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Money Monkeys

Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for $10 each.

The villagers seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, the villagers stopped their effort.

He further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again. Soon the supply diminished even further and people started going back to their farms.

The offer increased to $25 each and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!

The man now announced that he would buy monkeys at $50 ! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.

In the absence of the man, the assistant told the villagers. ‘Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each.’

The villagers rounded up with all their savings and bought all the monkeys. Then they never saw the man nor his assistant again, only monkeys everywhere!

Now you have a better understanding of how the stock market works.

Sexual Harassment and Discrimination

For Employer & Employee

The Supreme Court on June 26,1998, made employers more liable for incidents of sexual harassment. Ruling on two sexual harassment cases, Faragher v. City of Boca Raton, and Burlington Industries Inc. v. Ellerth, the Supreme Court basically stated that the employer is responsible for the actions of the supervisor, even when the employer is unaware of the supervisor’s behavior. An employer can no longer claim that they did not know about the sexual harassment because the employee did not inform them, nor can they claim that they were unaware of the supervisor’s behavior.

“Employers must be  proactive in order to  avoid a sexual  harassment lawsuit.”

Steps Employers Can Take to Avoid Sexual Harassment Lawsuits

1.) If your company does not have a sexual harassment/discrimination policy, get one fast! The policy should communicate that the company is taking a “zero tolerance” approach toward sexual harassment. Have an attorney review it, and make sure it gets out to all your employees either through the employee handbook or in memo form. Have the employees sign it to acknowledged that they received and read the policy. The policy should be verbally communicated to all new employees, and can even be posted in the workplace. If you have employees whose primary language is not English, have your sexual harassment policy translated or communicate to them in their primary language.

2.) Provide different routes that employees can take to file complaints; i.e., calling a hotline, contacting the human resource department, or by contacting their supervisor. Also the employee should have the option of talking with a male or female company representative.

3.) Conduct sexual harassment training, even if it is only composed of reading material or watching a video, something is better then no training at all.

4.) Conduct yearly meetings with your supervisors to review the sexual harassment policy, and to make sure that they understand that an employee does not need to suffer negative consequences in order to make a claim of sexual harassment. Inform the supervisors that even mild to moderate sexual jokes or statements can create an atmosphere of hostility that will make some employees uncomfortable, and could lead to the creation of an environment where sexual discrimination could develop. The supervisor should also be directed to always inform upper management of any sexual harassment complaints he or she receives from employees. Supervisors should never promise confidentiality with an employee when the information relates to sexual harassment.

5.) Conduct a yearly sexual harassment survey among your employees. The survey can be done anonymously and should be distributed with a copy of the company’s sexual harassment policy. The survey can simply ask the employees (male and female) if they have experienced any form of sexual harassment during the past year. Why do a survey?  The results of the survey will tell a court that your company is actively engaged in preventing and correcting sexual harassment. Remember, that the Supreme Court has just determined that an employer can be held liable for incidents of sexual harassment that they are unaware of occurring. So, one method of defense will be to demonstrate to the court or a jury that your company conducts yearly meetings with supervisors and also conducts a yearly sexual harassment survey to attempt to uncover sexual harassment violations before they cause problems for your employees.

6.) Conduct investigations promptly and thoroughly. After the dispute is resolved, a follow up should be done with the employee to ensure that no one has suffered retaliation. Make sure your sexual harassment policy spells out clearly that retaliation against an employee filing a sexual harassment complaint is illegal and will not be tolerated.

7.) Treat same-sex harassment, and men reporting harassment, the same as you would for a woman reporting her male supervisor being sexually inappropriate.

8.) Always document the results of any sexual harassment complaint or investigation. Not only document the results, but document any corrective action that you asked the employee or supervisor to take. Follow up on any corrective action so you can document if the employee fails to take advantage of your companies polices/procedures or any corrective action that your company takes to prevent the sexual harassment from occurring again in the future.

9.) Inform all employees that it is their obligation to report sexual harassment that they either experience or witness.

The Supreme Court also stated that the court will no longer heavily rely on the two different forms of sexual harassment, “quid pro quo” and “hostile environment.”  The Court called these two forms of sexual harassment of “limited utility” in assessing employer liability.  As a result, an employee that refuses the unwelcome sexual harassment of a supervisor, and who suffers no adverse job consequences, can still bring a sexual harassment lawsuit against her employer if the employee can show they were discriminated by the sexual content. The employee will not necessarily be required to show a loss of advancement, retaliation, loss of income, or stress as they once did under “quid pro quo” and hostile-environment. They will need to show that the nature of the sexual content they experienced caused them to experience discrimination.

Give It To Me Straight

This means that even though the employer has a policy against sexual harassment and even when sexual harassment training is provided to their supervisors; they still can be held vicariously liable in cases where a supervisor uses sexual content to discriminate against an employee. The courts are now looking at what a “reasonable person” would determine to be sexual content that could cause discrimination versus the old standards of quid pro quo and hostile-environment. The Supreme Court did not throw out these standards, but will not rely on them as courts have in the past.

The Employer Liability Test

The Supreme Court created a two part test to be used by employers in defending themselves against a sexual harassment lawsuit.

1.) The employer needs to show that they took reasonable care to prevent and correct any sexual harassment behavior within their workplace.

2.) The employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer.

Lower courts have even been apply vicarious liability and the two part test to determine employer responsibility in cases involving other forms of protected discrimination under Title VII. Deffenbaugh-Williams v. Wal-Mart Stores Inc. and Fierro v. Saks Fifth Avenue.

Employers Must Change
If you are an employer, it is time to change how you deal with sexual harassment in your company. Currently at least 40% of all women report being sexually harassed at some point in their career, and men currently account for 11.6 % of all sexual harassment cases filed with the EEOC.  So, the chances of your company needing to respond to a sexual harassment concern is great. Be prepared and you will likely deal with it successfully for all parties involved.

“Employers must be  proactive in order to  avoid a sexual  harassment lawsuit.”

Steps Employers Can Take to Avoid Sexual Harassment Lawsuits

1.) If your company does not have a sexual harassment/discrimination policy, get one fast! The policy should communicate that the company is taking a “zero tolerance” approach toward sexual harassment. Have an attorney review it, and make sure it gets out to all your employees either through the employee handbook or in memo form. Have the employees sign it to acknowledged that they received and read the policy. The policy should be verbally communicated to all new employees, and can even be posted in the workplace. If you have employees whose primary language is not English, have your sexual harassment policy translated or communicate to them in their primary language.

2.) Provide different routes that employees can take to file complaints; i.e., calling a hotline, contacting the human resource department, or by contacting their supervisor. Also the employee should have the option of talking with a male or female company representative.

3.) Conduct sexual harassment training, even if it is only composed of reading material or watching a video, something is better then no training at all.

4.) Conduct yearly meetings with your supervisors to review the sexual harassment policy, and to make sure that they understand that an employee does not need to suffer negative consequences in order to make a claim of sexual harassment. Inform the supervisors that even mild to moderate sexual jokes or statements can create an atmosphere of hostility that will make some employees uncomfortable, and could lead to the creation of an environment where sexual discrimination could develop. The supervisor should also be directed to always inform upper management of any sexual harassment complaints he or she receives from employees. Supervisors should never promise confidentiality with an employee when the information relates to sexual harassment.

5.) Conduct a yearly sexual harassment survey among your employees. The survey can be done anonymously and should be distributed with a copy of the company’s sexual harassment policy. The survey can simply ask the employees (male and female) if they have experienced any form of sexual harassment during the past year. Why do a survey?  The results of the survey will tell a court that your company is actively engaged in preventing and correcting sexual harassment. Remember, that the Supreme Court has just determined that an employer can be held liable for incidents of sexual harassment that they are unaware of occurring. So, one method of defense will be to demonstrate to the court or a jury that your company conducts yearly meetings with supervisors and also conducts a yearly sexual harassment survey to attempt to uncover sexual harassment violations before they cause problems for your employees.

6.) Conduct investigations promptly and thoroughly. After the dispute is resolved, a follow up should be done with the employee to ensure that no one has suffered retaliation. Make sure your sexual harassment policy spells out clearly that retaliation against an employee filing a sexual harassment complaint is illegal and will not be tolerated.

7.) Treat same-sex harassment, and men reporting harassment, the same as you would for a woman reporting her male supervisor being sexually inappropriate.

8.) Always document the results of any sexual harassment complaint or investigation. Not only document the results, but document any corrective action that you asked the employee or supervisor to take. Follow up on any corrective action so you can document if the employee fails to take advantage of your companies polices/procedures or any corrective action that your company takes to prevent the sexual harassment from occurring again in the future.

9.) Inform all employees that it is their obligation to report sexual harassment that they either experience or witness.

Disclaimer: All information on this site is provided in general terms and is not meant to apply to your particular situation or be legally current at the time you read it. The information on this site is not intended to serve as a replacement for professional legal advice or psychological counseling. The author specifically disclaims any and all liability arising directly or indirectly from the use or application of any information contained on this web site. The appropriate professional should be consulted regarding your specific condition. We do not take responsibility for the information posted on other sites to which it links.

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” ~ Warren Buffet.

Every business must manage their reputation because in the end, what else is there? Yes, a business with a great reputation can fail, but it is far more difficult for a business with a poor reputation to succeed. Marketing gurus talk about the importance of branding and although I don’t disagree, isn’t your reputation really your brand or image and vice versa? Therefore, protecting your reputation, your brand, your image (whatever you wish to call it) must be at the top of the list as a business owner.

There are several things that impact the reputation of a small business. In general, everything in your business that touches your customer has the potential to either build or tarnish your reputation. Your policies and procedures around customer complaints will often play a large role in determining your reputation. The message you send when you invoice a customer or make a collections call affects your reputation, brand and image. How your phone is answered and how many buttons the caller has to push before reaching a live person can affect your reputation. Every thing that touches the customer can have either a positive or negative impact.

In the past, companies managed their reputation by placing carefully crafted messages in various media. The invention and mass adoption of Internet access and interactive web applications including social media has effectively put the consumer in charge of the message. Consumers trust the word of other consumers far more than what the company might have to say. And, with the millions of people using social networking sites like LinkedIn, Twitter, Facebook, news can travel very fast – in minutes thousands of people can know of a good or bad experience with your business.

As soon as customers express their opinions about products, services, brands and companies (good or bad) on the web, it is there for the world to see and it is extremely difficult, if not impossible, to get them removed. If you doubt that, pick any company or brand name (maybe your own) and search Google for “CompanyName complaints”, CompanyName sucks”, or the like and you may be amazed at what you find.

So, how do you listen? Here are some free listening tools:

Twitter
There are millions of people chatting on Twitter every day and any one of these conversations could be about you, your company or your website. You can listen by using a free service called TweetBeep that monitors Twitter and sends you an email alert for the keywords, phrases and domains (your personal name, your company name, your brand, your blog/website name and/or domain) you have selected. The alert will tell you what was tweeted and who tweeted it. Of course, you will need sign up for a free Twitter account if you wish to insert yourself into these online conversations.

You will also want to sign up for BackTweet Alerts. Because Twitter messages are limited to 140 characters most twitterers will use link shortening services like http://bit.ly, http://tinyurl.com, etc. in place of the actual web address of a specific web page or blog article that is much longer. The really cool thing about BackTweet is that it translates the shortened address into your actual link and alerts you by email when someone tweets about it.

Websites, Blogs & Public Forums
Google claims to have indexed over 1 trillion domains and over 150 million blogs with over 1 million new posts every 24 hours. Then, there are public forums, social bookmarking and reviewing sites where users can comment. 

To “listen” in these places, you will need to sign up for a free account at Google Alerts and/or Giga Alert. I personally prefer Google Alerts. BackType Alerts is a free service that primarily searches comments on blogs and forums looking for keywords, phrases and domains. Don’t forget to sign up for that as well.

SocialMention is a free service that works a lot like Google Alerts. So why would you want to use both? Just in case one of them misses something, possibly the other will pick it up for you.

Have you ever wondered what people are saying about your company and brands on the message boards? All public message boards are open for search, but BoardTracker Alerts seems to pick up the ones that everyone else misses. Be sure you don’t forget this one or you will miss out on the discussion about your brand features, organization’s last fundraiser, and more.

All of the listening services above are free. However, you should not overlook Filtrbox even though they charge a small monthly fee for their service. Filtrbox can replace all of the free listening services and give you much more than just alerts. Not only does it listen/monitor and alert you, it gives you the tools to analysis and engage. At the least, might want to take advantage of the free trial.

By listening, you will learn a lot about which of your policies and procedures are creating goodwill and building your reputation and which ones are having a negative impact and diminishing your reputation. Of course, it is critical to empower your employees so they can resolve problems quickly while untold others in social networking communities may be watching. As I pointed out in my previous article, an unsatisfied customer made satisfied is ten times more loyal than a happy customer and often will become a vocal brand ambassador.

To accomplish this, you will need to encourage your employees to invest some of their time in these social networking sites. Is that too big of a leap for you at this point? It is entirely up to you. After all, it is your business and you need to determine what will work for you. However, those business owners who are hanging onto practices of the last decade seem to be struggling more than necessary.

– From the book 13 Bankers

That quote actually refers to how banks operated in the 1990s. But some things never change on Wall Street.

Goldman Sachs was charged with fraud on Friday, but you probably already know that. The story has been reported relentlessly. Just to cover the bases, here’s the deal:

• Collateralized debt obligations (CDO) are packages of mortgage-backed securities (MBS). The CDO are diced up into different risk slices and sold to investors.
• In a specific deal put together by Goldman, hedge fund manager John Paulson was allowed to help pick the MBS that were included in the CDO. Paulson ostensibly picked the most wretched MBS he could find because his hedge fund was short (betting against) these same securities through credit default swaps (CDS). Paulson paid Goldman $15 million to throw the deal together.
• All of this was unbeknownst to the clients purchasing the CDO. In fact, they were told otherwise: That the MBS were independently selected by a company called ACA Management, LLC.
• According to the SEC’s fraud charge: “The deal closed on April 26, 2007 … By January 29, 2008, 99% of the portfolio had been downgraded. As a result, investors … lost over $1 billion. Paulson’s opposite CDS positions yielded a profit of approximately $1 billion.”

“God’s work,” baby!
To be blunt, Goldman fibbed, rigged the game, and “ripped the faces off” its clients. Or at least that’s what it’s being accused of.

What’s curious is that, despite the media frenzy, most of this story has been known for some time. Wall Street Journal reporter Greg Zuckerman explained the bulk of it in his 2009 bookThe Greatest Trade Ever, which details Paulson’s bet:

Paulson didn’t think there was anything wrong with working with various bankers to create more toxic investments … After all, those who would buy the pieces of any CDO likely would be hedge funds, banks, pension plans, or other sophisticated investors …

However, at least one banker smelled trouble and rejected the idea. Paulson didn’t come out and say it, but the banker suspected that Paulson would push for combustible mortgages and debt to go into any CDO, making it more likely that it would go up in flames … other bankers, including those at Deutsche Bank and Goldman Sachs, didn’t see anything wrong with Paulson’s request and agreed to work with his team.

So to be clear here, that Paulson had a hand in helping Goldman create CDO isn’t news, nor was it a crime. The only charge (and it’s a big one) is that Goldman didn’t disclose this fact to the CDO buyers. What’s it all mean for the bank?

What this means for Goldman
In the late 1970s, John Whitehead, a former Goldman senior partner and co-chairman, wrote down a list of 14 “business principles” the bank should strive to follow. To this day, the list is paraded on Goldman’s website and in its annual reports as a practical bible.

Nos. 1 and 2 on the list are:

1. Our clients’ interests always come first. Our experience shows that if we serve our clients well, our own success will follow.
2. Our assets are people, capital, and reputation. If any of these are ever lost, the last is the most difficult to regain.

Assuming the charges against Goldman are legit, rule No. 1 has been thoroughly spat on, and the latter part of rule No. 2 is about to become the bank’s worst nightmare.

The biggest threat Goldman faces are not fines. It’s that clients will come to terms with what’s long been suspected: That a good number of Goldman bankers are well-dressed Ivy League carnies. Not wanting its face ripped off again, business could turn elsewhere.

Think that’s being dramatic? In the mid-1990s, a tape recording caught employees from Bankers Trust bragging that the goal was “to lure people into the calm and then just totally [$%@#] ‘em.” The bank never fully recovered from its reputational blow and was eventually taken over by Deutsche Bank. If you were a pension manager, or the head of finance for a municipality, and a Goldman salesman came to your door tomorrow offering to sell something fancy and lucrative, would you take him seriously after learning of these fraud charges? Think about it.

And although Goldman is the only bank implicated, suspicion of investment bankers is pretty universal these days. After learning of Goldman’s mischief, client protest may very well wander over to the other big shops – Citigroup, Bank of America ,JPMorgan Chase , and Morgan Stanley .

Maybe … maybe not
There are a few counterarguments here. One is that only one Goldman banker was named in the fraud charges, and the entire franchise shouldn’t be lumped in with his misbehavior. This sounds fair, but I don’t think this holds much water. When business is based solely on character, you’re only as strong as your most morally bankrupt idiot.

Enron’s auditor, Arthur Anderson, wasn’t engaged in companywide fraud, but its reputation was pretty well wrecked after Enron collapsed. That’s why when Warren Buffett stepped in as Salomon Brothers CEO in the early 1990s amid a scandal, he told Congress his attitude was, “Lose money for the firm, and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless.”

Another why-worry argument is that this has all happened before. After the dot-com bust, a mess of Wall Street banks were accused of hyping Internet stocks to clients while privately acknowledging otherwise. Some thought Wall Street was ruined. Yet just a year or two later, it was successfully peddling mortgages that could make Pets.com look conservative. Investors have short memories, especially when they get a new bubble to play with.

I certainly don’t think this will be fatal for Goldman. But I’m hoping — really, truly hoping — this wake-up call will defang some of the power and influence banks wield. Maybe that’s being naive. Fingers crossed.

Private Equity Firms are looking to Invest or Buy Companies with or from owners or ambitious management teams. A great time to sell or seek investment capital…

Private Equity Groups have not been hard-hit by the credit crunch or the past stock market decline. They have capital to invest and are looking for business acquisitions or investments. One of the major market shifts for the acquisition of privately held companies has been the growth in the number of Private Equity Groups (PEGs) over the last decade. These organizations number in the thousands in both the United States and Canada. Private Equity firms generally manage money for insurance funds, pension funds, charitable trusts and sophisticated investment groups. They have money to invest. Despite the downturn in the Canadian economy and industry in general, the buyout and investment market for Canadian companies remains hot. 

PEGs have become key players in business acquisitions. They offer flexibility as a liquidity source, giving entrepreneurs the ability to take some cash off the table, recapitalize their company or simply sell and move on. Private equity refers to buyout groups that seek to acquire or invest in ongoing, profitable businesses that demonstrate growth potential. 

Private equity buyouts or investments take many forms, including: 



Outright Sale – This is common when the owner wants to sell his ownership interest and retire. Either existing management will be elevated to run the company or management will be brought in. A transition period may be required to train replacement management and provide for a smooth transition of key relationships. 

Employee Buyout – PEGs can partner with key employees in the acquisition of a company in which they play a key role. Key employees receive a generous equity stake in the conservatively capitalized company while retaining daily operating control. 



Family Succession – This type of transaction often involves backing certain members of family management in acquiring ownership from the senior generation. By working with a PEG in a family succession transaction, active family members secure operating control and significant equity ownership, while gaining a financial partner for growth. 

Recapitalization – This is an option for an owner who wants to sell a portion of the company for liquidity while retaining equity ownership to participate in the company’s future upside potential. This structure allows the owner to achieve personal liquidity, retain significant operational input and responsibility and gain a financial partner to help capitalize on strategic expansion opportunities. 



Growth Capital – Growing a business often strains cash flow and requires significant access to additional working capital. A growth capital investment permits management to focus on running the business without constantly having to be concerned with cash flow matters. 

PEGs have become a major force in the acquisition and investment arena. The US PEG onslaught is coming. Get on board. 


-Mark Borkowski is president of Toronto based Mercantile Mergers & Acquisitions Corp. Mercantile specializes in the sale of mid market companies sold to strategic buyers or private equity firms.

He can be contacted in confidence at mark@mercantilema.com or (416) 368-8466 ext. 232 
www.mercantilemergersacquisitions.com

The cost of employees can be one of the biggest numbers in a small business budget. Consequently, decisions about what to pay employees can cause a small business owner much consternation. The objective is to pay them enough to keep them but not so much that the business can’t make a profit. In this article, I will not attempt to address employee rights or the very thorny issue of whether or not small businesses should bear the costly burden of benefits. However, I would like to address some fundamentals at the core of this issue.

When unemployment is high, it is tempting for employers to believe they can attract high performing workers while offering low compensation. The folly in this kind of reasoning is that it defies a general law of the universe; you get what you pay for.

According to Dr. Bradford Smart, in his best selling book, “Top Grading”, professional sports teams do not expect to get A players if they are only willing to offer C player wages. And yet, some employers expect to get high performers while offering low compensation. Sooner or later this strategy is bound to backfire. High performers who are not treated as such will leave resulting in turnover which is very costly for employers. At the very least, high performers who are not treated as such become resentful and unconsciously withhold their best. In the end, the deluded employer gets what they paid for: C performance.

C performance and turnover aren’t the only consequences of not giving employees commensurate rewards for their contributions. Disgruntled employees are more likely to take sick days, file disability claims, steal, blow the whistle, and file lawsuits.

So, what can a small business do to avoid these unsavory consequences? The short answer is quite a bit.

When determining what to pay employees, the first step is to find out what others are paying. Wage and salary data is accessible through classified employment ads, networking with other businesses, employment agencies, and online. Monster offers free wage and salary data at their website.

An important issue to consider relative to pay is how much of the business’s success depends on employee performance. If the success of a small business has little or no correlation to employee performance, then the issue of what to pay may not be an issue. However, even when employees have little or no visible impact on the bottom line they always have the potential to either build or tear down the business’s brand.

If the bottom line does depend on employee performance then it is in the best interest of the business to reward employees accordingly. An important issue to consider is how much competition exists in the market for these kinds of employees. If competition for talent is intense, the small business will need to not only pay “market rates”, it may need to offer comparable benefits. Otherwise, competitors can easily recruit employees away.

No matter what position an employee holds, a certain percentage of their pay should always be based on performance. Business owners should determine the key performance measures for each position in the company based on the outcomes they expect employees to deliver. For example, salespeople are expected to deliver revenue. So, a significant portion of their pay is usually based on revenue.

For positions other than sales, a smaller percentage of their pay can be based on performance. For example, in customer service, a percentage of their pay can be based on customer satisfaction and retention.  Ultimately, performance measures should be correlated to key business success indicators such as revenue, profitability, customer retention, etc.

Contrary to popular belief, pay is not the only way to motivate and reward employees. If giving employees healthy annual pay raises isn’t in the company budget there are many other methods for motivating, recognizing, and rewarding good performance. Beyond pay, employees place a high value on good benefits, opportunities for career advancement, training and development, and a positive work environment. You will find thousands of ideas on how to reward employees for good performance in Dr. Bob Nelson’s book, “1001 Ways to Reward Employees”.

Properly designed reward and recognition programs can strengthen employee engagement and reinforce behaviors that produce positive business results. However, don’t make the mistake of thinking all employees will respond to the same rewards and recognition programs.

In order to produce the desired results, the criterion for receiving rewards and recognition must be must be understood and achievable by everyone. A word of caution; they can backfire if management is perceived to favor certain departments or specific people.

Gift cards can be very effective as a reward or recognition for performance. An afternoon or a day off with pay, a free lunch, or a free dinner is another way to reward or recognize employees. Notes from management are another way to recognize employee performance. The notes employees receive can then be drawn once a month for a gift card or a more valuable reward.

I know a local small business owner who loves to cook. On occasion he will prepare a variety of homemade salads and bring them in for lunch for his entire staff. Every Friday during the summer the company has a barbecue. The owner as well as the employees bring in dishes, sit down to eat together, and enjoy a benefit that is totally unique to this company. I don’t know how much this benefit costs the owner, but, I imagine that it is worth every penny.

The key is to make sure that the compensation you offer employees is competitive and motivates the level of performance your business needs in order to succeed. Also, you will need to review compensation periodically. One thing is certain, the cost of living continues to rise and if your employees absorb too many of these increases, they may become disgruntled and/or decide to leave.

There is a fundamental principle that has a dramatic impact on employee performance regardless of rewards and recognition. That principle is revealed in the best selling book by Marcus Buckingham and Curt Coffman. In, “First Break All the Rules: What the World’s Greatest Managers Do Differently” the authors share insights gained though in-depth interviews with over 80,000 managers from 400 companies in a Gallup study. The research indicated that great managers have very little in common, except the belief that, “People don’t change that much. Don’t waste time trying to put in what was left out. Try to draw out what was left in. That is hard enough”.

Buckingham and Coffman assert that talent can’t be taught. Each employee is uniquely wired for certain tasks and has a natural desire to perform them.  If management places employees in jobs where they are allowed to express and are rewarded for using their natural talents, superior performance is likely. Unless these employees are mistreated and/or grossly underpaid, they will not only perform better, they will want to keep their jobs, which reduces turnover. It is a win-win for employees and employers.

One of the most powerful issues that impacts employee performance is the behavior of the manager. A hallmark of a great manager is an ability to secure the trust and loyalty of their employees. This ability can be cultivated by integrity, competence, and a genuine concern for one’s employees. Pretty words about employees being a company’s most important asset are just that, pretty words, unless employees feel their manager truly cares about them. In summary, managers who inspire superior performance know that you cannot light a fire under people; you must build a fire within them.

If you would like to contact me, you can do so by visiting my LinkedIn page or emailing me at mike.clough@bestbizpractices.org.