In 2012, the energy sector spent $17.9 billion on global research and development, more than $6.6 billion of which was conducted in the U.S. Assuming small and midsize businesses perform 20 percent of the U.S. energy sector’s R&D, these companies could incur up to $1.3 billion in R&D expenditures, the benefits of which may not be fully realized because they underutilize the R&D tax credit, says Robert Henry, a partner in Tax and Strategic Business Services at Weaver.
In addition, the R&D tax credit represents a permanent tax benefit; it reduces the overall effective tax rate as presented in generally accepted accounting principles basis financial statements.
Smart Business spoke with Henry about new ways to utilize R&D tax credits.
What is the R&D credit?
The federal R&D tax credit is a mechanism to spur technological advances and hiring in R&D fields. It has expired and been extended multiple times, but has most recently been extended through 2013. With support in both political parties, it is likely to be continued.
In addition, many states offer R&D tax incentives in the form of state income, franchise, or sales and use tax credits and exemptions. Texas’s R&D credit will come back into law effective Jan. 1, 2014. Texas HB 800 provides a sales and use tax exemption or a franchise tax credit related to qualified R&D activities taking place within Texas. This will greatly increase the potential tax benefit available to taxpayers conducting their R&D within Texas.
How is qualifying R&D activity defined?
Internal Revenue Code section 174 describes research and experimental expenditures as activities intended to discover information that will eliminate uncertainty concerning the development or improvement of a product. The activity must:
- Be related to the development or improvement of a product, inclusive of a technique, invention, formula or process.
- Address uncertainty regarding the appropriate method or design for the product.
Activities deemed eligible by section 174 qualify for immediate tax deduction. They also may qualify under section 41, where they must:
- Be technological in nature, based in hard sciences, such as geology or engineering.
- Contain a sufficient degree of development uncertainty.
- Contain the process of experimentation.
- Have a permitted purpose that improves a business component, which includes a product, process, software, technique, formula or invention.
What oil and gas activities may qualify?
‘Wildcat’ exploration, the drilling of a well, the development of logistical infrastructure — really the entire exploration and production process — may qualify for the R&D credit. That also includes improved analytics and software that enables more accurate interpretation of reservoir studies. A pipeline company in the industry’s midstream sector may be more efficiently monitoring flows of oil and natural gas or overcoming adverse field conditions in placing a pipeline. Downstream companies may benefit from improved processes for purifying or refining natural gas or oil.
What costs are eligible for the credit?
Wages for employees engaging in qualified research, directly supervising qualified research or supporting it are eligible. A company may also deduct 65 percent of contract labor costs associated with qualifying R&D activities.
Tangible property costs used in the R&D process or in the construction of a prototype can be qualifying expenditures. Supply expenses, though, cannot include land or land improvements, or property subject to depreciation. Expenses for royalties, shipping or travel also cannot be included. In addition, special considerations apply for internal-use software.
In order to capture all eligible credit when R&D activities are identified, companies must track and record labor costs of internal employees, contractor and vendor expenses, and supplies or materials costs. A business that is aware of the manner in which these costs are tracked and accounted for will more accurately define what it can claim for an R&D tax credit. ●
Insights Accounting is brought to you by Weaver
Cloud computing has grown in popularity because it can help boost productivity and reduce costs by allowing organizations and employees to work collaboratively over the Internet from the office and remote locations.
But that ease of access to your business applications and data brings increased risk.
“Cloud computing presents a number of risks, ranging from data leakage to cyberattacks on cloud computing vendors and their customers,” says Jim Stempak, a principal at Crowe Horwath LLP.
Smart Business spoke with Stempak about a methodology to periodically assess cloud computing IT security risks.
What risks are associated with cloud computing?
Whether you sign up for software as a service (SaaS), platform as a service (PaaS), infrastructure as a service (IaaS) or some combination of service models, your organization is exposed to risk because security is applied differently than in traditional noncloud IT environments. Additionally, your vendor might not have security standards on par with your own.
Some areas of risk are:
- Cloud governance risk. Cloud governance refers to controls and processes for cloud planning and strategy, vendor selection, contract negotiation, implementation, operation and possible termination of service. Some companies rush into cloud computing and don’t properly assess risks and implement controls to mitigate them.
- Weak identity and access management controls. Moving to the cloud can drastically change how customers control access to accounts and computing resources, thus introducing new security risks.
- Unsecured data connections. With the cloud, much of the data communication takes place outside of your IT environment. It’s important to understand where your data is and assess vendor protection of data in transport and storage.
- Workforce security risk. Often employees use personal cloud storage services such as Dropbox, Evernote, Google Apps, SkyDrive and iCloud to transfer and store work-related files without authorization or oversight from IT management. A recent Nasuni Corp. survey of 1,300 corporate IT users found one in five respondents put work files in personal Dropbox accounts. Personal cloud storage services lack enterprise-class security protection, and, in turn, could put sensitive data at risk and increase the chance your organization is noncompliant with industry and government standards.
How should a company assess its cloud security risks?
Companies should review all layers of risk associated with the specific use of cloud services in their IT environment. Start with a review of common controls, including cloud governance, identity and access management, and transmission security. A corporate cloud security assessment typically focuses on controls affecting cloud governance, such as cloud planning and strategy, vendor selection, implementation, termination and transition of cloud services; identity and access management, such as account setup, level of access and single sign-on; and secure connectivity, such as encryption, backup plans, logging and monitoring.
You also need to conduct a workforce assessment to identify unauthorized use of personal cloud services, which includes:
- Network scanning — special software applications scan networks for the most popular services for storing and transferring data in the cloud.
- Passive monitoring — applications track network traffic to uncover connections with website addresses associated with personal cloud services.
- Log analysis — servers have log files that capture useful data about network activity to help pinpoint cloud services traffic.
- Workforce survey — ask if employees are using personal cloud services for work and why. This can help you understand cloud service needs and identify potential risks.
Cloud computing changes the way people work and is here to stay. Organizations need to completely understand how they are using cloud services — in both known and unknown ways — before valuable data winds up in the wrong hands. ●
Insights Accounting is brought to you by Crowe Horwath LLP
When evaluating the Affordable Care Act (ACA), there are two angles — the employer’s angle and the individual American’s angle. Setting aside what employers need to know, in the individual world, the first thing people bring up is the individual mandate.
“It is important to discuss the individual side of the legislation, so employers know what their people face if they are not offered coverage and, also, what their part timers face who may not be eligible for the employer’s plan,” says Tobias Kennedy, executive vice president, Montage Insurance Solutions. “Employers may be considering reducing hours of certain staff down to part time, and countless American small business owners may be getting rid of coverage entirely, so a dive into the ACA’s impact on individuals is very important.”
Smart Business spoke with Kennedy about the individual mandate.
How exactly does the individual mandate work?
The individual mandate is the part of the legislation that says most U.S. citizens and legal residents must carry minimal essential coverage for themselves and their dependents. Exceptions are very rare and really only extended to incarcerated people or those who belong to a specifically recognized religiously exempt group. Other than that, pretty much all citizens and legal residents have to comply.
The good news is there are many ways for an individual to satisfy this mandate. Most commonly, people will be complying with this via employer coverage, social service programs like Medicare or Medicaid, certain Veterans Affairs programs like TRICARE or through plans purchased on the individual market including the new exchange marketplaces created by the ACA.
What happens if individuals don’t have coverage?
If a person doesn’t have coverage, there is risk of a tax penalty. The penalty begins humbly enough in 2014 at 1 percent of income, or $95 — whichever’s greater. However, in 2016, by the time it’s fully phased in, the penalty is 2.5 percent of income or $695 — again, whichever’s greater.
In fact, even though it’s called the ‘individual mandate’ people should be aware it extends beyond your self. People are not only responsible for themselves, but they’re responsible for dependents as well. If someone is on your tax return, you’re responsible for the fines if he or she doesn’t have coverage. Children’s fines are half of an adult’s, and there’s an annual cap per household, which keeps the maximum allowable penalty amount to three adults. But people will want to talk to tax professionals with an understanding that, for many folks, the individual mandate extends beyond just the individual.
How can people get help with coverage costs?
Thankfully, there is some financial help available for certain people, so it’s important to explore all of the options. This assistance comes by way of the ‘subsidies’ that have been in the news.
The subsidies are a way for people who qualify to get premium assistance, so their plan is more affordable. They are only redeemable in the exchanges and are set off of the silver plans, which are the middle of the road plans that carry a 70 percent actuarial value. Actuarial value is a broad-strokes term that describes the average a plan is designed to pay for claims expenses like deductibles and co-pays — the remainder is the average that a member is designed to pay. So, qualifying people can get a subsidy to purchase a 70 percent plan through the exchange.
The subsidy basically says ‘you are only responsible for a certain premium dollar figure per month, and we’ll cut a check to the insurance company for any overage.’ This keeps the plan’s monthly premium from going over a certain amount of out-of-pocket costs.
Qualification for the subsidy is based on a lot of factors, including having an income below 400 percent of the Federal Poverty Limit but also not having affordable coverage available elsewhere. Examples of other coverage that disqualify you for a subsidy are access to things like affordable employer coverage or social service programs like Medicare/Medicaid.
Next month, we’ll discuss all of the information surrounding how to qualify, what exactly qualification gets you, and the financial assistance’s extension beyond premiums to help with co-pays and deductibles, too. •
Insights Business Insurance is brought to you by Montage Insurance Solutions
No company is immune to fraud. You may have stringent internal controls, and rigorous hiring and training programs, but still employees may find ways to violate standards.
“It is not enough to have a strong personal ethical code. It needs to be communicated and enforced to become corporate culture,” says Mariah Webinger, Ph.D., an assistant professor of accountancy at John Carroll University. “When it comes to enforcement, you need to proceed cautiously to make sure you are achieving your goals.”
Smart Business spoke with Webinger about dealing with employee fraud.
What should you do if you suspect an employee of fraud?
First, sit down, take a deep breath and think. It is never a good idea to confront a suspected employee right away. You probably don’t have the evidence you need to prove either innocence or guilt. Confronting the employee puts them on guard and makes it even less likely you can get that evidence.
Secondly, you could be wrong. Accusing a suspected employee can be very demoralizing to your workforce and creates an atmosphere of suspicion, forcing bystanders to choose sides.
Third, you never want to interview a suspect when you are emotional. Acting on emotion rarely makes good business sense, so give yourself a break to cool down before you make any decisions.
Finally, communicate the issue and the consequence internally, and perhaps to external stakeholders. When you do, try to stick to the facts and avoid value statements about the employee or the situation.
Does the type of employee misconduct affect consequences and communication?
All types of employee misconduct should be handled thoughtfully and not emotionally. However, the type of conduct will influence the consequence, which in turn will influence how it is communicated. If it is a minor policy infringement, it may be acceptable to have a reprimand as a consequence and an internal memo for communication.
Embezzlement or fraud should result in termination, regardless of size, since these violations are willful and never accidental. Also, fraud indicates an internal control weakness. These weaknesses need to be rectified and should be communicated.
Should a fraud perpetrator ever be retained as an employee?
The short answer is ‘no.’ Usually two reasons are given for wanting to retain an employee after a fraud: The fraud was a small amount or the person is a great employee. All frauds start small. Keeping a dishonest employee on the payroll sends a message to your other employees that fraud is acceptable as long as it is small or if you are a valuable employee. No employee is as irreplaceable as your corporate culture. If they are a good person and a talented employee they will have a great career elsewhere. The consequences of violating an ethical code might be the most important business lesson they will ever learn.
When should you pursue legal action?
Collect your evidence first. Law enforcement is usually overworked and generally not an expert in business. It is unlikely that they will pursue something unless there is a very tight case.
When do you need to hire a forensic investigator?
Generally your current employees will be more efficient at collecting evidence than an external expert because they are more familiar with your company. However, if the issue is contentious or involves office politics, it is helpful to have an independent investigation.
Also, that the fraud was perpetrated suggests there is a weakness in the internal skill set. Usually fraud involves accounting and/or information technology. If you don’t have internal experts in those fields, try to hire a forensic investigator with that expertise.
Where can you find a forensic investigator?
Avoid the yellow pages. It is hard to differentiate between a good forensic investigator and an imposter. Ask your auditor or accountant. They may not be able to do the work for you because of independence issue, but they can usually refer you to someone who can. Also ask your attorney. Most likely they have worked with forensic accountants or business experts and can recommend someone. If all you have is a Web search or the phone book, ask for references and check them. •
Mariah Webinger, Ph.D. is an assistant professor of accountancy at John Carroll University. Reach her at (216) 397-4225 or firstname.lastname@example.org.
Insights Executive Education is brought to you by John Carroll University
Some mistakenly believe that U.S. patents travel the world with universal protection, but countries work independent of each other when granting patents. That is why, when conducting business internationally, it is important to understand how intellectual property protections are procured in each country.
According to the Paris Convention, a treaty signed by the U.S. and 174 other countries that protects industrial property, a patent granted in one signatory country does not mean it must be granted in another.
“U.S. patents are independent from those granted by foreign countries, so protection is advisable in each market a patented product will be sold,” says John S. Zanghi, a partner at Fay Sharpe LLP.
Smart Business spoke with Zanghi about acquiring international patent protection.
How does the Paris Convention apply?
National treatment and right of priority are two important clauses of the Paris Convention with which businesses should be familiar. National treatment says member countries must grant the same patent protection rights to foreign citizens of other signatory countries as it grants to its own nationals. Nationals from a non-signatory country also are entitled to national treatment so long as they have a ‘real and effective industrial or commercial establishment in a contracting state.’
‘Rights of priority’ refers to the length of time an applicant can take to file a patent for the same invention in two countries. For patents and utility models, an applicant must file additional applications within 12 months. A patent office handles these as if they were filed on the same day as the original application, allowing time to determine the commercial viability of the patented product in additional countries.
An applicant seeking priority based upon an earlier filing is protected from any subsequent disclosures, such as publications, that occurred since the first patent was filed.
Why can’t one international patent application grant protection in all countries?
People have long discussed the idea of a single international patent application, but it’s not available.
Applicants can file using the Patent Cooperation Treaty (PCT), a multilateral agreement administered by the International Bureau of the World Intellectual Property Organization, which allows applicants to file a single application for patent protection in multiple countries. Applicants select the countries or regions where they would like to receive protection. The application is submitted to each office for review, which manages the granting of patent protection individually. Applicants must adhere to the requirements of a particular country and prosecute each patent separately from other countries.
For patent protection in Europe, filing regionally through the European Patent Office (EPO) is an option. The EPO is a collection of 38 European countries that agreed to establish a single procedure for the grant of patents. A European patent gives its proprietor the same rights as would be conferred by a national patent granted in any participating country. Ultimately, if granted, the European patent will grant in the selected European countries. Any infringement is dealt with by national law.
What needs to be done to file a patent in a foreign country?
Obtain legal counsel in each foreign country because each manages its own patent protection. Local counsel has knowledge of local requirements and can assist in filing and prosecuting an application through to the grant of the patent. They also are able to process applications in a timely manner to ensure you don’t miss a filing deadline.
Which patent and patent laws apply if a U.S. business is sued in another country?
Each issuing country manages and maintains patent protection. If someone sues you for infringement outside of the U.S., the laws of that country govern. However, if the country is a Paris Convention signatory, it must grant the same protection to all non-citizens as its own citizens. It is important to understand how the various international treaties and conventions operate, as well as the filing requirements of each country.
Filing a patent is not an insignificant cost, so it is imperative to understand your obligations and risks wherever you conduct business or in countries where significant competitors conduct business. •
Insights Legal Affairs is brought to you by Fay Sharpe LLP
Twelve years ago, EY decided to go global with its Entrepreneur Of The Year awards and establish the World Entrepreneur Of The Year program — and the results have been, shall we say, an international success. The conference, held annually in Monaco, features Entrepreneur Of The Year country winners competing for the World Entrepreneur Of The Year title.
Assembling business leaders from around the world in one place to be honored is a huge accomplishment — the wealth of experience, as well as the variety of successful leadership styles, is outstanding.
Here are some thoughts from the collection of the world’s most accomplished entrepreneurs — innovators, futurists, turnaround specialists and problem-solvers — about leadership styles. ●
“I built the company based on people, not on experience from before. They were willing to learn and try anything. We had a bunch of people who had never done this before. None of us had run companies. None of us had worked in high levels of companies. None of us were from Fortune 500s. Chobani not only became a business that grew, but Chobani was like a school to us, including myself.”
founder, president and CEO
Entrepreneur Of The Year 2012 United States
2013 Entrepreneur Of The World
“Early on, the business was centered on me, and I had to make all the decisions alone. Now I share those decisions with my 10 main directors. If there are differences in opinion, I make the last decision.
The other thing is that I have had to ensure that the people who are invited to work here are people with principles, values, integrity, responsibility and passion. If I don’t see a person with passion, they don’t hang around the company very long.”
Lorenzo Barrera Segovia
founder and CEO
Entrepreneur Of The Year 2012 Mexico
“I’m a very passionate person, which will never change. When you grow, you gain more experience and the kind of problems you face change. As you grow, you need to grow with your organization.”
Entrepreneur Of The Year 2012 Argentina
“In the startup days, you have to be very innovative, hire and retain talent, refine your business as you deploy in the marketplace, and you learn things from it. Today, with a solid track record of business success, I can focus on what’s next and think more strategic and long-term than you’re allowed to in the early days. My style has evolved as the business has matured.”
Chevron Energy Solutions
“Entrepreneurship and leadership is about always having ideas, knowing that it is possible even though everyone says it is too difficult. Maintain the positive and always have new ideas.”
Mario Hernandez, founder and president, Marroquinera
Entrepreneur Of The Year 2012 Colombia
“To keep the entrepreneurial spirit and entrepreneurship alive once you've got past the startup base, I think it is making sure people understand why they are there. There are always things you can do to improve your business. You should be rethinking and retooling it every chance you get. The key thing is to make sure everybody in the organization understands the story, where are you going — how are you going to get there? And the belief that you are doing the right thing —people want to know their purpose. Keep the energy going, keep a strong sense of purpose.”
Dr. Alan Ulsifer
CEO, president and chair
Entrepreneur Of The Year 2012 Canada
“The skill sets of an entrepreneur involve understanding how to create business. Why not work with kids who need it the most and actually teach them and help them to be entrepreneurs? That’s what is going to grow our economy and create stability where otherwise we’re going to have a lot of social unrest.”
President and CEO
Network for Teaching Entrepreneurship
“I like to be involved. I want to know everything that is going on. But I have to delegate to my team. That was the biggest adjustment for me, and it’s not an easy thing to do. It’s that delegating to others, trusting them and reinventing yourself. Now that we’ve grown, I put more responsibility on my team and rely on my team more than I once did.”
President and founder
SME Entertainment Group
“If someone makes a mistake, what do you do? You laugh with them. You don’t yell at them. You laugh. It just keeps things light and lively and people want to do their very best. You let them know they screwed up, but you also let them know it’s OK.”
National Heritage Academies
Leaders often talk about how the traits of accountability and transparency helped make them who they are, but to retired Navy Adm. Mike Mullen, who served as the chairman of the Joint Chiefs of Staff for four years under President George W. Bush and President Barack Obama, leadership is quite simply how you listen, learn and lead.
It’s not just a coincidence that communication is as important in the war zone as it is in an organization — and that’s where Mullen emphasizes listening to what his team members have on their minds.
Smart Business talked with Mullen about the challenges of being in command:
Q. What do you see as the most important trait that any leader must possess?
A. Integrity. Be true to yourself, and obviously true to your values. The value of integrity intrinsically has been a driver for me since I was a midshipman at the U.S. Naval Academy. It has served me exceptionally well.
Integrity encompasses being honest, truthful and consistent — both publicly and privately in leadership positions — and representing that in every situation. It is most evident in the toughest decisions you have to make.
Q. And how can you ensure integrity is present in leadership?
A. What I loved about command was the responsibility and authority that came with it. But more than anything else, the other piece was accountability — accountable leadership. That is not just having someone hold you accountable, but having enough strength yourself as a leader to hold yourself accountable.
I just found that even with those decisions that can be very unpopular, if you are true to that value of integrity, even if it may not seem to some to be the best decision, it [integrity] holds you in the best stead as a leader over the long term. And because of that, it becomes incredibly supportive of those very, very tough decisions.
Q. So what can help a leader make those tough decisions more effectively?
A. As a more senior leader, I learned to keep a diversity of views around me. The more senior I got, the more diverse the people, the recommendations and the discussions had to be in order for me to make the right decision.
I had people around me who were willing to say, ‘Hey, this is when you got it wrong,’ as opposed to the opposite, which is isolation, where nobody will tell the emperor [he] doesn’t have any clothes on.
Q. You’ve mentioned the importance of listening to others in order to help you become a better leader. How did you do that?
A. Everywhere I went, whether we had a town hall meeting or we could call an all-hands meeting, I would take questions from the audience. So, for example, when a young enlisted man would give me a question of which I didn’t know the answer, I said, “I don’t know the answer, but give me your email address. I will go research it and get back to you.”
I did that. I went back and looked at whatever their concern was. And some of those concerns generated significant changes in the military, or in the particular service they were in. For me, as chairman, that was a vital part of trying to understand what I was asking them to do, and then taking that feedback and trying to fix the problem that they raised — if it made sense to do it.
A good leader can make such a difference, and create something out of nothing, whereas a bad leader is unable to do that. The ingredient that makes a difference is leadership. ●
Retired Navy Adm. Mike Mullen served more than 43 years in the Navy, having served as the chairman of the Joint Chiefs of Staff from 2007 to 2011, and as chief of naval operations from 2005 to 2007. He will be the keynote speaker at the Dec. 5 American Red Cross Hero Awards. Learn more about the Hero Awards at www.clevelandheroes.com.
Consider this business scenario: You’ve landed a big account for your company by converting a highly prized prospect into a valuable client. The new client has hired you to handle a specific scope of work and is counting on your team’s ability to deliver work that goes above and beyond.
While nothing is more important than delivering great customer service to satisfy the client, you may not realize that you’re probably overlooking unrealized opportunities to forge a stronger relationship with your customer.
In today’s business landscape, most large companies offer an array of products and services. More often than not, however, your clients use you for a specific service or skill set. And unfortunately, in this scenario, most companies focus solely on the task at hand — delivering what they’ve been contracted to deliver — failing to take ample time to think about the bond they’re creating with the client and what could be next.
In more simple terms, it is one thing to provide service that keeps a customer; it is another to keep that customer and expand the relationship to become a trusted partner.
Provide value in a deliberate way
The good news is that this is an easy fix. Establish a content marketing program that allows you to distribute thought leadership to your clients.
A content marketing program will help you provide value that other service providers may not, and when clients see you as an informational resource and partner, it will be easier to expand the relationship.
Take this example into consideration: You are an insurance provider and your main product is life insurance, therefore most of the communication you have with your clients surrounds that topic.
With a comprehensive content marketing program in place, however, you can educate your clients on the recent trends in the insurance industry and how that affects the individual. At the same time, you can give them an overview of your company’s wellness program and let them know that if they joined, they could reduce their monthly premiums.
As you can see, you’re not just providing your client with the original service, you’re also providing them with both your thought leadership — aka value — and additional offerings.
Personal connections payoff
Aside from providing value to the client with the content you distribute, a strong content marketing program allows you to showcase your brand’s personality. Clients will be able to connect with your brand on a more personal level.
Providing continually updated content through the right channels to the right clients enhances your day-to-day communications. Clients start seeing you as thought leaders and partners instead of just service providers.
It will help you expand relationships and, as a result, generate new business through more products and services.
Show them more than just what they see on the surface — show them how active you are in the community, or how much fun you had during a recent company outing. If may sound trivial, but your clients do similar things, and seeing you connect with the community and/or employees will help forge a more personal connection. You never know; you and your client may support the same charity, organization or team.
Open communication also will help strengthen relationships to the point where you can capture a premium price and eliminate price-jumping clients. Clients will pay more for a valuable relationship than simply look to get the lowest price elsewhere. ●
David Fazekas is vice president of marketing services for SBN Interactive. Reach him at email@example.com or (440) 250-7056.
You would think someone like Douglas Merrill would be a heavy multitasker, with multiple devices in hand, fielding several conversations — both real and virtual — simultaneously.
But you would be wrong.
Merrill, who was the CIO at Google until 2008, doesn’t like to multitask. He says that when you do it, you aren’t using your brain’s full capacity and aren’t as effective. He recommends focusing on one thing at a time.
Billionaire Mark Cuban has his own time management strategy. Cuban, owner of the NBA’s Dallas Mavericks, says you should completely avoid meetings unless you are closing a deal. Otherwise, he says, they are a waste of time.
Both of these proven leaders have learned that how you manage your time is paramount to your effectiveness.
As a CEO, you are swamped every day with calls and emails from people wanting a piece of your time. Some are internal, some are charity requests, some are from friends or family members and others are from service providers.
To help wade through this sea of information, it’s important to have a system in place to help you free up time to think about your business and the things that matter most in life. These open times are what author Richard Swenson refers to as “margin.” They are the spaces between ourselves and our limits that are reserved for emergencies.
But for many business leaders, there are no spaces left.
The way out of this trap is to set clear goals and values for yourself and your organization. Once you do that, you will have a filter through which to evaluate everything. Everything will have an immediate yes or no answer, eliminating the “let me think about it” category completely.
The key is to establish what your goals are first and then prioritize what is important. With your priorities straight, you will find more time to put toward important things on your goals list, but don’t forget to leave time on your daily schedule. There is no way to foresee all emergencies, so by leaving yourself some margin, when something unexpected happens, you already have time built in to deal with it.
Once you have margin built into your life, you have to have the discipline to stick to it. There will always be the temptation to take every meeting or answer every email. But if you use your goals and priorities as a filter, those requests are easily either accepted or declined based on where they fall on your priority list.
If you want a life where you can experience more peace and joy and less anxiety, start looking at your priorities and establish some margin in your daily schedule. ●
Deny, deny, deny; fall, tuck and roll; or put your head in the sand?
The quick answer to this headline is none of the above. A leader, by definition, must do exactly that — lead, which means being in front of a variety of audiences, including employees, investors and customers. Not everyone is going to be a gung-ho supporter. Sooner or later you’ll encounter a naysayer who either has a point to prove or is on a mission to make you and your company look bad.
Many of these verbal confrontations come out of nowhere and when least expected. As the representative of your organization, it is your responsibility to manage these situations and recognize that sometimes a “win” can simply minimize the damage.
When under siege, it’s human instinct to fight, flee or freeze. Typically these behavioral responses aren’t particularly productive in a war of words. Engaging in verbal fisticuffs could simply escalate the encounter, giving more credence to the matter than deserved.
If you flee by ignoring the negative assertions, you’ll immediately be presumed guilty as charged. It’s hard to make your side of the story known if you put your head in the sand.
By freezing, you’ll appear intellectually impotent. Worse yet, pooh-poohing a question will only fuel the aggressor’s determination to disrupt the proceedings. You could use a SWAT-type police and military technique to elude a confronter by falling, tucking and rolling to safety, but that usually only works on the silver screen.
Perhaps the best method to manage unwelcome adversaries is to be prepared prior to taking center stage. This applies to live audiences or a virtual gathering when you’re speaking to multiple participants, which is common practice for public company CEOs during quarterly analyst conference calls.
Most gatherings of this nature include a Q&A segment where the tables are turned on the speaker who must be prepared to respond to inquiries both positive and negative.
Before any such meeting, it is critical to contemplate and rehearse how you would respond to thorny or adverse statements or questions.
A good practice is to put the possible questions in writing and then craft your responses, hoping, of course, that they won’t be needed. This is no different from what the President of the United States or the head of any city council does prior to a press conference or presentation. The advantage of this exercise is that it tends to sharpen your thinking and causes you to explore issues from the other perspective.
In some cases you’ll find yourself in an awkward or difficult situation where there is no suitable yes or no answer, or when the subject of the interrogatory is so specific it is applicable to only a very few.
The one-off question is easiest to handle by stating that you or your representative will answer the question following the session rather than squander the remaining time on something that does not interest or affect the majority.
The more difficult question is one that will take further investigation and deliberation, in which case the best course of action is to say exactly that. Answer by asserting that rather than giving a less-than-thoughtful response to a question that deserves more research, you or your vicar will get back with the appropriate response in short order. This helps to protect you from shooting from the hip only to later regret something that can come back to haunt you.
Effective speakers and leaders have learned that the best way to counter antagonism is through diplomacy. It’s much more difficult for the antagonist to continue to fight with a polite, unwilling opponent.
Finally, when being challenged, never personalize your response against your questioner; always control your temper; and don’t linger on a negative. Keep the proceedings moving forward and at the conclusion keep your promise to follow up with an answer. This will build your credibility and allow you to do what you do best, lead. ●
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. “The Benevolent Dictator,” a book by Feuer that chronicles his step-by-step strategy to build business and create wealth, published by John Wiley & Sons, is now available. Reach him with comments at firstname.lastname@example.org.