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Business Success: Creating followers

June 12, 2013 by Leave a Comment
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Business Success LogoLooking back over my life, I can recall many leaders in my life — teachers, pastors, coaches, bosses, and others. Some of them were people I merely tolerated; others, I would have walked through fire for. What a difference between those in the first group and those in the second! The good leaders were the ones I trusted completely, learned from, sacrificed for — those for whom I gave my best, all the time. It’s hard for me to put my finger on just what it was about those leaders that so inspired me. But fortunately, it’s not difficult for Doug Williamson, CEO of The Beacon Group, who addresses just that in this week’s Business Success column.

Creating followers

Leaders in the workplace are always aiming to achieve the benefits, stature and even glamor of being a “real” leader — the person who calls all the shots and creates a visionary plan to boost revenues. How can you blame them? It’s all they’ve ever read about. It’s all they ever see in the workplace. Perhaps it’s even the behavior you project as a leader yourself.

Doug Williamson

Doug Williamson

Being the stereotypical leader is the easiest way to stand out, the easiest way to be noticed and the easiest way to move up. Everyone speaks that language. Who would want to be a follower anyway?

The fact is leadership, as we know it, is about the individual. It’s about guiding the sheep, if you can put it in those words.

The problem is that this idea of leadership leaves out the contributions of many others. Worse, it blocks leaders from noticing other leaders.

The outcome is a company that becomes dependent on the ideas, values and direction of a single person or group of powerful leaders.

The solution is to consider the less glamorous role of followers in your organization and assess their condition. Are they detached? Will they question your leadership? Will they follow you in every action you take?

Building leaders

This is a much talked about subject.

One of the central roles of leadership is to build other leaders. However, individuals are often so focused on themselves and their vision for the company or business, that they forget how to deal with upcoming talent.

The people you’re leading can play vital roles in organizing smaller projects, smaller groups and smaller ideas. They can mobilize entire components of your vision or they can be ignored and become isolated and detached. Just because they don’t stand out in an outspoken fashion, doesn’t mean they should be disregarded.

Forget about nurturing them. Have you even noticed your “mini-leaders”?

You know exactly who we’re talking about….

You know exactly who these people are. They are the implementers. Those who sit quietly in meetings, gather all the information and spring into action when the plan is set.

They are everywhere. You see them every day. But, they don’t scream individualism.

They may not come up with the latest and greatest ideas, but this doesn’t indicate that they don’t have the power to guide the fortunes of your organization.

And you better see it before it becomes a problem.

Followership
It’s a theme that author Barbara Kellerman repeats in her book “Followership”

Kellerman points to 5 types of followers: Isolates, Bystanders, Participants, Activists and Diehards.

It’s not difficult to see where this is going. Followers are categorized from most despondent to most active in your organization. For example, think of Isolates as the average voter — I mean those “voters” who don’t actually show up to the polls — as Kellerman describes. They are detached, perhaps frustrated with their environment, but unwilling to take steps to correct the situation.

Bystanders and Participants offer higher levels of involvement, but won’t follow your lead unconditionally. Needless to say, Activists and Diehards contribute significantly more to your overall success and the projects you initiate – if they’re on your side.

The next generation….

The most important part of this new approach to leadership is that it is designed specifically to fit with the flood of Gen Y employees arriving in the workplace.

While the term “Followership” may seem negative, Gen Y employees expect something a bit deeper than absolute leadership. They want their own little workplace kingdom to oversee, and they want to be sure that they are contributing to the organization in a very real way. Understanding the concept of Followership provides a shortcut to achieving this goal.

How to create Followership behavior in your organization….

Identify and Nurture – If you look at your top leaders on a regular basis, you should also be looking to categorize your followers. Who are the Isolates, the Activists, the Diehards? Identify what you want from each of these groups and develop a plan to move them from one level to the next.

The Flip Side – Different kinds of followers can challenge a leader’s ideas or vision in different ways. Generally, a healthy guideline is to allow for some critical feedback from your colleagues. Ensure that you build a diversity of followers in every category to be challenged from a multitude of perspectives.

Building Leaders – Your group of followers provides an excellent pool for leadership candidates. They’re not all leaders, but by turning them into effective followers you’re already constructing their leadership complex within their domain.

Doug Williamson is CEO  of The Beacon Group, a Toronto-based firm that specializes in Organizational Transformation and Effectiveness programs as well as Talent Identification and Leadership Development.

 

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Business Success: How to hire a grad who plays well with others

June 5, 2013 by
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Business Success LogoThe job market is flooded with brilliant, high-performing new grads. Unfortunately, says Bruce Piasecki — author of the new book Doing More with Teams: The New Way to Winning as well as the bestseller Doing More with Less — growing up in an era that celebrates the individual (think Facebook and Twitter) doesn’t tend to make someone a coachable, loyal team player—and that’s the kind of employee your company needs the most. Here’s how to find him or her.

Wanted—A (Rare) Team Player: Seven Interview Tips to Make Sure You’re Hiring a Grad Who Plays Well with Others

It’s that time of year again. All across the country, promising young (and increasingly, not-so-young) individuals are entering the job market with shiny new college diplomas in hand. If your company is hiring (and even if you’re not), you can bet that you’ll be flooded with their résumés. Sure, many of these newly minted graduates will have impressive credentials…but according to Bruce Piasecki, one of the most important attributes you should be looking for is actually somewhat rare—especially these days—and chances are it won’t be evident on paper.

That attribute? The ability to function well inside a team.

“Of course, it’s not universally true, but many young people are fierce individualists,” says Piasecki.  “It’s not surprising that the generation of Facebook and Twitter cares deeply about self-expression, but ironically, this mindset is the exact opposite of what the global economy demands.”

Collaboration and innovation are how work gets done these days, and the complexity of that work necessitates a dizzying array of skill sets. This means it’s better to hire a team-oriented, coachable, and loyal “smart enough” individual than to hire a super-talented high performer who prefers to go it alone.

“Look for good team players and not future MVPs,” advises Piasecki. “Even the most brilliant individual is less powerful than a cohesive, well-orchestrated team.”

The near future will be all about innovation for sustainable value creation, led by teams. The days when a larger-than-life personality is allowed to steamroll over the rest of the company are over. This destroys morale, which destroys results. (And without the ability to get results—and quickly—no company can survive in a swift and severe world.)

“Especially with recent graduates, keep a sharp eye out for prospective hires who may think the rules don’t apply to them, or who think they’ll become superstars inside your organization,” Piasecki warns. “Untested young people who found it easy to excel in school often assume the same will be true in the professional realm. They may be resistant to ‘paying their dues,’ so to speak.”

Companies can’t afford to teach new hires how to work with others. They have to be able to distinguish team-minded individuals in the interview process. Piasecki offers the following hints on the qualities you should look for and the questions you should ask:

• Conduct interviews in a team of four or five leaders. This will replicate the dynamics of the team setting the new employee will be working in, explains Piasecki. “Good team players tend to do well in settings of four or five people asking an avalanche of questions,” he observes.

• Look for an intrinsic ability to “bond” with interview team members. Even more important than dress, training, or résumé, says Piasecki, is the candidate’s ability to “bond” instantly to at least three to five members of the interview team. This doesn’t merely mean an affinity for small talk or schmoozing. The bond we’re discussing here must translate to action in a “reliable, sustained way” with those people—and it will reveal itself in the specific points the candidate makes.

• Also, look for a comfort level with the rapid-fire give-and-take of the interview team. Piasecki explains that people who work well in teams do certain things well in interviews. For example:

• They don’t get ruffled. They answer your pointed questions with calm and with precision, without being terse. Like a captain, they do not have performance anxiety. They demonstrate grace under pressure, know when to exert force, and overall provide your team with a sense of respect and fascination for more. “If you feel they have nothing to say to the team, they should not be your finalist,” notes Piasecki.

• They enjoy interviews that involve more than one “boss.” The true team player, the true potential project leader, or the true divisional captain is someone who shoots straight but understands the culture. That is, they know precedent, but they demonstrate an ability to work fast and past the impediments of budget, rules, and competition.

• They relate one person’s question to another, and they answer to the group by relating the questions as “pieces of an overall composite” of a whole. “Team players know individual questions are merely a part of the mosaic of the culture that runs a firm,” says Piasecki. “They are ‘looking’ to get a sense of that culture and articulate how they anticipate fitting into that culture and how they wish to perform within its norms.”

“In other words, team players understand that the group asks questions in a sequence for a reason, and that the questions are not arbitrary but often related to a larger issue,” he adds. “They seem to understand that what you’re really asking is Are you trustworthy? Can you work for our benefit? Will you share shoulder strength? Their answers will reflect this deeper understanding.”

• They show respect for the team they are seeking to join. Fierce individualists might focus on their performances in previous jobs, internships, or academic programs, and on why your company should put their ideas into practice. Team-oriented candidates, on the other hand, will never display such arrogance. “Team players understand the legacy of the team, the coaching approach, and the reasons to improve in the current season,” says Piasecki. “They live with the past legacy before them and demonstrate respect for it.”

• They demonstrate a desire to work with you for a long time. As a player in the global economy, your quest is to generate revenue through respect, relationships, and long service. That kind of well-paid loyalty requires a team player, says Piasecki. You are always looking for a longer-term player, someone who is coachable in a matter of seasons, not just individual project events.

“Fierce individualists tend to ‘make their mark,’ then move on,” he explains. “But in our swift and severe world, we need people who have a deep craving for the kind of team connections that grow stronger over the years.”

• Good team players look for feedback. In fact, they long for it. It’s not that they want the praise, but that they want to get a feel for the path of improvement available to them. They will expect it to be a two-way conversation, whereby you are able to interact with their responses, not just a Q & A session. The way they behave in the interview will mirror the way they’ll behave on the job.

• Be sure you have a “captain” making the final hiring decision. Captains, as opposed to plain old “leaders,” are skilled in the art of teambuilding. While an entire book could be written on the subject of captains, says Piasecki, in general they have the ability to recognize key capabilities in employees, to put the right people into the right roles, and to create a certain “magic” that transforms a group of individuals into an interconnected whole.

 “You may never have a candidate who does everything on this list ‘right,’ or answers every question the exact way you want it answered,” Piasecki says. “But if you approach your interview with an awareness for a teamwork attitude, you probably won’t go wrong.”

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Business Success: Finding profits through the back door

May 29, 2013 by
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Business Success LogoThis week’s Business Success column was provided by one of my favorite contributors, Tom Shay of Profits Plus. As a fourth-generation retailer, consultant and best-selling author, he really knows his stuff. Here, he provides some simple ways to increase your bottom line — by not spending as much to begin with.

Finding Profits Through the Back Door

The topic for today is increasing profitability. When we ask retailers for input, we will most likely hear two traditional suggestions: increase sales and increase margins. While true, they are two of the hardest ways to increase profits. Let’s take a look at 10 other possible ways to increase the overall profitability of your business.

#1. Examine your employee schedule. After inventory, wages are the largest expense your business has. tom_shay_av_shadowIf you have the data to review your sales history, you should see a pattern by day and month indicating when you need your sales help.

#2. While you are reviewing payroll, ask your workers compensation insurance sales rep to help you review how you have categorized your employees. You may find you have employees in higher-risk categories than necessary.

#3. Advertising. If you consider advertising a necessary expense rather than its being a method of drawing customers, you are probably wasting money.

Your advertising should be calculated as a percentage of monthly or annual sales. Of this figure, you should set aside approximately 10 percent for last-minute opportunities and advertising expenses that are over budget. You will often get a better rate by making an annual commitment rather than simply buying advertising time or space when the sales rep calls on you.

#4. Insurance. You should put your insurance coverage out for bid at least biannually to make sure the price you are paying is in line. As you visit with prospective agents, ask them where you can save money. Many policies allow seasonal fluctuations of up to 25 percent. If this is the case for yours, you can consider calculating your highest inventory level, subtract 25 percent, and buy inventory coverage for this amount. If your business is renting space, make sure you are not buying coverage for something that the landlord owns.

#5. Review your utilities expenses. Your cooling and heating systems have filters which should be checked each month and, if necessary, replaced. These systems should have at least an annual checkup to make sure they are operating at peak efficiency. You should also shop your long-distance service. Check your water usage by making sure all faucets and toilets are functioning properly. In many communities, your sewer disposal rate is tied to water usage, so if you are wasteful with water, you are paying twice.

Check with your garbage disposal company. You may find savings by deciding to recycle the large amounts of cardboard and paper you use.

#6. Are you utilizing your bank? If all you do with a bank is deposit funds and write checks, you should consider doing business where it will cost less. One dealer reported saving over $100 each month by changing banks after he took copies of his recent statements to other banks and asked what their fees would be.

#7. Outside services is a category that is often a catch-all for the miscellaneous expenses of business. However, an annual review of what you are categorizing as outside services is a mandatory step in keeping expenses controlled. You may also find certain tasks you or an employee are doing, such as payroll, could be better or less expensively done by an outside service.

#8. Accounting and legal expenses are usually grouped together. While you hopefully have a minimum amount of legal expense, the accounting service is always suspect. Review what you are getting from your accountant each month and ask other retailers what they are spending for these services. Too often a retailer pays an accountant several hundred dollars each month for a financial statement that he does not fully understand and does not use to make decisions. If the accountant is not helping with this, it may be time to look for a replacement.

#9. As a category, Supplies usually contains all the paper goods used in operating a business. The first place to reexamine supply expenses is the various places you buy forms. Anyone who has ever ordered a printed form has found that the difference in price between 1,000 and 5,000 copies is minimal. The expense-watching business will calculate the number of forms used within a year and order quantities that will not only cut down the frequency of ordering, but also save valuable dollars for the business.

#10. Repairs and maintenance are often hard to control. After all, if something breaks, you must have it fixed. However, many companies offer service contracts, which can work to your advantage. You may be able to negotiate a maintenance contract for your heating, cooling, delivery vehicles, computer system, and other equipment. On the other hand, if a piece of equipment rarely has a problem, you may want to consider canceling a maintenance contract and paying for repairs as necessary.

Cutting expenses is not a cure-all for a business. It takes a joint effort of increased sales, working to improve margins, and cutting expenses to maximize a business. However, as the old adage says, “If you don’t spend it, you don’t have to sell something to cover the expense.”

 

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Business Success: Facebook… or face time?

May 22, 2013 by
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Business Success LogoIt seems like all we ever hear about these days when it comes to marketing is the importance of social media. Today’s Business Success column, supplied by  Michael Houlihan, founder of Barefoot Wine  and co-author of the book  The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand, takes us back to the good old days, when relationships between a business and a customer were actually made in real life.

Facebook…or Face Time?: Why Business Relationships Take More Than Texting, Friending, and Online “Connecting”

Houlihan, Michael 5x7@300ppi blue bkg final aTechnology has yielded some great communication tools, but they are not relationship builders. Here, I share seven reasons why the personal touch will always be more effective than pixels on a screen.

It’s official: Email, texting, and social media are no longer just helpful supplemental business tools. They’ve taken over the whole game. Yes, technology has made many aspects of modern living more convenient and “connected,” but the pendulum has swung too far. Now, people are reluctant to do something as simple as picking up the phone, preferring to shoot off an email instead. And face-to-face meetings—well, they’re almost unheard of.

This “technology takeover” is not without consequence. Misunderstandings abound. Relationships stagnate. Trust is at an all-time low. And all of these issues are at least partially due to the fact that genuine human connections have been replaced by mouse-clicks and keystrokes.

Social media and technology do have their place, but they are not, and never will be, a substitute for in-person interaction. Your physical presence—or at least the sound of your voice—builds trust you can’t even approach with a keyboard, screen, or profile image.

Having bootstrapped a business from the ground up, I know what I’m talking about. Bonnie Harvey and I are the founders of Barefoot Cellars, the company that transformed the image of American wine from staid and unimaginative to fun, lighthearted, and hip. When we started our company in the laundry room of a rented Sonoma County farmhouse, we knew almost nothing about winemaking or the wine business. Our new book, The Barefoot Spirit tells our California-style rags-to-riches story in compelling and colorful fashion, and reveals just what it takes to succeed as an entrepreneur.

I can’t tell you how many retailers, suppliers, and potential customers I visited in person during those early years. What I can tell you is that I would have never gotten satisfactory results if I had tried to build those relationships via email and social media. The Barefoot brand would never have become a national bestseller without meetings, phone calls, and recurring personal visits that kept relationships all over the country healthy and up-to-date.

People don’t just buy your product; they buy you.

I worry that young people’s dependence on virtual communication has stunted the social skills they’ll need to attract customers. Through no fault of their own, they have inherited a world that provides a comfortable firewall insulating them from personal rejection—one in which they simply don’t have to communicate in real time. (Could you learn to walk if you were handed a crutch at birth?)

Of course, in a global economy, face-to-face meetings are expensive. When clients, vendors, and even employees are on the other side of the world, it’s not economically feasible to hop on a plane every time a meeting is needed. In these cases, Skype is the next best thing to being there.

Live video streams allow you to do just about everything short of shaking hands. I have begun to use Skype frequently in my own business dealings. I love that I can make eye contact with someone who is sitting on the opposite side of the country. We accomplish so much more when we become more than “just” an email address or a disembodied voice to one another!

If you make the time necessary for personal meetings—if not in person, then via Skype or, at the very least, on the phone—others will not only remember you, but they will appreciate the effort you put forth. Read on for seven specific advantages of real-time, in-person, face-to-face relationship building:

The time investment shows you really care. It’s a fairly universal truth that human beings want to be valued and appreciated. Spending time with someone else, whether that’s in person, face-to-face on a computer screen, or, if all else fails, via a phone call, is one of the best ways to convey these things. In essence, an investment of time says, “While there are many other things I could be doing, I’m choosing to spend my time with you. That’s how important I think you are!” Minutes and hours spent with another person have the power to create a bond that money can’t buy.

When you spend time with others, you find out what you truly have in common and you have an opportunity to share your opinions. Plus, visiting someone repeatedly over a period of time can also provide valuable non-verbal clues to his or her values and concerns. In my own experience, I have been amazed by how helpful it can be to travel with someone, whether it’s a colleague or client. On any trip there will probably be instances that cause stress and anxiety, which presents an opportunity for both of you to see how the other handles a variety of situations and to learn to work together more effectively.

You’re better able to give personalized attention. This is perhaps the biggest key to successful sales and the establishment of any long-term relationship. Think about it: It’s hard to multi-task on something unrelated when someone is physically planted in front of you, demanding your attention. Unless you have no problem with blatant rudeness, you’re focusing on the other person, responding not only to what they say, but also to their mood, movements, and many other non-verbal signals. You will read these signs and adjust your behavior accordingly.

Letters on a screen can’t compete with the personal touch. In my experience, when you use someone’s name along with eye contact and an attentive demeanor, they’re more likely to be agreeable and to give you the benefit of the doubt. They know that your time is valuable and that you chose to give it to them. The next time they see you, they will be more relaxed and familiar in your company. And the more visits you have, the more your relationship with that individual strengthens. Trust me, people want to do business with people they know. You can get to know them much better offscreen.

You’re more effective in general. When you’re talking to someone else in real time, you can make progress in real time and solve problems in real time. (Believe it or not, lobbing emails back and forth isn’t always the most efficient method!) Thanks to facial expressions, body language, and tone of voice (see below for more information on each), you’ll usually find out more than just the basics when you have a verbal conversation. In fact, if you’re really observant, you may notice things about the other company or clients that they themselves aren’t even aware of!

Always meet in person if you can. When an important client or critical team member is on the other side of the globe, a face-to-face meeting once or twice a year can often be a smart investment. The rest of the time, if your communication is anything beyond a simple FYI, be sure to Skype or call.

Facial expressions help get your message across… Did you know that the human face has at least 20 muscles that work in concert to create a myriad of telling facial expressions? When you put it that way, the process sounds complex, but amazingly (as you know!) we don’t have to consciously think about forming those expressions at all. This is a powerful argument for face-to-face meetings, whether they’re in person or via Skype.

Observing those expressions during verbal communication can give you instant feedback about how your message is being received. You can quickly adjust your message on the spot to make it more meaningful or agreeable, and avoid possible misunderstandings. Facial expressions are also an invaluable way through which to express sincerity, interest, curiosity, happiness, and more.

…So does your body language… Unlike looking at a posed profile shot or any still image sent over email, being face-to-face with another person gives you the opportunity to see the other person’s dynamic reaction and make adjustments to your own message. Real-time body language provides tons of non-verbal cues that are impossible to convey in a text or email.

As humans and social animals, we are naturally wired to get this feedback instantly. We’re also equipped to share our own feelings and attitudes through the way we stand, sit, gesture, and more. It’s a good idea to spend a little time learning the basics of body language. For instance, if you know that hands in one’s pockets indicate boredom or disinterest whereas leaning slightly forward indicates interest, you’ll be able to respond more accurately to others and avoid sending messages you don’t mean to.

…and so does your tonality. It’s happened to everyone: You send an email that’s laced with sarcasm or humor…which the recipient totally fails to pick up on. Oops! Now you’re left frantically doing damage control. That’s one major reason why texting, emailing, and friending can be great ways to communicate while failing to succeed at relationship building.

When spoken, the same words used in a text or email can have a very different meaning based on the tone, inflection, and the emphasis that the speaker gives. It’s much easier to “get” intentions behind the spoken word. And if the other person sounds reluctant, uncomfortable, or guarded, for instance, you can take advantage of the opportunity to ask why and discuss ideas that might never have been brought forward over email. So the next time you find your mouse hovering over the “compose” button, think about reaching for your phone instead.

Your vulnerability shows (and that’s a good thing!). In the virtual world, you can almost totally control the image you show to other people. You choose the pictures you post on your profile. You censor the information you do and don’t want to share in your messages, posts, and updates. And usually, you can think about and edit what you want to say before pressing “send.” But in a real-time, face-to-face relationship, the other person can see you in 3-D and observe your dynamic, spontaneous behavior, including tone of voice, expression, dress, and body language. The other party sees your human imperfections and is aware that you are vulnerable to potential personal rejection.

Imperfections and vulnerability make you appear more believable and sincere. Most people will overlook minor foibles in appearance and speech because you are literally there for them. It’s special! This can be a big advantage in the long run. And in the short run, you take precedence over all their virtual relationships

Despite my belief that people want in-person attention, Barefoot didn’t avoid technology as it developed—far from it. What’s important is to use these tools appropriately and not let them become crutches.

A relationship can start through text, email, or social media; in fact, I encourage entrepreneurs and other businesspeople to utilize those resources. But in order to be lasting and dependable, a relationship has to grow in person. Yes, developing your face-to-face social skills will make you feel vulnerable at times. As is the case with learning to walk, though, feeling vulnerable is why we get so good at it!

Like any skill, becoming personable takes practice. A good way to start is to eliminate virtual communication when in-person communication is possible or more effective. So shake hands and come out a winner! Remember, genuine, lasting, and dependable relationships take time and physical presence. High touch beats high tech every time.

 

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Business Success: Top tips to empower & motivate your employees

May 15, 2013 by
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It’s amazing what a group of people can accomplish if they are all highly motivated andBusiness Success Logo working toward the same goal. My most recent first-hand experience with this came earlier this month, with the enormous success of The Big Photo Show. Despite facing some serious challenges, my colleagues at PMA and I, and the board, as well as some other amazing folks who joined with us, pulled together and poured ourselves into making the show work — and work it did!! That would not have occurred had anyone on this phenomenal team not been both driven and empowered to make it happen. This week, that’s the subject of another great Business Success article from Doug Williamson, CEO of The Beacon Group:

Top Tips to Empower & Motivate your Employees

As you well know, in times of uncertainty, stress and organizational restructuring, it is more important than ever for a CEO and his or her entire leadership team to take a proactive and progressive stance when it comes to Employee Engagement and Motivation. The sad fact of the matter is, most organizations don’t do such a great job at this even in the best of times so, when the context changes, as it has, they find themselves both out of step and out of tune.

Doug Williamson

It is essential to understand Employee Engagement is not the same thing as Employee Satisfaction and at its very core, it is a measure or proxy of how “invested” employees are in making the company a success. If you frame the issue in this way, then it fundamentally changes how you go about the task of raising the level of “investment” in order to drive better business results. Employee Engagement is not about the soft stuff of many HR programs, it is about the hard stuff of improving the bottom line.

Steps to Take: Actions to Consider

Tip # 1 – Treat your employees as investors

In other words, position all of your messages in the same way you would to any investor. Give them a reason to be optimistic in the future even if they are in a funk today and then create the most favourable investment climate you possibly can.

Tip # 2 – Treat your employees as adults

You are simply not going to win the hearts, emotional wallets, confidence and support of your employees by assuming they don’t see what is going on every day. In fact, the average grass roots employee probably has better early warning systems that most VP’s and knows exactly what needs to be done to make things better.

Tip # 3 – Tell the truth and nothing but the truth

In most cases, the employee wants to know what the company plans to do so tell them straight. You will gain more by telling tough news early rather than late and by showing you are on top of things. The worst truth is still better than the best lie.

Tip # 4 – Make the business case

If you believe it’s going to be a tough period ahead with tough decisions that are going to have to be made, make the case for why the company needs to adjust and trust that logic will rule the day. Help people do the math and most will understand there are both assets and liabilities.

Tip # 5- Watch your say/do ratio

Perhaps the most important driver of Employee Engagement is the credibility of the leadership team. The best way to destroy credibility is to not keep your promises. So, if you say you are going to do something – then do it!

Tip # 6 – Discriminate with intelligence

Not all employees are created equal. While tough to admit, some employees matter more than others. As a result, the employee population cannot be thought of as one homogeneous mass. It is made up of different constituencies each with their own wants, needs and fears and therefore requiring their own investment strategy.

Tip # 7 – Find the core group and deputize them

In every organization there is a parallel leadership team, a group of people of all ages, tenure and seniority that are the “go to” people and who may not even show up on the senior level organization chart. These are the influencers, the people other people go to when they need to validate or translate what is going down from the top. These people ultimately determine what others think so their support and their use as a communication network is critical. Embrace them and allow them to influence for the positive.

Tip # 8 – Create real dialogue

People want conversation not memos, speeches and town halls. They want to be engaged one to one in dialogue that matters to them not to you. It’s the same as an election, you need to shake hands and kiss babies. Get out. Talk to people. Create conversation. You might even decide to be real brave and engage in social media to create the conversation in real time.

 

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Business Success: Are you scaring your employees into incompetence?

May 8, 2013 by
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Christine Comaford

Business Success LogoUnless I’m on a roller coaster, I don’t like being scared — and you probably don’t, either. It’s common sense that when we are reacting out of fear, we are not going to make the best decisions. That’s one of many reasons why fear in the  workplace can bring efficiency and innovation to a screeching halt. Most businesses owners and managers wouldn’t deliberately scare their workforces, but many do it without even realizing it. Might you be one of them? And if you are, what can you do about it? Read this week’s Business Success article, contributed by Christine Comaford, bestselling author of Rules for Renegades and of SmartTribes: How Teams Become Brilliant Together (Portfolio/Penguin), coming out in June — and find out.

Five Mistakes Leaders Unknowingly Make That Scare Employees to Death

Most leaders know that command & control is dead and that fear doesn’t motivate employees. Quite the opposite, in fact. That’s why, for the most part, we refrain from doing scary things. (Only the worst “bully bosses” make it a practice to scream at an employee, or call him abusive names, or threaten to fire him the next time he makes the coffee too strong.) Yet even good leaders unintentionally strike fear in the hearts of their workforce.

More accurately, we strike it into their brains. And the consequences are more dire than you might realize.

From time to time we all say or do things that spark unconscious fears in our employees. The primitive “fight, flight, or freeze” part of the brain takes control. When that happens, when people are stuck in what I call the Critter State, all they can focus on is their own survival.

In other words, everything that makes them good employees—their ability to innovate, to collaborate, to logically think through problems—goes out the window. All decision-making is distilled down to one question: What course of action will keep me safest?

Obviously, we need our employees to be in control of their whole brain—especially the parts responsible for the emotional engagement and intelligent decision-making that lead to high performance. Today’s economy demands it. That’s why my business—teaching leaders how to use the best tactics from neuroscience to get teams unstuck and shift them into their so-called “Smart State”—is booming.

I regularly see clients who master these techniques and quickly see their revenues and profits increase by up to 200 percent annually. It just goes to show how pervasive fear in the workplace actually is—and how crippling it can be.

My clients confirm how successful my techniques are at getting clients out of their Critter States and into their Smart States and how that translates to results.

“When I first met Christine, I knew we had to work together, but wasn’t sure what the return on investment in coaching could truly be,” says Sharon MacDonald, CEO, Interim Furnishings. “Now I know what it is: I think bigger working with Christine—we will double (or greater) our revenue this year as a result of my increased ability to create new strategies, expand my vision, see into my blind spots.

“Christine helped me see it was time to bring on a seasoned COO, scale up my team, and bring them new resources,” she adds. “She helped me create accountability structures and communication rhythms for my team so everyone is aligned and charging forward. We’re rapidly growing the company in a safe and sane way while preserving and increasing the fun of our culture. In less than 120 days we closed the largest deal in our company’s history using the strategy Christine and I created together. I know what’s going to happen next—we’ll exceed our sales quota. Again. This is now how we roll.”

In my new book, SmartTribes: How Teams Become Brilliant Together, I ask the questions: How might we be inadvertently holding back our teams and crippling our own cultures? What, exactly, are we doing to send our people into their Critter States? More to the point, what are you doing? Here, I describe a few (very subtle) offenders:

You “help them out” by giving them solutions. Or, you advocate when you should be inquiring. When we consistently tell people what to do instead of encouraging them to figure things out on their own, we develop a company full of order-takers instead of innovators. By training them to always ask, we create a workforce of employees who are perpetually “frozen” in their Critter State.

On the other hand, when we engage them in solving problems themselves, we create a sense of safety, belonging, and mattering—which are the three things humans crave most (after basic needs like food and shelter are met). And of course, we help them develop a sense of ownership that will serve them—and the company—well.

Start inquiring and see what happens. Ask, “How would you do it? What impact might your course of action have?” After you do this a few times with someone, she’ll start expecting you to ask questions instead of give orders. She’ll start coming to you with ideas, seeking feedback and validation. And after a few of these sessions, she’ll come to you saying, “I have a plan, here it is, and speak now if you aren’t okay with it.” Finally, she’ll stop coming to you altogether.

Aim for five inquiries for every advocacy. You’ll be amazed by what a powerful difference this makes in your employees and your company.

Your meetings are heavy on sharing and point-proving, light on promises and requests. Why might a meeting scare your employees? Because confusion and uncertainty create fear. Meetings that are rambling and unfocused send people into the fight-flight-freeze of the Critter State. On the other hand, short, sweet, high-energy meetings that have a clear agenda keep everyone in their Smart State.

The key is to understand the five types of communication:

- information-sharing

- sharing of oneself

- debating, decision-making, or point-proving

- requests

- promises

The typical meeting is heavy on the first three and light on the last two. Ideally, you should focus on only enough information-sharing in order to solicit requests from parties who need something and promises from parties who will fill that need.

Tune up your communication and the result will be meetings that are efficient and effective, and that keep your team happy and clipping along to glorious accountability and execution.

You give feedback to employees without first establishing rapport. Imagine for a moment that your employees are antelopes. Because you have authority over them, they quite naturally view you as a lion. It’s not that you’re purposely ruling with teeth and claws. It’s simply their critter brains at work, peering out and “coding” who is a friend and who is a foe. That means unless you can get employees to see you as “just another antelope,” you won’t be able to influence them—they’ll be too busy ensuring their own survival to accept your feedback.

I have a wealth of neuroscience tactics for helping leaders get inside their employees’ heads and truly establish rapport. Most of them are too complex to convey in a short article (Meta Programs are one of the most potent), so here I offer three “shortcut” phrases that help people feel safe enough to shift out of their Critter State:

  1. 1.     “What if…”: When you use this preface to an idea/suggestion, you remove ego and reduce emotion. You’re curious—not forcing a position, but kind of scratching your head and pondering. This enables someone to brainstorm more easily with you.
  2. 2.     “I need your help.”: We call this a dom-sub swap, because when the dominant person uses it, they are enrolling the subordinate person and asking them to rise up and swap roles. This is an especially effective phrase when you want a person to change their behavior or take on more responsibility.
  3. 3.     “Would it be helpful if…”: When someone is stuck in their Critter State and spinning or unable to move forward, offering up a solution will help them see a possible course of action or positive outcome.

You focus on problems rather than outcomes. First, a little background: I teach her clients there are three default roles that people lean toward—Victim, Rescuer, or Persecutor. (These were first created by Dr. Stephen B. Karpman, and his article detailing these roles won the Eric Berne Memorial Scientific Award in 1972.)1 These roles are interdependent (there must be a Persecutor for there to be a Victim for the Rescuer to save) and they play out every day in the workplace.

Together these roles make up the Tension Triangle—and when we’re in it we’re problem-focused. We see everything as a problem, which causes anxiety, which leads to a reaction, which leads to another problem. It’s a self-perpetuating cycle. The solution is to switch your focus from problems to outcomes. Instead of asking “What’s wrong?” and “Why is this happening?” we ask “What do we want?” and “How will we create it?”

Being outcome focused feels very different. It’s empowering and energizing and fills you with confidence. It firmly places you in your Smart State, where possibility, choice, innovation, love, and higher consciousness are abundant. Victims become Outcome Creators. Rescuers become Insight Creators. Persecutors become Action Creators. (I have a chart that lays out the differences.) So…how do you make the switch?

First, identify each role that you and the other person are playing. Speak to the other person as the positive counterpart. If he’s in Victim mode and you tend to be a Rescuer, don’t say things like “I’ll make it better for you” or “Let me help you.” Instead, say, “What outcome would you like?” and, “What will having that do for you?” If you do this in every conversation, and teach others to make the shift as well, you will transform your cultures and quickly start getting the outcomes you want.

You frame “change” the wrong way. Almost all leaders want—probably need—their companies to change. It’s the only way we can achieve growth. Yet as we all know, people inherently resist change. In fact, according to Rodger Bailey’s groundbreaking work on Meta Programs in the workplace,2 65 percent of Americans can tolerate change only if it is couched in a specific context (see Shelle Rose Charvet’s excellent book on Meta Programs, Words That Change Minds, for a deep source on Rodger Bailey’s work3). That context is “Sameness with Exception.”

What does this mean? Essentially, it means leaders need to present the “change” as merely an improvement to what we are already doing: The bad stuff is being removed, and good stuff is being added.

Seriously—this is the best way to package a change message. And don’t use the C-word. Say “growth” instead.

By the way, resistance isn’t necessarily a bad thing. It’s just the first step on the organizational path. The other four steps are Mockery, Usefulness, Habitual, and New Standard. But once you can clear the resistance hurdle—and it will go fairly quickly when you present change the way I just described—you’re well on your way.

Did you recognize your own leaders—even yourself—in the list above? If so, you’re not alone.  And the good news is that once you can make the (relatively simple) changes, you are likely to see dramatic improvements in your results.

All leaders want to outperform, outsell, and out-innovate the competition. And most of us have teams that are quite capable of doing so. We just need to stop scaring the competence out of them.

Filed Under: Business, Business Success Tagged With: ,

Business Success: Has a gorilla taken over your company?

May 1, 2013 by
Coach Burt Professional Blue (2)
Coach Burt Professional Blue (2)

Coach Burt

Take a quick look around you. Spot any gorillas? I don’t either… but it might not hurt any of us to take a second look. Many thanks to Coach Micheal J. Burt and Colby B. Jubenville, authors of the new book “Zebras & Cheetahs: Look Different and Stay Agile to Survive the Business Jungle (Wiley, 2013) for contributing this week’s Business Success column:

The Concrete Jungle Survival Guide: Four Steps to Overcoming the Chaos (and Taming the 10,000-Pound Gorilla in Your Midst!)

Your organization’s poisonous culture may be holding it back and tying your hands as a leader. Here, we explain what you need to do to put cooperation, growth, and innovation back in the spotlight.

Look around. Has a 10,000-pound gorilla taken over your company? Before you reply with a quick “no” and refocus on your to-do list, bear in mind that this giant beast is known by a second name—culture. And understand that taming him is imperative because his destructive behaviors can keep your company’s tribe from doing what

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Colby Jubenville, PhD

it was brought together to do.

Here are some tell-tale signs that he has adopted your organization as his habitat:

• There are several positive change initiatives in the works, but the old guard refuses to alter “the way we’ve always done things.” They aren’t receptive to new hires and won’t take an active role in training them. Rather than working to move the company forward, they spend most of their day making excuses for why things should stay the same.

• Your employees are constantly patting themselves and each other on the backs. Unfortunately, they’re often celebrating empty wins like getting a client’s order right on the second try or passing an angry customer on to another department. These “celebrations” only serve as a smokescreen to hide stagnation and lack of progress.

• Most people in your organization seem too comfortable. They gravitate toward and “nest” in the familiar. At times, you wonder if innovation, creativity, and motivation are foreign concepts to them.

Unfortunately, the gorilla’s constant bellowing drowns out other messages in the concrete jungle, which allows poisonous cultures to take entire organizations hostage. The good news is, prepared and proactive leaders can provide clarity, unite the tribe, and—yes—tame that unruly gorilla so that cooperation, growth, and innovation are once again in the spotlight.

In our new book, Zebras & Cheetahs: Look Different and Stay Agile to Survive the Business Jungle, we explain that leaders who can successfully go nose to nose with culture gorillas are members of a newly evolving breed: Zebra and Cheetah (or Z&C) Leaders.

Zebra and Cheetah Leaders are so called because they exhibit qualities of both breeds. Like zebras, they boast a distinctive appearance that others can easily recognize. Like cheetahs, they possess great speed and are particularly quick accelerators. And like both, they have an ability to utilize their senses so well that they excel in adapting to their environments. In other words, these are leaders who are able to adapt to the fast-paced, always-changing, and highly competitive business world, and who are capable of leading diverse tribes within it.

Zebra and Cheetah Leaders recognize that 10,000-pound gorillas are sustained by individuals who, unlike themselves, have refused to adapt to the ever-changing landscape of reality. Here, we share four things Z&C Leaders must do in order to stop feeding the gorilla…and create clarity amid the chaos of the concrete jungle:

Get real about the reality your tribe is facing. Chances are, the path your tribe once took through the jungle was wide, well marked, and free of most significant obstacles. You could count on easily visible indicators, typical benchmarks, and annual performance ratings to keep you going in the right direction. And if any doubt cropped up, your organization’s fearless leader—the lion-like king of the jungle—would dictate who should lead, who should follow, and what should be done. To hear your change-averse gorilla tell it, that’s still an accurate portrayal of reality. But don’t let him fool you. “The good old days” are long gone.

In today’s competitive, constantly changing global economy, organizations whose cultures expect the journey through the concrete jungle to be easy won’t last long. These days, the path can quickly change, or disappear altogether. You might encounter rockslides or quicksand at any moment. And predators—otherwise known as competitors—will be constantly nipping at your heels.

That’s why Z&C Leaders are committed to drawing a clear picture of the true, actual circumstances their organizations face, regardless of how positive or negative they may be. Only then will you be able to cut through the smokescreen your gorilla may be throwing up and unite your tribe in pursuit of an overarching dominant aspiration.

Make sure your tribe understands the complex order of the concrete jungle. In nature, jungles are incredibly complex. They contain a dizzying amount of animals and plants that are competing for resources and survival. But despite (or in some cases, because of) the occasional casualty, the ecosystem supports the many populations that call it “home” and enables them to thrive.

Ideally, that’s the case within your organization, too. (Think about the corporate buzzword “synergy,” which refers to diverse individuals accomplishing more together than they could alone.) However, it doesn’t matter how balanced and well calibrated your tribe is on paper if all of its members don’t understand where, how, and why they fit.

It’s a natural instinct for people to worry about their futures. That’s why so often new ideas, policies, and people spark pushback in the concrete jungle. Established tribe members worry that they’re being edged out or that they’re entering the endangered species list. And that type of uncertainty feeds the gorilla. It’ll beat its chest, bellow, and attack what it mistakenly perceives to be the competition, effectively halting growth and progress.

Remember, as a Z&C Leader, it’s imperative for you to not only leverage your tribe’s talents, but to make sure all of its members understand where they fit within your organization’s ecosystem, both now and in the future.

Clearly define success. Once tribe members understand the order of the jungle they inhabit, Zebra and Cheetah Leaders must outline what, exactly, constitutes success. Left to their own devices, each individual is likely to define that outcome differently, usually in whatever way would benefit them most personally. In this scenario, you’re likely to have some employees who mistakenly believe they’ve “made it,” while others struggle, strive, and snipe their way in the wrong direction.

We refer to the force of a tribe working toward success as collective passion. Why? Well first, collective relates to the fact that everyone in the tribe is working together toward a shared dominant aspiration, or goal. The word passion has a double meaning. Its modern context involves deep affinity for something, and its Latin root passio means “to suffer.”

Make no mistake: The struggle to survive and succeed in the global economy won’t always be pleasant or easy. But if your tribe goes through the metaphorical fire together, it will emerge as a stronger and more efficient group. Stated plainly, collective passion helps create a cooperative, unified environment within your organization—an environment in which gorillas can’t survive.

Create new levels of professionalism. Good news: This fourth step in overcoming chaos and keeping your corner of the concrete jungle gorilla-free is the easiest. You’ll find that when your tribe’s members have collectively survived the crucible and reached the first level of success you’ve set for them, their relationships with each other will change.

Specifically, competition within the tribe will naturally be replaced by new levels of cooperation once everyone sees what they’re all capable of accomplishing together. This will then allow the competitive focus to fall where it belongs: outside the tribe.

This is the position you want to be in as a Z&C Leader: basing your decisions on factors within the concrete jungle instead of focusing on factors related to the tribe. Just be sure to keep a close eye out for any signs that the culture gorilla might be creeping up on you. If you so much as smell him (for example, you notice tribe members excusing their own inadequacies or trying to backstab those they see as more productive workers), nip those behaviors in the bud.

There will always be chaos in the concrete jungle as a whole, but that doesn’t have to be the case within your specific organization. When you succeed in kicking the gorilla out and getting your tribe members to trust their Zebra and Cheetah Leader, your organization will enjoy increased transparency, accountability, and productivity.

Coach Micheal Burt — part coach, part entrepreneur, and all leader — is the go-to guy for entrepreneurs who want to become people of interest, salespeople who want to be superstars, and managers who want to be coaches. He is a former championship coach and the author of eight books. His radio show, Change Your Life Radio, can be heard globally on iheart.com (WLAC). Colby B. Jubenville, PhD, is principal of Red Herring Innovation and Design, an agency specializing in teaching people and organizations how to compete on unique perspective, education, and experience in order to create unique value. He regularly speaks on his philosophy, Collective Passion, a model that illustrates how to meaningfully connect organizations, customers, and employees.

Filed Under: Business, Business Success, Marketing Tagged With:

Build a better business through online presence

April 24, 2013 by
Kevin McNally (3)

Today’s Business Success is from a new contributor, Kevin McNally, CEO and founder of Interactive Palette, and focuses on a topic we can’t learn enough about: marketing online.

Kevin McNally (3)Build a Better Business through Online Presence  

Effective marketing is at the heart of a successful business with a prevailing online presence perhaps the most straightforward route to achieving commercial goals.

In fact, a company’s website is the first thing many potential clients check out before deciding where to take their business, so it pays to maintain one that provides consistent up-to-date information, is easy to navigate and in general positively reflects what your company has to offer.

A powerful website should focus on your specific industry and help to build your brand. Those in the photography trade already know that a picture is indeed worth a thousand words; as such current content is critical to a business website.  Here is where a Content Management System (CMS) can keep your website fresh and inviting.  All too often, businesses rarely alter their website, in large part due to the misconception that it will be a costly endeavor.  While it’s true that a complete overhaul of a website comes with a considerable price tag, adding a CMS is quite cost-effective and typically pays for itself in short time.

For the uninitiated, a CMS is a web-based interface that allows business owners and specified staff the ability to add pages, edit content, upload images and PDFs and make other changes to a website as needed.  This allows a business to maintain the most up-to-date information on projects, services and price information. It enables the capacity to post press releases, special offers, testimonials and useful links.  And perhaps most importantly for the photography industry, a CMS allows inclusion of a dynamic photo gallery of completed projects.

A website becomes much more search engine friendly with the use of a CMS, allowing for increased traffic and potentially increased business. Building wide awareness of a website is essential to the success of a business and with a few fundamental SEO (Search Engine Optimization) measures you can increase “hits.”

In much the same way that real estate is defined by “location, location, location,” in the world of websites a top ranking on search engines –such as Google or Yahoo – is king.

One of the best methods to increase search engine ranking is through the optimal use of keywords; that is, knowing what specific words or phrases people are searching for and then targeting those phrases on your site.  A website designer can conduct the appropriate research to determine and target those keywords and also provide further analysis to pinpoint the most important terms – or terms “with opportunity” – that might help bring the right visitors to your site.

Website linking is another technique used by professional website designers to attract traffic to a site.  In brief, this mechanism interlinks words or phrases key to a business website to other relevant pages on the site.  In addition, consider linking images from your website to other important pages in the same way; this can attract traffic through “image search” results.

While “less is more” in terms of a company’s home page or contact page, a website’s news section is where content rules.  Instead of short paragraphs or brief press releases, it’s wise to include blogs or articles of about 500 words.  This approach not only allows for comprehensive information about your services or other newsworthy information, it also adds to that all important keyword total.  In fact, search engines are always on the look-out for expanded website content, so use it to your best advantage.

So, how can you gauge whether your website is doing your business justice? Google Analytics is a service offered by Google that generates detailed statistics about a website’s traffic and traffic sources.  It allows you to measure sales and conversions and also provides insights into how visitors arrived at your site, how they use it and how you can keep them staying on it longer and returning more often.

Also, sure your company is included in Google Local listings – think of it a modern day Yellow Pages.

The “must have” list for better business is a website that loads quickly; that’s the best way to optimize traffic.  Keep in mind that if your website’s home page overdoes content, you may be in jeopardy of scaring off potential clients, so word to the wise – pare content on the home page down to the essentials to allow visitors continued navigation on the website.

Speaking of navigation, make sure that information is never more than a click or two away; providing a variety of navigational routes will go a long way toward ensuring customer satisfaction.  Think image maps, hyperlinks and drop-down menus in addition to search engines—all say “user friendly.”

Maintaining a few social networking profiles (such as LinkedIn, Twitter or Facebook) can be a great way to promote your company to new clients, while at the same time keeping past and current clients in the know about what’s going on.

While a static website that provides comprehensive and consistently updated information is of great value, site owners can leverage their knowledge, add another dimension to their site and directly target audiences through podcasts.

In short a podcast is a digital media file, downloaded directly from a streaming Internet source.  Podcasts are distributed over the Internet using syndication feeds and are hosted by individuals, businesses or organizations that want to share information. Podcast files are streamed and/or downloaded onto a computer, mobile device, MP3 player or iPod, etc.

Think of podcasting as having the ability to broadcast a personalized radio and/or video show directly from your website, thereby lending a “voice” to your business. Podcasting is a way to showcase your expertise and can enhance your reputation as an authority in your field.  It is also a means of communicating in a much more personal manner than via a blanket email, e-newsletter or attached written document. Another plus to podcasting is its minimal cost; all that is needed is a microphone and Internet connection with RSS, a format for delivering regularly changing web content.

Essentially, podcasts are recorded and then distributed over the Internet, allowing you to reach new and wider audiences through your website.  Once listeners subscribe to a podcast feed, new podcasts are automatically downloaded to their computer or mobile device as soon as they are available, enabling your audience to listen at their convenience.  Since podcasting is an on-demand subscription technology, you can monitor your subscribers and have confidence that they are receiving the information you’re providing.

As a bonus, guests can be invited to participate in your podcast, providing an interactive and engaging element.

Podcasting not only showcases your expertise, it also shines a media light on your personality, giving your audience a sense of who you are and what your business can provide.  Moreover, podcasting allows subscribers access to information at their convenience.  They can listen when they want, starting and stopping content at will.

Having and maintaining an up-to-date website is essential to conducting business these days, but optimizing its potential should also be a priority. Through the use of proven mechanisms, traffic can be drawn to the right destination… your website.

 

Filed Under: Business, Business Success, Marketing Tagged With: ,

Phantom stock: Shedding light on a key employee retention tool

April 10, 2013 by
Paul Bardaro headshot

Paul Bardaro headshotI’d like to introduce you to a new contributor with this week’s Business Success column, Paul Bardaro. He is a partner in the Boston-area accounting and business advisory firm Rucci, Bardaro & Falzone, PC.  Through the firm’s Business Planning Services Group, he offers business valuation, financial counseling and strategic planning advice to companies in transition. In this article, he explains how “phantom stock” can benefit employees, without taking control from the hands of the owner.

Phantom stock: Shedding light on a key employee retention tool

It’s an ongoing challenge for many photography businesses in virtually any phase of the business cycle – how to motivate and retain employees who are essential to the company’s success, yet without granting them an actual ownership stake.

True, during the most recent economic downturn, any serious thinking about long-term employee incentive programs may have slipped to the bottom of your to-do list.  But as the industry slowly regains its feet, it may be time to think ahead.

Keeping this rare and valuable type of employee in the fold usually requires more innovative incentives than the traditional 401k, health insurance and other typical perks.  But at the same time, business owners may not yet want to enter the “no-return zone” of ceding true ownership control.

One solution is the little known practice of issuing so-called “phantom” stock.  As mysterious as it may sound, the technique has numerous and comforting benefits for both the employer and the key employee.

For owners, that list of benefits includes:

  • Less hassle to set up and monitor – unlike its more conventional brethren, the issuing of phantom stock is considered a non-qualified benefit.  As such, it avoids much of the paperwork, restrictive rules and reporting requirements that are typical of traditional qualified benefit plans.
  • Complete control of plan terms – as a non-qualified arrangement, owners have total flexibility to determine how the plan contract is drawn up, which employees participate, when and how many shares are granted, terms of vesting, payout schedules and similar details.
  • Protects ownership control – since phantom shares come with none of the statutory shareholder rights under corporate law, the full authority for company decision making remains with the owner(s).  Any rights of the “phantom shareholder” are limited to rights specifically stated in the phantom plan.
  • Spurs employee motivation and productivity – high-value workers now have more than just a job and a paycheck to keep them interested.  They are in it for the long haul, especially if payout terms are tied to long-term company performance.

A sense of ownership, with little down-side risk

At its core, phantom stock is a highly effective compensation tool that allows key employees to enjoy a sense of “ownership” in the company – to share in its future success without necessarily sharing in the voting control, profits, dividends or distributions that normally come with the issuance of legal equity or stock options.

From the employee’s standpoint, the potential financial reward of participating in a well-designed phantom stock plan will closely mimic the payoff of actual equity or options: hence, the names “mirror stock” and “shadow stock” that are sometimes used to refer to these plans.

Yet many of the risks and liabilities that ordinarily come with direct, legal equity ownership are avoided with this pseudo version of company stock.  For instance, the employee isn’t required to infuse cash into the business, isn’t exposed for corporate governance issues, and isn’t required to personally guarantee company debt.

Here’s an example: Let’s say the business owner awards one of his high-value workers 5,000 shares of phantom stock.  Rather than having actual equity value, the phantom shares mirror the value of real company stock at, say, $20 a share.

The phantom stock plan that the owner has devised beforehand typically spells out a customized formula or generally accepted method for valuing the shares at some point in the future, say three years down the road.  When the time comes, the company schedules a valuation and determines that the owner’s stock is now worth $40 a share.  The employee receives a payment of $20,000 – his or her reward for staying with the company and contributing to its growth.

When it comes time to reconcile the tax implications of the transaction above, the company benefits from a $20,000 tax deduction, and the employee declares the amount on his or her tax return as ordinary income.

Notice that the original grant of phantom stock by the company is not a taxable event; nor was the eventual receipt of the proceeds from the stock considered a capital gain on the employee’s tax return.  These are two of the ways that phantom stock differ from actual equity and options, and are factors that need to be considered when contemplating the pros and cons of establishing a phantom stock plan.

A unique benefit at a comparatively modest cost

To be sure, there are some administrative costs to establishing and maintaining a phantom stock plan –legal fees, accounting fees and periodic reviews to help determine the value of these pseudo shares. These costs compare favorably, however, with those of a relatively inflexible ESOP or a qualified or nonqualified stock option plan.

Furthermore, the set-up and administrative expenses are no match for the price of losing just one of your key managers or executives.  Some experts estimate the cost of turnover at the senior level to be between 100 and 150 percent of the person’s annual salary.

Rather than face that type of financial burden, most business owners would agree – it’s far better to retain your top people with a thoughtful approach to compensation that truly benefits them, and keeps them engaged, productive and happy.
For a free copy of “Ten Questions to Ask When Considering a Phantom Stock Incentive Plan,” contact Paul Bardaro at 781-321-6065 or bardaro@rbfpc.com.

Filed Under: Business Success Tagged With: , ,

Lessons learned while boxing Gerrie Cooney

April 3, 2013 by
RonFelberheadshotsm

Ron Felber, President & CEO of Chemetall, North America and author of A Man RonFelberheadshotsmof Indeterminate Value learned a few things in the boxing ring that can also help in the board room.

Boxing Gerrie Cooney

Who knew how dangerous being a rabid boxing fan could be? Certainly not me when, at the age of 55, I accepted the challenge of boxing 6’ 7”, 265 pound former heavyweight contender Gerrie Cooney for a charity event in Plainfield, New Jersey!

It all began innocently enough. The company where I work donated a boxing ring to the Black United Fund (BUF), an inner city youth organization, and I—Golden Gloves alumnus, circa 1969—was asked by a fellow named Cliff, who worked in our mail room, to “lace up the gloves” for a boxing exhibition to get some publicity and funding for the program.

That was my first mistake.

You see, for me, the images that came to my mind upon being asked were happy, funny ones: Jack Dempsey mock-sparring with Charlie Chaplin, Jerry Lewis swooning for the cameras after being jabbed by Rocky Marciano or George Plimpton exchanging obviously pulled punches with hard-hitting champ Joe Frazier. There is a history for such foppery!

Unfortunately, these images were not shared by Cooney who suggested, through my erstwhile mailroom clerk turned publicist-trainer, Cliff, that “I get into shape” to make a good show of the three, one minute rounds of our pugilistic encounter.

This was my second mistake.

Since the exhibition—wink-wink—was being held to get interest in the BUF boxing program and some money through attendance, I assumed that Cooney’s comment was intentionally provocative like Ali once did to get fans excited about a bout. So, responding in kind, through my friend Cliff, I made a counter proposal which was that Gerrie better “get into shape” because I was already in tip-top condition!

The morning just prior to the exhibition, I should have known something was terribly wrong, but I didn’t. Cooney arrives and autograph-seekers surround him. He is jovial, buoyant, a really great guy…until he sees Cliff and me. I look up to his face towering above me, and now he is not smiling. “Where are you from?” he asks sternly.  I look to Cliff, who nods in the affirmative, “I’m from Mendham, Gerrie, and a big fan.” I answer. “Mendham,” he assesses skeptically. “That’s where all the rich guys live!” I think about it for a moment, look to Cliff, who eggs me on, and conclude that this, too, is part of the hype, “Yeah, you got a problem with that?”

Mistake number three was my biggest.

A short time later—after I’d entered the ring bedecked in gym shorts, head gear, and worn-out Adidas—a strange, crawly sensation begins to creep up from the small of my back as it occurs to me that perhaps Cooney didn’t appreciate the hype his out-of-shape executive opponent had given the bout and was genuinely angry about it! Worse, as I would soon discover, my trusted pal Cliff had neglected to have the bell’s timer changed so that the three, one minute rounds we were supposed to be fighting was actually set for three, three minute rounds! And that’s when, to me, “Gentleman” Gerrie Cooney, dressed entirely in black and now glowering at me from across the ring, began to look a lot like DARTH VADER from  the movie Star Wars.

ROUND 1: I stride out of my corner at the bell (think Jerry Lewis), have barely put my hands up, and BOOM! I get tagged in the face with a left jab that feels like a jack hammer on steroids. “Hmmm,” I’m thinking, “must be some kind of mistake,” when—before the thought finished crossing my mind—BOOM! A second jab, harder than the first, sends me reeling across the ring. And suddenly, at least in my addled mind, I’m no longer Jerry Lewis, but Manny Pacquiao after he’s been tagged hard, and now I’m thinking: “You know, I’m going to kill this guy!!”

Mistake number four.

Cooney and I fight, toe-to-toe for three full minutes of the first round (with him, of course, pulling his punches, and me not). And so it goes for three exhausting, terrifying rounds.

IN BETWEEN ROUND ONE: I notice that Cliff, who is also my “corner man,” is conspicuously absent. “Where’s Cliff?” I ask the stranger who greets me, breathless. “He had to leave,” he confesses, spritzing me with water as he barks instructions. “Wait a minute!” I say, “Why did Cliff have to leave?” The stranger, stops, “He said he just couldn’t stand to watch anymore,” he tells me.

Oh-h-h, my God!

IN BETWEEN ROUND TWO: no longer angry, tired, beat up, sitting in my corner with my new best friend, the corner man, my eight year old son Greg, who has been in the audience watching, approaches, “Dad,” he says, “if you get knocked out and have to go to the hospital, how do I get home?”

AFTER ROUND THREE, POST-FIGHT: I am a physical and mental wreck. No one wants to even look at me (which gives me a good idea of what I must look like!) Cooney just shakes his head, the mail room clerk’s replacement has disappeared, and even the woman from the BUF, in charge of planning the event, walks the other way as I leave the ring.

On the way home, dehydrated, with body throbbing, I stop at a local watering hole with my son, Greg, who has a soda while I nurse a very cold beer. “So, Greg,” I venture sadly, “who do you think won the fight?” Greg, stops, thinks a long moment and finally answers, “I think you did, Dad, but not by much.”

By Monday of the following week, returned to work after my boxing adventure, there were many lessons for me to contemplate as I sat in a conference room meeting with a group of employees at my company. The first is, think twice before jumping into precarious situations. The second is, the old axiom about what happens when you ASS-U-ME you understand what someone else is thinking—it makes an “ass” out of “u” and “me.” And the third is that professional fighters of both the caliber and nature of Gerrie Cooney are proud, decent men who genuinely care about the sport of boxing and don’t like to see it trivialized.

Proof for all of those observations came that Monday morning with a rap on the door of our conference room. When the group of us looked up, there was Cooney—all 6’ 7” of him, “I came by to make sure you were okay,” he announced, “and to tell you that you’re a gutsy little guy.”

To me, that said it all about the man and, perhaps, something about me, and what it was like boxing Gerrie Cooney.

Ron Felber is President and CEO of Chemetall, North America. He is the author of the forthcoming business thriller A MAN OF INDETERMINATE VALUE (Barricade Books; June 2013). Felber began his writing career with articles based on his experiences for True Detective magazine, and went on to write three books in the classic Nick Carter series.  He is also the author of Il Dottore: The Double Life of a Mafia Doctor, which is the basis for the Fox television series The Mob Doctor. His other books include The Privacy War: J. Edgar Hoover and the Fourth Amendment; Presidential Lessons in Leadership; and The Hunt for Khun Sa, Drug Lord of the Golden Triangle.

 

 

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