Demotion is never easy

We’re worried about how one of our supervisors is going to react. We don’t want to lose him, but we’re going to have to bring in a manager over him. This employee is clearly our star technical person. But he doesn’t have the scope or experience to manage the department as it continues to grow.

Thoughts of the day: First and foremost, your job as CEO and owner is to do what’s best for the company. Make it clear this is a reorganization in preparation for a growth spurt. Make the changes you need to make and be prepared for all variety of outcomes.

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Hire for Passion Instead of the Task

Thoughts of the day: When searching for new hires, lead with what your business is all about. Find job candidates who are already passionate about what your company does. Stop looking for last-minute job fillers. Make sure that current employees are good role models and start new hires on the right foot.

Thoughts of the day: When looking for new hires, advertise your company as well as the position. Make what your company does stand out. Look for people who want to talk to you about that. Be aware that people who come in looking for a job are different from people who are on a mission to apply themselves to specific kinds of work and market needs…

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Hiring and Managing Millennials

I’m getting a lot of applications from millennials, but it seems like millennials are just looking for the next best thing and are not willing to work as hard as generations before. Is it just bad stereotypes? How do I manage their expectations and mine, and use them to move the company forward?

Thoughts of the Day: Raised to be the best inside a protective bubble, millennials may need help to succeed. Harness the enthusiasm of youth, marry it with the wisdom that comes from experience, and you’ll have a winning combination. Stop generalizing. Know that millennials want to buy in. Learn to harness a millennial and maybe one day they’ll help to run your company.

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How to Balance Benefits and Profits

We’re not sure what to do about health care. We’re worried about getting hit with increases in premiums this year, which could eat into our profits. How do we sort it out?

Thoughts of the day: Figure out what your company can and can’t afford to pay. Health care has been in constant change for the last several years for every company — it’s time to discuss that reality with your employees. Considering encouraging employees to turn to your state’s exchange for insurance? Be sure you have someone lined up who can help explain all the policy options. Make sure you can explain what you’re doing and why.

Look at your ratios. Set a target range for all salaries and benefits calculated as compared to revenue and to gross profit. As you consider adding or adjusting benefits, and paying out bonuses, make sure that your changes don’t blow the target ratio.

Ideally, any growth in benefits and bonus payouts comes from growth of the company. Forecast increases in revenue and gross profit, and figure out if you’ll need any additional personnel. Deduct that increased personnel plus any material costs from the increase in forecasted revenue and gross profit. What’s left over is the amount of income you can use to build up profits, pay additional benefits and bonuses, invest in savings and infrastructure and use to pay taxes on profits.

Not sure whether your salaries and benefits are in line with your industry? Turn to your industry association for advice and benchmarks. Some industries have stats posted online, so check that as well. You can also contact peers in your industry across the country and ask them what they’re spending. Keep in mind that both coasts tend to have a higher cost of living.

Many companies struggle as they take on additional health care costs, benefits and pay increases without sufficient revenue growth. If that’s a problem your company is facing, be honest about what’s going on before potentially sending the company into a financial black hole.

Raises and additional benefits should happen as a result of increased profits. Over the past several years, companies have had to absorb a number of mandates regarding how employees are paid and what benefits they receive. The cost of these mandates is equivalent to annual cost-of-living pay raises and then some.

Many companies have taken on substantial increases in cost of pay without seeing significant growth in revenue or improvement in profitability through increased productivity.

Show your employees how much the company pays on their behalf, above and beyond salary. Start with federal insurance and unemployment contributions; don’t forget to add in the costs of medical, dental and life insurance, child care, time off from work, and any other benefit programs your company provides.

Have a rationale and set limits on how benefits are distributed and paid for. The simplest way to handle health care is to pay for the company’s individual premium or a percentage of that. Employees who want to elect more coverage for their family can do so and use a portion of their paycheck to cover the cost.

Be careful when considering higher benefit costs for managers. Keep in mind that managers tend to be more expensive in salary. Loading additional costs onto an already expensive manager may make that person so costly that they can’t prove they can deliver enough profits to allow the company to break even.

When getting ready to give out raises, calculate the raise as a percentage of the existing salary. One company decided to give employees an hourly raise, without realizing it was a 10 percent to 15 percent increase in pay across the board. They would have been better off giving this money as a bonus and making it clear to employees that it was only going to continue if profits stayed up.

There are some great reasons for providing employees with benefits. Employees who take time off regularly tend to be significantly more productive. Those who can afford to see a doctor regularly are more likely to be healthy and productive. Employees who can afford to stay home when they’re sick recover more quickly. Employees who know their children are safe are less distracted. The list goes on.

Looking for a good book? Try “The Employee Benefits Answer Book” by Rebecca Mazin.


If Employees Aren’t Listening, Reflect on Leadership

Worried that people who should be listening to me, aren’t listening to me. Think about my employees, and ask myself, “If they’re not going to listen to their boss, who are they going to listen to?” How can I keep from getting pushed out of the way?

Thoughts of the Day: Take a look around you. Make time to think about what you want, and whether the habits of communicating are getting you there. Figure out how you can get better at communicating. Lower your perception of the consequences if things go wrong. Think before you speak. Plant seeds.

Is it really just you who’s being ignored, or are others having the same problem? Is it all employees, or just some? Is it the same employee over and over, or different employees at different times? Is it all the time, or just some of the time?

Figure out the conditions under which you observe that you aren’t being heard. Compare that to your observations about what others experience under similar conditions. Do a reality check on who, when, what, and how people go their own way without dialing in to you.

Then ask some questions. Are they attempting to spread their wings, trying to fly solo with new skills they’ve acquired? Are they repeating a habitual way of behaving with you – as in, they always dial you out? Or is it somewhere in between?

Now do a reality check. What happens if specific people do or don’t listen to you? Do they get better results with, or without your input? Or do they come out about the same either way? Do they get enough value from your input that they can achieve higher level outcomes? Are you making requests that make their life easier or harder? Try looking at it from the receiver’s viewpoint.

Time for a bit of self-reflection. How do you come across as a leader? Are you positively motivated, and are you positively motivating the people around you? Can you inspire confidence?

Think about this. If you’re not ready to empower yourself to achieve success, how will you impart that to others? On the other hand, if you’re leading and no one is following, why is the whole group following a different path? What is it about how you’re coming across?

Can you take as good as you dish it out? If someone isn’t listening to you, ask them why. But be prepared to hear some things that might make you uncomfortable. Listen without defense in order to learn.

What in your style of presentation is irritating people or pushing them away. It often comes down to what you say and how you say it. Is it all about getting what you want? What gets in the way of perceiving or responding to what the person across from you needs?

Negative approaches tend to generate negative responses, and vice versa for positive ones. Keep doom and gloom to a minimum – it’s neither inspiring nor motivating. Instead, search for purpose. Put people on a mission.

Give people a visual of how things might turn out. Make sure it’s one that they’d actually want to achieve. Make it something worth having, something worth reaching for, from theirs, not your, point of view. To do that, you’re actually going to have to invest some time figuring out where the other person is coming from.

Remind yourself that it takes a village to build well rounded solutions. Plant seeds. Ask for small changes. Encourage behaviors you want to see continue by saying, “thank you, I appreciate that.” Talk honestly about problems, but also build people up by showing them how changes they are making lead to a better world. Take time out to celebrate wins – more than the time spent moaning over losses – a lot more.

Looking for a good book? Start With Why: How Great Leaders Inspire Everyone to Take Action, by Simon Sinek.