Situation: A CEO is concerned that there is insufficient fairness and accountability within her company. One manager is paid hourly and the CEO is thinking about shifting this person to salary plus bonus both to put them on par with other mangers and to create more accountability. How do you create accountability?
Advice from the CEOs:
What exactly are you trying to achieve? An operations manager is paid competitively at hourly rates, even compared to salaried employees. The issue is that this person has no responsibility for results as they relate to the P&L. Given this, the group consensus is that it is better to have this person on an incentive program that ties compensation to the performance results that you want.
One objective is that you want this employee to contribute more to planning, strategy or the company’s attempts to develop solutions to the challenges that they face. Have you spoken to the employee about your expectations? Does the employee realize that you want or value their input? Direct communication with the employee is important.
While the employee understands his responsibilities in the operations area, be sure that he is aware that he is also important to the profitability of the company, and managing operational expenses which are contributors to that profitability. Depending upon the individual’s background, he may need training about the links between expenses and the P&L.
Given these factors consider the following options:
Adjust the employee’s compensation by switching from hourly to salary. Make the base livable, but not comfortable, and tie the bonus (which will make the total compensation package comfortable) to the profitability of the business. This will have an immediate effect.
Clearly explain to the employee that you value his creativity and input. Give this person the freedom to contribute and make it clear that his contribution is expected. Early on encourage this and acknowledge contributions in meetings.
You may want to make this person a part owner of the business. This will have a long-term effect.
Situation: A CEO wants to schedule an off-site planning meeting with her top staff. She has heard about the potential efficacy of off-site meetings and is intrigued by the idea of taking her staff away from the office for a day or two to concentrate on planning. She is curious about typical agendas, time frames, objectives and who should be involved in the meetings. How do you plan an off-site meeting?
Advice from the CEOs:
Set the objective of the meeting in advance. Tell everyone involved the objective so that they are thinking about this prior to the meeting.
The staff involved depends on the objective of the meeting. Select participants to fit the need.
Include a team building event. One purpose of off-sites is to help the team or teams get to know each other better and improve collaboration.
Have an agenda for the meeting and meet without interruptions. Have participants notify key customers or contacts in advance, schedule back-up contacts if necessary, and don’t allow interruptions.
Hold the meeting during work hours. Options: one day, local for easy travel and return home; or two days, nice setting, dinner the first day, and late afternoon return home the second day.
Do you need a facilitator? This depends on the goal and organizer’s comfort with the topic of focus.
A speaker or educational component pertinent to the meeting goal.
Breakout and group discussions to think through important issues.
A team-building event.
Some fun – dinner or an evening activity that allows individuals to talk in a relaxed setting.
Examples of effective events:
Broad agenda – What can we do better?
All-hands meeting – prompts contribution by all.
Opportunity for CEO to communicate the company vision and involve employees in the planning process for the coming year or period.
As we begin 2015 more people are feeling upbeat about the economy than they have through most of the last six years. The dollar is at new highs against global currencies. The US is approaching energy self-sufficiency. However, some still see regulatory headwinds and downsides. What do you see and what will you do differently in 2015?
Advice from the CEOs:
Over the last six years, software companies have seen large increases in outstanding credit to clients, combined with restrictions on clients’ credit lines available and fewer new purchases. We hope for a better year in 2015, and will focus on reducing outstanding credit to improve cash flow.
Cash continues to be king. B2B business sectors with good cash positions are solid.
If your product/service saves clients money and makes financial sense, you’re in good shape.
Raising money will continue to be a challenge. Investors have been focusing on accelerating deliverables, creating a difficult environment for entrepreneurs. The Wall Street Journal says that the share of people under 30 who own businesses has reached a 24-year low, referring to young entrepreneurs as an endangered species,.
What is your current planning horizon?
We continue to plan quarter to quarter. There are too many variables for a longer horizon. We pay up our credit lines, and cover multiple payrolls with safe bank deposits.
We are watching headcount and dollars in the bank.
We are communicating more with our best employees and bringing them into more decisions so that they won’t be looking elsewhere.
Situation: A CEO is doing benefit planning for next year. The company is small, with just under 100 full-time employees. They are growing, and anticipate reaching over 100 FTEs in the next 12 months, unless they consider either contract or less-than-full-time employees. The CEO is curious about what other companies are planning for employee benefits. What changes in benefits do you see for 2015?
Advice from the CEOs:
Including employer-paid social security and Medicare matches, CEOs in the group are seeing a range of from 12.5% to 30% in benefits. This does not include 401K matches or bonuses.
Over the last five years, there has been a big shift in benefits, in particular a move from traditional health coverage to high deductible HSA plans.
ACA requirements for businesses kick in during 2015/2016. In 2015 employers with more than 100 FTEs will need to provide coverage to at least 70% of full-time employees. Starting in 2016 employers with 50 or more FTEs will need to provide coverage to 95% of their full-time workforce.
Much depends upon your annual cost per employee is for health coverage as well as your philosophy on employee benefits.
Starting in 2015, if a business is supposed to insure its full-time workers but does not, they will have to make a $2,000 per uninsured employee payment on their year-end federal income taxes.
The fee is $3,000 if the employee gets health insurance subsidies through the Health Insurance Marketplace.
Some companies who currently pay more than this in annual premiums per-employee are considering boosting employee pay and having their employees self-insure through the Marketplace, or by purchasing the same policies available in the Marketplace directly from health insurers. The policy cost is no different, assuming that the employees will not qualify for subsidies, but policies purchased directly from insurers may provide a better network of physician providers.
Before you make any decisions, it is best to consult an outside HR professional who is knowledgeable in both health care alternatives and the ACA.
Situation: A company wants to develop a better planning and execution process. Historically they have been poor at meeting goals and objectives. What are the most important factors that improve planning and execution in your company?
Advice from the CEOs:
Take the advice of Jack Stack in his book The Great Game of Business. When building a plan, do it as a company-wide exercise.
Make sure that all of your departments are involved, each has direct input into the development of its own goals, and each understands that they are fully accountable for the achievement of their own goals.
Also do this in open session, and assure that each department has the input of other departments whose activities are critical to the completion of each goal.
This assures that different departments are working in alignment and not against each other.
Finally, make the process interactive and add some fun so that everyone is engaged.
Milestones and meetings are critical. Each department develops quarterly goals to support the plan, and department heads meet bi-weekly to monitor progress and prevent conflicts. Revisit the plan on a quarterly or semi-annual basis to adapt as necessary.
Focus the plan on one-year performance – with quarterly objectives – but forecast financials and broad metrics out 3 years to assure that the 1-year plan supports long-term objectives.
Situation: Many executives in their 50s and 60s have parents in their 80s and 90s. When parents can no longer take care of themselves, there are important decisions to make regarding long-term care. What considerations are important to these decisions?
The most important challenge is that we often don’t want to think about these decisions.
There are three legs of the stool when it comes to later life planning.
Regular life insurance for family and final arrangements.
Financial planning to assure that you will have the assets to provide for yourself in later life.
Long-term care insurance can expand alternatives and help defer the cost of later life care.
Also, an estate planning attorney can shield assets if Medicaid will cover the expense of later life care.
The aging population is rapidly changing the demographics of later life care provision.
In Santa Clara County, California 16% of the population is currently 60+. This will go up to 25% by 2040.
Baby Boomers who waited longer to have children may have small children and aging parents at the same time. If a family member currently cares for elders, what will happen if they return to the workforce?
Medicare and Medicaid cover hospital and skilled nursing, but not assisted living. Long-term care insurance is important for those in their 50s and 60s and is less expensive if purchased earlier.
Needs and alternatives are changing as the generations change.
In contrast to their parents, Baby Boomers are more open to late stage options. They look for amenities and social environments that will enable them to stay active.
The village concept is gaining momentum – communities of like-minded seniors who will move into a community, often at a younger age than earlier generations.
Current elders are healthier than Boomers, and even more so than younger generations due to better diet and exercise habits. This has implications for both the care needs and options available to the younger generations as they age.
Technology will come into play in new ways. Current products assist in tracking and dispensing medications. There are also fall-alert devices and nanny cams to monitor parents in case of emergencies. Many more will be developed.
Key Words: Long-term care, Generations, Planning, Urgent, Insurance, Financial Planning, Long-term Care Insurance, Estate Planning, Demographics, Baby Boomer, Depression, Family Care, Assisted Living, Village, Health
Situation: A CEO has not taken a vacation for years due to focus on the company. He knows that he needs a vacation and wants to take one. However, he feels guilty taking time off. How do you take a guilt-free vacation?
Advice from the CEOs:
For your general health, you need to take time off to refresh and recharge!
Think of the vacation as your CEO Test – have you created a team that can perform in your absence?
You may be amazed at the initiative that some will take given the freedom to do so. As a corollary, initiative is accompanied by risk and your employees may make some bad choices. Be patient. Congratulate them for taking initiative and coach to improve choices.
Stay out of touch. Don’t call in daily and see what happens. If and when you do call in, don’t solve challenges that come up – let your people solve the challenges. Keep a few notes. On your return see where you need to adjust procedures to allow employees to make independent decisions.
More than one CEO has found that taking 3-4 week vacations each year has had very positive results. The company actually performs more efficiently and with more energy upon their return than it did when they left!
To ensure that you take a vacation, schedule it in advance. Let everyone know that you are going to take it and Just Do It!
If you can’t take the time to plan a vacation, have your spouse or a loved one plan the vacation.
If you need to feel in touch during your vacation, take your laptop. You may never even use it, but it will be there as a security blanket. Once you are on vacation, let family and personal priorities rightly take precedence over your need to stay in touch.
Situation: A long-standing employee committed suicide away from work. Relatives of this person work in the company. How can the CEO assure that assistance is available to help employees resolve their emotional shock?
Advice from the CEOs:
First, do not assume that this is a passing situation and that all will recover without assistance. One never knows what may have passed between employees in the days or hours prior to the event or what lingering feelings of guilt or involvement may remain and impact future performance or development.
Initiate personal contact with those employees closest to the individual to console them.
Search for local resources on death and dying that provide trained counselors to work with employees. The service is generally free of charge, but a donation is appropriate.
Be proactive – create a remembrance fund to allow employees to contribute as they wish. This can assist them in their personal bereavement process.
Establish a company bereavement policy – for example 3 days time off with pay with guidelines as to situations that trigger this benefit – so that they can deal with their loss.
One company has an Employee Assistance Program. They pay about $5000/year to access services for employees. This has been a very good program for the company.
There will inevitably be future situations that arise through accident, illness or other causes that will directly impact employees. It is best to be prepared with a plan in case any of these occur.