Today I shared with our Twitter followers a how-to series of posts the Young Entrepreneur blog is running on starting a business.  One of these posts I found interesting is Adam Toren’s piece on choosing a business legal/tax structure.  He helps budding entrepreneurs greatly by rating the pros and cons of structures including Sole Proprietorship, Joint Venture, Limited Partnership, Limited Liability Company, and C and S Corporations.

Reading Toren’s post inspired me to take a look at the data Winning Workplaces has on the small business applicants for our 2010 Top Small Company Workplaces award, in terms of revenue and profitability for the legal/tax structures we looked at under our criteria of evaluating privately held and not-for-profit organizations.  The legal/tax structures of the firms we assessed included:

• C Corporation (roughly 3/10 firms)
• S Corporation (roughly 5/10 firms)
• Partnership/Proprietorship (roughly 2/10 firms)

Here’s how they break down by structure for both average 2009 revenue and percentage that were profitable in 2009:

*Assumes the firm has been in business at least 3 years

The key takeaway is that while C Corps edged out the other two structures in revenue, a greater share of Partnership/Proprietorships are profitable.

You may be asking, What makes this survey sample a good one to use these metrics for benchmarking purposes?  Well, beyond the size of the sample (497 organizations) and the fact that they have all crossed the Dun & Bradstreet threshold of surviving after the first three years, most of these enterprises understand the payoff of employee engagement and team building strategies on the bottom line.  So they post better revenue and profitability numbers to shoot for than a survey sample in which employees are more likely to be actively disengaged.

What’s your take on the above?  How do you see strong people practices factoring into the equation?

View full post on Winning Workplaces

In February, Watts – who has been a CEO and has also assessed over 5,000 CEOs and other C-level execs in his long career as a management consultant – released his third book.  Its title, Becoming your Own Business Coach, carries the promise of helping business leaders who are serious about creating a more productive workplace culture of high employee engagement save potentially thousands of dollars in outside coaching fees by learning the skills they need to do it from the inside, with their own knowledge.

Here’s a video Watts posted on his website last month with nuggets from his book – five core principles to help you become a mature and wise leader:

I think there’s good food for thought here in creating the best leadership approach so that the people practices that evolve from that are set up to be successful.  (I define success here to mean, good for the business as they help employees.)

Watts’ latest post on his site/blog is the first of five parts on how to improve your decision making.  Click here to subscribe to his blog feed so you’ll receive parts 2-5 as soon as they’re posted.

View full post on Winning Workplaces

Incoming search terms for the article:

• george watts chicago events
• george watts las vegas
• \dr george watts\

I am getting a ton of great workplace culture and employee engagement best practices information by reading Delivering Happiness: A Path to Profits, Passion, and Purpose, the new book by Tony Hsieh, CEO of the hugely successful online shoe and clothing store Zappos.

For example, when the company was five years old, Hsieh asked one of his employees to create a Culture Book.  A more involved version of this practice by our small business honoree Rackspace, as with many people practices, the Zappos culture book turned out to be more about the journey than the end product.

I’d like you to gain the same insights, directly from the "horse’s mouth," as it were.  So I’m inviting you to comment below telling me how your business strives to deliver happiness.  Doing so will enter you in a drawing to receive a FREE copy of the book.  I’ll select and contact the winner at the beginning of July.

So have at it, readers.  And, Happy Friday!

View full post on Winning Workplaces

• Even with 92,000 employees, BP, the company most responsible for the spill out of several that were vested in the rig that exploded on April 20, has not been able to stop the flow of oil from the damaged well.
• While the federal government has considerable manpower and resources to assist BP in stopping the flow, they must defer to BP as subject matter expert in this crisis (mostly to their engineering team).
• It is urgent that the flow of oil be stopped to save the environment and companies and jobs in the region that depend on a clean ocean, and, from a profit motive perspective, to not lose more of a precious commodity.

We also know that small businesses are the most prevalent employers, representing over 99% of all firms.  Thus, it seems natural to ask if stopping the spill is one, massive opportunity for small businesses to "do well as they do good."

I asked this question this week on LinkedIn.  I’ve received three answers so far, with five days left for folks to weigh in.  I invite you to add your thoughts.

Related: Here’s one answer to the question: Opflex’s absorbent foam, which BP has agreed to purchase to help in its cleanup efforts.  I wonder how workplace team building and employee engagement activities are helping Opflex meet demand right now!

Photo credit: Wikimedia Commons

View full post on Winning Workplaces

Incoming search terms for the article:

• gulf oil spill 2010
• Opflex and oil clean up
• opflex july 2010
• success of OpFlex in Gulf

Lately I’ve shared with you data trends of the 40 finalist organizations for Winning Workplaces’ 2010 Top Small Company Workplaces award.  This includes our employee engagement research findings on:

• Industries
• CEO/employee ownership breakdown
• Top 10 performance bonus practices
• Top health/wellness initiatives
• Share of low-income workers they employ
• Their performance vs. the other 457 applicants this year on profitability, years in business, turnover, percentage of positions filled from within, and employee tenure

But what about takeaways that are more high level?  And what if they came from the perspective of an outside party (ie, not from our staff)?

I happen to have some feedback along these lines from Leigh Buchanan.  Leigh is an Editor at Large for Inc. Magazine, our Top Small Company Workplaces media partner.  She attended the meeting of our esteemed panel of judges in March in which the winners were chosen from the 40 finalists.  Since then she has served as head writer for the coverage of our 2010 winners and finalists (including their highly productive and profitable people practices) that will appear in the forthcoming June issue of Inc.

Here are Leigh’s observations:

• "I was particularly impressed by the very small companies that practice significant financial education in conjunction with open-book management as well as other forms of employee development.  I interviewed a woman who was over the moon about how understanding the numbers had made her feel so connected to the business and fired her up about her job."
• "A lot of CEOs describe their companies as democratic, but I was amazed at the extent to which some of these leaders involve employees in decision making."
• "It’s great how many companies encourage employee engagement with their communities and the world at large.  There were so many models for philanthropy and volunteerism.  And the best part is that these companies don’t dictate charities – "Thou shalt raise money for United Way" – but in most cases let employees choose causes that matter to them."
• "The geographic diversity was refreshing."  [You can view a map of the finalists here.]

The June issue of Inc., which will reveal this year’s Top Small Company Workplaces, will be out on newsstands on June 8.  If you subscribe to the magazine, you’ll receive it on June 5.

View full post on Winning Workplaces

• In recent years, leadership has supplanted management as the business world’s dominant paradigm.
• However, leadership is about changing direction, while management is about executing the current direction.
• Therefore, if management is not the dominant paradigm moving forward, it should at least share the stage with leadership.

I see the argument that executive assessment and coaching consultancy principal Mitch McCrimmon is making here.  Yet, I don’t know if I would always define leadership as facilitating change.  Certainly that plays a part, especially when times are better and companies can more easily expand and explore new markets.

But when I look at our employee engagement research on the 2010 Top Small Company Workplaces award finalists, I come to the conclusion that at any given time leadership is more about defining and creating a desired workplace culture of ownership.  This includes developing employees within this culture, and taking great care when bringing new hires into it.  So as opposed to change, I think of leadership as representing a path moving forward from a set point.

I guess the question I’m really asking here to define leadership is, What is the split for a CEO in being "chief culture officer" (as many leaders of our small business honorees think of themselves) versus "chief P&L strategist"?

I think with the economy being where it is now, most CEOs would consider themselves to be the latter; this makes total sense and does support change as being a central (maybe the) component of leadership.  But if a CEO thinks of him or herself more as the former, that could support the notion of an established, productive workplace culture as being the constant, with all other internal and external elements of the business revolving around that.

What are your thoughts here?

View full post on Winning Workplaces

• The government provided over $700 billion in TARP funds, largely to big banks, to open up lending.
• But since the bailout, Wall Street banks decreased lending to small businesses by 9%.

I’m going to insert one other fact that I think is relevant, from the SBA:

• Small businesses account for over 99% of all employer firms.

So why aren’t the most prevalent and needy employers – small businesses – getting the financing they need to open and sustain their operations?  Warren said in the interview that a major reason why banks are reluctant to lend to small firms is that they feel they can’t do it based just on the numbers (P&L, credit rating).  "You actually have to look at a business plan to do that," she said.

This tells me that, however unfair, small business owners and leaders are increasingly forced to take up the role of salesperson par excellence to their bankers – not just providing a top-notch business plan but, ideally, showing how their people resources and workplace culture of ownership contribute to sales and sales growth, as we discussed in these two posts.

Why should small business leaders focus on this at big banks as opposed to local, community banks?  On the one hand, as this report for an American Bankers Association summit held in Washington in March states, 45% of community banks have increased their business lending.  Unfortunately, they control less than $1 billion in assets.  By comparison, the co-author of the best-selling book 13 Bankers reports that the six largest banks control assets equating to 60% of our GDP – roughly $8.5 billion.  As with products in the marketplace, business leaders are inclined to go where the money is.

What do you think about the value of small business leaders reframing their approach when dealing with their bankers, especially at big banks, to go behind the numbers and stress the impact their employee engagement activities have on their current and future success?

View full post on Winning Workplaces

That sounds great on paper, but what difference is Biz2Credit making in the real world?  The short answer is, a lot.  They sent me a case study today showing the ROI a small (40-person) medical practice, also based in New York, saw from their involvement with the company.

The Issue:

A 15-year-old medical practice in Manhattan doing around $15 million in annual sales approached Biz2Credit to replace an existing, high cost $1.9 million term loan with a low cost alternative, as well as to get a $1 million Line of Credit (LOC) for business expansion.

The Response:

• Biz2Credit analyzed the managing doctor’s current and past business and personal tax returns as well as personal financial statements.
• It concluded that the medical practice would be best suited to replace the loan with a lower cost fixed interest rate loan while the line of credit could be arranged against accounts receivables, which could be floating interest rate product with an interest rate cap.
• In addition, Biz2Credit helped the firm increase their business credit score on D&B, which helped them to get better pricing.

Impact:

• The medical practice was able to lower its interest cost from 8% to 4.99% on the term loan.
• The line of credit was sanctioned at US prime plus 1 (4.25%).
• The business has been set up for further increases in LOC every 6 months.
• It has been able to add another 5 jobs from the time it got the low cost funding.
• Due to a lower debt servicing ratio, the business has become eligible to get another $500,000 in funding.

Biz2Credit provides this type of assistance to small firms all across the country.  It may be well worth your time – particularly if financing options near you are still out of reach – to engage employees in your business to check them out.

Learn more about Biz2Credit and get a phone number for one of their case managers here.

View full post on Winning Workplaces

We’re getting closer to revealing the winners of Winning Workplaces’ 2010 Top Small Company Workplaces award.  Or should I say, our media partner, Inc. Magazine, is getting closer to unveiling them.

I heard this week that Inc. is putting the finishing touches on its June 2010 issue.  It will arrive in subscribers’ mailboxes on June 5, and will be on newsstands by June 8.  When it comes to learning about top-notch employee engagement and team building strategies for a more profitable and productive workplace – especially in small to midsize organizations – you will definitely want to look for this informative issue and cover story.

Inc. will go into more depth on this, but I wanted to provide you with some value now and share the top 10 practices used by our 40 finalist companies for 2010 when it comes to structuring and administering performance bonuses.  The data on this was captured in Q4 2009 and Q1 2010 so it’s timely and actionable for your organization.

Here’s the list:

1. Managers receive 1% of the value of sales they generate and manage.  Non-management employees are eligible for quarterly performance bonuses based on their demonstration of the company’s core values.
2. Performance bonuses are a fixed percent of the employees’ salary.  Employees also have an additional bonus linked to achieving team goals.  The management team also receives profit sharing, a percentage of the company’s profit.
3. Distribution of bonuses on a semi-annual basis.  Bonuses are based on two components: company financial performance and individual performance.  "On-the-spot" bonuses are also randomly distributed to employees for work that goes above and beyond the call of duty.
4. Every employee is eligible for an Employee Performance Standard bonus which pays out at 10% of an employee’s annual wage at the "very good" performance ranking and 15% of annual wage for "outstanding" performance based upon measurable criteria.  If the company’s profit performance is over budget the employees’ percentage is increased by the same % that the company’s performance is over budget.
5. Distribution of an annual bonus that represents a minimum of 20% of the company’s profits.  Half of this bonus is distributed mechanically, based on tenure with the company.  The other half is distributed by the executive team based on performance.
6. Stock Bonus: Awarded at the discretion of management to selected employees who live the company purpose and core values, drive outstanding success through their leadership or entrepreneurial efforts, and have a commitment to long-term ownership of company stock.
7. Board of Directors determines annual profit sharing and number of stock shares to be issued to each employee.  Amount is the same for each eligible employee with 1+ year of service, regardless of position or salary.
8. Individual pay raises are decided at the lowest level possible (supervisor).  This is done by increasing the total labor budget for a department and allowing the supervisor to distribute this money in any justifiable way to reward prior-year accomplishments.  Detailed feedback and evaluations are regularly prepared so that no aspect of the employee’s evaluation or corresponding pay raise is a surprise.
9. For Business Development positions, performance bonuses are treated as sales commissions.  Bonuses are based on contribution, job level and the company’s financial results.
10. All full-time employees participate in a quarterly bonus program.  Everyone, from hourly workers to the CEO, works toward the same revenue target.  Bonus payouts begin as soon as 80% of the target is reached.  There is no upper limit to the bonus.  Results are discussed at all-hands meetings that are led by the CEO.

As you would expect, performance bonuses are an extremely popular way for companies to engage employees and encourage them to put forth their best effort: 90%, or 36 of our 40 finalists for 2010, use some kind of performance bonus program.

Related Posts:

• Two Employee Development Strategies from a 2010 Top Small Company Workplaces Applicant Firm
• 18 Benefits for Childless Employees
• Respecting Employees Improves Business Results
• 18 Flexible Work Practices of the 2010 Top Small Company Workplace Award Applicants
• How Our 2010 Small Biz Award Finalists Beat the Competition
• Revenue and Profitability Trends for 30 Industries

View full post on Winning Workplaces

Incoming search terms for the article:

• performance bonus in IT companies
• team building activities 4 employee bonus

Have you ever been at a big-box retailer where after the obligatory greeter you’re pretty much forgotten?  I must have had hundreds of experiences by now where I was disinclined toward the sale because either an employee couldn’t lead me to the product I was looking for; or even if they did in rare cases, they couldn’t tell me what I wanted to know about it.

Generally speaking, this is big businesses’ loss and small business’ gain.  What really makes this work for small firms, though, is having in place employee leadership development practices that result in each and every person knowing all there is to know about pretty much every product in the store (or service, if that’s what you offer).

On the Fast Company blog last week, Simma Lieberman described how these practices play out at a Canadian retailer called Everything Wine.  Its Founder and CEO Paul Clinton explained that,

Every employee goes through wine education.  We want our employees to have a good time, and look forward to coming to work, and we want our customers to have a good time, and enjoy doing business with us.

Because of the increased sales potential of this employee engagement model, many of our Top Small Workplaces rely on it.  Bill Loskutoff, President and CEO of California-based Jackson’s Hardware, gives his take on what this looks like and the results it brings his store in the video below.  Watch especially starting at 1:39 (click here if you can’t see the video in your blog feed):

To what extent are all of your employees knowledgeable about your product/service offerings?

View full post on Winning Workplaces

Incoming search terms for the article:

• paul clinton everything wine
• business articles on Simma Lieberman team building