Volume 2, No. 4


September, 2004

 

Know Thy Customer....Jim Witscher
 
Business Leaders Choking on Visual Aids...Neil Flett
 
Greeting Card Tango - How to Impress During the Holidays...Lydia Ramsey
 
Keeping Your Business in the Family...James Lorenzen
 
Money Sense - How to Manage IRA Assets You Inherit...Michael Falcon
 
Success Quiz - Using the Skills at the Right Time...Susan Ford Collins
 
Overcome the Myths of Negotiation...John Patrick Dolan 

 
 

Know Thy Customer

By Jim Witscher
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A fundamental principle of business is the adage “know thy customer”. This makes obvious sense for the sales and marketing people because they have goods and services that must be offered to the appropriate markets. Their success is directly proportional to how well they identify and then meet the needs of their customer.

You may be wondering how this applies to HR and I will say that it is just as vital and just as critical not only to your personal success as an HR professional, but to the success of the overall organization you work for.

Who is the customer for the work performed and services offered by the HR staff? If your answer is “the employees, of course”, your answer is wrong.  The correct answer is “the management staff”.  While you can never get away from serving individual employees when necessary, your definitive customer is the management staff. They are your peers and they are your partners.

It’s all in the numbers

By the time an organization is large enough to support one or more HR professionals, there will be a firmly established managerial structure in the organization. For the most part, the managers in this structure are paid to manage their employees and these employees are their full-time responsibility. If the organization follows the rule of thumb for staff size, the ratio of employees to managers will be around 10 to 1.

If the organization follows the rule of thumb for HR staff, the ratio of employees to HR staff will be about 100 to 1. Now, if the organization has agreed that 10 to 1 is an acceptable ratio for effective staff management, then it is safe to say that the organization cannot expect HR to effectively manage HR issues at the employee level at a ratio of 100 to 1. But they do or you do or you both do.

A closer look at those ratios will show that the ratio of employees to managers is just about the same as the ratio of managers to HR staff. This is not a coincidence or a quirk. It is a compelling fact of organizational dynamics? Managers are paid to manage employees at a ratio of 10 to 1. HR staff members are paid to assist managers from a human resources perspective at a ratio of 10 to 1.

If your organization is large enough to employ you as a human resources professional, there is probably more than one level of management. The organization thus runs “top down”. The president directs the vice presidents, the vice presidents direct the directors, the directors direct the managers, and so on. This is top down business and military strategy. It works and it works well. If your organization is like most, this is not the way HR works. Rather, it is the HR staff versus an assembled hoard of barbaric invaders.

The Tragic Flaw: “I can serve them all”

The flaw is not in the numbers; companies do not need one HR professional for every ten employees. The fundamental flaw is an assumption that HR is responsible on a daily basis for employee level issues. Granted, there will always be grievances to contend with and delicate employee relations issues, but is it the duty of the human resources staff to answer every employee question about vacation hours, benefits enrollment, and the sick time policy? The answer is a resounding ‘No’.  Serving and serving effectively are two different things. How many of you have been in a restaurant during an understaffed situation (i.e. too few waiters and waitresses). The overworked waitress eventually gets your order and gets your food, but something is lacking.  The waitress has served all of the customers, but she is not effective. Something is lost in trying to serve too many people.

 When doing it all is doing too much

An organization with the premise that HR serves the employee at the employee level has asked the HR department to make up for a less than adequate management staff. These are strong words, but let’s look at it carefully. The management staff is paid to manage employees on a full time basis. It makes sense then, that the management staff should be fully prepared to answer questions about the benefit plans, policies, and available sick or vacation time for the employee.

A manager who continually defers these questions to HR has actually decided to defer part of the management of that employee to HR. This deferment does little to enhance the manager to employee relationship, but rather sets up a “dual manager” relationship that will inevitably lead to confusion and miscommunication. The best management staff is that staff which effectively handles the highest percentage of issues (including HR issues) without deferring responsibility.

I shall contend that for every overworked, harried, and bedraggled HR staff member, there is an organizational premise that HR serves the staff at the employee level (i.e. the employee is your customer). At the ratio of 100 to 1, what else can result but a continual overload and an HR professional headed for burnout, or zero effectiveness. At a ratio of 100 to 1, you cannot be effective in meeting the HR needs of the organization.

You cannot divide by zero

You may recall this basic principle of math. It means that you cannot perform division when the denominator, the value on the bottom of a simple division problem, is zero. Because zero cannot go into something, there is no way to determine how many zeros are in something. When you attempt to do something for everyone, such as managing at the ratio of 100 to 1, you can only give a little time to each person. The more people you try to serve, the smaller the slice of time each person gets. Eventually, the slice gets so small that you actually have nothing to give to anyone. You become ineffective.

Of course, if you continue to keep giving at the ratio of 100 to 1 or higher and one or more of these 100 demand more than their few seconds a week, you will burn out. When you have nothing left to give, you are zero. And you cannot divide up your time when you have nothing left to give. You are not only ineffective you are useless to the organization you are trying to serve.

You may think you can do it all, and you have may have had success doing it all, but you will fail eventually. The numbers are against you. You cannot continue to serve a large customer base on your own and be effective. In fact, your current level of effectiveness may not be what you think it is. There is no such thing as a team of one. The HR needs of the organization are not solely your responsibility any more than winning a football game is the sole responsibility of the quarterback. Each member of the management staff must play their part.

What do you see?

Taking a careful look at your own organization, what do you see? Do you have an effective management staff which partners with you in meeting the human resources needs of the employees? Or, are you the classic overworked HR professional holding the whole HR mess together with bubble gum, paper clips, and your own massive personal labor commitment? Have you ever reached zero where you cannot be divided any further? Have you gone beyond zero, making sacrifices that no organization deserves? Have you crashed and burned?

Time for a Change

The first step toward remaking your current HR function is to stop the insanity. Insanity, by one definition, is doing the same thing over and over and over while expecting different results. If you are running around in circles staying one step ahead of exhaustion while satisfying no one fully, your first step is to slam on the brakes. That’s right, slam on the brakes.  You can try to work faster, you can try to work harder, you can even increase staff, but nothing will change. The paradigm is wrong. You cannot serve them all. Stop the insanity, stop the train, and get off. You cannot develop a world class HR function under a faulty paradigm and certainly not one that is, by definition, insane. In Part II next month, we will investigate practical methods you can apply to remake your HR function on a foundation of professional service.

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Mr. Witschger has 23 years experience in software development with a variety of firms and over 14 years in human resources software development, sales and marketing.  Mr. Witschger is the co-founder of Technical Difference, Inc., a privately held corporation and publishers of People-Trak; a PC based Human Resource Information System for organizations with 10 to 10,000 employees.

People-Trak is the leading HRIS solution in the market today.  It is an easy-to-use, robust system that allows you to manage the needs of your company today and long into the future. People-Trak's HRIS solution offers comprehensive employee data management and reporting; training and benefits administration; recruiting; and much more.   People-Trak solutions start at just $895 for small companies with a robust client/server version for larger companies.  To find out more about People-Trak, see www.people-trak.com or call 1-800-809-5731.

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How to Manage IRA Assets You Inherit

Michael Falcon Chief Operating Officer of the Retirement Group, Merrill Lynch

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Deciding what to do with the assets you have inherited from an individual retirement account (IRA) can be difficult.  You may have to determine how and when you will begin taking distributions of the assets fairly quickly, or you could face adverse tax consequences.  You’ll also want to be sure to manage the distributions—as well as the inherited IRA assets—in the context of your overall wealth management plan.  And since you can’t change your choice once you make a decision, it’s important to consider your options carefully.

Your IRA Options

Your distribution choices are governed primarily by whether the original account owner was your spouse and whether the account owner passed away before or after he or she was required to take distributions from the IRA.  All beneficiary types may take a lump-sum distribution regardless of when the original account owner passed away.  But there is a second option for those beneficiaries who inherit IRA assets from an account owner who had not yet begun taking distributions: the five-year rule.  This rule stipulates that distributions can be taken in any amount or frequency as long as the account is depleted by December 31 of the fifth year following the original account owner’s death.

Spousal Beneficiaries

If the account owner was your spouse and you inherited the IRA in a year the owner was required to take minimum distributions, you have several choices.  You can roll the assets over to your own IRA or you could assume ownership of the deceased account owner’s IRA.  In both cases, you can name your own beneficiaries and take the required distributions over your life expectancy.  Both of these options also allow you to wait until you attain age 70½ before you begin taking the required distributions.  If you prefer to roll over the assets into your own IRA, you may want to evaluate the investment flexibility offered by your IRA compared to that offered by the decedent’s IRA.

Leaving the assets in the decedent’s IRA will allow you to take distributions over the longer of your life expectancy or the original account owner’s remaining single life expectancy.  The distributions would have to begin by December 31 of the year after the year the original account owner passed away.  If you’re older than the original account holder, using his or her life expectancy could allow you to take smaller required distributions.

If the original account holder hadn’t yet been required to take minimum distributions at the time of his or her death, again you could roll the assets over to your own IRA or assume ownership of the deceased account owner’s IRA.  If you leave the assets in the decedent’s IRA, you can take distributions over your life expectancy (which may be beneficial if you are younger than the original account owner).  Those distributions would have to begin by the later of December 31 of the year after the year of the original account owner’s death or the year that account owner would have attained age 70½.

The rules governing when you must take required minimum distributions (RMDs) are very specific.  If, as a spousal beneficiary, you assume the decedent’s IRA or you roll the assets into your own IRA, you’ll need to start taking RMDs when you turn 70½.  If you leave the assets in the decedent’s IRA or if you transfer them into a beneficiary-controlled account (because you are one of many beneficiaries), the date RMDs must begin depends largely on whether or not the original account owner had been required to take minimum distributions at the time of their death.

Non-Spousal Beneficiaries

Unfortunately, you have fewer choices if the account owner wasn’t your spouse.  Regardless of whether or not the account owner was required to take minimum distributions, you don’t have the option of rolling the assets into your own IRA nor can you assume ownership of the deceased account owner’s IRA.  You would be able to transfer the assets to an inherited IRA and designate your own beneficiaries.  And if you don’t deplete the assets during your lifetime, after your death, the beneficiaries could choose to continue taking distributions over your remaining life expectancy, thereby “stretching” the IRA.

You can, however, transfer the assets to a beneficiary-controlled account and name your own beneficiaries.  If the original account owner died in a year that he or she was required to take a minimum distribution, your distribution will be based on the longer of your life expectancy or the remaining single life expectancy of the deceased account owner.  If the original account holder hadn’t yet been required to take minimum distributions at the time of his or her death, distributions will be based on your life expectancy.  As a non-spousal beneficiary, you must begin taking RMDs by December 31 of the year following the death of the account owner.

There are special rules for multiple beneficiaries.  In these situations, beneficiaries can set up beneficiary-controlled accounts by December 31 of the year following the account owner’s death.  Missing this date could mean that your RMDs will be based on the life expectancy of the oldest beneficiary or by some other method if any of the beneficiaries are entities (i.e., charities, trusts or an estate).  This could cause an accelerated depletion of your portion of the inherited assets.

The rules pertaining to distributions of assets inherited through an IRA are complex and difficult for beneficiaries to navigate on their own.  A financial advisor is well positioned to guide you through your options.

Your IRA Options

Your distribution choices are governed primarily by whether the original account owner was your spouse and whether the account owner passed away before or after he or she was required to take distributions from the IRA.  All beneficiary types may take a lump-sum distribution regardless of when the original account owner passed away.  But there is a second option for those beneficiaries who inherit IRA assets from an account owner who had not yet begun taking distributions: the five-year rule.  This rule stipulates that distributions can be taken in any amount or frequency as long as the account is depleted by December 31 of the fifth year following the original account owner’s death.

Spousal Beneficiaries

If the account owner was your spouse and you inherited the IRA in a year the owner was required to take minimum distributions, you have several choices.  You can roll the assets over to your own IRA or you could assume ownership of the deceased account owner’s IRA.  In both cases, you can name your own beneficiaries and take the required distributions over your life expectancy.  Both of these options also allow you to wait until you attain age 70½ before you begin taking the required distributions.  If you prefer to roll over the assets into your own IRA, you may want to evaluate the investment flexibility offered by your IRA compared to that offered by the decedent’s IRA.

Leaving the assets in the decedent’s IRA will allow you to take distributions over the longer of your life expectancy or the original account owner’s remaining single life expectancy.  The distributions would have to begin by December 31 of the year after the year the original account owner passed away.  If you’re older than the original account holder, using his or her life expectancy could allow you to take smaller required distributions.

If the original account holder hadn’t yet been required to take minimum distributions at the time of his or her death, again you could roll the assets over to your own IRA or assume ownership of the deceased account owner’s IRA.  If you leave the assets in the decedent’s IRA, you can take distributions over your life expectancy (which may be beneficial if you are younger than the original account owner).  Those distributions would have to begin by the later of December 31 of the year after the year of the original account owner’s death or the year that account owner would have attained age 70½.

The rules governing when you must take required minimum distributions (RMDs) are very specific.  If, as a spousal beneficiary, you assume the decedent’s IRA or you roll the assets into your own IRA, you’ll need to start taking RMDs when you turn 70½.  If you leave the assets in the decedent’s IRA or if you transfer them into a beneficiary-controlled account (because you are one of many beneficiaries), the date RMDs must begin depends largely on whether or not the original account owner had been required to take minimum distributions at the time of their death.

Non-Spousal Beneficiaries

Unfortunately, you have fewer choices if the account owner wasn’t your spouse.  Regardless of whether or not the account owner was required to take minimum distributions, you don’t have the option of rolling the assets into your own IRA nor can you assume ownership of the deceased account owner’s IRA.  You would be able to transfer the assets to an inherited IRA and designate your own beneficiaries.  And if you don’t deplete the assets during your lifetime, after your death, the beneficiaries could choose to continue taking distributions over your remaining life expectancy, thereby “stretching” the IRA.

You can, however, transfer the assets to a beneficiary-controlled account and name your own beneficiaries.  If the original account owner died in a year that he or she was required to take a minimum distribution, your distribution will be based on the longer of your life expectancy or the remaining single life expectancy of the deceased account owner.  If the original account holder hadn’t yet been required to take minimum distributions at the time of his or her death, distributions will be based on your life expectancy.  As a non-spousal beneficiary, you must begin taking RMDs by December 31 of the year following the death of the account owner.

There are special rules for multiple beneficiaries.  In these situations, beneficiaries can set up beneficiary-controlled accounts by December 31 of the year following the account owner’s death.  Missing this date could mean that your RMDs will be based on the life expectancy of the oldest beneficiary or by some other method if any of the beneficiaries are entities (i.e., charities, trusts or an estate).  This could cause an accelerated depletion of your portion of the inherited assets.

The rules pertaining to distributions of assets inherited through an IRA are complex and difficult for beneficiaries to navigate on their own.  A financial advisor is well positioned to guide you through your options.

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Business Leaders Choking on Visual Aids

Neil Flett
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Computer-generated visuals, such as PowerPoint slides, are a boon for day-to-day business management presentations.  However, for executive level speakers, audiences want their leaders to throw away the props and concentrate on connecting, convincing and inspiring.  While most executives and their audiences have come to rely on and expect computer-generated slideshows for demonstrations, they should have a limited place in a leader’s communication tool kit.  The personality and persuasiveness of business leaders are being smothered by computer-generated visuals. 

For one, slideshows are addictive:  presenters start by using one or two slides in their presentations and before they know it, they are using dozens.  The presentation becomes boring and the speaker loses the audience.  Ultimately, many presenters become reliant on the slideshow format to the degree that they use it for proposals, reports, leave-behinds and even company brochures.   People have actually presented as many as 90 slides, cramming each of them with line after line of unreadable print and complex graphics.  At that level, slides come and go too quickly; while the audience struggles to remember even a few of the points, let alone the key messages.

The situation has become so extreme that the chief executive of one public company has told his management team not to use more than six slides in any presentation.  His directive is to be applauded because for many speakers, the slideshow has become “the presentation” with the presenter simply narrating according to what appears on the screen. 

The speaker’s personality, power and connection with the audience can all be choked by a poorly used slideshow. It cannot establish a leader’s credibility, openness and integrity; it is not an emotional medium. I have yet to see a slide with charisma, or one that can inspire and motivate. 

Executives should deliver a verbal presentation that adds value to the written information distributed as a hand-out or that is being projected as they speak.  That might mean referring to the slide to add value or give a deeper understanding, but they should avoid being led by the slides. The objective must be to make contact with the audience and demonstrate a level of conviction that shows the company is in good hands.

Business leaders should also resist using a slideshow every time they speak. Get out from behind the lectern, walk around and talk to people; show them who you are and what you stand for.  The communication skills of senior executives are a lead indicator of how they may be running their business. We don’t see them face to face very often and when we do, we want them to talk to us, not to a screen.

The five most common mistakes made by slide deck presenters are:

1.      Filling the screen with too much information.

2.      Blocking the view of the screen.

3.      Over-using complex graphics when a simple message is required.

4.      Using typefaces too small to be read.

5.      Talking to the screen instead of the audience.

Slideshows are here to stay and they have a valid role in the business presentation, but the computer-generated slides must never replace the presenter.  Computer generated presentations, when used well, are fine for communicating information clearly, but without genuine face-to-face connection with the presenter, a slideshow is hollow.

 Here are a few tips to bring your slide deck presentation to life:

1.      Use more photographs, graphs and drawings and less words.

2.      Only one concept per slide.

3.      Build information in stages for complex slides, and allow the audience time to absorb it.

4.      Interact with the screen – let the audience know where to focus.

5.      Don’t change slides, or better still don’t have a slide for the first 90 seconds of a presentation so the audience can establish rapport with you.

6.      Insert a ‘black slide’ by pressing the ‘B’ button on your keyboard – allowing you to move around, even in front of the    screen.

7.      Reconsider the need for the slide – look at each slide and ask yourself, “Does the audience really need to see this slide?  Does it add anything?”

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Rogen International is an international consultancy providing training, strategic communication and professional management services that improve business results.  Based in Sydney, Australia, Rogen has offices in New York, Chicago, San Francisco, Seattle and Toronto.   For more information, e-mail North American Managing Director Michael Berman at mberman@rogenusa.com or visit www.rogen.com

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Greeting Card Tango - How to Impress during the Holidays

 

Lydia Ramsey
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When it comes to holiday greeting cards, to send or not to send is often the question. Once you have decided in the affirmative, you then have to determine who to include on your list, what kind of card to choose and how to address the envelope.

There are lots of reasons for sending those holiday cards.  You might want to enhance your current business relationships, attract new customers, remind old clients that you exist or show appreciation to those who have faithfully supported you during the year.  What is obviously a well-meaning gesture can actually offend the people you want to impress when it is not done properly.  Here are some tips to ensure that you impress and not stress during holiday greeting card season.

-The first place to start is with a good quality card to show that you value your clients and colleagues.  Skimping on your selection can be interpreted in a number of ways.  Your recipients might take it as a sign that business has not been good or that they aren't worth a little extra investment on your part.

-Make sure your list is up-to-date with correct names and current addresses.  If you do this on a regular basis, it does not become a dreaded holiday chore.  As you gain new clients and contacts throughout the year, take a few minutes to add them to your database and mark them for your greeting card group.  This way you won't overlook anyone or embarrass yourself by sending the card to the old address.

-Sign each card personally.  Even if you have preprinted information on the card such as your name - which is an impressive detail - you need to add your handwritten signature.  The most elegant cards should still have your personal signature and a short handwritten message or greeting.  Sound like a lot of trouble?  If the business or the relationship is worth it, so is the extra effort. This is your chance to connect on a personal level with your clients and colleagues.

-Take the time to handwrite the address as well.  If you are ready to throw up your hands at this point and forget the whole project, then have someone else address the envelopes for you.

Whatever you do, don't use computer-generated labels.  They are impersonal and make your holiday wishes look like a mass mailing. You may save time and even money, but lose a client or a business associate  in the process.

-You may mail your greeting to the home if you know the business person socially.  Be sure to include the spouse's name in this instance.  The card is not sent to both husband and wife at the business address unless they both work there.

-Whether you are addressing the envelope to an individual or a couple, titles should always be used.  It's "Mr. John Doe," not "John Doe," or "Mr. and Mrs. John Doe, rather that "John and Mary Doe."

-Be sensitive to the religious beliefs of the people to whom you are sending your cards.  Find out whether they observe Christmas, Hanukah or Kwanzaa and make sure your message is appropriate for each individual. If you decide to go with one card and a single message for all, choose a generic one that will not offend. "Season's Greetings" and "Happy Holidays" are both safe bets.

-Mail your greetings in time to arrive for the designated holiday. If you find yourself addressing the envelopes on Super Bowl Sunday, keep the cards until next year and send out a high-quality note thanking people for their business during the previous year instead.   The best way to avoid the last minute greeting rush is to have all your envelopes addressed before Thanksgiving.  Then during December you can leisurely write a short message - one or two lines are all that is necessary on each card, sign your name and have them in the mail with a minimum of hassle.

-You now have all the time in the world for the shopping, baking, decorating and celebrating that accompanies the holiday season.

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Additional Tips for Addressing Envelopes

If you are about to address your holiday greeting cards or the invitations to the company party and you are confused about the correct way to do it, you are not alone.  There are situations that we have not had to consider before.  There are more women with professional titles, increased numbers of women who retain their maiden name after marriage, and couples choosing alternative living arrangements.  The simple act of addressing an envelope has become quite complicated.  Here are a few tips to cover the majority of those demanding dilemmas.

Always write titles on the envelope.  The card or invitation goes to "Mr. John Smith," not "John Smith."  It is addressed to "Mr. and Mrs. John Smith," instead of "John and Mary Smith."

When you address a couple, use titles, rather than professional initials.  It's "Dr. and Mrs. John Smith," not "John Smith, M.D. and Mrs. Smith."

If both the husband and the wife are doctors, you write, "The Doctors Smith."  However, if they use different last names, you address the envelope to "Dr. John Smith and Dr. Mary Brown."  The husband's name is placed first.

If the wife is a doctor and the husband is not, you send your invitation to "Mr. John Smith and Dr. Mary Smith."

Try to get it all on one line.  When the husband has an unusually long name, the wife's title and name are indented and written on the second line:

The Honorable Jonathon Richardson Staniskowsky 
  and Mrs. Staniskowsky

When a couple is not married and share a mutual address, their names are written on separate lines alphabetically and not connected by the word "and."

Ms. Mary Brown
Mr. John Smith

When the woman outranks her husband, her name is written first. It's "Major Mary Smith and Lieutenant John Smith."

Note:  The man's name is always written first unless the wife outranks him or if the couple is unmarried and her last name precedes his alphabetically. So much for "Ladies first."

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ABOUT THE AUTHOR
Lydia Ramsey is a business etiquette expert with over 30 years of experience helping companies and individuals achieve success by adopting professional manners.  She is also the author of the acclaimed book "Manners that Sell- Adding the Polish that Builds Profits."  As a speaker and trainer, Lydia helps others polish their communication skills.  She writes a weekly business etiquette column for several newspapers and has been seen in publications such as the Wall Street Journal, The New York Times, Selling Power and Cosmopolitan.  For more information please visit: www.mannersthatsell.com

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Keeping Your Business in the Family

 

James Lorenzen
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Do YOU have an Exit Strategy?  It’s not so easy as you would think.

While 90 percent of all U.S. businesses are family-owned, only 30 percent will survive a generational transfer.[1]  It’s wise to have a roadmap.

“I’m not worried.  My son will take it over.”  

Sound familiar?  It’s funny how many of us expect a smooth transition, even without establishing succession plans and without plotting a strategic direction for the business that extends past their own retirement, despite the fact few of us have conducted an analysis to see if the business is capable of providing enough income to support the owner and his wife, or her husband, during retirement -  in addition to the family members who have now taken the reins.

The fact is, many business owners die first … before any planning has been done at all!   It’s little wonder many heirs taking over the business are ill equipped to run it – or have no interest.

Research bears this out, too: Mass Mutual Financial Group found in it’s American Family Business Survey that nine of ten owners surveyed expected their businesses to stay in the family and that 40% planned to retire within five years, but fully half of those had not tapped a successor.   Kind of like Harry Truman learning about the Manhattan Project at breakfast… ` Oh, by the way, you’re President now.’

The problem, however, is that a succession plan may take five years to construct.  At its most basic, it should define the mechanics (who will do what), define a transition strategy, and the future objectives of the business (something besides `we’re gonna make more money’).

Further complicating the situation – you’ll love this – is the fact an estate cannot liquidate its interest in the business, which means surviving family members have to dig into their own pocketbooks to cover estate taxes and other costs.   There’s a picture:  The surviving family members are left with a business to run, taxes to pay, and an uncertain financial future. 

Oh, yeah.  Don’t’ forget family infighting and turf-battles.  No wonder when you look at what causes most of the problems associated with transition failures, there are usually two:  Internal family conflicts or inadequate financial preparation.  Surprised, eh?

Advisors who specialize in working with business owners generally agree that setting and justifying compensation levels and defining job responsibilities (to avoid turf battles), as well as writing down business goals and strategy is critical to preventing family infighting and an imploding of the entire operation. 

A good business succession plan will also create a vehicle that provides (1) income to the surviving spouse and (2) a mechanism for transferring ownership to those family members who actually can – and want to – run the business.

 

How To Do It

The typical transition design is a cross-purchase buy/sell agreement between active family members and the owner.  Individual owners enter into an agreement for the purchase and sale of their respective interests.  This is normally binding and obligates all parties to either buy or sell their interest in the event of the death of the named party.  Don’t wing this; get a qualified estate planning attorney.

Where does the money come from?   Take your choice. 

The buying survivors (probably your kids) can:

(1)     save up their nickels and dimes until they have enough,

(2)     go to a lender and borrow the money, or

(3)     buy a life insurance policy on the life of the founder/owner.
 

Without getting into the details (talk to your financial advisor), it works like this:  When the owner dies, the stock in the company becomes part of the owner’s estate.  If the surviving spouse is the beneficiary of the estate, as named in the will or trust,  the unlimited marital deduction allows the stock to pass to the surviving spouse free of estate taxes.  The spouse then sells the deceased owner’s stock to the active family members under the terms of the buy/sell agreement.  The active family members, of course, use the life insurance proceeds, which they would generally receive free of income taxes, to purchase the stock.

The new owners have the business without having to support the surviving spouse and the surviving spouse has her nest egg to provide income for life, without worrying about the future of the business.   How about that, sports fans?

The Entity Purchase Agreement

Also known as a stock redemption agreement, this one differs from the buy-sell agreement in that it allows the company, rather than the surviving family members, to purchase life insurance on each owner and then use the death benefit proceeds to purchase the stock from the deceased owner’s estate.

Talk With A Qualified Estate Planning Attorney         

Each approach has its own estate and tax ramifications.  Your estate planning attorney can create the agreements you need and your financial advisor can help design the appropriate funding vehicles.

We know there’s more to operating a business than simply banking the checks.  And, there’s more to keeping it in the family than trusting it all to luck.

Nuff said.

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James Lorenzen is a national speaker who has headlined more than 500 conventions throughout the United States, Canada, and the U.K.  He is also president of The Independent Financial Group, a registered investment advisor, located in Thousand Oaks, California.  Jim can be reached directly at 800-257-6659 or through his website, www.indfin.com.  Securities are provided through QA3 Financial Corp., Member NASD¨SIPC.  The Independent Financial Group and QA3 Financial Corp., are not affiliated.  Ca.Ins.Lic.#0C00742.


[1] Source:  Boston-based Family Firm Institute

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Success Quiz - Using the Skills at the Right Time

 

Susan Ford Collins
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Most people complain about not having enough time, but the truth is we’re spending our precious time doing things that don’t really matter to success. But what does?

As a researcher at the National Institutes of Health years ago, I kept waking up in the night wondering what we could learn if we studied healthy, successful people and not just ill ones? Weeks later, I proposed my idea in one of our high-powered weekly conferences and my colleagues all laughed. Red-faced, I decided to agree with my dream instead of with them, and I spent the next 20 years shadowing “the greats” of the planet. Since then I’ve been teaching individuals and teams in business, education and government the skills highly successful people (HSP) use consistently… but frequently don’t know how to pass on to their employees and kids.

Take a few minutes to complete this Success Quiz. Then I will share with you how Highly Successful People answered these questions…

  1. How often do you acknowledge yourself for what you accomplish?

          Circle one:   daily        weekly             monthly           annually         

 

  1. How often do you fall asleep thinking about what you didn’t get done or you’re afraid will happen?

          Circle one:   rarely   sometimes       frequently

  1. Are you able to maintain your confidence when obstacles and failures confront you?

          Circle one:   rarely             sometimes       frequently

  1. Do you pride yourself on doing “more-better-faster”?

          Circle one:   rarely       sometimes       frequently

  1. Do you make time to learn the basics of new skills before you start using them?

          Circle one:   rarely       sometimes       frequently

  1. Can you stand up in a meeting and say you don’t agree?

          Circle one:   Yes          No

  1. How often do you push so hard that you can’t slow down to rest?

          Circle one:   rarely       sometimes       frequently

  1. Do you share your dreams with others or keep them to yourself?

          Circle one:   rarely       sometimes       frequently

  1. Do you spell out the details of outcomes you delegate?

          Circle one:   rarely       sometimes       frequently

  1. Would you rather (Circle one)

          Ask an expert for input     or      figure it out yourself

  1. Do you need to know how you’ll reach your goal before you take action?

          Circle one:   Yes          No

  1. Can you comfortably move into the unknown when you have a clear outcome in mind?

          Circle one:   Yes          No

  1. Do methods and solutions come to you out of the blue?

          Circle one:   rarely       sometimes       frequently

  1. When you are stressed, do you spend time away from the task?

          Circle one:   rarely       sometimes       frequently

So now let’s compare your answers…

  1. Highly successful people make time each day to acknowledge themselves for the successes they’re having. But the successes they have in mind aren’t just the usual ones. For them, success goes beyond finishing “business to dos.” It includes things that keep their lives in balance… like eating a good breakfast, exercising, spending time with family and friends, dropping off the dry cleaning and remembering to pick it up. Most people don’t acknowledge themselves for completing these things, but what happens to your productivity when you leave them undone? For HSP, success also means saying NO to actions that violate their values and dreams. Deletion Successes can be the most important ones of all! Too bad the higher ups at WorldCom and Enron didn’t know this.
     
  1. People who “succeed big” know the last few minutes of their day are most important. Your brain is in the Alpha State so it’s the perfect time to think about what you want tomorrow and long term. And the worst time to beat yourself up over oversights and failures. As you fall asleep, plan how you’ll make corrections instead. Remember: What you think is what your brain creates… so focus on what you do want instead of what you don’t want. That tiny change in focus will enhance your ability to move your life and career ahead.
     
  1. If you are Success Filing—that is acknowledging your successes each day—you will have the confidence to continue moving ahead when obstacles besiege you, when everything goes wrong and everyone disappoints you. Remember: When your Success File is full, you feel Success-Full. But when it is low, you feel dependent and needy… at the mercy of others’ opinions and in need of their agreement. HSP are willing to put off low priority items, but making time to Success File each day is a number one.
     
  1. Constantly priding yourself on doing more-better-faster lands you in The Success Trap, working longer and harder and raising the quantity-quality bar higher and higher. It can also land you in the hospital. For staying power, you also need to acknowledge yourself for slowing down to learn new skills and technologies, and for allowing your mind to wander into future possibilities and solutions. Creativity and innovation may be more important than productivity in today’s business world.
     
  1. It is essential for you come to a complete stop from time to time. Why? Because unless you do, you can’t gear your mind back to learn and you will slip behind. HSP schedule time to learn the most efficient tools available, rather than slogging along with equipment, programs and procedures that weren’t designed to do what you need to do now. Make time to master the basics before you attempt to gear up into production. Otherwise the mistakes you make will trip you and teammates up later and take more time in the end.
     
  1. You have to be able to disagree with the pack to stay ahead. For some people, getting others’ agreement is more important than getting their result. Not so for HSP. They can stand up, disagree and then so powerfully communicate the details of the scenario they see, hear and feel instead, that other people take on their vision and team up with them. They lead the way by inspiration, not perspiration.
     
  1. When you push so long and hard that you can’t slow down to rest, you’ve gone over the edge. HSP use this feeling to signal that they’re overusing the 2nd Gear of Success. Yes, Success has three gear-like phases and unless you know precisely when to shift, unless you can use all three Success Gears as circumstances require, you’ll burn out your transmission… and that means your body. And the time lost will set your business way back. Read The Joy of Success for specifics on the Three Gears of Success and Leadership.
     
  1. Highly successful business people share their dreams with people I call Codreamers. People who hold the details of their dream along with them. People who contribute additional information and perspective. People they can call when they come out of a meeting so devastated that their dream seems to have been literally erased from their minds. One phone call to a Codreamer can get you back on track. Who are your Codreamers? And who are your Codreaders? Make sure you know the difference!
     
  1. Going so fast that you can’t gear down to spell out the details of a task you’re delegating may seem strategic at the time. But in the long run it could ruin your business. To get the support you need from coworkers, customers and vendors, you need to share precisely what you have in mind. Or fall victim to Sensory Fill-In. When you provide a sketch, they automatically fill in the details they have in mind instead of the ones you have in mind. And who is responsible for the errors that result? Well, you are of course.
     
  1. Would you rather ask an expert or figure it out yourself? That all depends. If you are climbing the learning curve, ask an expert and follow their directions is what works best… with one exception. When you know next to nothing, making a salesperson your expert may set you up to buy what’s best for him or her but not for you. Consult an independent expert before you make a major purchase. On the other hand, depending on experts when you’re creating something new, may take you back to how it’s already been done. Listen to their input but, as its creator, know you are the ultimate expert when it comes to your dream.
     
  1. When we were kids, we were rewarded for doing things by the book. But as the head of your own business or life, that simply won’t work. These days, having to know how upfront will hold you back. What you need is a thoroughly detailed outcome… and the appropriate method will find you. Highly successful life changes, inventions and businesses frequently start as hunches or middle of the night Ahas! Most leaders I interview tell me they rarely know how, but they always know what.
     
  1. The ability to venture into the unknown is a must today. The marketplace is changing so rapidly that top CEOs tell me they don’t have a ten-year plan or a five-minute plan either. Flexibility is key. Can you think on your feet? Can you seize an opportunity others fail to notice it? Can you abandon your plan—your ten-year-ago or five-minute-ago ideas—and take the next step to your dream when it presents itself?
     
  1. For years I interviewed inventors and creators and over and over I heard the same comments. I woke up in the night with a clear image in my head or a voice telling me what to do. Or I was taking a shower when my idea hit me. Jeff Bezos, creator of Amazon.com, was so sure about his hunch that he packed up everything he owned and moved across the country in pursuit of his dream. And we all know he found it!
     
  1. When you’re stuck, instead of sitting and staring at your computer screen, get up and do something else. Go for a walk or switch to a project that requires another mindset altogether. HSP constantly tell me their most creative solutions come when they walk away from their desk and WHAM! The solution comes to them out of the blue… or out of the right brain. They tell me they strategically use the Alpha State to “program in” their problem and trust their mind to deliver a solution when they first wake up. And it does.

To find out whether you are using all 10 Success Skills… at the right time… and whether you are leading people around you to use them, read The Joy of Success: 10 Essential Skills for Getting the Success YOU Want, HarperCollins paperback 2004. Jack Canfield of Chicken Soup fame wrote, "I have been reading books on success for 30 years. This is one of the most sophisticated and useful ones I have ever read. I highly recommend it.”

Copyright The Technology of Success 2004

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Susan Ford Collins and Richard Israel are speakers, trainers and coaches, whose expertise has impacted 1 1/2 million people worldwide. Their clients include GlaxoSmithKline, American Express, CNN, IBM, Kimberly-Clark, Digital, Ryder System, Merrill Lynch, CondeNast, Coopers and Lybrand, Florida Power & Light, British Airways, International Distillers & Vinters, Royal & Sunalliance–Hong Kong, Zurich–Argentina, Guangxi Yuchai Machinery–China and University of Chicago Graduate School of Business.

Susan spent 20 years shadowing highly successful people and discovered they were using 10 skills consistently but unconsciously. In the 1980’s Susan and Richard collaborated in the creation of The Technology of Success training process. One of the skills highly successful individuals and teams use consistently is the ability to apply all three Success and Leadership Gears… at the right time. Susan is the author of The Joy of Success which Jack Canfield of Chicken Soup fame called “one of the most sophisticated and useful (success books) I have ever read.” Richard is the co-author of Your Mind At Work, How to THINK Creatively, Sales Genius, The Brainsmart Leader, Supersellf, The Vision, and Brain $ell which has been translated into 20 languages.

Together they have just written Shifting Gears: How to Succeed and Lead in the NEW American Workplace… 24 compelling case studies which teach how and when to use all three Success and Leadership Gears to solve the success and leadership errors employees and employers make. “A book all present and future business executives should make required reading for all their department heads," George A. Naddaff Founder, Boston Market. “Susan Ford Collins and Richard Israel have created a roadmap to navigate the confusion and reach a place where leadership, creativity, and innovation can grow,” Vince Alonzo, Editor-in-Chief, Successful Meetings. “Three-Gear Leadership is the jet fuel that can propel an organization to the next level,” Anita Brick, University of Chicago Graduate School of Business. For information about speaking engagements, contact Jones and O’Malley at 818-762-8353. To email Susan and Richard, visit www.technologyofsuccess.com.

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Overcome the Myths of Negotiation

 

John Patrick Dolan
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Wouldn't it be great if every client agreed to all the terms of a sale, no questions asked and no negotiation required? Although most people answer "yes" to this question, any salesperson knows that negotiating a sale is never that easy. And while negotiation is one of the most commonly practiced functions of communication, it is often the least understood.

Because most people don't understand the dynamics of negotiation, they may get nervous or apprehensive about the process. Even professional salespeople get sweaty palms and anxious stomachs before sitting down at the bargaining table. The trouble resides in all the myths associated with negotiation.

But, regardless of what you're selling, you can make the inevitable sales process more productive when you understand and overcome the following seven myths of negotiation:

Myth #1- In order to be a successful negotiator, you must be an SOB.

Mythbuster- This statement is completely false. In fact, most people become SOBs in sales situations because they are poor negotiators and must resort to ruthlessness to get what they want. In reality, effective negotiation has a great deal to do with the attitude you bring to the table. If you approach negotiation as a win-or-lose battle, then that's exactly what you'll get: a battle. You'll struggle against the other party, waste time and energy defending positions, and resort to sneaking things past your counterparts.

Then when it's all said and done, you'll probably come away with less than if you'd have treated the negotiation as an opportunity for everyone involved to profit.

Myth #2- Negotiating is synonymous with fighting.

Mythbuster- Fights generally break out when people can't negotiate effectively. When you understand effective negotiation, you can actually head off misunderstandings and conflicts that may arise in the process.

You'll know how to settle issues with customers without fighting. And in many cases, you'll be able to mediate conflicts, misunderstandings, and stalemates between other people and groups.

Myth #3- Negotiating is a talent reserved for shrewd businesspeople, experienced diplomats, and precocious children.

Mythbuster- Anyone can learn to negotiate effectively, without being a genius or manipulative. Most salespeople don't consider themselves negotiators, and certainly not professional negotiators. Many equate professional negotiators with hard-charging corporate raiders launching takeovers on other businesses, diplomats meeting to discuss the fates of nations, or lawyers settling million-dollar lawsuits.

But each and every person on the planet is a negotiator, and many times without realizing it. When you take time to learn the art of effective negotiation, you actually can get more of what you want. You can forge better and more productive relationships with your clients and all the people around you in other areas of life.

Myth #4- When you sit down at the bargaining table, you must abandon all ethics to get what you want.

Mythbuster- Getting what you want doesn't mean stealing it from others. By understanding negotiation, you can prevent being conned into things you don't want to do or getting less than you deserve. Consider negotiating for a new sales position. The terms you agree on with the new employer will obviously affect your time with that particular company, and also your time with future employers. The compensation package from one company will set the pattern for the level of income you can command when negotiating with other companies. It's not unusual for the difference in two people's earnings to be more affected by their individual negotiating abilities than their experience or talents.

Myth #5- You must have the upper hand to negotiate effectively.

Mythbuster- If you think that negotiation involves one group trying to beat the other out of a good deal, then you have an inaccurate perception of the process. Actually, the weaker your position, the better your negotiating skills must be, because you can save a huge amount of money. For example, suppose you're negotiating the price of a new computer system for your company. The person selling the system knows your current system is outdated and that you must make a purchase immediately to stay competitive. If you can bring the price down $15,000 from what the seller asks, you'll save much more than the upfront cost. By the time you add interest on a five-year financing plan, you'll have quite a savings that's well worth the negotiating effort.

Myth #6- Negotiating is a time time-wasting activity that only clogs the wheels of progress.

Mythbuster- When done right, negotiating is an enormous timesaver because it makes everyone work together to find solutions. Rather than struggling through a one-sided sale, it is much easier when both parties understand how to negotiate and actively participate in the process to produce the best results possible for everyone. Plus, enlisting others can help fulfill your plans and dreams.

Myth #7- Negotiating is always a formal process with clearly defined parameters and procedures.

Mythbuster- Negotiating is the sum and substance of all human give and take.

That's right; negotiation actually takes many different forms that you may not normally consider. For example, if you and your spouse are deciding who's going to prepare dinner and who's going to clean up the dirty dishes, then you're negotiating. Or maybe you're haggling the price of an item at a garage sale with the seller; this is also a negotiating process. Chances are you negotiate much more frequently than you think. In fact, any time you're making a deal or working out any kind of agreement with anyone, then you're negotiating. And if you're conducting these daily negotiations effectively, you'll reach an agreement that satisfies both parties. You can actually improve your professionalism in dealing with all types of people by applying some of the negotiation skills you practice without realizing it.

Busting the Myths of Negotiation

Human beings negotiate constantly, so it's vital to get beyond the negative thoughts that cause us to ask for less than we deserve. And the art of negotiation requires more than just trading off with others to get the things you want. Negotiating is a process of understanding people and discovering ways you can work together to produce positive results for everyone involved.

When you understand the myths surrounding the negotiation process, then overcome these fallacies, you will reap greater benefits from your sales profession. Most important, you'll come away from every sale completely satisfied for yourself and confident that the other party feels a similar satisfaction.

About the Author

John Patrick Dolan is a highly praised convention presenter, member of the National Speakers Association Speakers Hall of Fame, and author of the best

selling book "Negotiate Like the Pros." His offices can be reached at

1-888-830-2620, or by email at negotiatelikethepros.jpd@gte.net. Visit his web site www.negotiatelikethepros.com for preview video and complete booking information.

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Editor:    Douglas Shaw, CM
              doug@nma1.org