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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Consider Bonuses Instead of Raises

There are lingering questions and disagreements about what to tie our employees’ bonuses to. Historically, we’ve given out raises, not bonuses. A suggestion was made to give one-time bonuses tied to profits for this year. How do we figure out what to give our employees?

Thoughts of the day: There’s a huge difference between raises and bonuses. Compensation tied to profits is a great way to focus everyone on a common goal. It’s not just executives or salespeople who need to be rewarded for higher-level output. Figuring out how to divide up profits can get complicated.

Raises are something employees expect to keep year after year. Taking away a raise means a demotion to most people, or signals a business that’s fallen on hard times — neither of which might be the case. It may be that you’re simply tired of paying more than you have in the past for the same old results.

What this conversation is leading to is a discussion about compensation at risk, which is money paid, usually in the form of a bonus or commission, if something happens and not paid if something doesn’t happen. Basing bonuses on a common set of results, i.e. profit of the company, helps to focus employee attention on the company’s overall goals. Under these conditions, bonuses are above and beyond payments, given to some or all employees as a result of achieving some specific goal.

Employees may expect to see bonus payouts year after year if that’s been the historical precedent. The best bet is to teach employees that bonuses are not an entitlement but rather are awarded when good things such as profits happen to the company.

It is usually best if funds to go into bonuses are calculated based on some clearly measurable outcome. Give the bonus participants a way to track progress toward the outcome so they can see how their efforts are having an impact.

Think about what it is that you want your company to achieve. Increasing revenue and expanding profit are two of the most common objectives. Safety improvements, increased productivity, on-time delivery, keeping all positions fully staffed, managing within budget — these are all things that can be measured that ultimately should contribute to profit enhancement.

Decide how increased revenue or improved performance will translate into additional profit that the company can use for employee bonuses. Don’t plan to distribute all, or even most, of the increase in profits as bonuses. First you’ll need to pay taxes on profits, add money to reserve funds to keep the company safe, and pay down credit lines and loans.

Only a portion of additional profits should go to an employee bonus plan. The key word here is “additional.” Make sure your plan rewards increases in profit, output, performance, etc. Give people something to strive for. Don’t reward maintaining the status quo from previous years.

The next decision is who gets to participate in the bonus plan. It’s common to pay top executives a bonus for improved performance. The other people in your company who may be used to compensation at risk are salespeople. Why not get everyone in the company focused on the same set of goals and use a bonus pool to reward the results you’re hoping your company can achieve.

It’s important to let employees know how bonuses are calculated. For example, you can establish a single bonus pool and then divide it based on everyone’s portion of total salary. That rewards employees based on seniority and position within the company.

You can pay out of the bonus pool based on job performance — higher job performance ratings entitle people to a higher portion of the bonus pool. You can reward an entire department as a group or calculate rewards by individual. The permutations are endless.

Bonuses can come in the form of cash, gifts, travel, entertainment or any other reward. When considering what form bonuses should take, make sure it’s a form that employees will value. Generally the lower the income, the more likely employees will value cash. Keep in mind that any gifts or travel have to be included in the employee’s W-2 and they have to pay taxes on the benefit.

Looking for a good book? Try “Performance Management: A New Approach for Driving Business Results” by Elaine D. Pulakos.


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.


Managing Stress in the Office

According the American Institute of Stress, 80% of workers feel stress on the job, nearly half say that they need help learning how to manage stress, and 42% say that their coworkers need help. 14% of survey respondents had felt like striking a coworker in the past year, but didn’t.

I’m worried about how stressful it’s been around here lately. We’re short-staffed but still working at full speed. Our head of operations is visibly stressed. With everything that’s piling up, that person is starting to snap at employees. How do we help manage each other’s work and stress load?

Thoughts of the day: Do an assessment of the organization. It’s easy for things to get out of hand when growth takes off. Find stress points and increase the backup or reduce the load. Know that when people don’t have time to listen, they’re likely to take shortcuts and make less than optimal decisions. Make time to get away. Slow things down.

Step back and take a written assessment of the organization. How many open positions are there? What resources exist to fill open positions, and is that adequate? Who needs training, and what’s the plan to get them trained? How many clients are excessively demanding and need to be replaced? What do managers do to back each other up? How does accountability, or lack of it, contribute to success or stress?

Consider each employee carefully. Take into account things they may be dealing with outside work. While it’s not your responsibility to solve personal problems, it is your job to head off conflicts and disruptions. Find out if help is needed; at least provide a sounding board.

Make a list of things around the company that could use improvement. Prioritize the list, build a timeline and allocate funds. Show people the plan so they know that it won’t always be like it is today.

Often stress comes after a growth spurt. Everyone knew how to handle things at the former size. Then a bunch of new clients or new types of products or services got added to the mix. People are asked to take on more responsibility without enough practice. And all of a sudden there’s struggling and stress.

If growth is the problem, you have a couple options. Hire, train or acquire the workforce you need. Add systems to improve efficiency. Make it your top priority to get enough people in place, with the right tools, prepared to do the job correctly the first time.

Sit down with the people who are showing signs of stress. Ask them to talk about what’s going on. Insist that they engage in a dialogue about what’s happening in the work environment. Provide them with specific examples — things you’ve observed that cause you to be concerned.

Decide if this situation is temporary. If things aren’t expected to improve quickly, consider unburdening the individuals who are stressed. Lower goals, reduce the number of direct reports or reassign duties. Sometimes it’s necessary to take a couple of steps back in order to find solid ground from which to move forward again.

Don’t allow tensions to go on for very long. People under stress often make poor choices and reach incorrect conclusions. You need everyone in your organization thinking clearly, focused on the tasks at hand. If they are distracted by too many challenges, it’s better to reduce the load before more bad things happen to them or to the organization.

Consider the value of time off. Sometimes a week or two away from the job is all it takes to get a clear head and an improved attitude. A break from routine can turn into renewed energy and a fresh outlook. And if things don’t improve, be ready to take further action to reduce demands and eliminate challenges.

Encourage people to build trust by getting to know more about each other. Bring people together outside of work, where they have opportunity to share experiences, let off steam and build rapport. Hold meetings where you ask people to share their fears as well as their goals. Make time for the people side of the business to develop.

Stress is a sign of being overwhelmed. Slow things down. Whether it’s reducing the company’s growth rate or lowering the paced of advancement for a specific individual, get the stress under control by taking things off the plate. Allow time for adjustment to new conditions. Be realistic. Just because you believe a person can handle the workload doesn’t make it so.

Looking for a good book? Try “Success Under Stress: Power Tools for Staying Calm, Confident, and Productive When the Pressure’s On” by Sharon Melnick.


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.