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On Director Fees and Bad Advice

June 19th, 2014

In the lead up to the end of the financial year, we often hear of wonderful schemes that are apparently available to reduce taxation liabilities.danger-sign11

One of our crew came across some advice on a blog that is just plain wrong.  It concerns us deeply when advice given freely isn’t based on legislation.  The blog in question related to the payment of Director Fees or Director Bonuses at the end of the financial year (or even after!).  The advice provided by an accountant said that this was all fine and there are no super liabilities associated with such a payment.

Now, in certain limited circumstances this is true, however, based on our experience, it will not generally apply to the owners of smaller businesses. 

As we discussed in the office, always go to the legislation and, in this case, we refer to section 11(b) of the Superannuation Guarantee Administration Act 1992. 

We always work on the thinking that if it sounds too good to be true, it probably is!

On 4 Dimensions in People

June 5th, 2014

4 dimensionsPeople are not shallow or stupid (OK, some are, but humour me here).

Having done a fair bit of reading and cogitating over recent weeks, the issue about effective communication between people has been vexing my mind.  There are piles and piles of articles about how communication can be better and why we’re becoming less adept at it in this hyper-connected world.

The theory I have come up with is that we’ve become so accustomed to dealing with people on a two dimensional (2D) basis that we’re absolutely attrocious at dealing with people in a four dimensional (4D) way.  Allow me to explain.

In our office, I see our crew spending heaps of effort sending emails and telephoning people.  Sure this is convenient and somewhat effective,  BUT, does it really get you the results that you are desiring (for both parties to the conversation)?  Liaising with a 2D monitor, mobile phone, tablet or the like gives the impression that you are achieving things.  I believe this is wrong.

During my recent 1:1’s with my crew, I spent a bit of time with the younger, “connected” folk to explain to them that the 2D methods that they are really comfortable with aren’t as effective as 4D approaches.  The 2D focus has come about from the ubiquitous presence of social media and is creating pressure on people to react rather than respond. 

I had better explain the 4D approach:

You deal with the person in person (ie: 3D), but you “invest” in the fourth dimension with them - time

Personal interactions are far more effective as you can gain a far greater understanding of not only what is being said but also what is not being said (body language, tone, focus of attention etc).  By utilising this approach, you will be far more informed about the person you are dealing with and will be able to work with them to achieve the outcomes and results that are desired.

It saddens me when I see people at a restaurant supposedly dining together sitting focussed on their mobile phone or other device.  This constant distraction cannot be healthy and I read somewhere a while ago that the average teenager now has an attention span of 8 seconds (a goldfish gets to 9 seconds).  How are these younger folk going to be able to make meaningful contributions to their family and society if they can’t concentrate on anything for more than a few seconds?

When you consider the really valuable relationships you have with people, I would hazard a guess to say that most of these have been achieved by having personal (face to face) contact and spending time with them.  It is for this reason that I believe we need to focus back on having 4D relationships.

By spending the time and making the effort to develop more 4D relationships, you might just find that people aren’t shallow or stupid and the quality of those relationships will improve markedly.

On Getting Your Ducks in a Row

June 3rd, 2014

ducks in a rowTrying to “line up your ducks” is one of the biggest challenges for any leader or leadership group.

This morning I read the latest report from Deloitte Consulting titled “Business Trends 2014″ and one of the sections in that report is titled “The C-suite: Time for version 3.0?”

In reading the findings from the Deloitte research, it became apparent to me that one of the major factors that senior management and Boards need to consider is the ability of their team to work collaboratively and effectively across a range of specialist areas.  The development of team building and development strategies should become an agenda item for every Board of Directors.

As they state in the report:

A key requirement for the next-generation C-suite will…be the ability to secure alignment and coherence across multiple dimensions of essential change, without defaulting to the command-and-control arrangements of a bygone era.

This all has to do with the capacity of the leadership group of any business to be able to work with and across a range of functional specialties and be able to extract the information from those specialties to enable better decision making to be achieved.  Often this can be difficult because the leaders can be subject to assumptions that cloud their thinking or limit their imagination.  This can lead to issues with limiting the imagination or creativity of the team with the result that they deliver less than optimal outcomes.

By investing in personal development and team understanding, the chances of this limiting approach can be lessened.  We have found that utilising tools such as Trimetrix and the Stages of Growth creates massive upside and allows the senior leaders in any business to see well beyond their area of specialisation.  The tools help identify opportunities and allow the establishment of highly collaborative, multi-specialist teams to further investigate and exploit the opportunities that do exist.

Having a leadership team that works effectively and can not only see but work towards delivering “the big picture” will help to keep the organisation dynamic, make a massive difference in staff engagement (they will see true leadership from “the top”) and allow the utilisation of talent that would otherwise be left to stagnate or “vote with their feet”.  The collabroative teams can be drawn from across the business and business units which increases the “team” feeling and allows those people in the organisation with particular skills and talents to be more fully aligned with the whole business.  In effect, it helps to assist develop a culture that encourages innovation, collaboration and creativity.

I encourage you to read the report which can be found here and to have a think about what it means for you and your business.

Once you have had a think, initiate action to start “herding your ducks”.

On 2020 Vision

May 30th, 2014

Your big opportunity may be right where you are now

Napoleon Hill uttered these words and I was prompted to think of them when listening to Bernard Salt at last week’s Business Day Out hosted by Commerce Ballarat.

Bernard presented some fascinating information on the demographics of the world, Australia and Victoria in particular.  The information really “got to the guts” of what is likely to happen to the population over the coming years and any business owner, manager or strategic thinker would be well advised to take heedof the detail provided.

By far the most interesting statistic was the one which showed the greatest increase in population in Victoria in the years to 2023 is going to be in the age groups from 30-39 and 70-79.  There is also going to be a significant increase in the number of kids aged 5-14.

Now take this information whichever way you like, but I would be thinking about what these people are going to be wanting and needing from the perspective of goods and services, schooling, clothing, food and the like.  What, for instance are the propects for a business that is targeting new-borns?  Not as good as one targeting school-age kids.  Demand for the 20-something requirements (cheap housing etc) is likely to wane.  What are the retirees going to be needing as they do become less mobile and move from their established family homes? 

When you are planning your business for the period in to the early 2020’s, have you really considered what your customer base is, where they are coming from and what they need from you? 

For example, did you realise that the number of people in the 35-39 age group in Victoria is expected to increase by 120,000 over the 2013-2023 period?  What are they going to need, where are they going to be living (probably not in Charlton!) and what is going to be important to them?  If you consider these types of issues, you will be very well placed to ride the wave that they create.

By opening up your eyes and accessing informaton such as that provided by Bernard Salt, you will be placing yourself in the position to take advantage of the opportunities that are presenting themselves.

Take off your spectacles and use the 2020 vision that has been provided to you!

On Setting Them Free

May 15th, 2014

FreedomYou know the situation – “They’re causing issues and I just want to get rid of them”.

One of our customers was faced with a similar situation which we detailed recently.  I met with this customer yesterday to discuss a number of things going on in their business and we also reviewed how things were progressing after the Trimetrix Analysis we had performed.

When we undertook the Trimetrix review of the people in the business, it was singularly apparent that one of the people we were working with had HUGE potential for management.  Due to the management peceptions of this staff member in the business at that time, this wasn’t ever considered.  In effect, the people in the business has let their own “glasses” distort the real picture that was there.

Subsequent to the review we did and the various debriefings that were part of the process, we recommended to the MD of the business that they seriously consider moving this person into a management role.  To their credit, an opportunity arose and the staff member was offered a senior role in a “Special Projects” area. 

In discussions yesterday, I could not believe how highly the MD spoke of the progress and contribution this team member was now making.  As he said -

“they have gone from being last in and first out to now being first in and last out.”

The level of engagement that this team member now has is exceptional.  BUT, the sad thing here is that they were always wanting to do this, it’s just that the culture and approach in the business had not previously enabled them to engage to the level they now have.

Reflecting on our discussion last night, I thought about the number of people that aren’t being fully engaged with their work or with the business with which they work.  In most cases I believe this is due to the fact that the environment is one where preconceived biases are acting to (in effect) “pigeon-hole” people.  These biases can serve to restrict engagement or to protect people who might appear to be doing a good job but who aren’t.

Imagine, if you will, what would happen if you took a really gutsy, positive and proactive step with your people and found out the following:

  • what are their strengths?
  • where do their real abilities lie?
  • how do they approach lots of things (challenges, people, systems, tasks, themselves)?
  • which is the best way to communicate with them?
  • what are you doing that is holding them back?

Once you had found this out, you will be able to truly engage them with their role and they will then be able to make an incredibly positive contribution to their fellow team mates which then flows on to your business.

One of the other things that came up in our discussion was the fact that the customers of this business were providing incredibly positive feedback to the MD about this person’s job performance.  In effect, the level of trust they have in the business has increased significantly since they had taken on their role.  Wouldn’t you love your customers to say that about your people?

I applaud our customer for having the trust in themselves to trust the person they have promoted – this was so far outside the realms of possibility before we did the Trimetrix that it would have been laughed at.

The results are there to see – improved performance, singificantly higher engagement, better results, happier team (the whole team) and a less-stressed MD. 

If you’re prepared to engage people in your business, why not have the guts to invest in them to find out where and how they can make a seriously positive contribution to your efforts?  You might just be amazed at the results you do get.

I have long been a firm believer in recruiting great people, providing them with the tools, support and environment to let them excel and then getting the hell out of their way.  If you’re interested in some of the thinking behind this approach, have a look at Marcus Buckingham’s video here or the Employee Engagement video here.

As I say to all of my crew – if you’re good enough to employ, you’re good enough to trust. 

Many business owners and managers feel that they aren’t doing their jobs unless they are micro-managing their team.  This is bullshit.  Our job is as detailed above then to set them free.

Do you have the guts to do this?  If you’re willing to challenge some of your own thinking and help get your people on a  track that delivers outstanding results, give me a call.  What have you got to lose (apart from stress, unhappy and dis-engaged staff, un-satisfied customers and a whole pile of issues)?

On Digitisation and When You Will Lose Your Job

April 23rd, 2014

DigitisationSo, we are now in an age where the expansion of digital functions across our economies is becoming ubiquitous. What does this mean for you and your role in the future?

I was spurred to ponder this after reading an article by Gillian Tett in the Financial Times this week.  It really gets you thinking about what the impact of the increasing use and application of digital technologies is going to have on us in the years to come.

Tett makes the interesting observation in her article that the industrialisation that happened a couple of centuries ago during the Industrial Revolution enabled displaced farm workers to obtain work in factories.  This then lead to the development of ever-larger cities and industrial complexes that have now, possibly, reached their zenith. The new digital economy means that a lot of people no longer need to be tied to a particular venue to enable work to be done. New products and services are available that allow people to work from “wherever” and, to a certain extent, “whenever’.

What does this mean for you and me? In my role, we’re seeing new offerings every week that make the whole process of running a business more streamlined and (hence, theoretically) efficient. They allow access from anywhere you can get an internet connection and you can basically sit on a beach and do your figures. Wonderful. Or is it?

How will the new age being rapidly foisted upon us create the wealth that we seem to seek? Will it actually lead to a higher quality of life? Or will it get us to the point that we are so reliant on computerised things that we effectively become redundant? If this is the case, what will we do? Will it be a life of “beer and skittles” or will it be a life of IT-driven poverty?

There is no question that those leading the charge in the world of apps, big data and IT will make an absolute killing. There is no question that there will still need to be resources supplied and food grown. There is little doubt that many of the tasks we humans used to undertake to do these things will soon be taken over by computers. If this is the case, are we then in a position we we are serving them rather than the other way around?

Being somewhat melodramatic, are we heading down the path to worlds “forseen” by the Wachowski brothers (writers of “The Matrix”) or James Cameron et al (”The Terminator”)?

But, we can take some comfort in the fact that our very “human-ness” will serve to ensure that dystopian futures such as those mentioned above can not and do not happen. We only need to have a listen to the likes of Simon Sinek and others who point out that what we really value are our human interactions and relationships. These cannot be replaced by machines (I may be somewhat delusional here) and I don’t believe that anyone wants to see this type of future created.

Luddites destroyed the new means of production in the knitting mills in England centuries ago. They saw them as a threat to society. I am not arguing that we need to address or limit the expansion of the new digital economy – rather I am arguing that we need to ensure that we grasp the opportunities it will present whilst embracing the fact that we are and will remain human.

The time has come where most people tend to have 2-dimensional relationships with a lot of people (and businesses) they deal with. I believe that we need to ensure that the 3-dimensional relationships (or, maybe 4-dimensional so that it includes time) that we enjoy are maintained. The new economy might even enable us to have more time to spend on these things – but we’re not seeing that happen just yet…

When you think about your role and what keeps you busy when you’re not at home, think about how that can be replaced in some form or other by a computer, app or drone. Chances are, this situation is coming sooner than you think.

On Terms & Conditions – Watch Out!!

April 9th, 2014

During a discussion with one of our customers yesterday, they broached the subject of the Terms & Conditions one of their suppliers imposed and of which they had not been aware.

The issue arose because they had approached another supplier in the same industry with a view to appointing them.  The potential new supplier advised them that there is a “secret clause” in the agreement between our customer and their current supplier and that no-one knew about it.

We then proceeded to review the Agreement and Terms & Conditions attached to it.  You know the Terms and Conditions that are in miniscule type on the back of the various documents from the suppliers that you generally get?

On review of these we found the following clauses (and I have not detailed the company – yet):

Term – subject to [where the supplier terminates on 30 days notice], the Agreement is for a term from Commencement until Expiry, or, if unspecified [which it always is], for a term of 5 years from execution. [Supplier] will renew the term for a further 60 months on the same conditions (including automatic renewal) (at [supplier's] option), unless by written notice: (i) Customer advises [supplier] not more than 120 days but not less than 60 days before the end of the Term, that it does not intend to renew the Agreement…

Services – During the term, [supplier] will provide Services in accordance with this Agreement…and  Customer agrees to obtain all [services] exclusively from [supplier] except to the extent that a pre existing service agreement is in place. The Customer agrees that on the expiry of the pre existing agreement it will use [supplier] exclusively.

Now, I don’t know about you, but I would have thought that a supply agreement that effectively signs you up to rolling five year engagements with termination only possible in a three month window in a very specified time frame should be discussed with the supplier. In this instance, our customer assures us it wasn’t.

Does this constitute unconscionable conduct? Would an ethical and moral business seek to engage and lock in customers without disclosing this requirement and obligation?

I know our customer is furious. They are going to fight this as they were never made aware of it on commencement and would not have engaged with the supplier on these terms.

My question above however remains: Would an ethical business operate under processes like this?

If you would like to know who the supplier is, send me an email…

On Changing Rules for Not-For-Profits – Doctors Beware!

March 17th, 2014

surgeryThe Federal Government has recently released the final report of the Not-For-Profit (NFP) Working Group relating to the tax concesssions the NFP sector is currently able to access.

It is pretty dry reading and  there is no endorsement by the government of any of the recommendations from the working group.  This then provides little in the way of guidance for us as advisors, however, we need to be aware of the specific recommendations that are in the report as released as they have the potential to change the NFP tax environment markedly.

The major items we see as impacting on the sector include:

  • removal of the Fringe Benefit Tax concessions;
  • removal of uncapped meals and entertainment facility leasing concessions (this will impact public hospitals and medical staff salary packaging);
  • removal of “serial capping” where people may work across a number of concessioned employers (eg: medical staff working at two or more hospitals); and
  • removal of “mutuality principle” where receipts from members (eg: Clubs) are not assessable for income tax purposes.

There are a number of other recommendations in the report, however these appear to be the most impactful and possibly controversial.  For instance, if the serial capping of FBT-concessioned benefits through public hospitals is removed, is this going to make it more “challenging” for hospitals to recruit and retain medical staff or are they going to have to pay more for their services?

As always, it is a matter of “watch this space”.  Where the government goes with these recommendations is anyone’s guess, however, the recommendations as they currently stand are a significant change to the current status quo.medical

On Bringing it all Together

March 5th, 2014

SynergyHow wonderful is it to be able to access the best thinkers in the world and have them contribute to your world?

In recent months, I have been very privileged to read and view some highly intelligent people discuss a wide range of subject matters revolving around leadership and management.

Why did I need to do this?  Because I have a hell of a lot to learn about both of these areas.

So, the journey I have taken has been somewhat long, circuitous and arduous, but I have learned a great deal.

This post could end up being a book on its own and I don’t want to bore you (if anyone is reading this) witless – you’d be far better off going and watching some Greg Kyte videos - he is far smarter and funnier than I will ever be!  Either that or have a read through David Thorne’s work – one of the funniest blokes on the planet.

I will attempt to bring all this reading and viewing down into some useful points that others may gain some value from.  Here goes.

People Need to be Treated as People

Over the journey I have seen many people who make it all about themselves.  They will pick people up and shower them with things, praise and the like until they have what they want and then they will drop them.  Quickly.  When they get treated the same way, they often “ark up” because it is so rude and unfair.  Needless to say, they generally end up alone.

There is an old adage about treating people the way you like to be treated.  It is very simple.  Easy to understand.  When you make this a concentrated effort, you will find good things start to happen and your credibility goes up.

Trust is the guts of it - in yourself, them and lots of others, but I strongly recommend you read “Smart Trust” by Stephen M R Covey – gets the point across very well but you need to trust yourself first.

Make it All About Them

The journey so far has enabled me to see a couple of different styles of leader.  The two styles can be broken down as follows:

  • Those who make themselves feel big by making everyone else feel small; or
  • Those who make themselves feel big by making everyone else feel bigger.

You cannot build people or a family or a business by breaking people down.  It might sound stupid, but you build them by building them.  I have seen a number of people over the past years who focussed so much on their own success that they left everyone else behind.  Needless to say, they generally end up alone.  And bitter.

Be Honest and Open

By taking this approach, you never have to remember lies or mistruths that you may have spoken.  As Ronald Regan said:

“I’m not smart enough to lie”.

It must be remembered that when you are having to have an “unpalatable” discussion, you need to ensure that the discussion is about the issue, not the person.  By trying to minimise the impact of unpleasant matters that do need to be discussed, often times, we will avoid doing this – the outcome from adopting this approach is that the issue ends up becoming even worse.  I can recommend you read the book “Fierce Conversations” by Susan Scott – this will help you get a handle on not only how but why you need to get the openness and honesty thing happening.

If, however, you try and rationalise everything, forget it.  You will generally end up alone.  And bitter and twisted.

Challenge Yourself and Everyone Else

Finding out what actually motivates people and where their strengths lie is a great way of getting people to develop and flourish.  Marcus Buckingham has presented some wonderful videos on Youtube which explain this very well.

When you get the feeling that you are “in the zone”, playing to your strengths and enjoying what you do because it “feels easy”, then you will grow and develop and you’ll share that with the people around you.  But, you have to start with yourself.

Unfortunately, there are people out there who don’t want to challenge themselves first.  By not doing this, they don’t become authentic leaders (or people) because they haven’t been on the trip themselves and therefore cannot give the support and guidance required for others when they try and go on this journey.  They generally find that they don’t have long term work relationships and their social relationships are usually spasmodic/episodic. 

When you adopt this approach, you will generally end up alone.  And bitter and twisted.  And self-obssessed.

Give a Lot Back

The man who will use his skill and constructive imagination to see how much he can give for a dollar, instead of how little he can give for a dollar, is bound to succeed.   Henry Ford

I know there are a lot of people who do not necessarily believe in giving – I’m not referring here to just money.  I am talking about the sharing of knowledge and wisdom.  As my friend Ron Baker says – knoweldge is a non-rival asset – he can share his knowledge with me - I now have it but he still has it – in other words, by sharing, it is expanded.  Giving a lot back needs to be about helping others develop and learn from your and others’ experiences. 

In many professional firms, I see Partners and senior people who are loathe to share their knowledge because they have a fear that the knowledge they share may make them redundant or they “might be found out”. This is also the case in business where the owners and managers of some businesses will be scared of letting go.  By giving back to the people around you, sharing your version of reality and helping them understand new and different points of view, you are helping them develop.  You are giving them the tools that will help them further develop others.  There are a lot of wonderful quotes about education and the legacy it leaves.  By giving back to everyone around you, there is a deep feeling of satisfaction in seeing their confidence, self esteem and competence improve.

Where people are scared to give for fear of, well, I don’t know what, I find it terribly sad.  They will generally end up alone.  And bitter and twisted.

Understand “The Rules”

From my readings and watchings (yes, I know), there is a chord that struck me very clearly from Patrick Lencioni.  He talks about “The 5 Dysfunctions of a Team” and it all starts with trust (Aha! I hear you say).  It develops from there and much of what he has to say supports and is supported by the things I have mentioned above.  I strongly recommend you take 40 minutes of your time and have a look at his lecture at the Royal Albert Hall. 

When you consider the issues he raises about teams and why they don’t work (and, conversely, why they do), it becomes apparent that most of the issues are about having clarity about goals and where you are going, agreeing on what is acceptable behaviour and getting everyone prepared to have “fierce conversations” on the road to getting there.  Couple that with the thinking of Simon Sinek and you get the idea about why working toward something that is worthwhile and “valuable” in the true sense gets things going.

There are a number of people in the world who have only one vision – to make as much money as possible.  They are not inspiring anyone apart from their bank manager (and barely even them).  “Obsession with possession” will generally cause those who aren’t prepared to share, develop and support those around them to lose sight of what is really important.  Their families, friends and work colleagues are merely cogs in a wheel rolling toward a destination that has no intrinsic value.  They will generally end up alone.  And bitter.

People are Irrational

In recent years, the field of behavioural economics has developed and, I must admit to being a bit of a convert to the thinking that is bound up around this school of thought.

We generally believe that people are rational sensible and (effectively) predictable.  Nothing could be further from the truth.  I recommend that you have a watch of Dan Ariely discuss this as it will challenge the way you approach your interactions with people.  Couple this with the presentation by Dan Pink and you will start to see that people want to have interactions that actually “mean” something.

Where folk look at people as cogs in a wheel and use their personal focus on money to believe they can get the best out of people through money alone, they will generally find that those who work FOR them will not give the v0luntary effort that they could.   In effect, if you treat people purely as commodities to be exploited, they will repay you with that level of engagement.  When people such as this are more driven by what they can get from people rather than what they can give, they forget about what it is that the people they are using really want and desire.  As a consequence, they will generally end up alone.

In Conclusion

It is all about people.  Working WITH them, focussing on developing their strengths and having clarity about why you are all doing what you are doing will help them be more engaged and more effective.  You will enjoy the journey more and they will be more than happy to come along with you on that journey.

A lot of people out there have a fear of adopting this approach due to a lack of self esteem or trust in themselves. 

I feel sorry for them as they will never know the true satisfaction that comes from seeing the crew they work with become much better in every sense of the word.

On New Credit Laws

February 27th, 2014

Credit trapAre you in the habit of paying your bills a bit late?

You know – the power bill, gas bill, phone bill etc?  Those bills that rack up during the month and you sit down one night to clear them all up in one go?

Under new credit laws which start to apply in Australia from 1 April 2014, there is a new regime for credit providers to report your credit history.  In effect, the changes will result in your payment history being reported – not just your non-payment history.

Up until now, credit reporting was only done where you were over 60 days late in paying a bill.  With the new changes, you will be “reported” if you’re one day late.

Not much of an issue you ask?  Well, consider this – all the financial institutions will now have access to your full payment history.  They have made noises about the late payment of bills not being a large influence on their credit assessment processes, but they have indicated that they will take this into consideration when looking at any credit applications.

Even if you have a perfect history of paying all your loans and credit cards on time, have never had a default notice issued to you and have generally run a clean financial life, the fact that you regularly pay your phone bill late can have an impact on the financial institutions’ view as to your credit worthiness.  The reporting will also be done when you are in dispute with (say) your telephone company – you’re late and they don’t care about the reason for you being late (even if it is not your fault).

It will come as no surprise that the legislation was largely driven by the banks and financial institutions.  They will be able to use the information obtained to offer a more detailed “risk rating” on everyone and this will in turn mean changes to the margins they charge on loans.  End result?  More revenue for them.  At a time when we need to get our economy going and encourage spending, this type of legislation will end up having the reverse effect.  Talk about the law of unintended consequences!

So, when you get your bills from now on, make sure you pay them on the due date – even if you are in dispute.  If you don’t you might just have a nasty shock coming next time you apply for credit!

Image credit: The Australian