good business to work toward this?
It is more of an attitude shift of the owner than a hard cost to the business to get there. Next post we will get into how to have a highly engaged workforce – how to weave it into the fabric of how your business operates.

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How engaged are your employees?

Isn't this job great!

I Love my Job! I just need a little nap.

A recent Gallop study quantifies the bleak state of employee engagement at work. Only 30% of employees are engaged at work.

Do you know how engaged your employees are?  You are missing out on a lot of brain power and frankly improvement to your business bottom line if you don’t look it.

There are excellent  and time tested ways to double the engagement of your employees – and it isn’t weekend retreats or a ropes course – of which the benefits are short lived.

I will be discussing this more in-depth in a series of posts during April.

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What Road is your Business on?

What Road is your Business on?
A thoughtful vision is powerful for setting the direction and providing the fuel for the growth of a business.  That is usually how a business gets started, someone has a “vision” for how they could provide this great product or service and they are off and running trying to make this vision happen.

Most of the time this vision doesn’t get written down and doesn’t get shared, at least not in-depth. This “vision” might just be collecting dust in the business owners mind. I want to encourage you to write it down, share it with your partners, friends and employees. Getting input from other stakeholders will help get their buy in and feel more like part of the team. If you going to take the time to do it you might as well do it well, which includes communicating it.

In addition, if a vision is important for the company as a whole, then shouldn’t developing a vision for each part of the company and each person (position) also be valuable? I think so!

If you have a vision of what success and excellence looks like for you and your business from the top to the bottom this will be like high octane fuel in the tank of the owner, managers and your hourly team members to execute the details of your plan.

Don’t underestimate the momentum of customers and friends taking hold of your vision and cheering you on. You want and need their perspective on where the company is going. If you are the only one bought into your vision, it will be like hiking five miles uphill in two feet of snow, both ways to school. It could be done, but why not have other people be part of creating the vision? Then it would be more like sledding downhill in the snow. This would be a lot easier and more fun, right?

Having a written vision goes a long way to help define goals and objects and with the type of people you hire to achieve that vision. Could you see having yourself and all team members be in their sweet spot?

Business and life sweet spot! Have your whole team hit their sweet spot and your customers will love you for it!

I like what Ari Weinzweig (co-owner of Zingerman’s) said “Having a vision of greatness in writing certainly doesn’t guarantee success, nor does not having a written vision mean you’re doomed to failure. But a vision sets us up to work together toward a shared, inspiring, attainable (if also challenging) positive picture of the future.”

Ari has written a more in-depth article about the “Power of Visioning” an 8 step approach at http://www.zingtrain.com/node/85 it is worth the quick read.

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John Franklin