Ten Common Investment Errors: Stocks, Bonds, & Management

Investment mistakes happen for a multitude of reasons, including the fact that decisions are made under conditions of uncertainty that are irresponsibly downplayed by market gurus and institutional spokespersons. Losing money on an investment may not be the result of a mistake, and not all mistakes result in monetary losses. But errors occur when judgment is unduly influenced by emotions, when the basic principles of investing are misunderstood, and when misconceptions exist about how securities react to varying economic, political, and hysterical circumstances. Avoid these ten common errors to improve your performance:

1. Investment decisions should be made within a clearly defined Investment Plan. Investing is a goal-orientated activity that should include considerations of time, risk-tolerance, and future income… think about where you are going before you start moving in what may be the wrong direction. A well thought out plan will not need frequent adjustments. A well-managed plan will not be susceptible to the addition of trendy, speculations.

2. The distinction between Asset Allocation and Diversification is often clouded. Asset Allocation is the planned division of the portfolio between Equity and Income securities. Diversification is a risk minimization strategy used to assure that the size of individual portfolio positions does not become excessive in terms of various measurements. Neither are “hedges” against anything or Market Timing devices. Neither can be done with Mutual Funds or within a single Mutual Fund. Both are handled most easily using Cost Basis analysis as defined in the Working Capital Model.

3. Investors become bored with their Plan too quickly, change direction too frequently, and make drastic rather than gradual adjustments. Although investing is always referred to as “long term”, it is rarely dealt with as such by investors who would be hard pressed to explain simple peak-to-peak analysis. Short-term Market Value movements are routinely compared with various un-portfolio related indices and averages to evaluate performance. There is no index that compares with your portfolio, and calendar divisions have no relationship whatever to market or interest rate cycles.

4. Investors tend to fall in love with securities that rise in price and forget to take profits, particularly when the company was once their employer. It’s alarming how often accounting and other professionals refuse to fix these single-issue portfolios. Aside from the love issue, this becomes an unwilling-to-pay-the-taxes problem that often brings the unrealized gain to the Schedule D as a realized loss. Diversification rules, like Mother Nature, must not be messed with.

5. Investors often overdose on information, causing a constant state of “analysis paralysis”. Such investors are likely to be confused and tend to become hindsightful and indecisive. Neither portends well for the portfolio. Compounding this issue is the inability to distinguish between research and sales materials… quite often the same document. A somewhat narrow focus on information that supports a logical and well-documented investment strategy will be more productive in the long run. But do avoid future predictors.

6. Investors are constantly in search of a short cut or gimmick that will provide instant success with minimum effort. Consequently, they initiate a feeding frenzy for every new, product and service that the Institutions produce. Their portfolios become a hodgepodge of Mutual Funds, iShares, Index Funds, Partnerships, Penny Stocks, Hedge Funds, Funds of Funds, Commodities, Options, etc. This obsession with Product underlines how Wall Street has made it impossible for financial professionals to survive without them. Remember: Consumers buy products; Investors select securities.

7. Investors just don’t understand the nature of Interest Rate Sensitive Securities and can’t deal appropriately with changes in Market Value… in either direction. Operationally, the income portion of a portfolio must be looked at separately from the growth portion. A simple assessment of bottom line Market Value for structural and/or directional decision-making is one of the most far-reaching errors that investors make. Fixed Income must not connote Fixed Value and most investors rarely experience the full benefit of this portion of their portfolio.

8. Many investors either ignore or discount the cyclical nature of the investment markets and wind up buying the most popular securities/sectors/funds at their highest ever prices. Illogically, they interpret a current trend in such areas as a new dynamic and tend to overdo their involvement. At the same time, they quickly abandon whatever their previous hot spot happened to be, not realizing that they are creating a Buy High, Sell Low cycle all their own.

9. Many investment errors will involve some form of unrealistic time horizon, or Apples to Oranges form of performance comparison. Somehow, somewhere, the get rich slowly path to investment success has become overgrown and abandoned. Successful portfolio development is rarely a straight up arrow and comparisons with dissimilar products, commodities, or strategies simply produce detours that speed progress away from original portfolio goals.

10. The “cheaper is better” mentality weakens decision making capabilities, leads investors to dangerous assumptions and short cuts that only appear to be effective. Do discount brokers seek “best execution”? Can new issue preferred stocks be purchased without cost? Is a no load fund a freebie? Is a WRAP Account individually managed? When cheap is an investor’s primary concern, what he gets will generally be worth the price.

Compounding the problems that investors have managing their investment portfolios is the sideshowesque sensationalism that the media brings to the process. Investing has become a competitive event for service providers and investors alike. This development alone will lead many of you to the self-destructive decision making errors that are described above. Investing is a personal project where individual/family goals and objectives must dictate portfolio structure, management strategy, and performance evaluation techniques. Is it difficult to manage a portfolio in an environment that encourages instant gratification, supports all forms of “uncaveated” speculation, and that rewards short term and shortsighted reports, reactions, and achievements?

Yup, it sure is

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Business, Opportunity And The 80/20 Rule

In business and opportunities the 80/20 rule can be utilised much more frequently and to your advantage. In every walk of life the 80/20 rule seems to hold dominance.

  • 20 percent of actors rake in 80 percent of the wages.
  • 20 percent of sportsmen win 80 percent of the prize money.
  • 80 percent of your business comes from 20 percent of your clients.

The 80/20 Rule and how it affects your Business is quite simple. So how do you use it in your business?

Who are your core 20 percent of customers? They should definitely deserve more than 20 percent of your time. What about using the formula – your top 20 percent of customers deserve 40 percent of your time? When it comes to marketing 40 percent of your budget should be allocated to the top 20 percent.

What about the time spent in business discussing and debating the issues? Most meetings and time spent focus on the 80 percent that is not important. Again analyse your time spent on each issue. If it is not that important to you or your business then halve the time you spend on in it. Double the time you spend on critical issues which will have long term affects on your business.

What about staff? 20 percent of your staff will bring in 80 percent of your business. Surely they deserve more than 20 percent of your time? Allocate 40 percent of your time and resources to the top 20 percent of performers in your organisation. They will feel respected and valued.

80 percent of your profits will come from 20 percent of your products. Spend more time and resources to developing your main products and less on trivial products that will never generate any useful income.

Mr Richard Smith from System Designer says the following:

“In R&D (research and development) we have the 90/10 rule – 90 percent of the design effort will be taken up by 10 percent of the project specifications. Often that 10 percent turns out to be bells and whistles that are not required. The key to it is spotting the 10 percent and convincing the customer they are wasting resources on features not required.”

“The key: Get to know your customer and their product. That way you can deliver what the customer needs and not just what the customer asks for. (The two can be very different!)”

Most business opportunities that are examined will end up being binned. Less than 20 percent will end up in generating an income or some profits for you. The 80/20 percent principle definitely works.

What other areas of business could you use it in? Contact us for Help :Email:info@crowehorwath.com.jm

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Be More Productive Now

Would you like to start being more productive right now? Want to stop wasting precious time and move your projects to completion? This article will focus on how to be more productive from this point forward.

The key to becoming more productive with your time is to concentrate your efforts on the task at hand. So how do you begin to concentrate your efforts? The key is to eliminate distractions.

Distractions come from two sources. The first source is outside things, such as phone calls, emails, interruptions from other people and so on. Pick a time when you feel at your peak, and sequester yourself, for a period of time each day, to give yourself a real boost in productivity. Develop your own methods to “hide” from the outside world, for a period of time each day, and you will see your output grow.

The second source of distractions comes from within. Unfortunately, this is the hardest source of distractions to control. It is hard to shut yourself off from yourself. . The key culprit for us is multitasking. Many studies have been done at this point, that show multitasking reduces productivity, instead of increasing it. Our minds can only hold one thought at a time, and switching tasks causes us to lose focus and momentum, and forces our mind to play “catch-up” over and over again. To become more productive, you must master the art of focusing on one thing at a time and give it your best effort and attention, until it is done. If boredom sets in while you are working on your task, give yourself a SHORT break, and remind yourself of what the ultimate objective is for what you are working on and what the payoff is to you.

You need to make sure the task you pick to concentrate on, is in fact your highest priority item. Many of us fall into the trap of staying busy, vs. staying productive. One task may clear mountains of paperwork off your desk ,or you might be better served by moving just one piece of high priority/high payback paper. Use the 80/20 rule to help find the true “gems” in your inbox. The 80/20 rule says that 80% of the gains you receive, come from 20% of your efforts. Find out what that 20% of high payoff project are and make sure you concentrate on accomplishing them first.

And of course don’t forget the basics of time management. Say no to as many projects as you can to help streamline your workload. Try to “cherry pick” projects you know in advance hold high payback potential and try to pass on lower priority projects. Also delegate as much lower payback activity as possible. Calculate the value of your time and try to delegate low value activities, even if you have to pay someone. It is money well spent.

Increased productivity is as close as your next thought. Remember everything counts. Every action you take as well as those actions you don’t take can help you move towards your goal of increased productivity. Constantly remind yourself of your need to be more productive and discipline yourself to do the right thing. Don’t beat yourself if you have a setback, but be certain to reward yourself in someway, for each action that moves your productivity up a notch

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11 Steps To Creating The Perfect Business Plan

What should a business plan cover?

That’s the million dollar question.

For one thing, it should offer a thorough analysis of the need for the particular product or service you are planning to offer. It also needs to talk about how you are qualified to be making such an offering to the public.

A business plan should address your strategies in terms of production and marketing, how you will be organized, any legal aspects that you must address, and what your accounting methods will be. In short, a business plan should address the following questions:

* What do I want and what am I capable of doing?
* What are the most workable ways of achieving my goals?
* What can I expect from the future?

Keep in mind that there is not one specific format that you should use, or one best way to lay out your business plan. However, there are some steps you can take to make the process go a little more smoothly; we’ve listed what we think is the easiest method, below.

Step 1: Making the Commitment – be sure that you desire to work for yourself is truly greater than you desire to work for someone else.

Step 2: Analyze yourself – list your strengths and weaknesses. Determine how you can build off your strengths, and improve on your weaknesses. Remember, this can be a daunting task because you may have to own up to a few shortcomings you’re not prepared to recognize!

Step 3: Choose a Product or Service – this sounds silly, but just because you think you know what business you want to be in, it doesn’t mean your idea will be a profitable one. Take a look at the feasibility of your idea.

Step 4: Research Your Market – marketing research is crucial to the success of any business, large or small. The more you know about your potential market, the greater your chances of securing the customers you want, right out of the gate, and that means making a profit.

Step 5: Forecast Your Sales Revenue – after you take a look at the market your product is best suited for, estimate the percentage of that market that you think you will reasonably be able to take over. Take in to account the number of your competitors, their size, and the amount of market they already have. It is important to be realistic during this exercise.

Step 6: Choose a Location – is your new business going to be on the web? Or will you have a retail storefront? Will you consult out of your home office? Be careful to weight both your personal preferences and what makes the most sense for the ultimate success of your business. You might like the idea of working in your pajamas every day, but if your shingle needs to be seen by the public for maximum growth potential, a home office might not be your best option.

Step 7: Develop a Marketing Plan – here you will be forced to detail you plan to gain customers, and turn a profit. Discuss possible marketing channels, price points, advertising, and sales promotion.

Step 8: Develop an Organizational Plan – what skills and talents do your new business need to not only survive, but to grow as well? If you don’t have all these traits, how are you going to get them in the door? Will you hire freelancers? Are you hoping to bring on an employee right away? If these individuals, and their skill sets, are vital to your success, do not make a plan without them!

Step 9: Decide on Your Status – sole proprietor? Partnership? You need to decide how you’re going to approach this, and investigate the legal ramifications of each situation. As a sole proprietor, you’re in control, but you’re also solely responsible. In a partnership, you share the responsibility, but you also share the decision making and the profits. What works best for your budget AND your personality?

Step 10: Address Your Accounting – if you don’t know how much money is coming in and out of your business, you will never know if you are making a profit, or if you need to make changes. Keeping track of your numbers is one of the single most important things you can do for your business. Decide on whether you will do it in house, or outsource it to a professional; if you take care of it yourself, decide on what software you will use.

Step 11: Put it All into Numbers – this may or may not be necessary for you; it depends on what type of business you are starting. When you approach a financial institution for a small business loan, they will respond better if they see all of your plans in numbers; they are, after all, in the business of numbers. So, go back through all the above steps, and assign dollar amounts to what you can; when you approach the bank, you can tell them exactly how much you need, and show them where their money will be going. You can then show them, with a number, how much of the market you are planning to corner, and your growth, by percentage, over the next X years.

That’s it – wasn’t so hard after all, was it?

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Five Interview Questions You Should Always Ask

There are five (5) important Interview Questions you should always ask. These five questions go beyond the obvious ones, such as the title of the job, the job description, to whom it would be reporting, and other such basic questions. In fact, it’s unlikely you’ll even need to ask those questions, as they’re usually outlined for you.

With some preparation and thought, you should be able to easily come up with 15 – 20 first-interview questions to ask. But these five – in some form – should always be asked.

Not only will they help you to ascertain if the job for which you are interviewing meets the criterion of your perfect job, but the answers, when put together, will give you a fairly accurate picture of what’s really going on behind the interview.

1. WHAT ARE THE PRIORITIES THAT WILL NEED TO BE ADDRESSED IMMEDIATELY IN THIS POSITION?:

A title alone tells you nothing. The job description won’t reveal much either, except whether or not you’re capable of doing what’s required functionally on a daily basis.

For the same reason that you put your accomplishments on your resume – and not just the job description – here, too, you want to get a sense of the individuality of this job in this company.

Was everything left running smoothly? Is it pretty much picking up and continuing daily functions as normal? Or is there damage control that needs to be done? If so, is there a time line for the repair, and is it an achievable one considering your capabilities? Is it realistic regardless of who holds the position?

If you don’t have any information already, this will begin to clue you in about both the supervisor and the previous employee. If you have been provided with some detail already, then the answer should track with what you’ve already learned.

2. HOW LONG WAS THE PREVIOUS PERSON HERE? WHY DID THEY LEAVE?

Generally, in answering the first part, the interviewer will answer the second part as well. But if they don’t, then ask it. And if that person was there an oddly short time, you also want to know how long the previous person before that was there.

See where I’m going with this? If the job is in disarray, and the last two people were there a short period of time and were fired, you don’t need to ask any of the other questions here.

Exit gracefully and then run! Because before long, you, too, will be terminated for not achieving whatever it is they want done – regardless of if the stated time frame sounded realistic or not.

3. TELL ME ABOUT YOUR MANAGEMENT STYLE. HOW DO YOU BRING OUT THE BEST IN YOUR EMPLOYEES?:

Is he a micro manager? Is he an information hound that needs to be kept informed of everything? Does he leave people alone to do what he hired them for and simply keep on top of what’s going on? Does he help you if you have trouble? Do any mentoring? Or is he a berating, derogatory, jerk?

Obviously he’s not going to come right out and tell you he’s a micro manager! Instead he might say, “I like to keep a very close watch on what’s going on in my department,” or “I visit with each member of my department on a daily basis to make sure they’re staying on track,” or something similar.

You’ll find that the person will be fairly straight forward in sharing their management style with you. What you want to pay attention to is how they word it.

4. WHAT TYPES OF PEOPLE TEND TO EXCEL HERE?:

Workaholics? Ones who are self-motivated and manage themselves well? People who work well in teams or committees? Employees who keep their supervisor informed of “where they are with things” on a daily basis?

This tells you something about the pervasive culture in the company or department. Generally speaking, companies – or departments – tend to be made up of similar types of people that are in harmony with the company culture and philosophy.

An entrepreneurial person won’t function well in a committee environment. While sales personalities can vary greatly, the top achievers are goal driven and motivated to achieve, rather than be complacent.

People who are accustomed to thinking for themselves will find themselves chafing in a company that has a more dictatorial style, while those who perform better when they’re told what to do will find themselves adrift in a company that requires its employees to think for themselves.

5. HOW LONG HAVE YOU BEEN HERE? WHY DO YOU STAY?:

The answer to this question will give you an indication as to the feeling or health of the department or company. The way in which he/she answers the question will also give you additional insight into your potential boss, his management style, and what type of people excel in the department or company.

These are informational questions, not challenges. Be genuinely interested in the answer, because you’re gaining valuable information that has to do with your future. When you leave the interview and process it within yourself, you’ll be matching what you learned with what you are looking for.

Pay attention to the interviewer’s body language and facial expressions. Is he relaxed? Does he fill in some of the spaces? Does he speak to you – or AT you? Does he answer the question briefly and then quickly fire off another one?

These, too, are valuable clues, and after the interview, you’ll need to piece them together with the verbal information you received.

Your perfect job might land in your lap by grace and good fortune. But more likely, you’ll need to look for it. It’s there – but to recognize it, you’ll need to know what it doesn’t look like, as well as what it does.

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If You Want Something Done… Delegate

“Delegate?”
“It’s easier if I do it myself.”
“No one else can do it as well as I can.”
“I don’t have time to teach someone.”

Do any of these sound familiar? Every day people add more tasks onto their ‘To Do” lists. Then they find that the day (or week, or month, or year) has slipped by, and they haven’t gotten it all accomplished.

The results?

1. Feeling overwhelmed or out of control
2. Build-up of stress and anxiety
3. Procrastination because of too much to do
4. Lack of advancement or promotion

Delegating is one of the action options that is stress in  time management training seminars because, in the rush of day-to-day activities, it is a tool that is often overlooked.

There have been many articles in the news recently about the exorbitant pay of some CEOs. Why might some of these CEOs be earning ten times to fifty times more than the average business employee does? Is it that they spend ten to fifty times more hours at their job than that average employee? Of course not. Everyone is using the same 24-hour day.

What are they doing that is different? For starters, if one looked at their ‘To Do’ lists, you wouldn’t see them involved in the minute details of their business operations. Their job is to look at the big picture, figure out how it can be done, and then those steps are delegated. They have to rely on others who have been trained in specific areas of the operation.

Not everyone is in circumstances that enable them to afford multiple assistants. However there are still ways to can learn to let go of some things. Consider the resources you might have at hand:


1. Office assistant.–Many times they are only given the most mundane tasks, and the result is that they are not challenged. Give them a chance to grow in experience.

2. Spouse/children–Let all share in the home chores. It teaches responsibility and will produce more “together” time. Self-employed people can also hire their children to assist with routine office work.

3. Outsourcing–If in-house staff isn’t available, explore hiring experts, such as bookkeepers and web designers, to help. For clerical assistance, look into an area high school or community college for student interns.

Just as the major CEOs do, look at the big picture in your business and in your personal life. Train yourself to explore more options. What are your goals? What are the important tasks that will help you to achieve those goals? In deciding if your can delegate a task or project, ask yourself:

Why am I doing this?
Is there someone else capable of helping?
Is there someone I can train to do this?

Once you have identified the tasks and projects that could be reassigned, use these guidelines:

1. Be explicit about what it is you want done
2. Check to be sure they’ve understood
3. Set a completion date and get their agreement
4. Hand over the authority that goes with the responsibility
5. Identify benefits for the person doing the task
6. Be available to handle questions but don’t check up too many times

When time is taken out to get organized, that time spent is gained back within days, and then you are working ahead, using effective time management techniques. Delegating is one aspect of getting organized. It may take a little time to train someone to do an activity the way you want it done, but then you no longer are handling that work in the weeks and months ahead. It is worth the small amount of time to train and to delegate. Don’t procrastinate in taking the next steps

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What To Do With Employees Who Don’t Properly Manage Their Time

Are you a business owner? If you are, there is a good chance that you have employees in your staff who do not know how to manage their time. What do you do with these employees? If you are unsure as to how you should proceed, please continue reading on.

First, it is important to do something. The last thing that you will want to do is let an employee who has bad time management fly under the radar. Many business owners do not think about this at the time, but there are a serious consequences for not calling out poor performing workers.

One of the many consequences to allowing one of your employees to keep on wasting their time and yours, is that others are likely to follow suit. Even some of your best performing employees are likely to waste time socially or by surfing the internet when they see that others are able to do the same and get away with it.

Your business profits will also likely be put at risk. When an employee spends too much time surfing the internet or wasting time in general, it will likely take much longer for you to get projects completed. This can have an impact on your business profits. For example, you may later end up paying your employee overtime to complete a task that they should have finished during normal work hours.

If your business deals directly with the general public, an employee who does not know how to mange their time can also have a negative impact on your company’s public perception. Deadlines should not be missed, but proper time management is vital when working with clients. Did you agree to have forms drawn up on time for a client of yours? If you did, they should be ready when expected. If not, your client may look elsewhere. Also, places that have employees just hanging around the office and socializing tends to look unprofessional in nature.

So, you now know the consequences of letting an employee with poor time management slide, but what should you do?

It is important to bring a lack of time management to the attention of your employee or employees. Let them know that wasting time on the clock is not acceptable, especially when there are other tasks or projects that they could be working on. Clearly state that socializing is for break times only.

Next, be sure not to let the same behavior continue. Workers who have been warned about wasting their time and the time of the company should not have any excuse for doing so. Give one more final warning before taking action. This action may include terminating your employee’s position with the company.

Despite the fact that termination is an option, you may have what you believe to be an otherwise good employee. If that is the case, you may want to opt for time management training. This can be done yourself or with the services of a third party. In fact, if you have a large number of employees who seem to not know how to manage their time, you may want to opt for company wide training.

Should you decide to host your own time management training seminar, as opposed to using outside help, be sure to share tips with your employees, outline the importance of making good use of their time at the workplace, as well as the consequences of not doing so. This leaves no room for exceptions and you should see a significant improvement in productivity in your workplace.

As a recap, if you are a business owner or even just an office manager, it is important to make sure that all of your employees are working to the best of their ability. Your company and your own personal reputation may end up taking the fall for those who do not perform to the best of their ability.

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The Value of Hiring Good Employees

In one of my previous articles, I wrote about the importance of customer service in business, and specifically the food concession business. In order to help implement this trait with your food business, hiring good employees is extremely important. But having good customer service isn’t the only reason to hire good employees. Other traits of good employees are trustworthiness, good work ethic, and ability to learn. These traits are all extremely important and an employee without one or more of these traits is simply not the full package. In order for your business to run smoothly and successfully, finding employees with the whole package is crucial.

Customer service is so important in being able to keep your customers happy. While you alone know how important it is to your business to create good relationships with your customers, since you probably won’t run the business completely by yourself, you must also convey this message to your employees. Good employees will care that you want to be kind to your customers. Employees that aren’t worth much might treat customers well in your presence but then treat them without care when you aren’t around. You must always leave a way for customers to leave feedback so that you can be sure your customers are getting treated in a way that will be good for your business’s reputation.

Knowing you can trust an employee to treat your customers well even when you aren’t there is part of the trait of being trustworthy. This is one of the most important traits you can find in any employee. An employee that you can’t trust does not need to be part of your team. An employee that isn’t trustworthy will not have any problem stealing goods, money, or supplies from you. This can be an unbelievably high cost to lose. Employee theft is one of the biggest expenses of businesses these days. A trustworthy employee is worth his or her weight in gold.

Another important trait of an employee with the whole package is good work ethic. This also goes along with trust. You have to be able to trust your employee to really work when your back is turned. An employee with good work ethic will do that for you. This is a priceless trait when you need to get as much work for the money you are paying employees as you can. Employees that just sit down when you leave are robbing you of your hard earned money. Getting something for nothing should be considered theft and if you have employees like this, either tell them to change their ways or they are out.

Finally, ability to learn is certainly near the top of the list of important traits for good employees. You have to have employees that pick up on procedures very quickly if you want to run a successful business. This will make your job much easier when it comes to being able to leave them alone and having work get done. If you have employees that aren’t good at learning on the go, you will not have as efficient of a business as you could. All of these traits are important employee traits for any business. Finding employees with the total package can help you have a successful experience in business.

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Techniques To Hyperforming Employees

As a manager strides into the office among the staff, he has the power to positively shift the outlook of the employee for the entire day.

Words, gestures, even the expression on your face spell the difference in how an employee perceives your opinion of them. These unconscious actions tell the employee what they mean to you and how valuable they are to you as a manager and to the organization.

Letting the employee feel needed and appreciated is a key factor to maintaining maximum employee morale and motivation. If your employees feel that they play a key role in the company by the work they provide, then they are much more likely to say that they like their job and to strive to better themselves at that job. For many, feeling valued is just as important as high pay, and promotions.

Let’s build zest with these tactics:

1.Let them feel your presence. Coming to work and announcing your arrival is a great way to motivate employees and get them upbeat on the first hour of the day. Striding through the doors and simply saying good morning with a smile on your face can make all the difference in the world.

2. Verbal Acknowledgement. This kind of commendation doesn’t have to be over dramatic or exaggerated, most times showing respect for your employees by saying simple things like please and thank you are easy and effective ways to motivate your employees.Praise like “you did a great job” when the employee deserves it is sure fire way that verbal praise can work to motivate employees.

3. Lay clear expectations. Communicating deadlines, milestones, and job objectives are essential to completing company mandates efficiently. Sometimes these things are reported very well but they may change. These changes may not be discussed in detail and therefore causes employees to feel that they are either not important enough to be told why the changes are taking place, or that the manager has made a mistake. Neither of these thoughts will lead to a motivated employee. One way to prevent this is to always get some kind of feedback from the employee about the job so that you are certain that he knows what is expected. If there is a change in a project, inform the employee why. Keep them part of the solution to the problem.

4. Provide employees regular feedback. Let the employee know when he is doing a commendable job. On the flip side, let the employee know when you are not pleased with the outcome and state your reasons. This is a great opportunity to let the employee know how they can do better next time. Ask the employee if there is anything that you as a manager can do to help with the change. Solicit feedback from the employee. Talk it over and enjoy a real discussion. This will make the employee feel like you are not offend about the job, but that you are genuinely concerned and willing to help rectify the problem.

5. Generate consequences. Make sure to not only tell the employee when you are satisfied with the work, but also provide recognition for marvelous work. A personally written thank you card is an effective and inexpensive way to do this. When an employee fails to meet company expectations, it is demotivating to other workers, after all, they may think, “If he isn’t doing it why should I?” That is why it is so important to broadcast consequences for those who do not perform as expected. Be consistent with consequences among the staff.

Employees will love working with you and you will enjoy working with them as you take a few minutes out of your day to butter their emotions. Spend time with employees during and after work. Demonstrate that you care and value them as important members of the company.

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Employee Performance Reviews — Dealing With Disagreements

What do you do when an employee disagrees with something you’ve written on their performance review? How can you prepare for this and deal with it effectively?

Start by listening to figure out the source of the disagreement. Is it an issue of fact (you wrote that the employee received a customer satisfaction score of 79 but the employee says that his score was actually 83), or is a matter of judgment (you wrote that the employee’s customer service skills were unsatisfactory; she feels that her skills are terrific)? If the disagreement involves an issue of fact, get the facts and make any corrections necessary. If it’s a matter of judgment, ask the employee for additional evidence. Then determine whether that evidence is weighty enough to cause you to change your mind, revise your judgment, and amend the rating that you assigned on the employee’s performance review.

Most of the time, you have a reasonably good understanding of the areas where disagreements are likely to pop up in the course of the performance review discussion. Before beginning the discussion, re-read the review you wrote and try to spot the areas where you and the individual may not seem eye-to-eye. Then ask yourself, “What am I going to say when George or Mary disagrees with my assessment that his or her performance on the Thompson project just barely met expectations?” If you’ve taken to time to review the appraisal you’ve written for potential hot spots, and given some thought to how you’ll respond, you’re much less likely to be caught off guard.

During the employee performance review discussion, start with your higher ratings and move toward the lower ones. Be prepared to give additional examples besides the ones you’ve included on the formal written appraisal. Refer back to the informal conversations you have had with the individual over the course of the year.

Of course, if you haven’t had on-going, informal performance review discussions with the individual over the course of the appraisal period, then it’s much more likely that disagreements will surface during the review. That’s one more reason for scheduling periodic, “How’s it going?” discussions with each person on your team.

As soon as a disagreement pops up, switch into active listening mode. “Active listening” involves allowing the other person to clarify both the facts and feelings about an issue so there’s nothing left under the surface. For example, using phrases as simple as, “Tell me more . . .” or, “What else can you share with me about that . . . ?” or, “Really . . . ?” can encourage people to talk more about their perceptions. Simply nodding without saying anything encourages people to expand on what they have said. It’s not at all unlikely that the employee, allowed a sufficient chance to think aloud about what you have written, will end up saying, “Yeah, I guess I see what you mean.”

In dealing effectively with employee performance review disagreements, remember what your objective in the discussion is — and what it isn’t. Your objective in a performance review discussion is not to gain agreement. It is to gain understanding. If the employee agrees with you, that’s great. But particularly if your appraisal is a tough-minded assessment of the fact the Charlie’s contribution toward achieving your department’s objectives was only mediocre, you’ll probably never get him to agree. That’s OK. What you want is for him to understand why you evaluated his performance the way you did, even if his personal opinion is different.

Finally, if you have several employee performance reviews to deliver, don’t start with the individual whose performance was the worst and where disagreements are the most likely to arise. Start with the easiest — your best performer — and move toward the more difficult. In this way, you’ll build your skills and become more comfortable with the performance review process.

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