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Bench marking is the process of comparing one’s business processes and performance metrics to industry best practices from other companies. This gives a business perspective on how they compare to their competitors and gives insights to how to better manage their operations/costs to remain competitive. This information can assist an organization in developing a sustainable business model at a lower cost. It also can give a business a “competitive advantage” over their local competition by providing insights into how businesses outside of the region conduct their business.

An example of bench marking includes comparing other businesses technological aspects to its own. As technology progresses there can be changes to processes and controls that can make staying current a daunting task for a business owner. These changes can impact company’s “best practices” and yield a higher level of service to a customer at a lower cost. If a business does not adapt to beneficial changes, they will soon find themselves offering a product of lower value than the competition or one that costs more to produce, thereby losing their competitive edge.

An internal example is reducing employee turnover by bench marking employee compensation (including things like benefits and training). Employee turnover is not only costly, it can have an impact on customer satisfaction and the customers’ perception of a business. Every business owner and manager knows how crucial this can be to limit compensation in order to control costs and remain competitive in the customer marketplace, while still providing employees with fair compensation. Training and scheduling is another important factor to ensure quality of products and services. Other businesses may incorporate certain training or scheduling functions that can lead both to employee satisfaction as well as higher customer service. If business are not staying abreast of these items as they compare to others they will find themselves left behind.

Bench marking can be a very valuable aspect of a business’s functionality. It is well worth the time and efforts to review these on a quarterly basis. Companies should look beyond their local market for this information and find other regions to analyze. They may find the “one new thing” that has proven success and sets their business in position for improved customer service and profitability. The price for bench marking will be far less than the cost of falling behind.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Why does one go into business? Consider these four classifications of Owners; the inventor, the salesman, the entrepreneur and next generation. Where does your client fall? There is almost no one who is a trained businessman from the beginning. Some may go to business school and desire to run a Fortune 500 Company, but most are everyday people that see opportunity and a niche or see a product that they think makes sense that they would be able to market. However, few have been taught the business of managing a business.

There are over 6 million small (under 500 employees) businesses in the U.S. How do they become successful and how do they manage success? Some will be self-taught (to a point), others will hire more skilled employees, and others will seek outside assistance. Which of these paths they will take may depend on which type of owner they are.

INVENTOR – He has developed a product or technique, and now he is not very concerned about how it gets marketed or how to price it or finally get it to the user? He is even less interested in billing and collecting his money. He just created the ultimate widget, and that is all his only care. He may want to invent enhancements, another widget or even retire. However, not much thought goes into putting a company in place to do what is necessary to get this product to the ultimate consumer. He might even sell the invention so as not to deal with the business aspect of it.

SALESMAN – He can sell almost anything; he is not really interested in managing people. The back office tasks of billing and collecting the money are all left to someone else. The challenge is in the sale of the product, where he might undercut its price just to get the sale. He likes his independent schedule and does not want to be held accountable for his time or efforts. He almost always needs someone to run the business or a strong “right-hand man/woman.” He will be looking for the next sale and not be concerned with the day to day operations. Rarely will he be in the office. The business is entirely dependent upon him for bringing in new business. Without the owner/salesman, the company would cease to exist because he is the only sales stream.

ENTREPRENEUR – This person is always looking for the new challenge; he does not want to be involved in the business he founded. He would prefer to establish a new venture, get it started and then move on again. He is probably not interested in day-to-day operations once the company is running. He may create messes and then move on to the next newer business, leaving others to clean up after him.

NEXT GENERATION – This group is the family or friends that inherit or buy an ongoing business. The business has been “successful,” and nobody wants to change that. Even though change is natural and inevitable; yet they keep doing things the same way it has always been done. Pricing from the 1990’s or sales and marketing methods that have not changed with technology. Alternatively, “let’s add 35% for overhead and profit because that is what we have always done.” Not knowing or taking the time to calculate what the exact number needs to be.

The object here is to point out a pattern in each of these types of ownership. The fact that not one owner wants to manage the business that he/she created, nor is the next generation going to change their methods of doing business. Each has a different goal in mind for his/her company. Keep in mind that 50% of all new businesses fail within five years. Is this surprising when you look at the type of “owners” who go into business?

A large number of owners may rely on advice from their accountant or lawyer to help run their business.

An accountant’s goal is to reduce your taxes; very few have run or are trained to manage a business. How the Chart of Accounts is organized can tell you how much credence is given to the actual running of the company. There are very few Charts of Account’s that are set up for managerial accounting. There is little thought to distinguish between fixed expenses and variable expenses. The accounts are not designed to provide adequate numbers to help manage a business. One line for all of the revenue streams, one line for the cost of goods is not sufficient for running a business. Most discussions are centered on tax avoidance and not how to efficiently monitor the numbers to improve the business. If the COA is not set-up correctly and you are using the accountant to provide the financials, then you are inevitably a month or two behind in getting this information. This system does not assist in the managing of the company because you are always looking backward; not forward.

The lawyer for the company is adequate for incorporation, asset protection, and other legal advice but is rarely trained actually to manage a business.

Most accountants and lawyers have enough trouble running their own business let alone that of their clients.

SUMMARY Yes, there are a small number of owners who do an excellent job of surrounding themselves with competent people who perform what they will not or cannot do. The vast majority, however, do not understand the business of running a business and those that do have not employed competent people to move to the next level.

The previous discussion is meant to point out just how many small businesses might benefit from a relationship with a Small Business Consultant. While there are a plethora of small business owners out there, they are not interested in actually “running the business” they have created. Most do not have the training, and many do not have an interest in running the business. Their forte lies elsewhere in the business. Consultants are perfectly equipped to determine the type of owner for each project and help them build a team to manage the company for the future.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

I’ve done some recruiting during my career, and the first thing I ask an applicant is, “Which company did you work for before, and why did you leave?” Money only rises to the number 4 or 5 reason for leaving a job. Things that come to the top of the list are:

Lack of managerial support

I want to do a good job but the managers either do not support what I do, or they get in the way.

Lack of control over my environment

I have some great ideas on how to improve things around here, but I do not have the authority to change anything.

I don’t know where I stand

I work hard and try to do my best, but I do not get any feedback about my performance specifically about how I can improve and contribute more.

Lack of Recognition

I never get recognized for doing something well. We can all use some positive stroking once in a while. I know I do because it makes me feel good.

What the employee is saying is, “I want to do a good job. You are not allowing me to do a good job here, so I am going to do a good job somewhere else.”

Do you have a business that suffers from high turnover, low employee morale, and low productivity? Do you feel that nobody wants to work, and therefore you cannot obtain and retain employees that perform well and stick around? When you point your finger at someone, three fingers are pointing back at you!

I know it’s humbling, but you must first accept that you are the root of the problem. Perhaps you do not provide your employees a proper work environment that nurtures their spirit and allows them to feel good about the job they are doing. Maybe you think you must do everything yourself. This trap can be escaped, but you must change the way you perceive the role your employees play within the organization. They must be considered and treated as valued contributing members of the group.

Simple steps to follow are:

• Sit down and map out your organization according to functionality and place a person in charge and responsible for that specific area. I find it best to start out with what I call the “three-legged stool.” The legs consist of Accounting and Administration, Sales and Marketing, and Operations. From there other possible functions to include could also be Quality Control, Research & Development, Shipping, Estimating, Project Management, Purchasing, or Inventory Control. Each company is different, and there is no right or wrong. The key element is to isolate each group with a “team leader” of ideally 4 to 7 employees in the group. According to Hans Selye, a Hungarian endocrinologist known for his studies of the effects of stress on the human body, a group tends to become less efficient with less than 4 or more than seven members. It’s only human nature and the way we work best with each other.
• Create a list of the areas of responsibilities for each “team leader” or manager, what the position will be accountable for, and how they will be held responsible. We want to empower the leaders to make many of the day-to-day operational decisions that affect the employees in their group. Be specific.
• Announce the changes to the employees. A group meeting would be best and answer any questions they may have by saying you are improving their work environment, providing them more support to make their jobs more efficient and effective, and improving communications for them to be more productive. This message goes a long way toward reinforcing the changes that are in their best interest.
• Set goals and objectives for the groups that are of benefit to the company for cash flow, generating revenue, or cutting costs. Some easy targets could be attaining $12,000 in invoicing daily for the Sales Department, managerial reports ready by the 8th of each month for the Accounting Department, or inventory levels not to exceed $2,500,000 for the Inventory Manager. Quantitative goals work best since they are easily measurable. Track these goals with periodic updates utilizing graphs in a location everyone can monitor.

Next, have these managers meet once a week in what I call an “Actioneering Meeting.” They meet once a week to identify, prioritize, and set forth actions towards solving selected issues. Meetings only last 15 to 20 minutes with a specific agenda:
10 minutes follow-up on last weeks designated responses (brief and to the point)
5 minutes next week’s problem to solve and actions to be taken (who, what, when, where)
It’s amazing what getting your people involved positively does to the morale, work environment, and tempo of the organization. Make it exciting to come to work again. Attend these meetings but only as a casual observer. Just sit back and enjoy the show.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Some things just never change. As long as there have been businesses, we all remain well aware that word of mouth has shown to be the best form of advertising that a business will ever achieve. This seems to be a fact that simply never changes. What has changed, however, is the fact that word of mouth has been placed on steroids with the advent of Social Media. The American Marketing Association recently conducted a study that has revealed that 64% of the Marketing Executives interviewed believe that word of mouth advertising is still the best form of advertising. So, what’s new, you ask?

It’s becoming more and more apparent that in today’s world, former employees may just be some of your finest Brand Advocates. This will, of course, depend upon how you, your management and supervisors treat their employees during their tenure with your company and even more importantly, how they are treated as they exit the company.

Your employees, while they are working within your particular company culture have come to understand exactly what you’re offering, the benefits and the quality of the company and all that it has to offer on many levels. Employees are constantly educating themselves about all aspects of your company and its practices with both clients and employees.

With this in mind, it’s likely very important that from the moment you onboard an employee, they are more than just another body filling a laborious need. They are also an investment beyond just the education and money you’re paying them; they are future Brand Advocates. Each and every employee will potentially be some of your richest advertisers. What sort of advertising they share will be largely up to you.

If you would like former employees to be ongoing advertisers for your company upon their departure consider the following among others:

• Do your best to create a close-knit environment that encourages all employees to depend on one another with you as their trusted go-to person even if something has gone awry. We’re all human, and we’ve all had to learn something the hard way.
• Be certain that evaluations have something positive to offer, even if there are plenty of issues that require attention. Always offer some sort of positive feedback.
• It’s likely that every employee is going to make some mistake that will cause you dismay; smile at them anyway; encourage them to improve their practices and move on. If they feel that their job is safe, they will most likely do everything that they can to earn back your care and respect.
• If you find that an employee isn’t working out for some reason, or, should you find you’re approached with an unwanted resignation, keep your positive interactions in place until the moment they leave your company.

If your employees are pleased with their experiences during and especially at the end of their employment period with your organization, they will continue to not only spread the word about the quality of your products and services; your former employees may also refer you to quality future employees. Remember also, depending on your products/services, should your former employees find themselves in need of your offerings, they will feel most comfortable returning to your company for their needs as your client.

Whether you realize it or not, every employee that you have will be an organic investment in the advertisement of your brand. This is the case while they are with you and especially when they leave the company. Although it won’t always be possible to please everyone, employees, just like clients, prefer to leave their experience with a handshake, a smile and well wishes for their future endeavors. Employees will always remember how they felt while they worked with you and how they were treated when they left.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Changing the culture in your organization is the hardest mission you will ever have to do in your career. The culture in most, if not all organizations is shaped by the workers that make up the body of the company. It will feel like rolling tires uphill when changing your organization’s culture. We have to first think about why the culture is the way it is; could it be because it matches the style of the organization’s senior management team?

The culture in an organization grows over time, and the people in the organization get comfortable with the current culture. It often takes a drastic event in the organization to spark new culture changes. This could include things like the hiring of a new CEO or other senior management position with a different viewpoint or the discussions of reorganization or even bankruptcy. Any major announcement or situation that will change the way the current organization operates will get the attention of the workers.

You may find in the discovery process that your current culture may not be bad, it may be that it does not effectively support the organizational goals and accomplishments or works against best practices. You may need to make some adjustments to the current culture to support the goals and efficacy of your organization, or you may need to do a full culture revamp. Even after discovering that the organization’s culture may the root cause of missed opportunities and effective processes, it is a difficult challenge that will take proactive planning and a constant and conscious devotion to change.

Once you and your organization recognize that change is needed concerning the current culture, it is the first step in the transformation towards a new culture. If someone told you that change is easy, let me say right now that it is not. Change is challenging, difficult, and sometimes messy. On the other hand, it is possible but it first needs commitment, a plan, and patience. You will also need tools to drive, measure, and sustain results.

To obtain an effective culture change you must provide a reasonable expectation for your employees. Use focus groups to begin establishing roles and responsibilities to put the mission and vision into an accountable process. Then comes frequent follow-up to ensure accountability is in place and is fostering the correct behavior changes. Keeping your employees informed will ensure there is a commitment between all.

You may need to redesign your reward and recognition system to encourage the behaviors to the new organizational behavior change. You must make sure that your current work system is structured to the new culture; such as employee hiring selection, promotions, and performance management.

Changing your organizational culture can be done without a doubt. It takes time, commitment, and follow through. But overall, it takes planning and proper implementation.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Full Content It seems about every other week there’s a news story about a major hack at a multi-billion company, exposing all kinds of customer data such as credit card numbers, banking information and social security numbers to illicit use, with significant financial implications to both the company and its customers. A recent breach at Equifax demonstrates that even the companies with the most sensitive information and multi-million-dollar IT budgets aren’t immune to hackers seeking to exploit weakness in business data systems. What then, can a small business owner possibly do to defend against breaches on a lesser-scale?

While it might seem that cyber criminals will favor larger organizations with potentially bigger payoffs, research shows that small businesses fall prey to cyber-attacks in significant numbers. According to a CNBC report based on research conducted by The Ponemon Institute, more than 50% of the 48 million small and medium-sized (SMB) businesses in the U.S. experienced a cyber-attack between 2015-2016, most involving theft of customer and employee information. Further, the cost to address such attacks can be crippling – the research showed small companies spent an average of $850K due to damage or theft of IT assets. Coupled with estimated disruption to normal operations, total costs to recover from cyber-attacks averaged roughly $2mil.

Cyber criminals may wreak havoc in other areas as well. Information essential to running a small business such as sales history, vendor transactions, QuickBooks data files, HR information, taxes, etc. can be jeopardized by hackers, especially if not adequately secured and/or backed-up periodically. Small business owners might be exposed on both a personal and professional level if individual and business accounts are linked or if family assets fall under the corporate umbrella
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All of this points to an immediate and pressing need for small business owners to examine their risks and take steps to guard against cyber interference. Risks come in many forms, including computer viruses, malware, phishing, weak passwords, out of date software, insufficient firewall protection, unencrypted data, mobile device security and many other threats.

Things like natural disasters threaten small businesses as well. Events such as flooding, hurricanes and tornados may not be top of mind for business owners but news coverage of places like Houston, TX and areas of Florida demonstrate that complete destruction of business assets and information may only be one storm away.

Internal employees present further risks because, quite-often, security breaches are an ‘inside job’ with individuals unknowingly compromising company safeguards or, worse-yet, deliberately undertaking activities to profit by exploiting company weak points.

So, how can small businesses protect themselves? Here are a few areas to consider:

• Government Resources for Small Businesses: The FCC, FTC and U.S. Department of Commerce have published guidelines specifically aimed at small and medium business. The FCC provides free resources including a Ten Tip Guide on Cybersecurity for Small Businesses and a customizable Cyber Security Planning Guide both of which allows a business owner to assess vulnerabilities and take actions to combat threats. The FTC publishes guidance for SMBs on Small Business Computer Security Basics. Finally, the Department of Commerce put together security information in a document called “Small Business Information Security: The Fundamentals“. These government sites are a good place to start when seeking universal recommendations on small business information security.

• Compliance and Regulatory Considerations: It is advisable to ensure that a small business is in compliance with legal and regulatory requirements which can expose a business to fines, lawsuits or sanctions inflating the costs of data breaches and threatening a company’s ability to do business. A simple Internet search will help identify the main areas of compliance for small businesses. For instance, the FTC has guidelines for businesses and financial institutions that act as creditors to adhere to the Red Flag Rule which seeks to protect business customers from identity theft.

Small businesses having access to Personal Health Information, either for employees or customers, must adhere to the Health Information Portability and Accountability Act (HIPAA) as well as the Health Information Technology for Economic and Clinical Health Act (HITECH Act). Forbes Magazine said that, “According to HIPAA, if you are belong to the category of “covered entities” or “business associates,” and you handle “protected health information (PHI),” you and your business are required to be HIPAA-compliant.” That means that businesses with company health plans or businesses interacting with health care providers, health billing agencies or related entities should investigate whether they need to compliant in this area and to what extent. These regulations require a data breach reporting plan and spell out specific actions if an incident occurs.

Small companies should educate themselves on requirements at the state level as well. Individual states may have security breach notification laws which require companies to contact all involved parties, internal and external to the firm, whenever sensitive information is compromised.

• Undertaking Security Initiatives Within a Small Business: For individually-tailored recommendations about information and asset security, small business owners might be well-served in seeking outside help such as consultants, advisors and lawyers specifically focused on the needs of the SMB market. It may be advisable to undertake cyber-security as part of a larger strategic engagement designed to address overall company improvements for growth, financial security, process efficiencies and/or performance management. Cogent Analytics is a provider in this space, helping many small companies achieve their objectives and position themselves for ongoing success.

No business, large or small, is completely safe from information or asset risks, but there are ways to mitigate these risks and prepare to act if a company suffers a breach. Being aware of public resources, creating action plans for cyber security, engaging with professional advisors and keeping abreast of process or technical developments is a great place to start!

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Although it seems like it, smartphones have not been around for long. In this short time they have changed the way people live their lives and do business. Cells have blurred the lines between personal and work time. Business owners complain about employees wasting time with personal matters and employees complain about being chained to work 24/7.

Cell phones are creating problems owners have never dealt with before. The debate of appropriate use in the workplace is a new one, one with strong opinions on both sides. Companies are struggling with the issue, most have yet to develop and enforce clear policies.

But, the clock has run out on sitting back and doing nothing. It is time to pay attention to your smartphone policies. The courts are ruling on workplace problems created by phone use. They are making new laws, which create new guidelines for your employee handbook.

Here are 3 of the issues the courts are looking at.

Americans with Disabilities Act – Some people are too attached to their phones, and have lost the ability to function in the workplace. Owners are seeing employees’ cell use negatively affect their jobs. Employees are getting professional help to fix the problem and keep their jobs. The courts will eventually define it as a mental health issue.

This is such a new condition that the medical community has yet to agree on what to call it or how to treat it. Lawyers are figuring out how to litigate it. Smart owners will keep an eye on this issue and address it early. They will link their phone/workplace policies with their ADA and Mental Health policies.

Fair Labor Standards Act – Laws are being enacted and amended to reflect today’s always connected workplace. This is a hot topic for federal and state courts. One difficulty they are addressing is employers expecting nonexempt employees to work (emails, phone calls, paperwork, etc) on their devices outside of a 40 hour week without getting paid for it.

How are you defining normal work hours and are they clearly spelled out? Are hours being consistently monitored? What policies, procedures and training have you done to insure compliance? Can you show disciplinary action against managers and employees when policies have been violated?

OSHA/Safety – Providing a safe workplace is an owner’s responsibility. The laws are extensive and well established. Cell phone use is new to safety and the details are being sorted out. But, one thing is clear – owners are liable for employee negligence created by phone use. Therefore, employers have a right and duty to restrict cell use, especially when it is a safety hazard.

Have you evaluated and updated everyone’s (management included) job requirements concerning phone use? When is cell use a hazard and what steps are you taking to contain it? What policies, procedures and training have you done to insure compliance? What disciplinary action have you taken against managers and employees when policies have been violated?

These are only a few of the issues the courts are looking at. Others include: harassment, discrimination, violations of the National Labor Relations Act (social media posting and the “right” to phone use), and theft of confidential information/trade secrets.

Many people believe using their cell phone in the workplace is a right, rather than a privilege. It is going to take future court cases to decide if they are correct. But, do not wait until they decide. It is important to your company’s success to be proactive with workplace risk.

Talk to a lawyer who has up-to-date knowledge and develop cell phone/workplace policies now. Then be sure to enforce them. You do not want to become a test case to make new law, leave that to other – bankrupted – companies.

In general, employees who work more than 40 hours a week are entitled to overtime pay at a rate of 1 half times their “regular rate” if they exceed the 40 hours. However, certain employees may be exempt from overtime if certain criteria are met. These are regulated by the Fair Labor Standards Act of Fair Labor 1938 Section 213(a)(1). In general, those exempted are classified into five positions:

1. Employed in a bona fide executive role.
2. Administrative role.
3. Professional capacity.
4. Outside salesman .
5. Computer designers and developers. (Base salary must be at least $57,740).

In addition each position must meet certain tests in regards to their job duties.The test is usually two-fold; a salary test and a duties test. If an employee is paid a fixed amount of money; weekly, biweekly or monthly and there is no deduction from the fixed rate based on the quantity or quality of the work; the salary part of the test would be met.

The duties test is different for each of the criteria and must be considered by the actual work done and not the job title or job description. According to the Code of Federal Regulations Section 541; to be exempt an:

1. Executive must:
   1.1 Customarily direct the work of 2 or more employees
   1.2 Primary duty is Management
   1.3 Authority to hire and fire or recommend a change in status
   1.4 Regularly and customarily exercise discretionary powers
   1.5 Spend no more than 20 % of their hours in a workweek not directly and closely related to those duties or 40% in a retail or service establishment.
   1.6 Be paid on a salary basis.
2. Administrative Employee:
   2.1 Primary duty must be to:
   2.1.1 Perform office or non-manual work directly related to management policies or general business operations or
   2.1.2 Perform work in and educational administration which is directly related to academic instruction or training.
   2.2 Customarily exercise discretion and independent judgement
   2.3 Regularly and directly assist a bona fide executive or administrative employee; or perform under only general supervision work that is specialized or technical and requires special training or knowledge; or performs special assignments or tasks under only general supervision.
   2.4 Spend no more than 20 percent of their hours in a workweek in activities not directly or closely related to the above duties, or 40% in a retail or service establishment.
   2.5 Be paid on a salary basis.
3. Professional Employee must:
   3.1 Primary duty must require:
   3.1.1 Advanced Knowledge customarily requiring extensive education or
   3.1.2 Originality and creativity in a recognized artistic field or
   3.1.3 Teaching or otherwise imparting knowledge as a teacher in a school or in an academic or educational institute or
   3.1.4 Theoretical or practical application of highly specialized knowledge in computer system analysis, programming, and software engineering in a computer or software occupation
   3.1.5 Consistently exercise discretion and judgement.
   3.1.6 Perform work which is predominately intellectual and varied and which cannot be standardized in relation to a given period in time.
   3.1.7 Spend no more than 20% of their hours in the week in activities not essential and necessarily incidental to the above duties and
   3.1.8 Be paid on a salary basis.
4. Outside Salesmen must:
   4.1 Engage in making sales or obtaining orders away from their employer’s place of business
   4.1.1 Devote no more than 20% of the hours worked by non-exempt employees of the employer to work other than making sales.
5. Computer Designers and Developers
   5.1 Engage in the application and system analysis techniques and procedures
   5.2 Design, develop, create testing for computer systems or programs.
   5.3 Design ,document, testing programs related to machine operating systems.

The reason to review this is that the minimum “basis” for salary was set at $455 dollars a week (updated in 2004). In 2014 President Obama directed the Department of Labor (DOL) to promulgate new rules regarding the minimum wages that need to be paid in order to be exempt from Overtime Regulations. This was done to “modernize” overtime exemptions.

New rules were announced in the Spring of 2016 which doubled the minimum salary required to $47,476 annually or $913 per week.

In the fall of 2016, the rules developed by the DOL were challenged by the case of Nevada vs. U.S. Department of Labor. U.S. Court of Appeals Judge, Amos Mazzant of the Eastern District of Texas issued a temporary injunction nationwide for the new rules, effectively stopping them from being enforced on the December 1st date. The DOL was found to have overstepped its authority in drafting the final rule. The Judge held that it created a rule based on salary levels and without the duties test that Congress desired.

A final ruling was later issued which permanently stopped the rules from taking effect. The only recourse left was for the DOL to appeal. With a change in administrations this ruling does not seem likely to be appealed.

On August 31st 2017, the Judge granted the Plaintiff’s Motion for a Summary Judgement holding the December 2016 rules” invalid” for eliminating the duties test and basing it solely on salary.
The DOL has asked for comments in order to form a new set of rules. New rules are expected to be drafted to raise the salary level to at least require a salary above the poverty level.

Overtime issues that arise can often be things like:

1. Working through lunch.
2. After hours emails
3. Time spent going through security; before and after work
4. Failure to track hours worked, accurately.
5. Requirements for being at work early for meetings, updates etc. prior to clocking in.
6. Unpaid training or safety sessions.
7. Tipped workers reporting early to set-up tables, bar etc.

CONCLUSION
Having said all this, it would appear that change is inevitable and we should be cognizant of our clients employees and their salary ranges. In addition, it would behoove us to ensure that those on salaries fall within the “duties” required for exemption. If the salary levels are met; are the duties test also being met? We often have clients that may not be aware of the rules but put themselves at risk. The pay awarded for failure to pay earned overtime can be very substantial. Advising them of potential pitfalls is our responsibility as well as suggesting valid alternatives. Remember that paying Overtime may not be as expensive as first thought.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

A customer-centered culture. This is one of those things that small business owners who want to be successful talk about needing, but do not always have. These owners have heard about it, think they need it and want to have it, but do not know how to get it. As with most things in life, the idea is really very simple; it is the doing it that is hard. A customer-centered culture will lift you above your competition.

In a customer-centered culture, it is everyone’s responsibility to understand and uphold the company’s stated purpose and values – the customer comes first. When a business’s objectives are at the center of the owner’s, manager’s and employee’s actions, decisions, conversations, and strategies it becomes easier to get things done.

If the company stays focused on the why and how it is selling the product in the first place; everyone is rowing in the same direction. It, also, makes it easier to see who is not rowing or working with the group. In a strong positive culture, employees who are troublemakers will often leave the company on their own. Their behavior and attitude are not supported by peers or tolerated by management.

The customer-centered culture flows from top to bottom and bottom to top. Management and employees work together to hold each other accountable for establishing and maintaining the culture. Everybody is responsible for monitoring, supporting and mentoring each other. It is an on-going project which requires discipline and commitment at all levels but is well worth the effort.

The place to start is to identify your purpose and values, as everything flows from there. The purpose and values should be practical, simple and easy to understand. They ought to answer the “why and how” questions. Why are we doing this? How does it affect the customer? The customer’s perspectives and experiences guide how people think and act on a daily basis. Here is an example of how it works.

The purpose:

• In a simple, timely and cost effective way we will provide the best hex, flange and lag bolts on the market.

The values based on the purpose:

• Simple – We provide an easy ordering system and responsive customer service. We listen to the customer and if there is a problem, we fix it.
• Timely – We meet our order deadlines and deliver on time. We listen to the customer, and if there is a problem, we fix it.
• Cost-Effective – We focus on good quality, financial and production controls. We listen to the customer and if there is a problem, we fix it.

Remember – people will buy from whoever gives them what they want when they want it – and they usually are willing to pay a little more for it. A customer-centered culture is not always easy, but winners do the things that losers are not willing or able to do. It is your company, which do you want to be?

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

“Why are you making such a big deal out of it?” asked a machine shop lead when I was incredulous that he paid his eight machinists 8 hours per day for only 7 hours of work (half hour for breaks and a half hour lunch).

As a Small Business Consultant, I work with many small businesses who are not actively aware of organizational performance metrics. In this case, it just took a week to identify key metrics to provide my machine shop lead friend with some interesting facts.

Here, the lady newly responsible for the pack/ship and distribution team had started measuring 1) the number of items shipped and 2) the total value. These are two pretty basic metrics and easily obtained. On this particular week, they had shipped 4,565 individual parts that equaled $393,000. And, a simple ratio shows each part had a value of $86.09.

We had also started measuring some very basic shop metrics (much to the displeasure of my lead friend) and found that the shop had produced 1,770 parts using 216.75 machine hours. Again, a simple ratio yields a production rate of 8.17 parts per machine hour.

We already knew there were 8 people getting paid and extra 30 minutes per day, so we calculated that cost as well.

.5 Hours X $20 (average rate of pay) = $10
$10 X 5 Days per week = $50 per week
$50 week X 50 weeks per year = $2,500
$2,500 X 8 machinists = $20,000 of over payment

Additionally, we are losing 30 minutes per day of work, so there is more productivity to be gained, so we did the math;
.5 hours X 5 days per week X 8 machinists X 50 weeks per year = 1,000 lost production hours.

Here is where we put this all together: If we can produce 1,000 more hours of product and the product makes $86.09 per part and we can produce 8.17 parts per hour the numbers get staggering.

$86.09 $/Part X 8.17 Parts/hour X 1,000 hours = $703,355.30 of additional revenue. At a modest 5% Net Profit that would yield $35,167.77 in profit. By the way, this would more than double what the business earned the prior year.

“What’s the big deal,” my friend asked. $703,355 in additional revenue (with the same resources) and potentially $35,168 in additional profit, THAT’S the big deal.

Do the math and count your money.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Talk to any small business owner about the problems they are having with their employees and one of the main complaints you will hear is, “They won’t do what I tell them to do. Most owners think the problem is with the employees. But, the good news is that most of the problem is with the owner. Yes, good news.

If the problem is with you, the owner, then the solution is also with you. The best kinds of problems to have are the ones where you can take control and influence change. The worse kinds of problems to have are the ones that are dependent on other people to fix them.
Unfortunately, the majority of owners do not see it that way. They do not want to do the job of managing; they want the employees to manage themselves. This seldom, if ever, works. No one will, or should, care more about the success of your business than you.

Here are 4 of the most common errors a lot of owners make.

Poor communication skills – The biggest problem people have with communication is assuming it has taken place. Good communication skills do not come naturally to many of us; we have to be taught them. An owner who wants to be successful will make an effort to learn these skills. They will make your professional and – added bonus – personal life easier.

Want to be the “Nice Guy” – These owners are more worried about being liked than managing effectively. However, what they see as niceness is frequently a cover up for weakness. People will like you and still take advantage of you. You can be liked and respected for being a tough, but fair manager – rather than just liked, but disrespected for being a pushover.

Poor or no follow through – Countless owners mistakenly believe, “I should only have to tell my employees something once and they should do it.” This thinking shows a poor understanding of human behavior. People have to be managed by a repetitive 3 step process – clear instruction, active supervision and immediate consequences for poor work or praise for good work.

Inconsistency – You have legitimate complaints about your employees, and they have some about you. One of the biggest is inconsistent management. Do you say one thing and then do another? Do you change your mind from day to day? Do you tell people to do something and someone else tells them something different? Do you make promises and not keep them? Bottom line – if you are untrustworthy people do not feel obliged to listen to what you say.

Changing ourselves is not easy. But, a little learning, some coaching and regular practice will go a long way towards reducing the problem of getting people to listen to you. If you are consistent, most employees will welcome the positive changes and perform better. Also, your new skills and knowledge will help you effectively deal with the few employees who cannot be helped. You will finally be listened to as an owner.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

In order for small businesses to succeed, they have to have solid employees to build upon their foundation. But, sometimes finding great employees can be difficult. These guidelines should ensure your hiring process will continue to add top notch personnel to your team. Using this recruiting process will help you find and hire capable and strong people. Those strong people will, in turn, raise the bar for your existing employees and create a more productive workplace.

Chart 1 displays each step to the hiring process. However, if you look at Chart 2, you can see those same steps, but in order of importance.

As you can see the most important step and the first step are not the same. Most business owners believe that the most important step is the INTERVIEW, some will tell you TESTING, and others will say that the SEARCH is number one. Unfortunately, none of those are the most critical step of the process. Let’s take a closer look at the two most important steps and the least important step to more clearly understand their value.

IDENTIFY – This part of the hiring process is where you clearly identify the attributes and experiences of the ideal candidate. If you, as a business owner, do not apply an effective and comprehensive effort the identification step, you will often be unable to find and/or hire strong employees, such as Driver, Outside/inside Sales Representatives, Installer, or Project Manager, that will succeed in your business. Through this step employers should be able to detect “soft skills” in potential candidates. These are the skills that can be transferred between different jobs and different industries allowing the candidate to be adaptable. Identifying people with the right skills to fulfil the role and contribute to the organization’s success should be at the forefront of their mind.

TEST – Many business owners and managers feel that the interview is the second most important step, but that is not the case. If you have experienced any hiring mistakes in the past, those errors were probably the result of an interview in which the candidate made a positive impression on you. Unfortunately, many candidates are capable of making a favorable impression in an interview but are not capable of actually doing the job and being productive. The results you gather from the correct test (i.e. accounting, sales, ability, intelligence, computer applications, personality, industry-specific process knowledge, etc.) can either confirm or challenge your initial impression of the candidate. For that reason, this is the second most important step, although it is actually the fourth step, in the process.

INTERVIEW – Of all the steps in the hiring process, the conversational INTERVIEW is the least significant step, although some would beg to differ. No other step in the interview process helps you measure self-presentation, composure, maturity, style, wit, responsiveness, thoughtfulness, or eye contact. Occasionally, the only way you can accurately assess the candidate is in a conversational interview, but without the other – more important – steps, you could potentially be wasting your time. If you have not performed the other steps properly, you will not know if the candidate is truly under-qualified or incapable of performing the job. Make sure that during this step of the process you are not wasting time on items that can be answered on an application or the resume.

Unfortunately, the resume has become a far less important tool than it once was. The only real information that can be gathered from a resume, anymore now, is the projected length a candidate would spend with your company. Make sure to note those work trends for potential candidates so you know when to expect some kind of depression, distraction, slump, or other downturn in performance, as those could all be signs the person is about to jump ship. People are creatures of habit and are no different when it comes to the workplace.

The hiring process for businesses should always remain a thorough and carefully executed process. Make sure you are constantly keeping your process up to date and that you do not become lax in any one step. Hiring great employees can be difficult, but if you value the process and place your efforts into the critical steps you will be able to find the diamond in the rough you have been looking for.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Many small business owners think their employees won’t steal from them. They may believe that “if I’m a good guy my people won’t steal”. Or they might believe “if I’m a hard case nobody would dare steal”. These are mistaken beliefs. The good guy/hard case (or anything in between) personality of the owner has little to do with the amount of theft they’ll have.

Owners of all personality types are equally likely to be taken advantage of. People commit fraud for a variety of reasons, but how they feel about their bosses and how their bosses feel about them is rarely one of the reasons. The number one reason people steal is because they can. If there are no effective controls in place, if it’s simple to do, employees will take supplies, products, time, materials and money from any type of boss.

Unfortunately, when owners believe their personalities can stop theft they also think that’s all they need. They don’t establish truly effective deterrents – a system which promotes transparency and accountability in daily operations. An owner’s personality is the weakest form of defense, fighting fraud is an operational issue not a personal issue.

Small business owners can use the ACE Business Review as a good method to help find and target risks in their business. In conjunction with a theft prevention plan, a business will be able to better mitigate their vulnerability to theft. Here are some things to include in a theft prevention plan to further protect your business.

On-going training – Businesses who have regular loss prevention training for managers and employees lose less money/materials/time per occurrence, have fewer incidences of theft and shorter time periods before the offender is caught.

Reporting opportunities – Giving people a way to anonymously report suspicious behavior is an important part of an overall strategy. Fraud is almost 3 times more likely to be uncovered through employee tips than any other method (Association of Certified Fraud Examiners, 2015).

Verify new hires – Employers are usually lazy about this one. Often the hiring process is the “I like him, he’s hired.” method. Those who are serious about finding honest people will do the due diligence.

Everyone has oversight – Don’t give too much responsibility to one person, and establish checks and balances for everyone. Embezzlement is overwhelmingly committed by trusted people (often family and friends) who have no supervision or accountability.

Know your people – Ignoring people’s behavior doesn’t make it go away or get any better. Almost all perpetrators show red flags (i.e. living beyond their means, financial difficulties, addictive behaviors, too close with vendors or customers, controlling/secret behavior, lying or changing stories, never taking time off).

Commit to consequences – Allowing people to steal without penalty is very poor management. The biggest complaints employees have about their bosses is that they don’t holding workers accountable and bad follow through, “Everybody’s allowed to get away with stuff. No one ever gets fired or punished.” Honest employees want to work in safe, fair, honest environments.

Employees will steal from their employers. It’s not a matter of “if” it’s a matter of “when and how”. A small business owner who has never experienced theft is the exception, or he just may be in denial. A responsible owner will protect his company and its honest employees by establishing a deterrent strategy. It’s nothing personal, its good business.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Incentives are an excellent way to foster loyalty and to get the extra effort sometimes required for a company to continue to grow and succeed. It is important to keep in mind that incentives can also have unintended negative consequences. For example, if an employee thinks they are deserving of an incentive bonus but don’t receive one or get one they feel is inadequate for their contribution, the incentive, meant as a motivational tool, can turn out to be a disincentive and create employee dissatisfaction when the opposite effect was intended. There is a saying, “tell me how you measure me and I will show you how I perform“, and its corollary, “if you measure me irrationally, do not be surprised by irrational behavior.”

Bonuses, not to be confused with incentives, are when companies “share” a portion of the profits with its employees. Generally, these come in the form of a “special day” or year-end bonus. These should be considered benevolent gifts from management, as there was no specific behavior of performance that drives the bonus. In most cases, bonuses are paid after the financial results are posted and only excess profits are used to fund the bonus. The philosophy being that it is better to share a portion of the company’s success with the employees rather than pay an equivalent amount in additional taxes. The structure of bonus programs is usually subjective and used as a means to reward the employees in general for the overall success of the company.

Incentives are quite different. Unlike bonuses, incentives are paid for specific, predictable behavior or results. The goal of an incentive program is to create one that has objective criteria for its basis. The criteria needs to be fair, obtainable and provides the type of positive motivation for which the incentive is intended. Incentives are not be benevolent gifts from Management but are earned for specific and measurable results. Unlike bonuses, incentives are paid before the financial results are posted as part of the recipients’ earnings, and are taxed accordingly.

When developing an objective incentive program for small business there are multiple things to consider to avoid pitfalls. Who should be eligible for such a program? How to determine what is “fair” and provides the impetus for the desired behavior or results. How are owner’s draws and dividends or other expenses that get assigned to the business treated? In some cases, these costs increase the indirect expense possibly creating an unfair burden on those with profit goals.

Another difficulty with incentives is the development of specific incentive programs: Based on the type of business, there might be several different populations of employees for which incentives make good sense. For example, in a contracting company you may have the following programs:

1) Foremen
2) Project Managers
3) Service Personnel
4) Administrative Personnel

1) Foremen: One company wanted to address an erosion of the company’s profitability directly related to lower labor efficiencies on jobs. An incentive was developed to allow Foremen to be eligible to receive a calculated, proportioned amount based on achieving targeted savings in labor and material costs on jobs based on the job estimate. The incentive is tied directly to the specific goal of improving labor efficiency and to use quoted material rather than spot purchases. The result will be increased profitability for the company with a portion of the profits going to the ones who had the most direct impact on it.

2) Project Managers: Adding to the emphasis on improved labor productivity and materials costs, the Project Managers were also eligible to receive a bonus on a job’s Net Profit. The presumption being that labor and material are the only controllable costs, but also every project must cover some portion of the company’s overhead. Because they are so closely aligned the Foremen and Project Manager’s incentives should be paid on the same dates.

The primary goal of these two programs is to increase the awareness and emphasis on controllable costs of labor and material purchases. It will also serve to help the Project Managers become more fiscally aware of a project’s finances.

3) Service Personnel: The Service Manager and Service technicians will participate in a quarterly incentive program based on the overall profitability of the Service department as a whole. The Service manager will be eligible for a certain percentage of the overall performance of the department and each of the technicians will share an amount set aside based upon their tenure with the department.

4) Administrative employees: Once annually, the administrative staff (To include Project Managers) will be eligible for an incentive based on the overall company profits. The payout is based on two factors that include: The percentage of Net Profit to be put into an incentive pool and the percent an individual earns to the total administrative salaries. This bonus, if offered, is paid sometime after the fiscal year closes.

The company, in the example, will pay out approximately 4% of revenue in the four incentive programs and the year-end bonus program. This is a very small price to pay to keep good employees happy and motivated.

Other businesses will have completely different populations. The key is to establish the incentives using S.M.A.R.T Metrics for your incentive plan will help you track the performance of each individual. They should be obtainable, even if some goals are a stretch to achieve.

In summary incentive plans are a very economical way to provide motivation for employees who are in roles where specific and measurable outcomes can be achieved. Each program should focus on the goals management and owners want to accomplish.

When contemplating the development of an incentive program, be aware that not everyone who receives an incentive will be pleased. If the recipient feels their reward is not commensurate with their contribution, the incentive could turn into a disincentive, breeding ill will. This is the exact opposite of the intention of the program. For that reason, any incentive must be objectively based, fairly applied and easily understood by all the participants with goals that are attainable, even if they are a stretch for the participant.

There is no one perfect solution for an incentive program, but by using just a few critical metrics the right program can be developed for any sized company.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

It used to be that people thought there was only one way to be a successful business owner. You had to be “smart” – the kind of smart that’s measured on an IQ (intelligence quotient) test. It was thought that the higher your IQ was the more likely you were to be successful.

Fortunately, that way of thinking has been proven wrong. There are many types of intelligence, and we’re all better at some of them than others. An entrepreneur can increase their chances for success by understanding their strengths and weaknesses in each category, and using that knowledge to their advantage.

Here are a few of the more common kinds of smart based on the typical small business owner, each with its own pros and cons. Most people are combinations of the different types, with 1 or 2 being the most dominate.

Mechanical smart

These are the people who have the ability to figure out mechanical or technical things. They can help a customer figure out the best tolerances for their new product. They’ll tear apart a mother board and rebuild it better than before. They’re able to rewire a building, up to code, with incomplete schematics.

Pros: Mechanically smart people thrive in environments where they are mostly left alone and can work at their own pace. They tend to be self-motivating, conscientious, independent and dependable.

Cons: Successful owners have to be able to establish on-going, effective interactions with partners, employees, customers and vendors. Their desire to work alone doesn’t serve the business well. Overall, they can struggle with personal interactions, creating and enforcing accountability, and motivating a workforce.

Language smart

Language smart people know how to use words to motivate, support and inspire others. They’re the writers, public speakers, educators and employers who communicate well and often. They give good presentations, write the business plans which raise venture capital and are able to explain complicated ideas simply.

Pros: They have the ability to get information across matters. Lack of communication is one of the biggest complaints workers, in all types of businesses, have about their bosses; but language smart bosses understand the importance of keeping others in the loop.

Cons: They spend too much time communicating (meetings, memos, emails, texts) and not enough time on other parts of their job (selling, quality control, financials, human resource issues, customer service). They believe talking or writing “at” others is managing – not getting that listening is the other half of the communication process.

Number smart

Number smart entrepreneurs understand profit, loss, and margins. Their estimates and bids are based on data, not guesses. They know how to “do the math” and use financial information to make plans from start-up costs to exit strategies.

Pros: Number people have a natural advantage that others don’t, and they’re more likely to outlast their competitors. The lack of number smarts is one of the biggest problems most owners have. It’s estimated that 80% of businesses fail in the first 5 years because they didn’t know, or didn’t care, how important the math is.

Cons: We’ve all known the guy who sits in his office and crunches the numbers, but ignores other aspects of his business. He has the same cons as the mechanically smart owner. In addition, he believes too much in the numbers and can overlook the human aspects of his decisions.

People smart

Owners who have this kind of smart enjoy, and are energized by, working with people. Their qualities include: having good social skills, being able to “read” others, easily interacting with many types of individuals and being well liked. Employees and customers describe them as having the ability to put others at ease and draw them out.

Pros: Owners who are people smart create great loyalty in their employees, have good customer service skills and get “pumped up” spreading the word about their products. Also, they provide a good image for the company and its brand.

Cons: People smart owners can focus too much on personalities, while finding day to day operations dull. Every day several companies close because the charming, Mr. Personality owner didn’t know how to make a profit, wouldn’t manage his employees, and ignored quality and production problems.

To be a smart business owner, you will understand which kinds of smart you are. You’ll learn to focus on your positives and overcome or compensate for the negatives. The more you know about yourself the greater the chance is that you’ll be successful.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Passive-aggressive is one of those “psychology words” people use a lot, but don’t really understand, and that’s unfortunate. It’s unfortunate because most workplaces have one or more employees and managers who are passive-aggressive.

When left unchecked it can destroy morale, sabotage productivity, create a hostile work environment and undermine authority. As disruptive behaviors go it’s the perfect crime – most small business owners aren’t familiar with it and are unable or unwilling to manage it. Therefore, it’s easy to get away with.

The behavior is, by design, sneaky and hard to recognize if you don’t know what to look for. It’s a deliberate, underground way of expressing anger at a person or organization. Passive-aggressive people often sabotage the business as a whole to express anger at the boss.

The employee feels their anger is justified, but they won’t address their concerns or dissatisfaction directly. Instead, someone “must pay” for their feelings of unhappiness and their behavior is intended to “get back” at someone, without others recognizing what’s happening. Passive-aggressive people work very hard at not being caught, and avoiding confrontation.

Some of the symptoms include: constantly not doing tasks they’ve agreed to do or are their job to do, regularly missing deadlines, withholding information, “stirring things up” to watch the fireworks, going over someone’s head or behind their back to make them appear incompetent, sabotaging other’s work, not taking responsibility for their actions/words, repeatedly blaming others.

Remember, they want to avoid direct, face-to face communication (passive), while still being able to act out their anger (aggressive). The rise of electronic devices and the ability to access other’s work has made it much easier for passive-aggressive people to do a lot of damage.

It gives them the ability to: write vague instructions and then accuse others of misunderstanding what they’ve written, claim important information has been sent when it hasn’t, appear busy (texting, emailing) without doing any real work, pass other’s work off as their own, throw off the team’s work with deliberate errors, blame others for poor communication skills.

Dealing with a passive-aggressive person feels like nailing Jell-O to the wall, they are slippery. They are very good at deflecting fault – the employee who has an excuse or explanation for everything, which usually includes blaming someone or something else. They are an expert in assuming the role of victim. But, ultimately, it’s the business who’s really the victim.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information: