Many business owners struggle to collect on their outstanding invoices. Customers tend to pay slowly, minimize the threat of action and focus first on bills that may result in the phone or electricity being turned off. So if you have nothing to leverage, and no ongoing service to discontinue, how do you get people to pay?
Collections aren’t fun – there is no doubt about it. And since most small businesses today have personal relationships with customers that they have worked hard to acquire, heavy-handed collection techniques can feel vicious or counter-productive. On the flip side, the lack of steady collection activity can lead to mad scrambles for capital and hard feelings toward lax customers. This article is intended to show you a better way to get the money that is owed to you… to help you build an organized collection system that you can feel good about.
Any collections system should be an orderly process that moves progressively through layers of increasing intensity and urgency and consequences. The levels of motivation to pay should play out as follows:
1. Incentives to pay early.
2. A reminder notice before the due date.
3. Friendly, sporadic communications referencing the past due balance.
4. Polite but firm reminders that are frequent and urgent and add penalties.
5. A ‘final’ notice.
6. Referral to an attorney or collection agency.
Let’s look at each motivation level individually and explore what the process would look like.
Motivation to pay early. It’s not widely known, but many mid-size and large companies (and even some small businesses) have a policy that requires bills to be paid at discounted rates if they are offered. That means that if you have an invoice that is due in 30 days, but you clearly offer 2% off the total for payments remitted within 10 days – the accounting staff may be required to take the offer and pay early! Even some individual consumers will be enticed by a small reduction in their bill and pay ahead of schedule with a motivating discount.
A reminder notice. Most companies don’t send a friendly reminder notice 5-10 days before a bill is due, but that simple step can really reduce the number of overdue invoices you deal with. It reminds customers of the reasons that they should pay before the due date passes while they still have time to act. The bottom line is that everyone is busy and cash-strapped, so keeping your bill in the forefront of people’s mind in a polite and helpful way can mean that you get your money before another guy gets his.
Friendly, sporadic communications. Once an invoice has gone beyond its due date, you should start by assuming the best about your customer – times are tight, they got busy, your bill got mislaid, etc… Your early past due notifications via telephone or mail should take the approach of friendly reminders or simple balance statements, and they should offer the customer one last chance to avoid a late fee (i.e. “Your bill is now 5 days past due. If you remit payment by the 15th of the month we will waive our normal late fee of $25 as a thank you.”) This phase of the process should stay light, non-threatening and continue to offer positive incentives to pay up.
Polite, but firm reminders with increasing frequency. If you’ve made 3-6 contacts over 30-60 days and the customer still has not paid their bill or explained why, it’s time to step up the urgency of your communications. This is the stage in which you make repetitive phone calls and send more frequent notices. Late fees and interest should be applied to any balances due and you should state that charges will continue to accrue until the bill is paid. You may also let the customer know that credit will not be granted on any other purchases and that you will consider requiring up-front payment in the future. In spite of the more heavy tone, I urge you to avoid accusatory language and demonstrate openness, even while being firm in your demand for payment. This is the stage at which you might make an offer of payment terms if you are open to that type of arrangement. (i.e. “If you remit 1/3 of your balance this month, we will accept 1/3 next month and 1/3 in June.”)
Encourage your customers to call and discuss payment options with you in person, and state that you are sympathetic to difficult situations and want to help resolve the balance fairly. Most people have a very negative view of the collection process and assume that there is no room to bargain or delay payment. No one likes drowning in guilt or being made to feel like an irresponsible person, so be sure that you don’t project those negative emotions onto your customers. If you demonstrate your willingness to talk, they may at least call and give you a true picture of what is going on - and that will translate into better knowledge of your own financial picture.
Send a ‘final notice.’ Every business reaches a point where they really need to get paid or stop dealing with a past due invoice in-house. This is the time to send a final notice letter. You should state in no uncertain terms that while you value your customer and want to work with them to resolve their debt, you simply cannot allow the bill to remain on your books any longer. For most businesses this timeframe is between 90 and 180 days. It’s often a good idea to send a final notice via FedEx, UPS or Priority Mail just to lend some credibility to the letter and track receipt of the message.
Two things are important about final notices... First, a final notice should really be final. Some companies start sending out rude and threatening letters at the 30 day mark and they really don’t mean it. Your final notices won’t have teeth if you keep them coming for months on end with no tangible action. Second, you should clearly state that the customer still has time to pay (give a short deadline) and tell them exactly what will happen if they don’t. (This could be sending their balance to a collection agency or hiring an attorney.)
Having a systemized approach will make collections much less painful for everyone involved - your customers, your staff, and you. Set up a schedule of activities for your team and assign someone to handle each collections task. Give them telephone scripts, templates of various collection letters and a detailed time table of when to perform each activity.
The benefits of a formal collections system are many, including improved cash flow, realistic expectations about receivables, better customer relationships, happier staff members and, of course, higher profits!
Saturday, June 19, 2010
Friday, June 11, 2010
Leadership in Uncertain Times
Imagine "...the moment in 1492 when somebody thought This is it: the absolute edge of no return, to turn back now and make home or sail irrevocably on and either find land or plunge over the world's roaring rim."
William Faulkner wrote this beautiful passage about facing a desperate crossroad, and making a decision in the face of uncertainty in his novel Intruder in the Dust. It aptly sums up the enormity of responsibility of leadership, and the critical need for it.
There is a pervasive illusion stalking executives and managers today. The illusion is that they should have concrete certainty about all the answers all the time. To the contrary, leadership is in fact necessitated by uncertainty and the element of intuitive guessing never fully vanishes from the leadership landscape.
We're definitely coping with uncertain times right now. Upheaval in financial markets, lack of confidence in government, global unrest, war and economic stress are causing companies around the globe to question their strategies and budgets. These are the very times when leadership is crucial - and sometimes proves to be the dividing line between success and disaster.
When everything is rosy, everyone is getting along, and there is no uncertainty people don't need leaders. As Jim Kouzes puts it, "Uncertainty creates the necessary condition for leadership." If you find yourself in the uncomfortable position of having your team look to you during a critical juncture - don't panic! Don't be tormented by the assumption that you have to know exactly what to do at any given moment.
Leadership in uncertain times requires a few simple practices:
Embrace change and uncertainty. The longer you lead and the more responsibility you accept, the more you will inevitably face change. It can be your friend, or it can be your enemy, but it will not go away. How you view it is entirely up to you. You can never hide uncertainty from your followers, so it's best to embrace upheaval and make peace with the unknown; which will allow them to trust your strength and confidence while understanding your humanity.
Have clarity of vision. All great leaders know where they are ultimately going. They may have to sail through uncharted waters to get there, but they aren't uncertain about the end goal. Having an unwavering vision of the final prize will give you the fortitude to overcome difficulties and confront unknowns along the way.
Use what you already know and call your shot. When a general at war is faced with a do-or-die battle situation, what does he do? Does he say 'I can't command my troops because I don't have complete information'? Of course not! He draws upon historical facts, his knowledge base, the expertise of other people and intuition and he gives the order. Be decisive.
Measure success by the score, not the play. In sports, we accept that coaches make guesses and shift their strategies to suit the game situation. Somehow we don't acknowledge the same ever present give-and-take in the business world. Educated guesses and gutsy moves won't always work out, but if you measure your progress by the larger game score and not the individual play, you'll find that you most likely win more often than you lose.
Leadership involves taking other people on a journey with you - often to places you yourself have never been. You'll face unanticipated problems and have to change your plans to deliver the big win - that's life. But you must remain clear even when you are not certain. You must make decisions and stick with them. You must guide your team confidently and own the results of every decision you make.
Strong leaders will survive a few bad decisions... what they won't survive is a lack of vision or faltering courage. If you were captain of that ship of destiny in 1492 and you reached the point of no return, what would you do? Go home, or sail irrevocably on towards the world's roaring rim.
There is a pervasive illusion stalking executives and managers today. The illusion is that they should have concrete certainty about all the answers all the time. To the contrary, leadership is in fact necessitated by uncertainty and the element of intuitive guessing never fully vanishes from the leadership landscape.
We're definitely coping with uncertain times right now. Upheaval in financial markets, lack of confidence in government, global unrest, war and economic stress are causing companies around the globe to question their strategies and budgets. These are the very times when leadership is crucial - and sometimes proves to be the dividing line between success and disaster.
When everything is rosy, everyone is getting along, and there is no uncertainty people don't need leaders. As Jim Kouzes puts it, "Uncertainty creates the necessary condition for leadership." If you find yourself in the uncomfortable position of having your team look to you during a critical juncture - don't panic! Don't be tormented by the assumption that you have to know exactly what to do at any given moment.
Leadership in uncertain times requires a few simple practices:
Embrace change and uncertainty. The longer you lead and the more responsibility you accept, the more you will inevitably face change. It can be your friend, or it can be your enemy, but it will not go away. How you view it is entirely up to you. You can never hide uncertainty from your followers, so it's best to embrace upheaval and make peace with the unknown; which will allow them to trust your strength and confidence while understanding your humanity.
Have clarity of vision. All great leaders know where they are ultimately going. They may have to sail through uncharted waters to get there, but they aren't uncertain about the end goal. Having an unwavering vision of the final prize will give you the fortitude to overcome difficulties and confront unknowns along the way.
Use what you already know and call your shot. When a general at war is faced with a do-or-die battle situation, what does he do? Does he say 'I can't command my troops because I don't have complete information'? Of course not! He draws upon historical facts, his knowledge base, the expertise of other people and intuition and he gives the order. Be decisive.
Measure success by the score, not the play. In sports, we accept that coaches make guesses and shift their strategies to suit the game situation. Somehow we don't acknowledge the same ever present give-and-take in the business world. Educated guesses and gutsy moves won't always work out, but if you measure your progress by the larger game score and not the individual play, you'll find that you most likely win more often than you lose.
Leadership involves taking other people on a journey with you - often to places you yourself have never been. You'll face unanticipated problems and have to change your plans to deliver the big win - that's life. But you must remain clear even when you are not certain. You must make decisions and stick with them. You must guide your team confidently and own the results of every decision you make.
Strong leaders will survive a few bad decisions... what they won't survive is a lack of vision or faltering courage. If you were captain of that ship of destiny in 1492 and you reached the point of no return, what would you do? Go home, or sail irrevocably on towards the world's roaring rim.
Sunday, May 23, 2010
Problem Solving
Most of the clients I work with are trying to solve problems. I happen to be a person with a natural knack for fixing things, and it's sometimes disheartening to watch people struggle so much with troubleshooting, brainstorming solutions and solving problems. Over the years I've learned a few tricks that will help you find solutions for situations that are bugging you.
One of the most basic observations I've made about problem solving is that you can't examine something from the same point of view that created the issue and expect to fix it. You have to change your mind in order to see all the possibilities and options that exist. You cannot get a fresh perspective on how to resolve or cope with a problem unless you can step back from your typical mindset and look at the issue with new eyes.
Think about global warming... our biggest barrier to working together to solve the problem is that our entire social structure is oriented toward instant gratification and excessive consumption. Until we can look at the destruction of the planet from a different perspective and formulate creative solutions that are outside of our current way of living, we won't make any progress.
Another barrier to effective problem solving is reliance on historical information. Now you might say, 'but isn't historical data helpful in knowing what will work and what won't work?' Sometimes. The trouble is that a historical perspective will never let you look beyond what has already been tried. And, truthfully, the success or failure of an innovative idea that hasn't been attempted before cannot be measured by looking backward. Even ideas that have been tried at some point may work out completely differently in a new situation and a new time frame. So don't be afraid to try something new or resurrect a brainstorm from the past.
Letting go of preconceived notions is another huge leap toward solving problems. Having a closed mind that is deeply attached to established beliefs is a surefire way to go through life facing down one tough problem after another with no ability to find a solution. Try to allow your mind to open up to all possibilities, and don't harbor expectations for certain outcomes or make blanket judgments.
Have you ever been in a relationship that went through a 'rough patch'? It's really hard to continue a healthy, happy relationship after bad experiences because of our innate need to hold onto our notions of how our partner might hurt or disappoint us. Thanks to our negative attitude and horrible expectations, the relationship develops a natural tendency to become negative and horrible. But, by letting go of the outcomes we've been trained to expect, we can open the door for a positive experience and build a new, loving bond with the other person.
Don't be overly attached to the things you believe are 'right' or 'good'. The best problem solvers are willing to look at any and every option to uncover the one that works best. Opening your mind doesn't mean that you have to end up accepting everything - it simply means that you are open to new ideas and are not overly attached to your old ones. Your ego makes it hard to open up like this, but it's truly the only way to get innovative and fix the things in your life that seem hopelessly broken.
We all have problems. No one is immune. But if you can consciously work to re-program your approach to the problems in your life, you can learn to see them with new eyes and push through to a solution quickly.
Friday, May 7, 2010
Stopping Just Short of the Finish Line
In my business of working with entrepreneurs and business owners to achieve growth and manage change I take on many roles. Some days I feel like a counselor, a teacher, a coach, a cheerleader or even a cop! There are some critical facets to my job that have nothing to do with an MBA or marketing savvy or the ability to make projections and plans. Sometimes the most important thing I do for a client is to hold them accountable for their dreams and push them across the finish line.
It's apparent to me that many professionals stop short of reaching their intended goals - usually because they are playing it safe and refusing to step outside of their comfort zone. We all love our comfort zone, but it's NOT the place that makes you great. Think about runners in a marathon... if they all stopped running when it got uncomfortable, few people would make it beyond mile 5. Our shining moments, heroic acts and greatest payoffs come from places of discomfort and risk. We each have a tendency to allow our fear of screwing up or failing to prevent us from taking advantage of opportunities and winning the race.
Don't stop short of your intended goals. If you have an aspiration - go after it with a vengeance, and run straight on to the finish line.
It's apparent to me that many professionals stop short of reaching their intended goals - usually because they are playing it safe and refusing to step outside of their comfort zone. We all love our comfort zone, but it's NOT the place that makes you great. Think about runners in a marathon... if they all stopped running when it got uncomfortable, few people would make it beyond mile 5. Our shining moments, heroic acts and greatest payoffs come from places of discomfort and risk. We each have a tendency to allow our fear of screwing up or failing to prevent us from taking advantage of opportunities and winning the race.
Don't stop short of your intended goals. If you have an aspiration - go after it with a vengeance, and run straight on to the finish line.
Tuesday, April 27, 2010
20 Indicators your Financials are all Wrong
By Ken Kaufman
April 24, 2010
Not too long ago I was asked to review the financial statements for a struggling company. This business had several years of fantastic performance, but the business was out of cash and needed desperately to correct its course. The financial statements depicted a strong, healthy company with plenty of liquidity to handle its obligations and demands. Yet the bank account was empty. Something was not right.
Upon further investigation, the financial statements were not correct. The issue went back for more than 18 months, meaning the company had operated for over a year with an incorrect understanding of its performance and direction. You can imagine the frustration and anger expressed when the owners of this company realized they could have avoided most, if not all, of their current issues if they had received accurate information that helped them identify their problems.
Here are 20 indicators that will let you know if you aren't getting accurate information.
1. Revenue Incorrectly Recognized
If your customer pays you up-front for a product in May, and then you deliver the product in June, you should recognize the revenue in June. Each industry has different criteria for revenue recognition, but it needs to be right so the financial statements are accurate.
2. Missing Matching Principle
If you pay $100 for an item in May and then sell it for $200 in June, you should recognize the $100 expense in June when you earn the revenue.
3. Gross Margin Variability
Any issues a business has with numbers one and two can cause the gross margin of the business to change more than a few percentage points each month. This should never be the case unless your business has undergone a significant change in its business model.
4. Period Cost Timing
Why did you pay $4,000 in rent in January and $0 in February (you didn't move, did you)? Most likely January and February rent payments were both entered in January. This is just one example of period cost timing issues.
5. Discounts Buried
If your business gives discounts, you should be able to see them on your Profit & Loss so that it can be measured. After all, it really is an investment into customers. Don't bury discounts against your revenue; illuminate them to track your return on this investment.
6. Bad Debt Neglected
Don't decrease your revenue when you write off your bad debt. You should expense it. It is a cost of doing business and it should not hurt all the work you are doing to correctly recognize revenue.
7. Divisional Profitability Hidden
Every time I have ever helped a company separate its divisional stand-alone performance, the business owner was shocked to learn which divisions were subsidizing the others. Do you have more than one department, division, or location? If so, you need to break it out.
8. Job Costing Forgotten
Looking at a profit and loss statement by itself will never give you all the information you need to know about your profitability. Use job-costing (or similar approaches for other industries) to find and improve your profit drivers.
9. Balance Sheet Reconciliations Dismissed
Every account should be reconciled every month, not just the bank accounts.
10. Accounts Receivable
Have an answer for why each and every invoice over 60 days past due has not been paid. If any of your answers are not truly legitimate, write it off and send it to collections.
11. Pre-Paid Item Indifference
You pay your general liability insurance every year in February. As a result, February is always one of your worst months because it bears the brunt of all twelve months worth of insurance. Book it as pre-paid and share the "love" through the entire year.
12. Physical Inventory Lost
It does not matter how good you are, how nice you are, or how smart you are. You still need to do a regular physical count of your inventory. If you have inventory, properly managing it will make all the difference to your cash flow.
13. Depreciation Debacle
Just because your tax CPA depreciated your capital expenditures last year does not mean that last year should carry the burden. Keep your depreciation on a straight-line or more appropriate basis and spread it out over a realistic lifetime of each of your assets.
14. Fixed Assets Expensed
There are differing opinions here, but pick a dollar amount, like $1,000, and capitalize anything that costs more than that and will have a life of more than 12 months in your business. Forcing one month or even one year to carry the weight of fixed asset purchases is not accurate — that is why we have depreciation!
15. Payroll Liabilities Overlooked
Reconcile this account to zero every month to make sure you stay on the good side of the IRS, your state, and any other agencies or companies to whom you owe money from payroll.
16. Long-Term and Short-Term Debt Confused
If you buy a new vehicle for your business and you finance it over four years, the portion due in the next 12 months needs to be a short-term liability and the remaining balance is a long-term debt.
17. Principal and Interest Jumbled
The principal and interest portion of each loan payment needs to be properly coded rather than applied to an expense account called "Loan Payment."
18. Retained Earnings Miscarried
The name of this balance sheet account is exactly what it means: The accumulation of all of the losses and profits that have not been distributed from the company. Appropriate journal entries need to be made at the end of every year to make this balance correct.
19. Owner Compensation Confused
Owners receive compensation in one of three ways. Make sure to code each one correctly.
20. Statement of Cash Flow Ignored
Most businesses don't have to worry about the accuracy of their statement of cash flows because they ignore it altogether!
Accurate financial statements are critical to building a successful business. Give heed to these indicators and you will be well on your way to accuracy.
Ken Kaufman, Founder & CEO of CFOwise®, serves as the Chief Financial Officer for a dozen start-up, emerging, and medium-sized businesses. With almost two decades of experience and as an adjunct professor and published author, Ken focuses his professional efforts on helping entrepreneurs maximize cash flow, improve profits, and obtain clarity.
April 24, 2010
Not too long ago I was asked to review the financial statements for a struggling company. This business had several years of fantastic performance, but the business was out of cash and needed desperately to correct its course. The financial statements depicted a strong, healthy company with plenty of liquidity to handle its obligations and demands. Yet the bank account was empty. Something was not right.
Upon further investigation, the financial statements were not correct. The issue went back for more than 18 months, meaning the company had operated for over a year with an incorrect understanding of its performance and direction. You can imagine the frustration and anger expressed when the owners of this company realized they could have avoided most, if not all, of their current issues if they had received accurate information that helped them identify their problems.
Here are 20 indicators that will let you know if you aren't getting accurate information.
1. Revenue Incorrectly Recognized
If your customer pays you up-front for a product in May, and then you deliver the product in June, you should recognize the revenue in June. Each industry has different criteria for revenue recognition, but it needs to be right so the financial statements are accurate.
2. Missing Matching Principle
If you pay $100 for an item in May and then sell it for $200 in June, you should recognize the $100 expense in June when you earn the revenue.
3. Gross Margin Variability
Any issues a business has with numbers one and two can cause the gross margin of the business to change more than a few percentage points each month. This should never be the case unless your business has undergone a significant change in its business model.
4. Period Cost Timing
Why did you pay $4,000 in rent in January and $0 in February (you didn't move, did you)? Most likely January and February rent payments were both entered in January. This is just one example of period cost timing issues.
5. Discounts Buried
If your business gives discounts, you should be able to see them on your Profit & Loss so that it can be measured. After all, it really is an investment into customers. Don't bury discounts against your revenue; illuminate them to track your return on this investment.
6. Bad Debt Neglected
Don't decrease your revenue when you write off your bad debt. You should expense it. It is a cost of doing business and it should not hurt all the work you are doing to correctly recognize revenue.
7. Divisional Profitability Hidden
Every time I have ever helped a company separate its divisional stand-alone performance, the business owner was shocked to learn which divisions were subsidizing the others. Do you have more than one department, division, or location? If so, you need to break it out.
8. Job Costing Forgotten
Looking at a profit and loss statement by itself will never give you all the information you need to know about your profitability. Use job-costing (or similar approaches for other industries) to find and improve your profit drivers.
9. Balance Sheet Reconciliations Dismissed
Every account should be reconciled every month, not just the bank accounts.
10. Accounts Receivable
Have an answer for why each and every invoice over 60 days past due has not been paid. If any of your answers are not truly legitimate, write it off and send it to collections.
11. Pre-Paid Item Indifference
You pay your general liability insurance every year in February. As a result, February is always one of your worst months because it bears the brunt of all twelve months worth of insurance. Book it as pre-paid and share the "love" through the entire year.
12. Physical Inventory Lost
It does not matter how good you are, how nice you are, or how smart you are. You still need to do a regular physical count of your inventory. If you have inventory, properly managing it will make all the difference to your cash flow.
13. Depreciation Debacle
Just because your tax CPA depreciated your capital expenditures last year does not mean that last year should carry the burden. Keep your depreciation on a straight-line or more appropriate basis and spread it out over a realistic lifetime of each of your assets.
14. Fixed Assets Expensed
There are differing opinions here, but pick a dollar amount, like $1,000, and capitalize anything that costs more than that and will have a life of more than 12 months in your business. Forcing one month or even one year to carry the weight of fixed asset purchases is not accurate — that is why we have depreciation!
15. Payroll Liabilities Overlooked
Reconcile this account to zero every month to make sure you stay on the good side of the IRS, your state, and any other agencies or companies to whom you owe money from payroll.
16. Long-Term and Short-Term Debt Confused
If you buy a new vehicle for your business and you finance it over four years, the portion due in the next 12 months needs to be a short-term liability and the remaining balance is a long-term debt.
17. Principal and Interest Jumbled
The principal and interest portion of each loan payment needs to be properly coded rather than applied to an expense account called "Loan Payment."
18. Retained Earnings Miscarried
The name of this balance sheet account is exactly what it means: The accumulation of all of the losses and profits that have not been distributed from the company. Appropriate journal entries need to be made at the end of every year to make this balance correct.
19. Owner Compensation Confused
Owners receive compensation in one of three ways. Make sure to code each one correctly.
20. Statement of Cash Flow Ignored
Most businesses don't have to worry about the accuracy of their statement of cash flows because they ignore it altogether!
Accurate financial statements are critical to building a successful business. Give heed to these indicators and you will be well on your way to accuracy.
Ken Kaufman, Founder & CEO of CFOwise®, serves as the Chief Financial Officer for a dozen start-up, emerging, and medium-sized businesses. With almost two decades of experience and as an adjunct professor and published author, Ken focuses his professional efforts on helping entrepreneurs maximize cash flow, improve profits, and obtain clarity.
Friday, April 16, 2010
How to Survive in an Unhappy Workplace
Lots of people are having to cope with bad working conditions right now. Here are some great tips from Pat Olsen about how to survive - and even thrive.
When you don't like your job, going to work every day can be a challenge. Your problem might be with a bad manager, that you constantly feel stretched to the breaking point, or that you are resentful about taking a pay cut. Or, the whole environment may just feel toxic. You might need to stay in your job because it provides health benefits, or maybe you're only staying while you look for another position. Whatever your reasons for being unhappy, you need to maintain your professionalism and prevent a bad attitude from sabotaging you.
What the Experts Say
Timothy Butler, Senior Fellow and Director of Career Development Programs at Harvard Business School and author of Getting Unstuck: How Dead Ends Become New Paths, believes there's something elemental about the statement 'I'm unhappy at work.'" Butler, whose research focuses on personality structure and work satisfaction, says that to understand your unhappiness, you need to turn towards that feeling of unhappiness, experience it in a deep way, and not try to solve things too quickly. He suggests observing the feelings and not expecting anything. You may just find yourself at a frontier, considering what you're going to do next. "The existential nature of unhappiness is a wake-up call," Butler says. "There's some part of the self that is not being heard, that wants your attention, and that's the issue."
Similarly, Joe Mosca, an associate professor in the Leon Hess Business School at Monmouth University, who specializes in human resources management and organizational behavior, agrees that looking within is the first step. "That may be hard for some people to hear," he suggests, because while it's true that sometimes people just don't match well with their jobs, employees tend to rationalize their job dissatisfaction rather than consider that they may be part of the problem. But if you are part of the problem, you may be part of the solution, too.
Tammy Erickson, a workplace expert and author of Plugged In:The Generation Y Guide to Thriving at Work, advises that if you're unhappy, see if you can upgrade your contribution to the company, or find a way to be more creative about your job. She once performed very dull work in a book bindery but avoided becoming negative about the job by finding a way to make it less boring. Erickson was "interested in the process" and tried completing the tasks in a different order, which made the work quicker, easier, and less monotonous. "No work is uninteresting if you can think how to do it differently," she says.
That's not to say unhappy workers don't have valid complaints. One thing you don't want to do, however, is let your feelings boil over at work.
Signs That You Need to Take Action
Perhaps you've heard of someone who was so unhappy he quit on the spot or blew up at a boss. Losing control at work helps no one and may have repercussions in both your current job and in the future — you never know when you'll work with one of your current colleagues again.
Indications that you need to address your emotions may be physical or behavioral, explains Catherine McCarthy, a clinical psychologist and COO of The Energy Project, an organizational consulting firm. The signs include feeling distracted, sluggish, angry or irritable, not sleeping well or sleeping excessively, relying on alcohol or food to comfort yourself, and withdrawing from friends and activities. All may indicate underlying depression or anxiety, which you shouldn't ignore.
If you feel you have nowhere to turn, are about to burst, or are depressed, one option is to seek out your company's Employee Assistance Program (EAP) if it has one, adds McCarthy. Some EAPs will help you find a counselor, and all are bound by healthcare and workplace laws to keep your request confidential.
There are also things you can try to change in your approach to your job. Consider these solutions for surviving and even thriving in a job that's less than optimal:
1. Face the reality head-on. China Gorman, chief global member engagement officer of the Society for Human Resource Management (SHRM) reminds workers that during a recession or slow recovery, people at all levels experience the pain. Such an economic climate makes it more difficult to leave a job, but it doesn't mean you should feel stuck. Erickson advises that you "Accept that this job is not where you want to be, even if you can't make a change today. But begin taking steps to change things." McCarthy seconds this advice.
"Practice radical acceptance," she says. "Tell yourself, 'This is where I am, this is where I'm going to be for a certain amount of time.' You have more control over how you think than you realize." Understand what you're feeling, and that if you show up to work irritated, it affects your performance.
2. Develop a plan. Be proactive. Brainstorm with trusted friends and family members about your ideas. If there's something you'd like to change, decide whether your boss is approachable and if so, the best tactics to use. If you have suggestions, discuss how they will improve your performance as well as others'. The Human Resources department may also be able to help in some way, suggests Gorman, from helping you find a job within the company you're better suited for, to assisting with work/life balance.
You could also try learning a new skill. At the very least, it may help you prepare for another job. It can also lift your spirits and lead to new possibilities at your current job. If your problem is with your boss, Gorman offers advice from personal experience. She once had a boss who was smart and a strategic thinker, but terribly lacking in people skills. Gorman decided to be the boss she wished she'd had. "I made a list of what not to say, for example, and developed skills I still use today," she says.
Finally, consider looking outside your job for fulfillment. Having an outside interest or two gives you another outlet and an activity to look forward to.
3. Find (or Accentuate) the positive. Make a list of the good points about your job, advises McCarthy. Gorman calls this a benefit log. You may be thankful to have healthcare and other benefits. You may like your coworkers, or the fact that you have a short commute. Maybe there's a great gym on-site, or you enjoy the opportunity for travel or the mentoring you do. Listing what you do like about your job will help shift your perception and keep you from feeling so trapped. If you don't take responsibility, "it will hurt your performance, erode your satisfaction further, and make your time at the job worse," she says.
Principles to Remember
Do:
Elizabeth Roman (not her real name) had been head of marketing at a professional services firm in New York for four years when she fell out of favor with her boss. He had always given her good performance reviews, so she was stunned the day he let her know that he had little respect for her work. After that conversation, Roman "hated going to work every day." She resolved to find a new job, but in the meantime, she wanted to find some ways to make her job bearable. "First, I pushed myself to perform at the highest level possible after that conversation so he'd have no further ammunition against me," she said. Along with that, she came up with a creative project for attracting clients, suggested it to her boss, and threw herself into organizing it with her staff. Roman also contacted a mentor at another firm who served as a sounding board and lifted her spirits. She never betrayed her boss and never let her feelings affect her relationship with her employees. When she finally found another position and resigned, she mustered the grace to thank her boss for all he had taught her.
Case Study #2: Finding Satisfaction Outside of Work
Allen Smith (not his real name) is a technologist at consulting giant Bain who became frustrated with what he saw as a lack of a career path. "I also felt like my manager didn't understand what I needed day to day to do my job," he says. But he liked the people he worked with, so he did some soul-searching, asking himself whether he was unhappy because of someone else or because of his own attitude. He decided it was the latter. Smith had been toying with the idea of starting a business, and he thought if he could do it on the side, it would affect his outlook. He was right. He was given permission to work three days a week, which allowed him to start the part-time property management business he envisioned. "With a reduced work week, regular chats with my manager, and a focus outside of work, I've become much happier about my time here," he says. In turn, working fewer hours helped reduce his department's budget.
by Pat Olsen - HBR Blog
When you don't like your job, going to work every day can be a challenge. Your problem might be with a bad manager, that you constantly feel stretched to the breaking point, or that you are resentful about taking a pay cut. Or, the whole environment may just feel toxic. You might need to stay in your job because it provides health benefits, or maybe you're only staying while you look for another position. Whatever your reasons for being unhappy, you need to maintain your professionalism and prevent a bad attitude from sabotaging you.
What the Experts Say
Timothy Butler, Senior Fellow and Director of Career Development Programs at Harvard Business School and author of Getting Unstuck: How Dead Ends Become New Paths, believes there's something elemental about the statement 'I'm unhappy at work.'" Butler, whose research focuses on personality structure and work satisfaction, says that to understand your unhappiness, you need to turn towards that feeling of unhappiness, experience it in a deep way, and not try to solve things too quickly. He suggests observing the feelings and not expecting anything. You may just find yourself at a frontier, considering what you're going to do next. "The existential nature of unhappiness is a wake-up call," Butler says. "There's some part of the self that is not being heard, that wants your attention, and that's the issue."
Similarly, Joe Mosca, an associate professor in the Leon Hess Business School at Monmouth University, who specializes in human resources management and organizational behavior, agrees that looking within is the first step. "That may be hard for some people to hear," he suggests, because while it's true that sometimes people just don't match well with their jobs, employees tend to rationalize their job dissatisfaction rather than consider that they may be part of the problem. But if you are part of the problem, you may be part of the solution, too.
Tammy Erickson, a workplace expert and author of Plugged In:The Generation Y Guide to Thriving at Work, advises that if you're unhappy, see if you can upgrade your contribution to the company, or find a way to be more creative about your job. She once performed very dull work in a book bindery but avoided becoming negative about the job by finding a way to make it less boring. Erickson was "interested in the process" and tried completing the tasks in a different order, which made the work quicker, easier, and less monotonous. "No work is uninteresting if you can think how to do it differently," she says.
That's not to say unhappy workers don't have valid complaints. One thing you don't want to do, however, is let your feelings boil over at work.
Signs That You Need to Take Action
Perhaps you've heard of someone who was so unhappy he quit on the spot or blew up at a boss. Losing control at work helps no one and may have repercussions in both your current job and in the future — you never know when you'll work with one of your current colleagues again.
Indications that you need to address your emotions may be physical or behavioral, explains Catherine McCarthy, a clinical psychologist and COO of The Energy Project, an organizational consulting firm. The signs include feeling distracted, sluggish, angry or irritable, not sleeping well or sleeping excessively, relying on alcohol or food to comfort yourself, and withdrawing from friends and activities. All may indicate underlying depression or anxiety, which you shouldn't ignore.
If you feel you have nowhere to turn, are about to burst, or are depressed, one option is to seek out your company's Employee Assistance Program (EAP) if it has one, adds McCarthy. Some EAPs will help you find a counselor, and all are bound by healthcare and workplace laws to keep your request confidential.
There are also things you can try to change in your approach to your job. Consider these solutions for surviving and even thriving in a job that's less than optimal:
1. Face the reality head-on. China Gorman, chief global member engagement officer of the Society for Human Resource Management (SHRM) reminds workers that during a recession or slow recovery, people at all levels experience the pain. Such an economic climate makes it more difficult to leave a job, but it doesn't mean you should feel stuck. Erickson advises that you "Accept that this job is not where you want to be, even if you can't make a change today. But begin taking steps to change things." McCarthy seconds this advice.
"Practice radical acceptance," she says. "Tell yourself, 'This is where I am, this is where I'm going to be for a certain amount of time.' You have more control over how you think than you realize." Understand what you're feeling, and that if you show up to work irritated, it affects your performance.
2. Develop a plan. Be proactive. Brainstorm with trusted friends and family members about your ideas. If there's something you'd like to change, decide whether your boss is approachable and if so, the best tactics to use. If you have suggestions, discuss how they will improve your performance as well as others'. The Human Resources department may also be able to help in some way, suggests Gorman, from helping you find a job within the company you're better suited for, to assisting with work/life balance.
You could also try learning a new skill. At the very least, it may help you prepare for another job. It can also lift your spirits and lead to new possibilities at your current job. If your problem is with your boss, Gorman offers advice from personal experience. She once had a boss who was smart and a strategic thinker, but terribly lacking in people skills. Gorman decided to be the boss she wished she'd had. "I made a list of what not to say, for example, and developed skills I still use today," she says.
Finally, consider looking outside your job for fulfillment. Having an outside interest or two gives you another outlet and an activity to look forward to.
3. Find (or Accentuate) the positive. Make a list of the good points about your job, advises McCarthy. Gorman calls this a benefit log. You may be thankful to have healthcare and other benefits. You may like your coworkers, or the fact that you have a short commute. Maybe there's a great gym on-site, or you enjoy the opportunity for travel or the mentoring you do. Listing what you do like about your job will help shift your perception and keep you from feeling so trapped. If you don't take responsibility, "it will hurt your performance, erode your satisfaction further, and make your time at the job worse," she says.
Principles to Remember
Do:
- Differentiate between what you can change and what you can't.
- Take responsibility for making a change.
- Focus on making the best of a bad situation.
- Assume nothing will ever change.
- Allow negative thoughts to rule you.
- Go it alone.
Elizabeth Roman (not her real name) had been head of marketing at a professional services firm in New York for four years when she fell out of favor with her boss. He had always given her good performance reviews, so she was stunned the day he let her know that he had little respect for her work. After that conversation, Roman "hated going to work every day." She resolved to find a new job, but in the meantime, she wanted to find some ways to make her job bearable. "First, I pushed myself to perform at the highest level possible after that conversation so he'd have no further ammunition against me," she said. Along with that, she came up with a creative project for attracting clients, suggested it to her boss, and threw herself into organizing it with her staff. Roman also contacted a mentor at another firm who served as a sounding board and lifted her spirits. She never betrayed her boss and never let her feelings affect her relationship with her employees. When she finally found another position and resigned, she mustered the grace to thank her boss for all he had taught her.
Case Study #2: Finding Satisfaction Outside of Work
Allen Smith (not his real name) is a technologist at consulting giant Bain who became frustrated with what he saw as a lack of a career path. "I also felt like my manager didn't understand what I needed day to day to do my job," he says. But he liked the people he worked with, so he did some soul-searching, asking himself whether he was unhappy because of someone else or because of his own attitude. He decided it was the latter. Smith had been toying with the idea of starting a business, and he thought if he could do it on the side, it would affect his outlook. He was right. He was given permission to work three days a week, which allowed him to start the part-time property management business he envisioned. "With a reduced work week, regular chats with my manager, and a focus outside of work, I've become much happier about my time here," he says. In turn, working fewer hours helped reduce his department's budget.
by Pat Olsen - HBR Blog
Monday, April 12, 2010
Your Employees... You don't need to marry them, but you do need to engage them!
2009 is over and the recession is receding. Having cut expenses and laid off employees, you are now operating with a lean workforce and focusing keenly on building revenue, maximizing profit, and generally improving business outcomes. So as 2010 gets underway, what lies on the road ahead for you?
According to The Conference Board CEO Challenge Top 10 Report, here are the top three challenges and priorities facing business leaders today:
Recent studies by Towers Perrin and the Gallup Organization that compared the financial results of those businesses that had high levels of engagement with those that had low levels of engagement showed significant differences in such measures as net income growth,earnings per share, absenteeism, turnover and customer retention. We also know from countless other studies that engaged employees tend to stay put for longer, are more creative, and play a pivotal role in boosting customer loyalty and retention through providing excellent service and going the extra mile.
The Bureau of Labor Statistics' latest data on workplace disengagement inform us that employees across the nation, across all industries, are disengaged an average of two hours per day (and some estimates more recently go as high as 3.5 hours per day). You can do the math with your organization's own numbers, but if you take a rough cost estimate of $35.00 per employee per hour, and you have 100 employees, that equates to an annual cost of disengagement at $1,680,000!
Putting all this information together, it makes sound business sense to put top priority on engaging your employees. Now more than ever before, your employees are the main driver behind positive business outcomes.
Sounds like a plan, but exactly how is that done? While there is no "one-answer-fits-all" response to the question, here are some things to consider:
Fiona Cattermole is a strategy consultant and performance specialist. Visit her website at www.catt-alyst.com.
According to The Conference Board CEO Challenge Top 10 Report, here are the top three challenges and priorities facing business leaders today:
- Sustained and steady top line growth
- Customer loyalty and retention
- Profit growth
- A real or perceived lack of opportunity for advancement
- Having borne the brunt of keeping companies afloat during the recession, they feel they are not appreciated or valued
- Their compensation is not commensurate with their contribution
- They are unhappy with their managers
Deloitte Consulting predicts that headcount reductions and other cutbacks will give way to the need to retain employees and focus on their development. At a cost of one to three times annual salary to replace each employee, not paying attention to retention could destroy some companies that are already struggling to stay afloat. However, almost one quarter of companies surveyed are doing nothing about it, or are unaware of the impact that retention has or will have on the bottom line.
Recent studies by Towers Perrin and the Gallup Organization that compared the financial results of those businesses that had high levels of engagement with those that had low levels of engagement showed significant differences in such measures as net income growth,earnings per share, absenteeism, turnover and customer retention. We also know from countless other studies that engaged employees tend to stay put for longer, are more creative, and play a pivotal role in boosting customer loyalty and retention through providing excellent service and going the extra mile.
The Bureau of Labor Statistics' latest data on workplace disengagement inform us that employees across the nation, across all industries, are disengaged an average of two hours per day (and some estimates more recently go as high as 3.5 hours per day). You can do the math with your organization's own numbers, but if you take a rough cost estimate of $35.00 per employee per hour, and you have 100 employees, that equates to an annual cost of disengagement at $1,680,000!
Putting all this information together, it makes sound business sense to put top priority on engaging your employees. Now more than ever before, your employees are the main driver behind positive business outcomes.
Sounds like a plan, but exactly how is that done? While there is no "one-answer-fits-all" response to the question, here are some things to consider:
- Run an engagement survey to get the current engagement level in your organization
- Ask your employees what improvements they would suggest that would result in them being more involved with their jobs (bear in mind that outside facilitation may be necessary to ensure confidentiality, trust, and honest responses)
- Find out how you can establish a culture of engagement in your company by customizing an Engagement Model
Fiona Cattermole is a strategy consultant and performance specialist. Visit her website at www.catt-alyst.com.
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