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You’re the Boss Blog: This Week in Small Business: Small Data

May 13, 2013 by Leave a Comment
Dashboard

A weekly roundup of small-business developments.

What’s affecting me, my clients and other small-business owners this week.

Must-Reads

Christopher Mims says most data is not “big,” and businesses are wasting money pretending that it is. A. Craig Burnside, Martin Eichenbaum and Sergio Rebelo question whether the housing market upswing will last, and Rick Newman offers five reasons the housing recovery remains wobbly.

The Economy: Budget Pressures Fade

Payrolls are rising but labor productivity is decreasing. Corporate profits as a percentage of gross domestic product are at their highest levels ever (and Berkshire Hathaway’s cash hits a new high). As the red ink recedes, pressure fades for a budget deal in Washington. Cicadas invade the East Coast. A new TD Bank survey shows performance on track for small businesses, and Hispanic small-business owners have a positive outlook. A study from Wells Fargo and Gallup shows optimism among small-business owners. A new study concludes that as the economy picks up, more people with high net worths move from being employees to business owners. But 78,000 people still want to leave Earth and live on Mars.

Mother’s Day

Even presidents can be embarrassed by their mothers.

Management: Procrastinate Like a Boss

John F. Demartini says the business leaders who are best at maintaining balance in a company “will be the most loved, loving and sustainable.” Karol Krol offers suggestions for procrastinating like a boss. Joanna Warwick has the ultimate quick fix for solving any problem in your life. This is how to make the best use of small-business downtime, and here are four tips for keeping your business organized. Dennis McCafferty learned 12 management lessons from Disney U, and Matt Kemp teaches a lesson in kindness. Brad Farris is not a fan of swearing in the workplace: “For me, it turns into a kind of verbal litter, cluttering up the communication.” Bill Clinton tried to reunite Led Zeppelin.

Start-Up: The Start-Up Gap

Martin Jones explains how to start a business when you’re fully employed. Here are four things your start-up needs to attract venture capital, and here’s what Google Drive means for start-ups. This comic strip shares some simple rules for freelancers. Start-ups in Iowa lead the country in revenue, and crowdfunding is easing the cash squeeze for Arkansas start-ups. The Securities and Exchange Commission issues a call for crowdfunding suggestions to promote small-business capital formation, while a “Kickstarter for the black community” aims to close the African-American start-up gap. One venture capitalist advises against motivating start-up employees with a bonus. Neil Irwin explains why Sterling Cooper Draper Pryce would be a terrible stock.

Employees: Ridiculous and Annoying

Here are 17 ridiculous office rules companies actually enforce and 20 of the most annoying things about working in an office. And here are four reasons employees shouldn’t have set hours. A new book explains why you should have those crucial conversations with your people. Here are eight tips for retaining information technology talent. Crispin Jones discusses the benefits of a diverse workplace, and here are a few tips for building a strong team.

Entrepreneurs: The Least Favorite Question

This is how Australian entrepreneur James Fox has built a leading company, and Kathryn Minshew reveals every entrepreneur’s least favorite question. It appears that the shorter your first name, the bigger your paycheck. Neal Jenson says being able to sell anything is one of eight skills every entrepreneur should have. An Oxford University researcher says William Shakespeare was the first great “writer entrepreneur.” These teenagers are getting $100,000 each to drop out of school and start businesses.

Cash Flow: Early Warning Signs

Big manufacturers continue to put pressure on smaller suppliers. Here are a few cost-reduction strategies for small businesses. The Credit Managers’ Index drops, and Michael Monroe explains how to spot early warning signs of bad debt. This is how small businesses should leverage their debt in an unpredictable economy. Gerri Detweiler asks when you should consider bankruptcy.

Red Tape: Online Sales Tax

Adam Liptak says this has been the most business-friendly Supreme Court since World War II. The Senate approves an online sales tax bill, Senator Ted Cruz explains why he opposes it, and here’s who would be the winners and losers. John Berlau explains how the bill could tax your 401(k). This is a small-business wish list for tax reform, but Joy Taylor predicts that capital gains tax breaks are going away. A new rule means more government contracts for women.

Marketing: Pointless!

Here are a few tips for embracing green marketing. Jim Jacques says there has been a rebirth of phone answering services for businesses. Peter Hupalo explains how to make money from seminars and workshops. Gary Shouldis gives five reasons your advertising isn’t working. Dustin Heap says setting up call tracking is one of three ways to increase the return on your marketing spending. David Newman’s new book tells business owners how to improve their marketing: “Don’t be an idiot on social media.” Rob Fuggetta says this is the ultimate question you should be asking customers. Jeremy Porter explains how to take a newsroom approach to content marketing. Rhonda Campbell offers examples of blog content that drives sales, and Henry Davids believes that an average Web site is like a blunt pencil: pointless!

Local Marketing: Bleeding

Michael Borland explains how Yelp makes money. Dave Conklin offers five reasons your business needs to be doing more local search engine optimization, and a new report demonstrates how heavily mobile is used for local search. A study says daily deal sites are bleeding each other dry, and Chris Brogan wonders if local businesses deserve your money. Spike Jones says you can’t create a community because “you can’t build people.”

Social Media: Fans Beat Followers

A study shows small businesses find growing value in social media — and that two million Facebook fans are better than a Super Bowl ad, a celebrity endorsement or Twitter followers. Here are some tips to market your business through social networks, three tips for better social media engagement and a few hints for understanding Google Analytics. An infographic explains how social sharing improves e-mail results. Here are five quick steps for using LinkedIn to recruit and three easy ways to use YouTube to promote your business. Adam Vincenzini lists his favorite social media tools of 2013. Heidi Cohen has proof that social media drives sales, but John F. Dini says the army of social media fanatics that “go ballistic at any hint that social media isn’t the be-all, end-all and answer-from-above for every marketing need on the planet are just wrong.” This is what really happened when Facebook bought Instagram.

Around the Country: Reality TV

Small and big businesses are competing for subsidies. Small-business owners will be honored this week at a conference in Columbus, Ohio. This is how small businesses around the country have been helped by reality TV, and this is how you can turn a small business into a reality TV star. These are the best cities for college grads.

Around the World: Icebreaker

In Ireland, 80 percent of all employees spend 56 minutes of their working day on social media, and in China employees are sometimes made to crawl in public. Nearly half of all workers across Europe, the Middle East, Africa and India think that bribery and corruption are acceptable ways to survive an economic downturn, according to a new report. This is what it’s like to spend two months on an Antarctic icebreaker.

Health Care: Power Grab?

Some small business owners sue to stop the Internal Revenue Service’s health care “power grab.” Sarah Kliff wonders if the Affordable Care Act will lead to millions more part-time workers. Here are some wellness programs for small businesses. An ADP webcast this week will help small businesses understand the health care act.

Technology: Printing Guns

Microsoft has a Windows 8 do-over on the way. Here are eight Windows 8 apps for less than $25, 10 apps that will keep your business organized and 11 new iOS business apps. Coke introduces the “world’s thinnest” vending machine. Staples becomes the first major American retailer to sell 3-D printers, and a 3-D printable gun reaches 100,000 downloads. “Saturday Night Live” has some fun with Google Glass, and Marcus Wohlsen concludes that Google Glass fails to acknowledge that “walking around with a camera mounted on the side of your face at all times makes you look dorky.” Microsoft Skydrive passes 250 million users. Rob Enderle explains why Apple won’t be around as long as I.B.M. This short video will help you decide between the iPad and the Surface Pro. A new survey offers five reasons small business are turning to cloud file management. Robert Lemos suggests five ways for small businesses to increase security, but Roger Grimes warns that too many administrators will spoil your security. A study says 66 percent of small-business owners use mobile technology. Ken Mueller says there are five things small businesses need to know about customers and smartphones. And AVG Technologies shares five Mother’s Day tips for mobile moms.

Tweet of the Week

@JoeMande – What’s to stop someone from printing 3-D printers with their 3-D printer?

The Week’s Best Quote:

Anne Bezancon believes older entrepreneurs are better: “This is why, contrary to popular belief, most entrepreneurs do not create companies in their early twenties. Almost always, they have experienced real economic relationships and power dynamics, and gained an understanding of where the opportunities were, in order to figure out what problems need fixing or how something can be done better. Age is not just a data point – it signifies years spent watching, listening and learning, filing away facts and lessons, and developing the ability to recognize patterns and opportunities at the right time.”

This Week’s Question: Do you swear at the office?

Gene Marks owns the Marks Group, a Bala Cynwyd, Pa., consulting firm that helps clients with customer relationship management. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/05/13/this-week-in-small-business-small-data/?partner=rss&emc=rss

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You’re the Boss Blog: S.B.A. Budget Pits the Small Against the Less Small

May 10, 2013 by Leave a Comment
The Agenda

How small-business issues are shaping politics and policy.

The Agenda has often recounted efforts at the Small Business Administration to shift attention to larger businesses, a particular interest of the outgoing administrator, Karen Mills. Now The Washington Post reports that a program that the Obama administration has proposed to provide counseling to midsize businesses would come at the expense of counseling programs for much smaller companies.

As part of its 2014 budget, the S.B.A. seeks $40 million for an “Emerging Leaders” initiative, which the agency describes in a budget document as “a training initiative that specifically focuses on executives of established businesses currently poised for growth from communities across the country.”

At the same time, the budget proposes cutting almost $10 million, or 9 percent of what it received in 2012, from the grants it offers to small-business development centers, and $480,000, or 7 percent, from the agency’s funds for Score. Several other counseling programs would undergo cuts as well; all told, cuts to the four leading small-business counseling organizations that the agency calls its core resource partners would total $11 million.

Ms. Mills has long insisted that the agency needed to expand its focus to larger small businesses, which she has said are often overlooked as a source of new jobs, and that it could do that, as she put it recently, “without ever taking our eye off the ball on Main Street.”

The 2014 budget, however, suggests that with this broader mission, something has to give. At a recent House Small Business Committee hearing, Ms. Mills testified that small-business development centers could still compete for this money. But according to C.E. Rowe, president of America’s SBDC, the association representing development centers, the money could be used only for the Emerging Leaders program and not to offset the administration’s proposed cuts.

Under those cuts, “you lose counselors,” Mr. Rowe, known as Tee, said. “And if you rehire them for this program, they can’t serve the general population. You can’t fudge under a federal grant.”

A representative for Score, Bridget Pollack, said, “Whenever Score’s mission matches with the Emerging Leaders education program, Score will certainly work with the S.B.A. to try to participate.”

Michael Chodos, the S.B.A.’s associate administrator for entrepreneurial development, said in a statement that development centers and other counseling groups already received funds earmarked for special purposes, including the sort of classroom instruction the new program hopes to build on.

“We’re still asking for over $120 million for core services across our resource partner network,” he said. “The $40 million represents additional resources to scale up existing training, which we know brings immediate growth and job creation.”

Still, even if the Emerging Leaders program does get money, it remains to be seen if it will come at the expense of the other counseling programs. The Obama administration has tried to reduce appropriations for Score and the development centers for several years, but each time, Congress has blocked those efforts.

Article source: http://boss.blogs.nytimes.com/2013/05/09/s-b-a-budget-pits-the-small-against-the-less-small/?partner=rss&emc=rss

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You’re the Boss Blog: The Problem Social Media Cannot Solve

May 10, 2013 by Leave a Comment

On Social Media

Generating revenue along with the buzz.

Stop. Don’t send that tweet. Don’t post that video on YouTube. It’s time to face facts: It doesn’t make sense to do anything in social media if you don’t have a good Web site.

Your Web site is your welcome mat. It’s your most important selling tool. The ultimate goal of social media marketing is to drive traffic and potential customers to your Web site and then convert those leads into phone calls, meetings and sales. And yet, if you are great at social media but have a lousy Web site, your social media efforts will just allow you to annoy more people faster.

If your Web site needs work, do not put it off. But be careful about who you hire to build, update and maintain your site. The process is time consuming and full of lots of opportunities to learn expensive lessons. There are plenty of snake-oil salesmen and brothers-in-law (and even brothers) who prey on those who are not technologically savvy. Over my next few posts, I’m going to discuss the process of hiring a Web developer to build a site, and I’ll also offer some alternatives to a full overhaul.

In 2012, after surviving for nearly 12 years in business with a one-page Web site, Advanced Comfort Technology finally decided to invest in a Web site for its main product, DCC Waterbeds. Based in Reedsburg, Wis., the family business builds waterbeds for dairy cows and takes in about $4 million a year in revenue. Yes, cows sleep on waterbeds. (Apparently lying on a waterbed protects the cows who lie down an average of 14 hours a day.) [Read more…]

Article source: http://boss.blogs.nytimes.com/2013/05/10/the-problem-social-media-cannot-solve/?partner=rss&emc=rss

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You’re the Boss Blog: One Social Media Start-Up Rises From the Ashes of Another

May 9, 2013 by Leave a Comment

Start

The adventure of new ventures.

One of the hardest things for an entrepreneur to do is to admit defeat. But in the case of Apu Gupta and Nick Shiftan, failure was likely the best thing that could have happened to them.

In 2011, Mr. Gupta, 37, and Mr. Shiftan, 31, founded Storably, a company they billed as Airbnb for storage space. Anyone with spare space — in their basement, driveway, garage, closet — could rent it out to those in need. Storably facilitated the transaction, provided insurance and allowed users to post reviews.

Mr. Gupta and Mr. Shiftan raised $750,000 from the venture capital firms NEA and First Round Capital and introduced Storably in September 2011. Two months later, they knew it wasn’t working. The site was getting barely 3,000 visitors a month. “That’s the equivalent of opening a retail store and having crickets show up,” Mr. Gupta said. “It’s abysmal. By the time we shut down, only 23 people had used the site for a transaction.”

At that point, Mr. Gupta and Mr. Shiftan had burned through 25 percent of their money and felt they had two options, which they presented to their investors. “We said we can give 75 percent of your investment back and liquidate the company, or we can figure something else out,” Mr. Gupta said. “And they told us, ‘We didn’t invest in the idea, we invested in you guys. We don’t want our money back, so go figure something else out.’ It was an amazing thing to hear.”

After two months, Apu Gupta (left) and Nick Shiftan knew Storability was not working.Courtesy of Curalator After two months, Apu Gupta (left) and Nick Shiftan knew Storability was not working.

The pair — along with their first employee, Brendan Lowry — brainstormed for about a month, coming up with three or four ideas apiece each day. At the end of the month, they had about 70 ideas, seven of which they deemed promising. They tested a few, including DrinkedIn, an application for LinkedIn that would match users and send them to a bar to have a drink and network.

But the idea that rose to the top was a platform that allows companies to measure the impact of Pinterest and other visual social media. They called the company Curalate, and they introduced it in beta in March 2012 and for real two months later. Mr. Gupta said the rise of Pinterest last year looked similar to Twitter’s early days with brands “falling over themselves to get on board but reluctant to commit until they had some way to measure their presence on the platform.”

Enter Curalate, which created a way to listen and measure visual conversations. The company’s algorithm recognizes images using pixels and then matches it to a brand. “The platform tells companies the conversations people are having about their product,” Mr. Gupta said.

He told the story of a shoe offered by the department store HM. The company’s Web site displayed the shoe in a bright neon color, but the shoe customers were “pinning” and describing in loving terms was a combination of beige and pink. “So there was a big discrepancy between what the brand thought people wanted versus what people actually wanted,” Mr. Gupta said. “And that’s the whole point behind what we’re doing. We reveal, by looking at their imagery, what consumers really care about.”

Here’s where the company stands now, roughly a year after its introduction.

Employees: 15

Location: Philadelphia

Pitch: “We are trying to help brands form meaningful relationships with their customers,” Mr. Gupta said. “You have to be able to understand your customers and if they speak to you visually, you need a platform for that. It’s not just about Pinterest, but a fundamental shift in consumer behavior. Consumers increasingly talk about brands using pictures rather than words. Even Facebook has become a more visual medium. We pin and reblog and Instagram our lives.”

Challenges: Finding the right talent — salespeople, developers and designers — has been an ongoing challenge. A more perplexing challenge, Mr. Gupta said, is staying focused. Curalate’s space is so wide open that the company can try just about anything, and that freedom has caused them to sometimes lose direction. “When a space is new, it’s easy to feel pulled in different directions by clients,” he said. “It’s easy to lose your own point of view. So we really have to figure out a road map. And sometimes that means we need to say, ‘this is what we build and it’s not right for everyone’ and we may have to turn some clients away.”

Traction: Mr. Gupta said Curalate was now used by 350 brands that paid a monthly fee for its software as a service, which included a suite of marketing tools in addition to analytics. The company recently added the ability to analyze Instagram images to its platform. “Pinterest is about the things people aspire to buy, the things they want,” Mr. Gupta said. “Instagram is people celebrating what they bought.”

Revenue: The company declined to discuss its revenue, but the typical brand spends about $1,500 a month for Curalate’s services.

Financing: After going through what was left of the original $750,000, the company raised another $3 million late last year from the same investors.

Competition: Repinly, Piquor and PinReach are a few companies operating in the space, but none of them “is doing anything across platforms or using image recognition,” Mr. Gupta said.

What’s Next? “We want to broaden the number of platforms we get insights from,” Mr. Gupta said. “Companies also want us to build things that encourage consumers to communicate visually more often.”

What do you think? Have Mr. Gupta and Mr. Shiftan hit upon the right idea this time?

You can follow Eilene Zimmerman on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/05/09/one-social-media-start-up-rises-from-the-ashes-of-another/?partner=rss&emc=rss

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The Next Level: Where the Happy Talk About Corporate Culture Is Wrong

May 8, 2013 by Leave a Comment
The Next Level

Avoiding the pitfalls of fast growth.

“Tell me something I don’t know,” is what I think every time I see another article, blog post or book on the value of happy employees. And here is what I find disturbing about these happy-employee propagandists. They are mostly off about what it takes to motivate employees and keep them happy in a fast-growth culture.

Don’t get me wrong — I want happy employees, too. But I think there are two types of happiness in a work culture: Human Resources Happy and High Performance Happy. Fast-growth success has everything to do with the latter and nothing to do with the former. Unfortunately, 99 percent of the discussion and solutions are focused on Human Resources Happy.

Here’s how I define H.R. Happy: Bosses are at least superficially nice and periodically pretend to be interested in employees as people. These employees can count on birthday-cake celebrations and shallow conversations about what their hobbies are outside of work. This approach allows H.R. people to do the job they love — compliance and regulations — instead of the job they should be doing — finding and recruiting the best available talent.

And this may work in a call-center environment or in a second-rate corporate culture where people resign themselves to the fact that they will get more if they accept being treated like children. But these H.R. Happy employees can have a rough time at fast-growth companies when they meet people who are High Performance Happy. Think of an Olympic athlete jumping into the pool for those 4:30 a.m. laps. High Performance Happy is an attitude with a skill set that says we are on a mission that is bigger than any one of us. We find our happiness in being on a world class team that is making a difference.

H.R. Happy says we should do what pleases us first — bring your dog to work! High Performance Happy says I will fight for every inch. I will be there at 4:30 a.m. no matter what and until the last dog dies. Respect is core to the success of High Performance Happy, and it is based on what you are giving not on what you are taking. For example, if one person has a sick child, we all have a sick child, and we all give more that day. And this is why High Performance Happy builds deeper bonds.

In the movie “American Beauty,” Annette Bening played Carolyn, the personification of Happy H.R. Set aside her bedeviled husband, and no matter what was said to her, she felt compelled to say something positive, even though it was as phony as the eyelashes she batted. But that is what the H.R. propaganda teaches on how to build a company. Be nice to people and they will work hard for you. But , by the way, that was not the approach at successful companies like UPS and Apple, which magnify the outcomes of the high-performance elite and obliterate the happy talk.

Steve Jobs was well known for his rants about time-clock punching morons, but his high performance elite got better not bitter. Why? Apple’s mission — making technology cool — was far more important than a few harsh words or even a little immaturity. And before its founder passed way, UPS was a great example of high performance elite with an almost military culture. At UPS, performance reviews were called “agent orange” because they were orange in color and dreaded if you had not met or exceeded your commitments. Back in the late ’80s, UPS was disciplined by the Occupational Safety and Health Administration for being too hard on its management employees at its six-week, basic-training school for supervisors. I attended it, and let’s just say it was taxing. The company ended the program shortly thereafter. On the other hand, UPS managers often had to be disciplined for working too many hours, week after week. Why? We truly believed that the American economy depended upon our moving packages from point A to point B.

High Performance Happy means you give employees tremendous responsibility, and they are happy to show that they are the best. You don’t have to con them into doing things with a flavor-of-the-month methodology that suggests they will only perform if you make them happy first. H.R. Happy says, I want you to think that I like you. High Performance Happy says, I believe in you. Here are the guideposts for building a High Performance Happy culture.

First, you can’t hide the duds the way you can in corporate America. If high performance is level 10, then duds aren’t the two and threes who are quickly shown the door. The duds are the fives and sixes who are the happy slackers — the ones who do just enough to get by, but hey, they’re happy! They befriend the boss, love meetings and are the first to check the scores and Facebook when they get back from lunch. Their H.R. Happy habits will do one of two things — bring the high performance elite down to the middle or push them out the door. The duds have to go. Today.

Here’s what you tell the high performers. Come spend time with us if you want to do something special. Don’t take it personally if you get yelled at for something you did not do. Get over it, and I am sure we will apologize when we find time. If you ask for help, we will be there. If you do not ask for help, we will assume that you are performing in a blaze of glory so be ready to show it. Don’t tell us later that you were confused or did not agree with what we were doing. You can say whatever you want to whomever you want when the decision is up for discussion — and this will be encouraged in many formats, from quick huddles to day-long strategy sessions. But when the decision is made, you march with the decision and not with what makes you happy.

High Performance Happy does not like a lot of unnecessary processes and rules, which is why entrepreneurs have to let high performance people make decisions. If you trust them with your mission and with hundreds of important daily choices, you can also trust them to handle their vacation schedule, their paid time off, and the tools they need to get the job done.

High performance organizations do not hire family members. That’s because it’s very hard to fire family, and you have to earn your spot in a high performance lineup every day. Here is the deal: I love your work if you are making the plays. If you are not, I have to find someone who can.

In High Performance Happy, you cannot have people behaving like liberal Democrats or right-wing Republicans. It has nothing to do with politics. In fast-growth organizations, life is not fair every day, and you can’t have liberals running around trying to make sure everything is equal and no one is offended. I am sorry but there are going to be days when not all is equal and someone is offended. We always try to go back and make it up, but there are times when you have to take it for the team — and not bring it up three years later at a company meeting.

But you also don’t want right-wing types who really don’t understand how the world works and lack the emotional intelligence to get over anything that bothers them. If they think somebody got more than they did, they stew over it every day until you give them more. Again, I am sorry, but in fast growth there are times when one group gets more than the other. “Get over it” is the natural response in a high performance environment. Of course, that would be considered the height of hypocrisy at an H.R. Happy company.

The toughest part of High Performance Happy is dealing with the exit of a high performance employee. What do you do when one of the chosen chooses to leave? First, you ask if there is an issue that you have not discussed. Then you ask if there anything you can do. If the answer to both questions is no, and the employee is just leaving to go to another team, the person exits with a thank you. No good-bye parties. No H.R. exit interviews. No farewell dinners. The person is gone, and the quicker the better.

But here’s the flip side. When it comes to lay offs of high performance employees during downturns, you simply cannot do it. You have to figure out other ways. In 2001, after the dot-com crash, my information technology company lost about 20 percent of its revenue. I remember the chief financial officer came to see me with what was supposed to be good news. With some belt-tightening measures, he said, we only had to lay off 12 or 13 people. We looked at our list of folks and could find nothing but High Performance Happy.

We had just made the Inc. 500, so they had delivered, and I did not want to break the we-are-in-this-together bond. So I decided the 40 highest paid people would take a 10-percent pay cut, and we would make up the rest in travel reductions. I was not surprised when I did not hear any whining, moaning or groaning from the top 40. I was surprised when the person who would have been No. 41 came into my office and said he wanted the same cut. The next day, the H.R. director came to see me and said, “Cliff, I have had a stream of people in my office all day — team leaders, front-line people, just about every role — asking if they can take the 10-percent pay cut, too. I don’t even think we need the money.”

I think it was that day that I knew for sure we had a great company that was High Performance Happy.

Cliff Oxford is the founder of the Oxford Center for Entrepreneurs. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/05/07/where-the-happy-talk-about-corporate-culture-is-wrong/?partner=rss&emc=rss

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Staying Alive: Why I Would Rather Pay My Employees Too Much

May 8, 2013 by Leave a Comment
Staying Alive

The struggles of a business trying to survive.

Thank you to everyone who commented on my last post, “Why I Pay What I Pay,” about the performance I expect from workers at different wage rates. I was surprised by the number of comments, but I guess that any discussion of pay is going to push someone’s button. That said, I’d like to respond to a couple of points that were raised and also make a few new ones.

First and most obvious: Every dollar I pay my workers has to come out of a client’s pocket. Having cash to make payroll is not a forgone conclusion. We scramble to make sales and bring in revenue every day. The amount of money I have on hand varies widely, but pay day arrives every two weeks like clockwork. This has caused me a lot of stress over the years and often leads me to question whether I am paying the right amount. If I were running a different kind of business — one where I knew with certainty that the money I need to meet payroll will always be there — I would think about wages differently. But I don’t have that luxury. I have to allocate our revenue stream to cover all of our operations, not just payroll, and making a mistake can be fatal. If I spend too much on the wrong thing, there will be no money for some other critical function.

Second, clients don’t care what I pay my workers. In the last three years we’ve had more than 2,000 inquiries for our product, and not a single potential buyer asked about my wage scale. These buyers also do not care whether I make a profit — as long as I deliver what they ordered. And many would probably prefer that I didn’t make any money at all, at least not on their order. As a small-business owner, I understand how important profits can be, so when I’m buying something, I don’t sweat over every penny I spend. I know that I’ll get better service and a better product from companies that aren’t struggling to make ends meet. But that perspective is unusual. Many of my clients have price targets, and they need us to hit them. They are not at all concerned with what I have to do to meet their needs.

Third, the question of how I interact with my employees is up to me. My business model and my history lead me to want to treat them well. I’m with my employees as often as I’m with my family, and I made the decision long ago that I’d rather spend my time with people who are happy to be working for me than people who hate me. It has cost me a lot of money to do this, but I believe that in the long run it has served me well.

I know a number of shop owners, running businesses like mine, who made different decisions about how to pay people. One in particular advertised his shop as a woodworking school, and charged his workers tuition. He then used their labor to build a product line that was sold at regular market prices. On the face of it, it was a brilliant business model, but he closed his doors years ago, and I’m still around. I run into his former “students” now and then, and they all describe the bitter moment when they realized what was going on and how they decided to leave as quickly as possible.

I don’t want that kind of relationship with my employees, and I don’t want to deal with constant turnover. My people are smart and hard-working and that’s who I want to spend my life with. I’d rather err on the side of paying them too much than have to deal with grumbling and turnover. But if I were running a business where turnover is expected — an ice-cream stand in a summer resort, for example — I’d have a different attitude. I’d be a lot more interested in my own reward than the long-term prosperity of my workers. And that would make sense, for that situation. On to some questions.

From kathy d:

I’d be interested in knowing how long a worker spends at each level before he/she can be promoted. Is it simply mastery of the skill set for that level, or is there a regular schedule of promotions/raises?

I’m small, so a promotion path is not a given. It’s just not possible to make that promise in a company this size. I wrote about this in the summer of 2010, and my thinking hasn’t changed.

From Meredith:

Do you offer cost of living yearly increases? Say, 2 or 3%? Or a yearly bonus for excellent performance?

Here’s my question for you, Meredith: Where’s my Cost of Progress Discount? Why am I expected to raise pay steadily when my workers’ skills set is constantly being made obsolete by market forces? Why can’t the workers who are not upgrading their own skills expect a continuous reduction of wages? This would allow their employer to compete in the market through continual, automatic cost reduction. That might sound harsh, but it reflects my reality as a manufacturer.

Seventy-five percent of what we do every day was not possible 10 years ago. I have had to re-invest cash continuously — money that could have gone into my own pocket — on new technologies, new equipment, experiments in process improvement, and employee skills development. Driven by my own desire to make my business more competitive, that effort has kept us in business. It has allowed me to keep my wages where they are. I don’t feel that workers should automatically expect pay raises unless their employer enjoys the luxury of automatic increases in revenue and profit. That’s not happening in my kind of manufacturing. As for bonuses, I have paid them in the past, based on no formula other than whether I was feeling rich and happy at the end of the year. That approach has some drawbacks, so I am implementing a regular, predictable profit-sharing plan this year. I’ll be writing more about it in the future.

From ted:

Can you tell us approximately how much the benefits you offer add to the hourly wage? (vacation, holidays, health care)

I can tell you my projections for 2013. We offer personal days, which can be used either for sickness or vacation, along with six paid holidays. New employees get six personal days in their first year of service and an additional day for each subsequent year, topping out at 16 personal days. Add the six holidays, and my long-term employees get 22 paid days off. The overall cost of doing this is tied to the pay rate and length of service for each worker, but in 2013 the total bill for paid time off will be $50,218. This includes the wages and the payroll tax we pay. That’s 5.76 percent of our total wage bill of $872,581 (excluding my pay, which is budgeted at 6 percent of sales).

As for health costs, the company pays two thirds of the cost of ensuring our employees, and their families, who accept the coverage we offer. Twelve of my 16 workers participate, and this year the cost to the company will be $51,565. That is 5.91 percent of our total wages. The two benefits, added together, cost $101,784, or 11.66 percent of our wages. Is that expensive? Again, it depends on the context. For me, it’s not. I’d love to shed the hassle of dealing with health care, but the cost is not going to break me. And what I get for my spending on vacations and health care is a stable, healthy work force. That’s important to me, and I think it makes my shop a good place to work. Is it possible to duplicate that in every business? No.

In closing, I thought long and hard about publishing the last post, as it committed me to live up to my words and pay my people based on a clearly understood formula of skills versus pay. Many bosses wouldn’t do that, for lots of good reasons that boil down to this: published wage scales change the balance of power between bosses and employees. They make it much harder to be flexible (boss’s description) or arbitrary (employees’ description.)

In the last few years, I have made a number of changes to how I run my business, in all cases revealing information that many bosses keep secret. I am hoping that empowering my workers, letting them see what really makes the business run, will help all of us figure out how to increase sales and profits, which we can then share.

But that may not be a good idea. If it is the best way to run a business, why don’t more bosses do it? Am I compromising my own financial future for the sake of starry-eyed idealism? Would my approach work in your business?

Paul Downs founded Paul Downs Cabinetmakers in 1986. It is based outside Philadelphia.

Article source: http://boss.blogs.nytimes.com/2013/05/07/why-i-would-rather-pay-my-employees-too-much/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: ,

You’re the Boss Blog: How We Keep Our Mentors and Investors on Board

May 8, 2013 by Leave a Comment
Fashioning Change

A social entrepreneur tries to change the way people shop.

When I came up with the idea for Fashioning Change, I had no idea what it meant to create a technology start-up. I just knew that I wanted to create something that would rival big fashion brands and e-commerce sites like Amazon, and I knew there was a lot I needed to learn. So I sought out resources to help me.

In the beginning, my search was frustrating. It seemed as though the only options I could find were women’s business organizations that would create “vision boards” for the companies they worked with using fourth-grade magazine collages or business programs led by people older than my father who had no understanding of emerging technology. I considered getting an M.B.A., but I didn’t want to go into debt learning business principles so that I could one day hope to build Fashioning Change; I wanted to build Fashioning Change. That’s why, when I came across the Founder Institute in TechCrunch, I knew I wanted to apply.

The Founder Institute is a global network of start-ups and mentors that helps entrepreneurs create meaningful and enduring technology companies. As a graduate of the program, Fashioning Change is proud and humbled to receive the support of mentors, advisers and investors who have built and sold some extremely successful companies. They are constantly being solicited for their time, advice and money, and we are very appreciative that they choose to work with us.

One of the ways I try to build our relationship with the people who support us is by sending them honest and thorough updates. I’m a big believer in proactive communication, internally and externally. Adeo Ressi, who created the Founder Institute, has credited us with having the best investor and stakeholder updates he has seen. I thought it might be valuable to share an example of how we handled updates and how they benefited Fashioning Change. Here is a link to a template that includes some sample information from an update that we sent last August when we introduced a gift-recommendation tool.

Who Gets The Updates: Investors, potential investors, mentors, advisers and other stakeholders or potential partners.

Why We Do Them: Sending out updates has helped build external confidence in Fashioning Change. As you can see in the example, we set benchmarks, which means that every time recipients get an e-mail, they can see whether we have achieved our goals. Doing this consistently shows that we have a plan and that we are executing it. In addition, creating and sending out updates has helped us rally support, deepen our relationships, open doors and obtain important insights. Most important, the updates keep the team honest and accountable for our key performance indicators.

How We Do Them: We are driven by key performance indicators. At the end of each week we plan our benchmarks for the coming week, and we make sure they correlate with our quarterly indicators (one side benefit: this helps us avoid “feature creep” — getting distracted by features we think would be cool but aren’t essential). So when the week starts, everyone knows what his or her plan of attack is and what we will be reporting on at the end of the week. To make sure there are no end-of-week surprises, we have a 15-minute key-performance-indicator meeting every day after lunch. Having these quick meetings every 24 hours helps ensure that we meet our goals and that there are no bottlenecks. Everyone on the team sends me a weekly report, and I plug the information into a template I’ve built in MailChimp, which we use to generate the updates.

What They Tell Us: When we send out updates, MailChimp allows us to track who actually opens them and what they click on. This lets us see which of our mentors and advisers are the most engaged. If I notice that someone I have been trying to cultivate hasn’t opened an e-mail in a while, I may send a quick note and schedule a phone call.

How They Help Us: Some weeks, creating a weekly update is the last thing I want to do, but I know that they go to people who genuinely care about Fashioning Change. The updates serve as a weekly reminder that we are not alone, that we have people cheering us on and ready to give us a kick when we need one.

Do you have any tips for cultivating and engaging stakeholders?

Adriana Herrera is chief executive of Fashioning Change. You can e-mail her at adrianah@fashioningchange.com, and you can follow her on Twitter at @Adriana_Herrera.

Article source: http://boss.blogs.nytimes.com/2013/05/08/how-we-keep-our-mentors-and-investors-on-board/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

Building the Team: If Practice Makes Perfect, Why Don’t Companies Practice More?

May 8, 2013 by Leave a Comment

An H.Bloom University video conference.Courtesy of H.Bloom An H.Bloom University video conference.

Building the Team

Hiring, firing, and training in a new era.

In his terrific book “Outliers,” Malcolm Gladwell writes about the importance of practice and, specifically, the necessity of completing 10,000 hours of practice in a particular field to become proficient. This makes sense to me. Everything I did before starting in business taught me that practice was essential to achieving success. In school, I had two or three exams each semester, but I went to class every day. Moreover, I had voluminous amounts of homework each night to refine my skills in a particular subject. In football, there were 10 games in a season, but nearly 100 practices.

Why is it that, in business, no one ever practices?

At my previous company, practice was viewed as an afterthought. Once a year, someone would say, “Maybe we should do some training.” Heads would nod, and the person who had come up with the idea would arrange for a third-party specialist to come in to conduct training for a particular group within the company. Members of that group would shuffle into the room, help themselves to the coffee and bagels, nod politely to the instructor as a lesson was presented and then shuffle out at the end — knowing that they would not be subjected to practice or training again until the next year. Every day was a game, and excellence was expected despite the utter absence of practice.

I view this as a massive opportunity. If most companies put their “players” on the “field” without the benefit of practice, surely those that put real emphasis on practice would gain a distinct advantage. Here’s what we’re doing at H.Bloom:

SEED Program

We introduced our SEED Program at the beginning of 2011. The program recruits people who aspire to run their own business but know that they need to learn the basics. We bring these ambitious folks into one of our already-existing markets and have them rotate through all aspects of the business: buying, production, delivery, account-management, sales and customer service. Those who graduate have the opportunity to move to a different city to open and run a new H.Bloom market. Today, four of our five markets are run by SEED graduates, and we have another three SEED participants in rotation now, hoping for their chance to open and lead a new market.

The SEED Program for market managers has worked so well that we are starting a SEED Program for sales people. I alluded to this possibility in a previous post, and I am happy to report that it is happening. Even more exciting, the ambitious person I interviewed in Pittsburgh a few weeks ago has accepted our offer and is moving to New York City to be our first Sales-SEED participant. We expect to start the program by the end of May with a group of people who will engage in a three-to-six-month program that consists of daily lead-generation activities, weekly sales training, on-the-ground training in our New York market and monthly classes with members of our executive team. Successful graduates will have the opportunity to move to a new market and lead our sales efforts there.

H.Bloom University

At the end of last year, we started H.Bloom University. While the SEED Program is focused on training people to take on a new role, H.Bloom University is meant to refine the skills of people in their current roles. We are running two tracks, and a few other tracks are under development:

Sales

Our entire sales team meets monthly, by video conference, to work on specific sales skills. One of our sales managers leads each of the sessions. Training classes have included: time management, building a sales pipeline, cold calling and using Salesforce. The instructor builds a slide deck to present and oversees a skills workshop for each participant.

Management

One of the most fulfilling aspects of my job is leading the monthly management classes. Again, these are done by video conference. I do two each month on the same topic: one for our market managers and one for our sales managers. I split the group to ensure that each person’s face can show up on the video screen — we use Adobe Connect to facilitate the conference, and a session of six people is about the maximum for getting ideal user engagement.

Recent classes have covered communication, feedback, expectation/goal setting, inspection of results and data-driven decision-making (which I will cover in more detail in my next post). I come up with the topic, and then our head of talent, Rebekah Rombom, finds reading material that is germane to the coming discussion. Recent readings have included chapters from Jim Collins “Good to Great” and Kenneth Blanchard’s “The One Minute Manager.”

This week, I’ll be reviewing our profit-and-loss statement in detail, walking through the things I look at in the income statement and the levers we can flip to improve the economics of our business. At the end of each class, I make an assignment (based on feedback I got from our Dallas manager, Julie Schiller, a former school teacher, who told me that retention of lessons is highest when an assignment is given immediately after a class so that students have the chance to put the new information into practice). We then schedule a follow-up for each attendee to present their work for that assignment to the group.

Operations and Floral Design

Rebekah is developing a program for these two position-types. We expect to start the programs for our operations team members and floral designers by the end of the year.

Engineers

We’ve engaged with a third party to help arrange customized training classes for our software engineers. I’ll have more to discuss on this topic after the first sessions are held.

We’ve really just gotten started with our efforts. I don’t think we do it well yet or with the frequency that I’d like. But I do believe we have identified an opportunity to build a fundamental advantage in our business.

Bryan Burkhart is a founder of H.Bloom. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/05/08/if-practice-makes-perfect-why-dont-companies-practice-more/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

With Bleak Job Prospects, Parents and Children Buy Into Franchises

May 8, 2013 by Leave a Comment

Late one night in January 2012, Paige Palmer called her mother at home, crying. She was entering her final semester as a communications major at St. Mary’s College of California in Moraga, and neither she nor her friends were finding work. The job market was terrifying.

“In this culture, your whole life is planned out until you graduate from university,” Ms. Palmer, 22, said. “That time had come, and I didn’t know what was at the end of the tunnel.”

Ms. Palmer’s concerns found a receptive audience in her stepfather, Tony Uzzi. In June 2010, after 25 years in the pharmaceutical industry, Mr. Uzzi, 55, had been laid off from his job as senior vice president for sales at a pharmaceutical company based in Switzerland.

He had spent a year playing golf and trying to start a consulting career, but he had grown bored; going back to the corporate world was not really an option. “Not a lot of attractive job offers came my way,” he said. “None. I was 53. I had been making several hundred thousand dollars a year, and no one wanted to pay me that.”

Eight months later, Mr. Uzzi and Ms. Palmer put down $130,000 of Mr. Uzzi’s money to open in Mission Viejo, Calif., a franchise of Nurse Next Door, a home health care service based in Vancouver, British Columbia.

With that, they joined a growing number of parent-child partners who have responded to poor job prospects by buying franchises together. During the first month in operation, Mr. Uzzi said, they took in $23,000 in revenue, a first-month record for Nurse Next Door. Six months later, he said, they were averaging about twice that amount.

Concrete figures on multigenerational franchises are hard to come by. But anecdotal evidence suggests they are becoming increasingly common for job-seeking parents and children who have an entrepreneurial urge but not the experience or confidence to start a business alone.

Rick Bisio, a franchise consultant in Bradenton Beach, Fla., and the author of “The Educated Franchisee,” said that 10 to 20 percent of the franchisees he places start as parent-child pairs and that the number has risen since the economic turmoil.

An analysis by The Associated Press found that in 2011, 53.6 percent of those with bachelor’s degrees under the age of 25 were jobless or underemployed, up from 41 percent in 2000. And according to the Bureau of Labor Statistics, the average length of unemployment for workers over 55 has risen to more than a year.

“In the U.S., the economy has been rough since 2008,” said John DeHart, co-founder and chief executive of Nurse Next Door. “You have a lot of seasoned executives getting packages, and they’re looking for new careers. And you have this disproportionately high unemployment in the under-25 group. With that you get the dad/grad trend.”

Mr. DeHart said that four of the 11 franchises his company has opened in the United States in the past year have combined parents and recent graduates.

Larry Leonard is one such older worker who turned to opening a franchise with his children after a job loss. Mr. Leonard, 59, had been in the steel business for 38 years when he was “down-sized” from his job as president of a small steel company in Chicago Heights, Ill.

After an executive search firm told him it would take at least eight months to find another job, he and his family turned to CPR Cell Phone Repair, a telephone- and tablet-repair franchiser. The expected cost for the first store is about $125,000, said Mr. Leonard, who bought the rights to open eight stores over the next five years.

His wife, Paula, will run the front desk, Mr. Leonard said, while his older son, Russell, 29, will be responsible for marketing; his younger son, Philip, 27, for technology; and his daughter, Carolyn, 24, for social media. That division of labor is common among multigenerational franchisees, with parents typically handling jobs that require local connections and the children taking care of day-to-day operations and online marketing.

“I thought, I’m going to be 60 and if I could spend the last five to 10 years of my working life building up a company that would help me in retirement and help my children, I would investigate,” Mr. Leonard said from a soon-to-open branch in Orland Park, Ill. “We could make $30,000 to $50,000 per store in profit. It will take a few stores to match my old salary, but I’m building for the future, not just for today.”

Laid off parents and their unemployed children are often attracted to franchising because it offers easy-to-follow systems. But that guiding hand has a price. The overall cost of opening a franchise can range from roughly $50,000 for a pet-services store to some $445,000 for a restaurant, according to data from the industry magazine Franchise Business Review.

In addition, franchisees usually pay 5 to 8 percent of their revenue in royalty fees to the franchiser, said Eric Stites, chief executive of Franchise Business Review. “While franchising can be profitable, it’s a long-term investment,” Mr. Stites said. “Most franchisees will need seven to 10 years or longer to grow a successful business to a point where they can potentially sell it and make a solid return on their investment, and clearly, there are no guarantees.”

When Greg Galvez, now 52, took early retirement from his job as general manager of imported beverages at Coca-Cola after a 2011 reorganization, he bought the rights to open Proshred Security document-shredding franchises in Georgia. He operates his first in Norcross, Ga. with the help of his 16-year-old twins, who may join the business full-time after college.

Article source: http://www.nytimes.com/2013/05/09/business/smallbusiness/with-bleak-job-prospects-parents-and-children-buy-into-franchises.html?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

You’re the Boss Blog: Where the Happy Talk About Corporate Culture Is Wrong

May 7, 2013 by Leave a Comment
The Next Level

Avoiding the pitfalls of fast growth.

“Tell me something I don’t know,” is what I think every time I see another article, blog post or book on the value of happy employees. And here is what I find disturbing about these happy-employee propagandists. They are mostly off about what it takes to motivate employees and keep them happy in a fast-growth culture.

Don’t get me wrong — I want happy employees, too. But I think there are two types of happiness in a work culture: Human Resources Happy and High Performance Happy. Fast-growth success has everything to do with the latter and nothing to do with the former. Unfortunately, 99 percent of the discussion and solutions are focused on Human Resources Happy.

Here’s how I define H.R. Happy: Bosses are at least superficially nice and periodically pretend to be interested in employees as people. These employees can count on birthday-cake celebrations and shallow conversations about what their hobbies are outside of work. This approach allows H.R. people to do the job they love — compliance and regulations — instead of the job they should be doing — finding and recruiting the best available talent.

And this may work in a call-center environment or in a second-rate corporate culture where people resign themselves to the fact that they will get more if they accept being treated like children. But these H.R. Happy employees can have a rough time at fast-growth companies when they meet people who are High Performance Happy. Think of an Olympic athlete jumping into the pool for those 4:30 a.m. laps. High Performance Happy is an attitude with a skill set that says we are on a mission that is bigger than any one of us. We find our happiness in being on a world class team that is making a difference.

H.R. Happy says we should do what pleases us first — bring your dog to work! High Performance Happy says I will fight for every inch. I will be there at 4:30 a.m. no matter what and until the last dog dies. Respect is core to the success of High Performance Happy, and it is based on what you are giving not on what you are taking. For example, if one person has a sick child, we all have a sick child, and we all give more that day. And this is why High Performance Happy builds deeper bonds.

In the movie “American Beauty,” Annette Bening played Carolyn, the personification of Happy H.R. Set aside her bedeviled husband, and no matter what was said to her, she felt compelled to say something positive, even though it was as phony as the eyelashes she batted. But that is what the H.R. propaganda teaches on how to build a company. Be nice to people and they will work hard for you. But , by the way, that was not the approach at successful companies like UPS and Apple, which magnify the outcomes of the high-performance elite and obliterate the happy talk.

Steve Jobs was well known for his rants about time-clock punching morons, but his high performance elite got better not bitter. Why? Apple’s mission — making technology cool — was far more important than a few harsh words or even a little immaturity. And before its founder passed way, UPS was a great example of high performance elite with an almost military culture. At UPS, performance reviews were called “agent orange” because they were orange in color and dreaded if you had not met or exceeded your commitments. Back in the late ’80s, UPS was disciplined by the Occupational Safety and Health Administration for being too hard on its management employees at its six-week, basic-training school for supervisors. I attended it, and let’s just say it was taxing. The company ended the program shortly thereafter. On the other hand, UPS managers often had to be disciplined for working too many hours, week after week. Why? We truly believed that the American economy depended upon our moving packages from point A to point B.

High Performance Happy means you give employees tremendous responsibility, and they are happy to show that they are the best. You don’t have to con them into doing things with a flavor-of-the-month methodology that suggests they will only perform if you make them happy first. H.R. Happy says, I want you to think that I like you. High Performance Happy says, I believe in you. Here are the guideposts for building a High Performance Happy culture.

First, you can’t hide the duds the way you can in corporate America. If high performance is level 10, then duds aren’t the two and threes who are quickly shown the door. The duds are the fives and sixes who are the happy slackers — the ones who do just enough to get by, but hey, they’re happy! They befriend the boss, love meetings and are the first to check the scores and Facebook when they get back from lunch. Their H.R. Happy habits will do one of two things — bring the high performance elite down to the middle or push them out the door. The duds have to go. Today.

Here’s what you tell the high performers. Come spend time with us if you want to do something special. Don’t take it personally if you get yelled at for something you did not do. Get over it, and I am sure we will apologize when we find time. If you ask for help, we will be there. If you do not ask for help, we will assume that you are performing in a blaze of glory so be ready to show it. Don’t tell us later that you were confused or did not agree with what we were doing. You can say whatever you want to whomever you want when the decision is up for discussion — and this will be encouraged in many formats, from quick huddles to day-long strategy sessions. But when the decision is made, you march with the decision and not with what makes you happy.

High Performance Happy does not like a lot of unnecessary processes and rules, which is why entrepreneurs have to let high performance people make decisions. If you trust them with your mission and with hundreds of important daily choices, you can also trust them to handle their vacation schedule, their paid time off, and the tools they need to get the job done.

High performance organizations do not hire family members. That’s because it’s very hard to fire family, and you have to earn your spot in a high performance lineup every day. Here is the deal: I love your work if you are making the plays. If you are not, I have to find someone who can.

In High Performance Happy, you cannot have people behaving like liberal Democrats or right-wing Republicans. It has nothing to do with politics. In fast-growth organizations, life is not fair every day, and you can’t have liberals running around trying to make sure everything is equal and no one is offended. I am sorry but there are going to be days when not all is equal and someone is offended. We always try to go back and make it up, but there are times when you have to take it for the team — and not bring it up three years later at a company meeting.

But you also don’t want right-wing types who really don’t understand how the world works and lack the emotional intelligence to get over anything that bothers them. If they think somebody got more than they did, they stew over it every day until you give them more. Again, I am sorry, but in fast growth there are times when one group gets more than the other. “Get over it” is the natural response in a high performance environment. Of course, that would be considered the height of hypocrisy at an H.R. Happy company.

The toughest part of High Performance Happy is dealing with the exit of a high performance employee. What do you do when one of the chosen chooses to leave? First, you ask if there is an issue that you have not discussed. Then you ask if there anything you can do. If the answer to both questions is no, and the employee is just leaving to go to another team, the person exits with a thank you. No good-bye parties. No H.R. exit interviews. No farewell dinners. The person is gone, and the quicker the better.

But here’s the flip side. When it comes to lay offs of high performance employees during downturns, you simply cannot do it. You have to figure out other ways. In 2001, after the dot-com crash, my information technology company lost about 20 percent of its revenue. I remember the chief financial officer came to see me with what was supposed to be good news. With some belt-tightening measures, he said, we only had to lay off 12 or 13 people. We looked at our list of folks and could find nothing but High Performance Happy.

We had just made the Inc. 500, so they had delivered, and I did not want to break the we-are-in-this-together bond. So I decided the 40 highest paid people would take a 10-percent pay cut, and we would make up the rest in travel reductions. I was not surprised when I did not hear any whining, moaning or groaning from the top 40. I was surprised when the person who would have been No. 41 came into my office and said he wanted the same cut. The next day, the H.R. director came to see me and said, “Cliff, I have had a stream of people in my office all day — team leaders, front-line people, just about every role — asking if they can take the 10-percent pay cut, too. I don’t even think we need the money.”

I think it was that day that I knew for sure we had a great company that was High Performance Happy.

Cliff Oxford is the founder of the Oxford Center for Entrepreneurs. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/05/07/where-the-happy-talk-about-corporate-culture-is-wrong/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,
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