Business and Home Life: it’s a balancing act

November Benefits Installment by Jim Moniz:

With the economic landscape still in a stall, many business owners find it necessary to put work first now more than ever, pushing family and their own financial needs to the back burner. The need to meet weekly payroll and be up to date with vendor payments often translates into long term financial needs not being met – business owners run the risk of focusing on the present and compromising into-the-future plans, especially when it come to their own households.

For example, recently I spoke with the owner of a service company who said he gave his wife $5,000 a month to pay bills, run the household, etc. He couldn’t understand why every other month she had to ask him for more money. I told him outright that it wasn’t fair for him to have $2 million a year flowing through the business and his wife didn’t have enough cash to go to Starbucks at the end of the month.

At the same time his wife didn't quite understand the need for investment in their business. At times she did not understand the dynamics that her husband had to deal with in running the business. She did not understand the time commitment, when he needed to deal with employees and the money that needed to be spent on marketing. She still looked at his income as coming from salary, his work nothing but a job.

He might be a savvy businessman but this gentleman couldn’t think past the month he was in – never mind the concept of buying another home sometime down the road or setting up college funds for his small children. Too much of “in the now” equates to an out of balance life. This same guy also had an almost non-existent business growth plan, relying again on in-the-moment “organic growth.” It’s too bad because this otherwise knowledgeable businessman is missing out on opportunities, both in his business and personal life.

I’m not saying that a business owner – veteran, fledgling or somewhere in between – should look at their business as “just a job.” We all recognize that it takes time, attention and diligence to create a successful business, but the same strengths that aided you in building a lucrative company should carry over into your personal finances and life. We need to work on our personal systems as we do our business systems. Our families must be as important to us as our business models.

In fact, the most successful entrepreneurial balancing acts can occur when you consider your business a part of the family. But in order for this mid set to work, everyone in your family must be on board with it. Business owners – and by extension their families – must realize that their workplace is not “just a job.” Its successes and failures have both short and long term effects on your entire family.

About our Benefits Installment Author:

James E. (Jim) Moniz, CEO of Northeast VisionLink, a Massachusetts firm that specializes in structuring executive compensation. James E. Moniz is a national speaker on the topic of wealth management and on executive compensation.

Jim Moniz will be presenting at this years SHRM conference in Phoenx, be sure to check out our presentation: “Creating and Sustaining a Competitive Advantage, The Role and Impact of Effective Compensation and Rewards Strategies”

+25% of Employers Think Employees Fake Illness to Explain an Absence

More Than A Quarter of Employers Think More Employees are Calling in Sick with Fake Excuses Due to Stress Tied to the Recession, Finds CareerBuilder’s Annual Survey

Chicago - While the cold and flu season serves as a primary culprit in workplace absences, the economy may be a factor as well this year. CareerBuilder’s annual survey on absenteeism shows nearly one-third (32 percent) of workers have played hooky from the office this year, calling in sick when they were well at least once. Twenty-eight percent of employers think more employees are absent with fake excuses due to increased stress and burnout caused by the recession. The nationwide survey included more than 4,700 workers and 3,100 employers.

While the majority of employers said they typically don’t question the reason for an absence, 29 percent reported they have checked up on an employee who called in sick and 15 percent said they have fired a worker for missing work without a legitimate excuse. Of the 29 percent of employers who checked up on an employee, 70 percent said they required the employee to show them a doctor’s note. Fifty-two percent called the employee at home, 18 percent had another worker call the employee and 17 percent drove by the employee’s house or apartment.

"Longer hours and heavier workloads are common in the current economic climate and employers are becoming more flexible with their time off policies," said Rosemary Haefner, vice president of human resources at CareerBuilder. "Sixty-three percent of companies we surveyed said they let their team members use sick days for mental health days. If you need time to recharge, your best bet is to be honest with your manager."

More than one-in-ten workers (12 percent) who played hooky admitted to calling in sick because of something work-related, such as to miss a meeting, give themselves some more time to work on a project or avoid the wrath of a boss, colleague or client. Others missed work because they needed to go to a doctor’s appointment (31 percent), needed to relax (28 percent), catch up on sleep (16 percent), run personal errands (13 percent), catch up on housework (10 percent) or spend time with family and friends (10 percent). An additional 32 percent just didn’t feel like going to work that day

When asked to share the most unusual excuses employees gave for missing work, employers offered the following real-life examples:

• I got sunburned at a nude beach and can’t wear clothes.

• I woke up in Canada.

• I got caught selling an alligator.

• My buddies locked me in the trunk of an abandoned car after a weekend of drinking.

• My mom said I was not allowed to go to work today.

• A bee flew in my mouth.

• I’m just not into it today.

• I accidentally hit a nun with my motorcycle.

• A random person threw poison ivy in my face and now I have a rash.

• I’m convinced my spouse is having an affair and I’m staying home to catch them.

• I was injured chasing a seagull.

• I have a headache from eating hot peppers.

Amazing.

Here is the link to the original release. Thank you CareerBuilder for always amusing us!

The Promotion That Got Away

Here's a really great "guide" from the New York Times for how to handle getting passed over for a promotion and what to do to make sure it doesn't happen again.

The story can be found here.

Enjoy.

I’m paying out $1 million in bonuses for my top five people – what’s in it for me?

October Benefits Installment by Jim Moniz:

When Jack Welsh left GE, he received – and by the way continues to enjoy – a retirement benefit valued at about $ million a year, plus perks. Lots of press attention and much controversy followed, but the reality is Welch’s package amounted to less than 3/100s of 1% of the shareholder value that was created while he was at GE. In fact, his total compensation during Welch’s entire time at the company was less than 2/10ths of 1% of the value created.

OK so what’s my point? The Welch example illustrates a fundamental premise in examining the value of compensation. If you juxtapose Welch’s compensation arrangement with GE’s results during his tenure there, it hardly seems exorbitant…that’s because his “rewards” are being evaluated in the context of the bottom line. While the numbers may not be as dramatic in your business, the same premise and principles still apply. Compensation should drive and be tied to results that are quantifiable and measurable.

Here’s the big question – what are you getting right now for what you’re paying out? You’re getting the current result, whatever that may be. But if the results you achieve this year are not measurably different than what you had last year, what are you going to do next year to drive a different performance level? And how will pay differ in regards to these changes? Growth implies different results and by extension the strategies you’ve used to get current results can’t be the same in the future if a different result is desired or expected. Because compensation is one of the strategic tools in a business’ arsenal to affect change, companies looking to develop different performance results can’t expect to achieve forward motion if their rewards programs don’t match up to their goals.

Let’s break it down a little. If your company sets its target on growing net income by 20% per year over the next three years, you need to ask yourself a few important questions. What part of our compensation and rewards plan communicates that goal to employees? If we achieve or exceed that number how much are we willing to share? Who will get their fair share and then some if we meet our financial targets? To what extent will key employees’ participation fuel this desired growth? In other words, what comes first – growth or employees that are motivated by incentives to create growth?

For growth to occur sustained performance must be achieved…and since these results are largely a function of your key employees, compensation becomes a focus. As a business owner you have to determine the right mix of compensation components. These elements should include a strategic mix of core benefits, executive benefits, qualified retirement plans, supplemental retirement plans, salary, short-term incentives, long-term incentives and long-term equity incentives.

Ultimately the proverbial “rubber meets the road” when a rewards plan prompts employees to rise to a higher level of performance. For rewards to be effective they have to create increased focus on the part of participating employees – this focus is a direct result not only of financial reward, but also of a positive work environment and the path that you, as company owner, have drawn for their personal and professional development. Remember, money may be motivating, but so is an atmosphere where a culture of confidence exists.

At the end of the day, compensation can only do its part in changing results within an organization if the model and the compensation plan are understood and valued, results are achievable, and if employees are committed and feel a sense of ownership.

Results must also be concrete and measurable and communicated regularly. If these elements fall into place you will know that you’re paying your key people appropriately and you will also know what you’re getting in return.

About our Benefits Installment Author:

James E. (Jim) Moniz, CEO of Northeast VisionLink, a Massachusetts firm that specializes in structuring executive compensation. James E. Moniz is a national speaker on the topic of wealth management and on executive compensation.

Jim Moniz will be presenting at this years SHRM conference in Phoenx, be sure to check out our presentation: “Creating and Sustaining a Competitive Advantage, The Role and Impact of Effective Compensation and Rewards Strategies”

Maybe the problem is not you … just your environment

Today we present an article by a new HR-Worldview Guest Author.

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This year at My Next Path, we have worked with a certain number of clients who started a coaching process because they felt uneasy with their current job. Some of them even got the unpleasant sensation they might have some sort of issue. When we started working together, they in fact quite quickly came to realize that they did not have any problem themselves: the source of their trouble was their environment! Therefore, instead of feeling bad, stuck, paralyzed or sometimes worst, what they had to do was actively take action and work their way out to another environment that would better fit them. Let us explain more below.

Mary*has been working for 8 years in the same company. She was a middle manager in the sales and marketing area. She had always been travelling a lot for her job and liked it. She liked her industry and was very knowledgeable about key factors of success, players, etc. But more recently, she had 3 different bosses in 2 years, an increasing pressure and despite good results in her region, little recognition. Her self confidence was eroded and she found herself drowned in micro-management tasks imposed by an insecure manager. When we started working together, Mary was really unsure about her own abilities.

After a few sessions of analyzing what she thought were her issues, she came to realize, she had lost her self confidence because of the environment (poor management, wrong cultural fit etc), not because she had problems herself! In fact, she was perceptive enough to take action, seek help, and finally take that healthy distance to realize that. A few months later, Mary landed a new job in a company more in line with her style and expectations. Although everyone around her told her to stick to her current job because of the tough economy, she overcame her initial fear, dedicated the appropriate time to look for the right opportunity and found one.

We have seen more than one case similar to Mary’s this year: Before feeling bad about yourself and jumping to conclusions, make sure you are able to analyze your situation with perspective. Actively take action to find a work environment that better fits you maybe the best decision you will ever make! This obviously could mean changing company but not necessarily. This could also mean changing job/department within a corporation: very often in big companies, people have been offered jobs that do not properly fit their profile; by changing to another job, area or department within the company, they suddenly feel better and everybody wins.

About our Guest Authors:

Myriam Le Cannellier and Catherine Bortolotti are Career Coaches who work with professionals who are experiencing a transition in their career, because of relocation, an unexpected situation in their current job or the will to make a significant change in their professional life. Learn more about them at www.mynextpath.com

Competitive Advantage: becoming the “big dog”

Special September Benefits Installment by Jim Moniz

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It’s a childhood memory that most of us share…the loud bark of the snarling neighborhood dog that would come out from no where and scare the “you know what” out of you every other time you walked or rode your bike down “his” street. Chances are you eventually became weary of the scenario and decided to avoid the the big dog at whatever cost, first by avoiding the street then consequently the dog’s neighborhood altogether.

That “big dog” concept continues its chase in the business world. If you have the competitive edge, you have the advantage over others who fearing your loud and well-defined “bark” will retreat, leaving you to reap the business benefits of being “top dog.”

So, how do you become the “big dog” and get that competitive advantage? Competitive advantage is achieved when a business produces surplus profits - greater than it's competitors - due to unique product pricing or resource advantages. As a result, its profitability is greater than the average profitability of all other businesses competing for the same set of customers

The advantage, however, goes to those organizations that can achieve a sustainable competitive advantage. This implies that a business's strategies enable it to maintain above-average profitability for a number of years. This is typically achieved through the creation and execution of processes, positions and/or propositions (as in value proposition) that are difficult if not impossible to duplicate.

Businesses pass the competitive advantage threshold by attracting and retaining great people and then nurturing a unique culture - one that demonstrates passion, executes with consistency, perpetuates success, breeds confidence and rewards performance.

Companies that achieve this start with and build upon a foundation of mission, values and vision that are reinforced by, in and through every aspect of their business plan. As a result, they commonly enjoy a shared value system with their employees - because both are clear about, and compelled by, the direction the company is headed, how it's going to get there, what is expected of everyone and how each will be rewarded for the company's success.

In their book, Strategic Management, Charles W. L. Hill & Gareth R. Jones offer the following insights about organizational culture. Their insights are key to linking the ability of a company to enjoy a competitive advantage in the market place with building compensation strategies that will correspondingly fuel the performance needed to achieve that outcome.

Organizational culture is " ...the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization..."

"Organizational values are beliefs and ideas about what kinds of goals members of an organization should pursue and ideas about the appropriate kinds or standards of behavior organizational members should use to achieve these goals..."

"From organizational values develop organizational norms, guidelines or expectations that prescribe appropriate kinds of behavior by employees in particular situations ..."

The key word in this quote is "behavior." For a business to achieve the results associated with a competitive advantage it needs the right people consistently doing the right things in the right way and for the right reasons. As a result, any rewards system that is built must, at its core, encourage a focus on the right performance factors and reward their execution. This is how results are achieved and sustained.

Larry Brody and Ram Charan, in their book Execution, put it this way:

"A business' culture defines what gets appreciated, respected, and, ultimately, rewarded; those rewards and their linkage to performance are the foundation of changing behavior. If a company rewards and promotes people for execution, its culture will change. However your organization determines rewards, the goal should be the same - your compensation and reward system must have the right yields. You must reward not simply on strong achievements on numbers, but also on the desirable behaviors that people adopt. Over time, your people will get stronger, as will your financial results."

With the aforementioned principles in mind, consider the impact on your company's ability to achieve a competitive advantage in the marketplace if your culture demanded the following in its efforts to attract and retain great people:

• Only talented, committed and focused people "need apply"
• No entitlements (people are only rewarded for achieving well defined performance standards)
• All employees must think and behave like owners

Such a culture needs a rewards system that reinforces those standards and that attracts the right "fish" to the "pond". That said, the rewards framework needs to be built in harmony with the strategic, operational and performance management systems of the company for a competitive advantage to ultimately be achieved.

The pathway that a company needs to take to achieve a competitive advantage starts with a foundation of mission and values, out of which grows the company vision. At this stage, a company must clearly define why it exists, what it stands for and what it values. Correspondingly, it must build a compatible total rewards foundation and philosophy consistent with the ends it seeks to serve. The company vision is fulfilled only through a well designed strategic plan. That plan is matched on the rewards "side" with a Compensation and Rewards Game Plan that envisions pay for performance programs that will support and reinforce the company's strategy.

Execution of the company's strategy is key to its success. Capital and cash flow need to be managed, marketing initiatives need to be crafted and launched, operations need to be well executed, superior products or services need to be developed, and excellent customer service needs to be rendered. All of these functions depend upon the applied intelligence of a dedicated workforce. As a result, these elements need to be reinforced by compensation strategies that are effectively engineered and tied to roles and expectations that are well defined and communicated.

Through this combined confluence and application of business ideals, organizational architecture and rewards processes and systems, a company ultimately experiences success and builds a culture of confidence.

Rewards reinforcement strategies work hand in hand with performance management systems to elevate that success and create true "line of sight" in the organization. Such a company has unleashed the lifeblood of a competitive advantage.

Ultimately, companies that enjoy a competitive advantage in the marketplace don't just initiate a Compensation and Rewards system. They sustain them. Their ability to do so is dependent in part on the way in which they identify the issues and problems they face and then address them according. We classify these issues in the following categories. In asking the questions associated with each category, a business can better assess its area of greatest priority in dealing with its compensation development.

Future

• Are employees compelled by the future of the organization?
• Is there a belief in the business strategy of the company?
• Are there opportunities for personal and professional growth and development?

Foundation

• Is there an alignment between the compensation philosophy of our company and its mission, values and vision?
• Do we have a rewards value proposition that has attraction capacity - that will help us recruit and retain great people?
• Is there an ownership mentality throughout our organization?
• Framework
• Are we achieving an efficient return on our compensation investment?
• Is our compensation program properly balanced between long and short-term rewards and guaranteed versus incentive compensation?
• Have we established clear performance standards for the achievement of rewards in the organization?
• Focus
• Have we created "line of sight" in our organization between the vision and strategy of the company and the roles, expectations and rewards we have and provide for our employees?
• Do we have a rewards reinforcement strategy in place that keeps employees focused on the expectations we have of them and how they will be rewarded for performance?
• Are we consistently achieving the desired results we want from our employees?

A competitive advantage in the marketplace begins and ends with getting and keeping the right people "on the bus" as stated in Jim Collin's seminal book, Good to Great. Once in place, a culture of confidence needs to be nurtured and achieved through consistent execution of key results emanating from the vision and strategic plan of the business. Such a pattern of execution is achieved, in part, by developing an aligned rewards philosophy and Game Plan, then envisioning, creating and sustaining great compensation strategies.

Best of luck in becoming the”big dog”!

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About our Benefits Installment Author:

James E. (Jim) Moniz, CEO of Northeast VisionLink, a Massachusetts firm that specializes in structuring executive compensation. James E. Moniz is a national speaker on the topic of wealth management and on executive compensation.

Jim Moniz will be presenting at this years SHRM conference in Phoenx, be sure to check out our presentation: “Creating and Sustaining a Competitive Advantage, The Role and Impact of Effective Compensation and Rewards Strategies”

Don't Mistreat Job Seekers

Alison Green of U.S. News and World Report recently compiled a list of 5 ways companies mistreat job seekers.

1) "Having no regard for the candidate's time."

2) "Not sharing their timeline."

3) "Refusing to share their salary range, but asking for yours."

4) "Misrepresenting the work."

5) "Not notifying candidates that they are no longer under consideration."

The full article and some expansion on each of these items can be found here.

2, 3, and 4 are downright shameful and there is no plausable excuse for them. Often times, however, we've found that 1 and 5 are accidental and are caused by time and volume pressures.

That's no excuse. It hurts your company's reputation.

Take a look at your process. If you find that you are guilty of 1 and 5 above, ask yourself if these are simply being overlooked. That is, are you unintentionally disregarding the candidate's time or not notifying them when they are chucked from the pool? If the answer is yes and you think it's because you are buried in work, then something is wrong with your recruiting process. Maybe it's time you looked into ways to simplify or streamline your process and give up the notion that you can handle it all yourself.