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Get Website Users to Stay Longer: 7 Tips

Fri, 05/18/2012 - 13:15

Advice from Emerson Spartz, founder of Spartz Media, and Scott Gerber, founder of the Young Entrepreneur Council.



Categories: Business News

5 Traits Remote Employees Must Have

Fri, 05/18/2012 - 11:59

Managing far-flung employees is always a challenge. (What are they doing, anyway?) Make it easier by hiring the right people first.

Chances are some of your employees work from home (or from wherever they like). You probably do too, at least some of the time. If you're running a start-up where resources are scarce, that's even more likely.

And even if all your employees work in established locations, the odds are most occasionally access data and mange tasks and projects outside the office on mobile devices.

Face it: No matter what your business, at least some of the time your employees are cloud workers.

That shift dramatically changes the nature of the workplace. According to Avinoam Nowogrodski, the CEO and co-founder of Clarizen, makers of online project management software and some really cool apps, that shift also changes the way you select and evaluate employees.

Some of the qualities employees need to succeed in a traditional work environment are less important, while these traits are vital for cloud-based employees:

1. Proactively set and share goals.

It's easy for employees to get lost in the cloud. (Sorry, couldn't resist.) Managers still set goals, but collaboration and water-cooler "aha!" moments are much less likely. And it's easier for employees to slowly turn into not much more than to-do list "completers."

Great remote employees actively suggest new ideas, create their own projects, set and share personal goals, and recommend solutions.

Working from home is appealing to relatively introverted people, so make sure the employees you hire enjoy working on their own but also thrive on stepping forward.

Sure, it's a tough balance, but the best remote employees enjoy the benefits striking that balance provides.

2. Stay connected—almost obsessively.

Great team players are trustworthy—and available. Web and mobile connectivity makes it easier to connect with remote employees, yet also makes it harder and less certain. (Maybe he's on a call with a client? Maybe he's on Skype with another team member? Or maybe he's just ducking me?)

It's easy for remote employees to hide behind the technology... or lack thereof.

Whose responsibility is it to try to stay connected: the remote worker's or the home office? Either opinion is correct, but great employees assume the onus is on them; that way, no matter what, they stay connected.

Great remote employees let others know when they won't be available, and why... and how they can still be contacted in the event of an emergency. They see working remotely as a trade-off: They know they have more freedom, but they also recognize that with that freedom comes the responsibility of hyper-availability.

And they recognize that hyper-availability creates trust—with employees and with customers.

3. Focus on results, not time.

In some organizations it's enough to show up and put in your time; what you actually accomplish is almost secondary to being present. (We've all known people who have a positions but don't actually work.)

That's obviously not the case for employees working outside of headquarters. Results, not presence, are everything. Great remote employees focus on accomplishing objectives as quickly and efficiently as possible. Who cares if a task "should" take a week; if it can be completed in three days that opens up time to accomplish other tasks.

Great remote employees finish tasks ahead of time—and ask for more.

4. Constantly want to learn.

Remote employees often, but not always, have very specific duties, focus on a set list of tasks, or work on well-defined projects, if only because that makes managing them easier. They don't have access to some of the same formal or informal training and development opportunities.

So they push for development and learning opportunities. Constantly. Incessantly. To their boss, irritatingly.

And that's a good thing.

5. Push to become irreplaceable.

Say business is down and you're forced to let a few employees go. Who is easier to downsize: The employee in the office next to you or the employee on the other side of the country you never see ? (Come to think of it, he seems to get a lot done, but who knows how hard he's really working?)

In an ideal world every employee is evaluated solely on performance. In the real world other factors come into play, sometimes fairly, sometimes not.

Great remote employees understand that perception and bias can be a factor. But they don't just think, "That's not fair..."

Instead of complaining they work hard to prove how valuable they are. In fact, they enjoy proving how valuable they are.

Which, of course, benefits them... and your business.



Categories: Business News

Business Blogs Face Big Changes

Fri, 05/18/2012 - 11:55

Blogs used to be a valuable way for entrepreneurs to develop, and communicate with, a business or industry community. Sadly, those days are gone.

Many of my clients ask me: Should my company start a blog? Once I would have given them an unqualified yes. But today I would add a few caveats.

There are many great reasons to maintain a company blog. A blog allows you to:

  • share knowledge and demonstrate your company's subject matter expertise
  • give your company a voice
  • help generate the new content valued by both users and search engines
  • encourage valuable "link love" from customers, colleagues, and industry peers
  • provide a living and easily accessible archive of company content for future reference

A company blog used to also be a way to gather feedback and welcome consenting and dissenting opinions, particularly through its comments section.

But I'm not so sure that last rationale applies anymore. The reason stems from what I consider a dismaying trend, and one that I don't see reversing any time soon: the decline of commenting on blogs and articles.

These days it feels like unless the blog is quite niche or controversial, it's less likely to attract many comments. And that means that while blogs are still useful, they're no longer a driver of community. That's something I consider unfortunate.

Just take a look at this latest blog post from Marriott International's executive chairman, on China's "Nobility of Nature" – Bees, Honey & Clean Water. Here's a screen grab from the bottom of the post: It's got 1.1K Facebook recommends, 12.5K tweets ... and zero comments.

Why is this trend happening? I can come up with a few reasons.

Social Media Makes People Lazy

Social sharing icons and buttons next to content have become ubiquitous. Read a blog post and find value in its content? It's so easy to just tweet it, "like" it, or share it through other social media platforms that fewer and fewer people find it important to leave behind comments in order to express their approval.

On the one hand, this form of sharing is great; it helps "amplify" your content, carrying your post–and therefore your information, thoughts or opinions–from your website onto other platforms. On the other hand, content shared on these platforms is ephemeral (Twitter) or potentially restricted from the public (Facebook). It has limited lasting value for your presence, and may never allow you to collect feedback or engage with your audience.

I also question whether the sheer number of tweets or likes carries the same weight as a well-crafted comment. On social media, someone's like is one of dozens, hundreds or perhaps even thousands. But a comment on a page, singular and nestled among others, creates a community–and a conversation–in a way that simple shares don't.

In other words, a comment has meaning.

Spammer Overload

Another reason comments are dying: spammers! They ruin everything for everyone, and blog spam is no exception. No one dares to have an unmoderated blog anymore, for fear of nasty spam comments appearing and offending other readers. Because so many blogs have moderated comments, it may be a while before a comment appears–and when it does, other readers may have already come and gone. How unmotivating.

Blog Saturation

It might be hard to imagine, but blogs used to be a novel thing. So novel, in fact, that back in 2001 my agency had to ask a guest contributor to explain blogging to our email newsletter subscribers! Early bloggers benefited from being in an uncluttered space; many became quasi-celebrities in their own right.

After blogging caught on, however, suddenly everyone wanted to have a blog: individuals, businesses, nonprofits, trade associations. Users searching for subject matter could be inundated with reams of similar content and not know where to turn. With so many blogs, reader attention and loyalty got divided, which led to fewer blog comments on any single blog, too.

In a video interview on Social Media Examiner, Shani Higgins, CEO of Technorati, a premier blog directory site, declares that it used to be that "a story wasn't a story until comments were there." Those days are gone.

Bloggers Have Been Bought

One final issue: While blogs once provided online expression and sharing of thoughts, ideas and news, today's blogs have been coopted by more commercial comment.

In addition to straight self-promotional content and in-blog advertising–both of which are transparent to the reader–blogs may also feature less transparent compensation models like paid-for posts, paid brand-spokesperson bloggers, and sponsored event attendance by "blogger celebrities." Many brands also conduct blogger outreach to harness the influence of a blogger. There's also self-promotional blog commenting, where the comment really adds no value to the post other than to give a link to the commenter's product or service.

Some users have recognized these less-than-genuine blog posts and comments and have become leery of all bloggers' and commenters' intentions. As readers' trust in the blog platform and community becomes compromised, the importance of posting comments suffers, too: "If this blog post is essentially an ad, does anyone care what I have to say in my comment anyway?"

What does the future hold for blogs, particularly non-personal ones? Will blogs become nothing more than yet another one-way broadcast medium? It wouldn't be my preference, but I fear that's where they're headed.



Categories: Business News

After Facebook: 6 IPOs to Put on Your Radar

Fri, 05/18/2012 - 11:30

Has Facebook reinvigorated the IPO market? Here are a few tech companies racing to go public--and what you should know about them.

On Friday, Facebook raised a record-setting $18 billion in its IPO, placing its value at a staggering $104 billion. Not bad for a start-up founded just eight years ago in a 19-year-old's dorm room. While the company's IPO has helped plenty of its investors get very rich very fast, it has also set the scene for several other companies to go public.

In the last year, there have been several Silicon Valley darlings to go public; Yelp, Zillow, Pandora, and LinkedIn, just to name a few. Facebook's IPO will certainly cast a long shadow against the next wave of tech companies waiting to hit the markets. The question, of course, is whether the IPOs will live up to their hype.

Here's a look at a few tech companies that have filed their S-1 documents in preparation to go public.

Kayak

The hotel and flight booker had originally filed to go public in November, but market conditions held the IPO at bay. Riding the coattails of Facebook's IPO, the company has expressed renewed interest in going public; Last week the company announced it planned to raise $150 million at a $1 billion valuation. Back in 2010, the company reported revenues of $128 million, 140 employees, and local websites in 14 countries outside the United States.

Workday

Founded by PeopleSoft veterans Dave Duffield and Aneel Bhusri, Workday provides business management and HR software to thousands of businesses in the form of dashboard analytics. The company's revenue exceeded $300 million in 2011, according to AllThingsD, and the company is estimated to be worth around $2 billion. In April, the Workday hired Goldman Sachs and Morgan Stanley to lead its initial public offering, and has already raised $250 million in venture capital.

GoGo

If you've ever connected to the WiFi on a transatlantic flight, chances are you've used GoGo. The Itasca, Illinois-based company filed to go public in December, 2011, hoping to raise $100 million. Founded in 2008, the company now has nearly 500 employees and earned over $113 million in revenue in 2011.

ServiceNow

This San Diego-based company, headed by CEO Frank Slootman, filed to go public in late March 2012, hoping to raise $150 million. The firm, which offers IT management cloud services to small and medium-sized businesses, was founded in 2003 and now has MORE THAN 730 employees. The company earned nearly $50 million in revenue in 2011, but is saddled with about $150 million in debt and liabilities from capital expenses.

Shutterstock

This photostock service, which was founded as the personal photography website for its CEO, Jonathan Oringer, plans to raise $115 million in its public offering. Taking on photo industry giants like Corbis and Getty, Shutterstuck plans to use its IPO capital for human and working capital, and, according to its filing, "to acquire or invest in complementary companies, products, or technologies." With 167 employees based from its New York office, the company earned $120 million in revenue in 2011.

E2Open

Though you've probably never heard of them, E2Open is a huge supplier of cloud-based software companies use to aid in their supply chain process. Based in Foster City, California, the company has about 330 employees and earned nearly $60 million in revenue in 2011. One Network Enterprises based in Dallas is a major competitor, but E2Open services about 45,000 companies and is growing; A few notable clients include Boeing, Cisco, Dell, IBM, and Xerox.



Categories: Business News

Help Your Employees Be Strategic Thinkers

Fri, 05/18/2012 - 09:25

Ongoing education is a core part of every great business. The investment is small, but the return can be a game changer.

Education is easy to make part of any business. That does not have to mean bringing in outside experts or sending employees away to expensive courses. Drawing on in-house resources can be just as rich. At Metal Mafia, we used to have sales seminars on a regular basis, at which different staffers would present on everything from the pros and cons of new products, to techniques for communicating better with customers. As we got busier, the seminars were scheduled less frequently, and finally, not scheduled at all.

Two weeks ago, I asked my staff to tell me why a customer would want to spend money on a specific new product we now offer. I thought the answers could have been better, so I decided we all needed a refresher course in how to explain the value of our products in a meaningful way to our customers. I held an in-house tutorial this week, and the investment paid off.

Here's what I think you'll find most useful.

Let your staff know it's okay to ask questions.

People have a tendency to allow embarrassment over not knowing something trump the need to know it. Even if you think you have clearly shown your staff how to do something or gone over the benefits of a product with them a million times, the concept may not be as firmly in place in their minds as it is in yours. It is important to give your team an opportunity to learn and re-learn key ideas that are core to your business's success. It sends your team a strong message--this information is worth mastering--if you set aside time for a seminar about the concept you want to be sure everyone understands.

I could have typed up a list of the key points I wanted my reps to memorize instead of making time to re-teach the concepts in a class setting, but that would have made the process about dictation instead of education. A workshop rather than a memo encourages your team to ask questions in a low-pressure setting.

Communicate strategies in non-threatening ways.

The freshest ideas in business come from conversations. If you want your employees to not just understand something, but to really own an idea, you need to give them ways to engage in your strategy on their terms.

Teaching situations are not meant to be lectures, but to invite participation. I had ideas about what I wanted my team to take away from the class we scheduled, but I left the teaching up to everyone who attended. The sales reps came to the class ready to participate--and because they knew their input was both sought and valued, they were willing to teach and learn openly. They each talked about five products they thought could bring value to our customers' businesses, and explained concretely how the products should be talked about to get that value across. They asked each other questions, reviewed talking points, and discussed the customer concerns they had fielded. In the end, we all left as "A" students because we found better ways to help our customers.

Raise awareness and energy levels.

Devoting time and resources to promote continuing education emphasizes to team members that you value not only results, but also development. If you want your team to always examine interactions for deeper meaning, creating time for learning and evaluation is crucial. Employees who are encouraged to learn are the first to spot additional market opportunities, the best at increasing customer satisfaction, and the most effective at trouble-shooting. Learning to ask questions in a class setting hones one's instinct to probe outside of the classroom as well.

My team left our "class" today with both ideas and enthusiasm—and a feeling they were better-equipped to do their jobs. The confidence that came from being well-prepared was evident in their energy level.



Categories: Business News

Master Networking: Tips from Introverts

Fri, 05/18/2012 - 07:41

Inc. readers give insightful tips for the introvert who is looking to build a valuable professional network.

As it turns out, there's a lot of introverts out there! And many of them have their on tricks for making networking not only effective but almost enjoyable. We received a number of responses to our article on Networking for Introverts. Several of our readers were kind enough to share additional tips on how introverts can network successfully, so we thought we would share them here.

Patrick Zielinski writes:

"Part of life's gift is just being able to listen and get to know someone. Still, I sometimes don't say anything when I'm with a group of people or in a meeting. I notice the voice in my head telling me to speak up. But, as soon as I drown it out, then I know I'm not pretending to be someone else."

Patrick's comments really resonated with me. I also have heard that voice in my head telling me to say something, anything! Yet my worst networking moments have been when I have listened to that voice and tried to play the role of "gregarious extrovert." It is uncomfortable and phony, and it takes me away from my strengths as an introvert. I am actually much stronger at active listening and reacting than I am at leading a conversation. In my worst "gregarious extrovert" moments, I have stopped listening and learning as I got caught up playing a role.

I cannot emphasize this point enough: A good listener can be a great networker! In my experience, most people enjoy talking about their job, their life and their concerns, and will gladly lead the conversation if you let them. Empathize with and actively listen to your conversational partner, and you may have a great networking conversation without saying more than a few dozen words.

Beth Buelow (founder of The Introvert Entrepreneur, a training and coaching resource for introverts) writes:

"Networking is a skill that can be learned, even for the most shy or introverted person... What helps me:

  • Go with a friend or colleague, so we can offer mutual support and introductions.
  • Give myself permission to come and go as I want, no apologies (I don't need to be first on the scene, or stay to the bitter end!).
  • Don't schedule anything else social that day, so I've got energy to exert.
  • Remind myself that other people might be anxious or uncomfortable, too; we're all in this together.
  • And remember to smile. Smiling invites and relaxes like few things can."

All great ideas! I use many of the techniques Beth mentions to reduce stress and put less pressure on myself to give a great networking "performance." By going to networking events with a friend, we can share "hosting" duties and I can spend more time just being myself.

Corey Dilley writes:

"Another strategy I've found helpful – make friends and figure out how to do business later... Make a friend first, then the business conversation will come much more naturally."

This is a really important point! We are all "allergic" to being sold to by a salesman; many people immediately throw up a lot of defensive barriers in a conversation if they think a person is selling to them. Some of my worst networking moments have been when I have tried to play the role of "salesman." Conversely, my best networking moments have been when I was not playing a role at all, but was simply listening and talking to the person and making a friend.

One key thought when networking: the first goal of any conversation is to earn the right to the next conversation! Networking is not about "winning the sale" in any individual conversation, it is about continuing the conversation over time and building a productive and mutually profitable relationship. Make friends first, do business later!

Are you an introvert? If so, what coping techniques have you adopted to help you become a better networker? Please let us know in the comments below or email us at karlandbill@avondalestrategicpartners.com.



Categories: Business News

What's Your Leadership Position?

Fri, 05/18/2012 - 07:37

When management issues arise, it may be because the people on your team are playing the wrong roles.

In sports, when people "play out of position," the opposing team quickly calculates the gap and then takes advantage of it.

It's similar at work. If you are not playing the right role at the right time, you create gaps that open up risks.

When discussing positions in the workplace, it's important to understand the key elements of the different roles: leaders, managers and supervisors.

  • Leader: Focused on goals, resources, direction, logjams
  • Manager: Focused on priorities, planning, options, clarity
  • Supervisor: Focused on compliance, accuracy, day-to-day implementation

On many occasions, as someone explains a management challenge, I ask what role he or she was playing in the situation. The answer is often, "I'm that person's boss."

Problem is, that's an organizational chart position–and my question was about the role.

Depending upon the other person's development, tenure and performance, overcontrolling or underdirecting can produce bad results, friction, and lower long-term credibility.

Many times, I find that this is not a single person's problem, but actually a cultural problem in companies that operate with overlapping lines of control.

In small entrepreneurial companies, it's common to find the player-coach-owner role as a leadership model. As the company develops, the model gets imitated, creating a company with murky role understanding.

When your leadership team is having management challenges, ask a few of these questions to see if "playing out of position" might be part of the problem:

What role am I playing? What role is everyone else playing? It's dangerous to be directing day-to-day implementation like a supervisor when you should be just setting goals and direction so the management can develop the plan and execute it. It's just as dangerous when you give a "figure it out yourself" directive to an untrained or unprepared employee.

If I am playing out of position, whose position am I covering? It's possible that you are playing out of position because you are covering someone else's role–but whose role is it? This may indicate that you don't trust the person to do his job, or maybe you're hogging a task just because you've always done it–and not allowing the other person to develop. Remember that you may also be giving short shrift to your own role.

A fair question is "Can you play more than one role at a time?"

Most people in a company have moments when they need to fulfill each of the roles. During the development of a new person, you supervise. When it is time to lay out new programs, you plan and prioritize. And as you rally a group or work with a contractor, you lead.

But if you are not getting the results that you want, you or your colleagues may be playing out of position.



Categories: Business News

To Make Your Employees Feel Less Busy, Give Them More to Do?

Fri, 05/18/2012 - 07:29

Incredibly counter-intuitive research out of Harvard suggests a novel way to make your employees feel more free: Give them more to do. Huh?

Sometimes scientific findings of such head-slapping obviousness--talking on the phone makes you a worse driver and men generally favor large breasts, for example--that they make the average lay person wonder how anyone ever got funding to investigate the question in the first place. But then every once in a while, you run into a research result on the opposite end of the spectrum--something so counter-intuitive you can hardly believe it's true.

Harvard Business School just produced one of the latter, and it's of particular interest to entrepreneurs hoping to help their busy employees feel less of a time crunch. Michael Norton, an associate professor of business administration, wanted to find out how bosses can help their teams feel like they have more time. Given that we can't slow the sun's crossing of the sky, the obvious alternative is to simply give employees fewer tasks. But it turns out this common sense response is actually the exact opposite of what Norton discovered.

To figure out what can relieve our sense of time pressure, Norton conducted a series of experiments that gave some study subjects an unexpected block of free time, by sending them home 15 minutes early from an experiment they were told would take an hour for example. Another group was instead told to fill the time with worthwhile activities to help others such as editing essays for low-income students. Which group reported back that they felt they had enough time for all the tasks in their day?

Surprisingly, the answer is those who spend time helping others rather than those who were given additional free time. By doing activities that make them feel useful, employees increase their sense of "time affluence," the researchers conclude, implying that the source of our perceived time famine isn't really lack of hours but a lack of a sense of purpose and accomplishment. Norton offered three suggestions for how managers could put thus insight to use to Business Insider:

Make employees participate in a company volunteer effort, particularly if they can use part of their workday to do it.

Let employees know how their day-to-day tasks are helping others. If they can hear how the employee helped a customer, this will also make them more satisfied with their job.

Use fun strategies to encourage team members to help each other. Norton tells of one experiment where salespeople were given $20 bonus money and told they had to spend on another team member. Those teams sold more than other groups that were told to spend the $20 on themselves.

This latest research finding of Norton's follows earlier studies showing analogous, counter-intuitive results. One finding, for instance, revealed that letting employees give bonuses to others is actually more motivating than receiving bonuses themselves.

Do you think forcing your team to spend time on worthy tasks to help others would relieve their sense of being time poor--or just start a mutiny?



Categories: Business News

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Fri, 05/18/2012 - 07:29
Categories: Business News

3 Ways to Annoy Your Customers

Fri, 05/18/2012 - 07:06

These boneheaded moves practically guarantee you'll become an irritant. Try a few better approaches.

Want your prospects and customers to think you're obnoxious? Want to make yourself persona non grata?

Here are the most common ways sellers make themselves into nuisances–plus a few thoughts about better ways to work with customers.

1. Ask Scripted Questions

For decades, most sales training seminars have been built around "sales scripts" intended to uncover customer needs. Unfortunately, scripted questions are irritating–because it's clear from the start that the questions reflect not true curiosity but just curiosity about whether the prospect is likely to buy.

Scripted questions are intended to lead the prospect toward buying; they're designed to elicit the "correct answer" regardless of the actual situation. And questions are, by their very nature, intrusive–and continually asking them, or asking a series of them, is an excellent way to alienate people, even when you aren't in a sales situation.

What works better: Rather than scripted questions, write down a brief agenda of the subjects you'd like to discuss, and share that agenda with the customer. Rather than giving the customer the third degree, have a conversation where there's a give and take of information.

2. Be a 'Know-It-All'

Right now, one of the most popular books on selling is The Challenger Sale, basically a rehash of the old "solution selling" but with the twist that sellers should "challenge" customers.

Unfortunately, the "challenge" terminology is likely to increase some sellers' tendency to lecture the customer, in the hopes that the customer will be impressed with the seller's expertise. But no one likes being lectured to–and it's easy to sound like you think you know more than the customer about how to run the customer's own business. Would you appreciate that?

What works better: It's fine to have your own perspective, do your own research and develop expertise in your own offerings–but approach every customer with the assumption that the customer knows more about their own business than you do. Use your time with the customer to hear about the real situation she is experiencing. And never, ever lecture.

3. Give a Sales 'Pitch'

Nobody likes hearing a sales pitch–but that doesn't seem to stop people from giving them. Sellers keep trotting out lists of features and functions, bragging about their company, talking about their guarantees, and so forth.

Why does this insanity persist? It's probably because people have been told for years that giving a sales pitch or presentation is what selling is all about–and that what's important to the customer is the "solution" that's being pitched.

What works better: After you've had a conversation with a prospective customer, take some time (like a day or so) and really think about what you've learned. Then draft up an email or similarly brief document encapsulating what you learned and how you think you can help.

If you enjoyed this article, click one of the "like" buttons to the left and sign up for the free weekly Sales Source newsletter.



Categories: Business News

Rdio: Great Music, for a Price

Fri, 05/18/2012 - 07:00

The founders of Skype and Kazaa have moved onto their next digital venture: Rdio, a streaming music service. Will listeners subscribe?

In 2008, Janus Friis and Niklas Zennström, the Scandinavian founders of Skype and Kazaa, started working on Rdio because they were convinced that music listening is shifting permanently from a download model (like iTunes) to one streamed on-demand from the cloud (like Pandora).

Initially with funding from Zennström's venture capital firm—when Skype was sold twice in recent years, Friis and Zennström reportedly earned close to $1 billion in the process—they set up shop in San Francisco. They also asked Drew Larner, a former movie executive with 20th Century Fox and Spyglass Entertainment, to be CEO. (Larner had met Friis and Zennström 10 years ago, when they were still working at Kazaa, the controversial online music-sharing service.)

Rdio users can now play any of 15 million songs from the likes of Justin Bieber, the Beastie Boys, and Coldplay—and never hear an ad—from the web or an app, and share (or discover) music in real-time with friends.

What distinguishes Rdio most is that—unlike many Internet publishers that rely heavily on advertising revenue—the company is going after a subscription model from the start instead. "It’s a very disruptive [music] experience to have to listen to an ad all of a sudden," says Larner. "We wanted to keep the experience clean and felt like we'd be able to offer something that was compelling enough to get people to subscribe."

Rdio users can listen on an Internet browser or Rdio desktop application. After hearing an undisclosed number of free songs (users see a meter "run out"), they are required to pay $5 a month. An additional $5 monthly fee applies to listen to music on the go with Rdio's iPhone, Android, Blackberry, and Windows 7 smartphone mobile apps. "Ten bucks is roughly the cost of an album, and with us, you're getting access to everything," says Larner.

But the subscription model still pins Rdio up against established behaviors. Consumers are not accustomed to paying for online content. Less than 10% of revenue in the Internet publishing industry comes from paid subscriptions, according to IBISWorld.

And if they're going to pay, says Jack Plunkett, CEO of Plunkett Research, "consumer preference is to own the music."

Larner attributes consumers' slow shuffle toward paid subscriptions to an emotional disconnection from digital content. "In the past you showed people that rack of albums you had in a milk crate and said, 'Look, this is who I am,'" he says. "We believe Rdio expresses that really well in the way the service is built, but getting people over that hump is a challenge."

Rdio is focused on overcoming that challenge. With a reported $17.5 million in financing, Rdio is trying to make finding and sharing new music easier. The company recently upgraded to a faster browsing speed and continuously-scrolling interface. Each user can display most-played songs and artists on a profile, "follow" friends and other members, and share music with Facebook friends. Says Larner: "Once people see that everything is there—they can listen to [Rdio] on any device, they can listen to it on a plane, they don’t need an iPod or iTunes—they’re hooked."



Categories: Business News

Can Your Business Survive Without You?

Fri, 05/18/2012 - 07:00

What would happen to your business if you were called away on an emergency? Here are three tips to ensure it doesn't miss a beat.

I was recently called away from the office for a family emergency. While sitting in the hospital waiting for news on my relative I began to wonder about the importance of having an orderly plan in place when people are unexpectedly called away from the office. When people go on vacation you have the opportunity to plan for their leave. But is your business really prepared for the unexpected?

My first mentor attorney was a great instructor. A former Assistant U.S. Attorney he taught me almost everything I know about trial work. And one of his most indelible lessons, albeit somewhat morbid, was that you always need to prepare and build business such that if the leader "gets hit by a bus tomorrow" someone steps into his or her place and the company does not miss a beat.

So ask yourself, what would happen if I were suddenly called away from the office? What would happen if I were hit by the proverbial bus?

So to make your company impervious to this possibility prepare for the unexpected today. Here's how:

1. List Your Critical Functions

List your critical functions to the company. Understand what you need to do on a daily, weekly, and monthly basis to keep the company going.

2. Order of Succession

Create a redundant order of succession such that when you are out others in the office automatically know they are charged with the responsibility of getting those functions completed.

3. Train Your Successors

Once the functions are identified and an order of succession put in place train your successors in every facet of their assigned duties so that when that day comes the transition is seamless and the business moves forward even in your absence.



Categories: Business News

Facebook Pulls Off Largest Tech IPO Ever

Fri, 05/18/2012 - 07:00

Ring the bells: It's a landmark day for Wall Street and Silicon Valley as the world's biggest social network becomes a public company.

The American Dream is alive and well in Menlo Park.

Facebook is going public Friday, after raising $16 billion Thursday at a valuation of more than $104 billion. Shares are trading at $38 each, and could be driven higher when the stock begins trading publicly around 11 a.m. It is the largest VC-backed tech IPO ever—10 times bigger than Google's IPO in 2004, and the third largest public offering in the history of the United States, just behind General Motors and Visa. Having grown in eight years from a scrappy start-up, the company, which has created more than 3,000 jobs, and made $3.7 billion revenue last year, today enters a new phase in its trajectory.

Underwriters for the deal, who stand to make millions in fees and even more in shares owned, included Morgan Stanley, JPMorgan Chase, and Goldman Sachs. Yesterday, Bloomberg reported that Goldman Sachs will sell about $1 billion of stock in Facebook after the IPO, "cashing out almost half their stake after the social network doubled in value."

With its IPO, Facebook seals its status as a legendary tech company in Silicon Valley, rivaling industry stalwarts like Intel and Apple. Born out of a Harvard dorm room, the world's largest social network—with 900 million usesrs worldwide—may have once been seen as "a novelty," has grown in eight years from an online place a few college students tallied their social connections to a global communication platform.

More than any other enterprise on the Web, Facebook has become a a prime aggregator of user data, and accordingly, a prime vehicle to deliver advertisements to potential consumers. On the Web, data is money. In 2012, digital advertisers will spend more than $32 billion to get potential customers to click their ads; Facebook will take a substantial chunk of that spend.

Facebook filed to go public on February 1. In the company's S-1, Zuckerberg opined that "Facebook was not originally created to be a company," but that "It was built to accomplish a social mission—to make the world more open and connected."

That sentiment certainly sounded like an investor-wooing kin to Google's "Don't Be Evil," but perhaps Facebook's quantifiable data does pale in significance compared to the myriad of unquantifiable connections, relationships, and conversations the networked has spawned since it was founded in 2004. For better or worse, with nearly a billion users, Facebook has fundamentally altered the way people interact, socialize, plan events, share information, hunt for jobs, flirt, date, and memorialize death. It's not hard to make the argument that Facebook has fundamentally altered the way humans think about the world and each other. Could the Arab Spring have happened without Facebook? Probably not.

Facebook has also forced governments to reflect on the nature of personal privacy in the online age. Scores of legal and academic criticism has mounted over the years in the wake of data leaks that resulted in the dissemination of mounds of personal information to third party advertisers, not to mention the hundreds—if not thousands—of HR debacles that resulted from the posting of lewd status updates and scandalous photos. (As of 2011, four percent of the world's photos—as in, all images captured throughout human history—were being hosted on Facebook. It also stores more than 10,000 times the amount of photos in the Library of Congress.)

In the wake of negative PR surrounding Facebook's mysterious methods of obtaining, retaining, and selling data, The Wall Street Journal formed a task force in 2009 titled "What They Know." The investigation revealed the depth of Facebook's knowledge of its users, from simple facts like a user's birthday to the sexual preferences of that user's closest friends. One book, The Facebook Effect, claims that Zuckerberg even experimented with algorithms that would be able to predict users' breakups.

Still, regardless of personal perceptions or attitudes about Facebook (whether or not you believe it is or evil, or if the site is just a fad) the company has been a relentless force in captivating the ethos of the country. In under eight years, the company has shot from a few 19-year-old hackers in a dorm room to an established firm that has managed to dominate the cultural zeitgeist. Countless books have been written about the company, and The Social Network, a film about Facebook’s origins penned by Aaron Sorkin, received eight Academy Award nominations and won three.

In 2010, Time named Mark Zuckerberg "Person of the Year," adding the young founder to the auspicious list of magnates that has included Mahatma Gandhi (1930), Martin Luther King, Jr. (1963), and Barack Obama (2008).

Facebook has become so much a part of daily conversation that it's even shifted the etymology of English words in its vocabulary. The word itself, Facebook, can be used as a verb. So can "friend." To Like something is now altogether different than liking something. Poking is still a bit creepy, both on Facebook and in real life.

In less than a decade, the company's IPO has made a slew of people inconceivably wealthy, especially Zuckerberg himself, who is now worth about $18 billion (making him the richest self-made 28-year-old on the planet).

Plenty of others are cashing in too, from Facebook’s initial investor Peter Thiel (who will earn about $2 billion) to Facebook’s graffiti artist, David Chu, who was paid in company stock that is now worth upwards of $200 million. Bono, the front-man for U2 who invested about $120 million in Facebook in 2010, will see his investment quintuple to more than $1 billion.

Rumors of a Facebook IPO started swirling in the Valley in 2009, shortly after Digital Sky Technologies bought two percent of Facebook for $100 million. When the company officially filed its SEC papers in February, critics began to question Zuckerberg’s ability to lead what would become one of the world's largest publicly-traded companies.

The Mark Zuckerberg Show

This week Zuckerberg raised eyebrows when he showed up to the company's IPO roadshow in a black hoodie. Some doubted his ability to cast a professional image to the scores of bankers and Wall Street executives sizing him up.

"He's actually showing investors he doesn't care that much," one analyst told Bloomberg TV.

But hoodie or suit, with 57 percent of the voting shares, Zuckerberg will retain a level of control rarely seen in public companies (most recently, Google's trio of founders held on to 40 percent when it went public). This means Zuckerberg will have an absolute say over election of directors, any sales of assets, and all mergers and acquisitions.

The world got a taste of this one-man-show mentality in April, when Facebook bought Instagram for $1 billion—a deal worked out privately between Zuckerberg and Instagram CEO Kevin Systrom without the input of the company board or investors.

From the company's start, Zuckerberg made strategic decisions about equity, employees, and the structure of the company. And when former Napster founder Sean Parker became president of Facebook in 2004, he helped Zuckerberg gain two seats on the company's board.

In November 2009, Facebook's board of directors voted to establish a dual-class stock structure, moving the existing shareholders stock from Class A to Class B shares, which carry 10 times the voting power. Dual stock-structure doesn't necessarily give Zuckerberg final say in every decision, but his votes carry so much weight that it makes him an incredibly powerful player in the company—even apart from his status as founder and CEO.

Navigating Obstacles Ahead

For current Facebook employees, especially those who joined the company early on, the IPO means newfound liquidity. This has several implications for the company. Beyond trips around the world and expensive European cars, Facebook managament faces a potential attrition from current employees who want to strike out on their to launch their own ventures. And by trading in stock for cash, several employees will have the runway to make that decision.

"I think it's always a risk when you have a liquidity event," said one former Facebook employee, speaking on the condition of anonimity. "Facebook mainly hired entrepreneurs in the early days, and so a lot of those entrepreneurs are going to be starting their own companies in the next 12 months."

The road ahead for Zuckerberg and Facebook will be filled with hurdles

No longer a start-up, the company will need to ease into life as a large, publicly traded company that answers to shareholders and board members—not just Zuckerberg. The challenge, it seems, will be to retain the same hacker culture the company was founded with—and thrived on—while maintaining the scale and growth investors will expect.

"At Facebook, the issue is to continue to grow and provide vision for company and have deep sense of meritocracy," says Brad Silverberg, a former Microsoft executive and founder partner of Ignition, a Washington-based venture capital firm. "Where things break down is in companies where they get bigger they have a 'have-and-have-not mentality.' The role of politics interferes and then you get some larger issues—and you get the best people leaving."

The Making of Start-up History

Facebook launched in 2004, as The Facebook. As the famous start-up tale goes: Zuckerberg and a few friends ran the invite- and student-only social network from his Harvard dorm room. It quickly expanded to other Ivy League schools. By the end of 2005, Zuckerberg had taken in former Napster founder Sean Parker as the company's first president, and also raised $13 million in funding from Accel Partners.

Along the way, Zuckerberg fought highly-public legal battles. In late 2004, Harvard students Cameron and Tyler Winklevoss, who had hired Zuckerberg to build their social network, ConnectU, filed a lawsuit claiming TheFacebook was their idea. Around the same time, Zuckerberg’s co-founder Eduardo Saverin also sued over equity dilution. (By 2009, both cases settled: No details on the Winklevoss case, but Saverin walked away with five percent equity in Face book.)

After opening up the service beyond college students in 2005, the company experienced a period of rapid growth. By 2007, the sevice took in new members at a 250,000-per-day rate. In 2009, at 200 million users, Facebook usurped MySpace as the world's largest social network.

In a 2009 interview, the typically tight-lipped Zuckerberg gave some telling insight into his company's future:

I think that one of the most important trends over the next 10 or 20 years is how the world opens up. Will it be done in such a way that people have complete control of their information, or will it be done in a way where they don't and that information is just out there? Facebook is really invested in making sure that it's the former one, where people can always control what their identity is and what information of theirs is being shared with different people, and I just think that matters a lot. I think that's one of the key questions for our generation.

Since the company filed to go public in February, Zuckerberg has been legally required to remain quiet to press and investors. But now, things have changed. Zuckerberg will be accountable to shareholders, to his board, and to employees in a public arena he has yet to face. In the coming months, the public will get a chance to witness how Zuckerberg handles being the 28-year-old CEO of the world's most important technology start-up.



Categories: Business News

Do-It-Yourself Public Relations

Fri, 05/18/2012 - 06:40

Hiring a top PR firm is often out of the question for start-ups. Here are five tips for how to handle your own public relations.

For most journalists, taking a meeting with a vacuum salesman would be right up there with getting their teeth pulled. But when we worked as reporters and James Dyson came to town, we always took the meeting.

Dyson—the founder of the eponymous appliance company that's best known for it's see-through vacuums and quirky commercials—isn't just a brilliant inventor, he's the perfect pitchman for his company. But it wasn't his fabulous British accent or those memorable ads that got him the coverage in our magazine. In fact, at the time, his ad campaign hadn't crossed our radar yet and his company was relatively unknown in the United States.

What was it that set Dyson apart from the chorus of PR pitches we'd hear on a regular basis? He was passionate, animated, and honest. He built his company from scratch and was able to share all of the personal stories (like failing 5,000+ times in his quest to perfect his vacuum cleaner) that go along with being an entrepreneur. And it was that ability to tell real and interesting anecdotes that made us want to write about him.

While Dyson always made it look easy, getting media attention is far from simple. You've heard this before, but it's still true: the best way to get coverage inside a glossy magazine or on a national news show is to get to know someone on the inside. And that's really tough if you're running a company outside of New York City or any major metropolitan area. And that's where a large PR firm comes in handy—they make a living developing contacts in the media world.

Unfortunately, if you're an entrepreneur running a start-up (and are not yet as successful as Dyson!), you probably won't be able to afford a top PR firm. So until you reach that size, here are five tips for how to get your story told.

1. Authenticity is key.

The silver lining to the sad fact that you can't afford to hire a fancy PR firm is that, like Dyson, you are the most authentic spokesperson for your business. You are the biggest champion of your brand and no one knows your company better than you do. Such authenticity is impossible to buy. Even the best (and most expensive) PR folks can't fake it. And journalists love to hear the real story-how did you dream up the company, how did you get funded, where did the name come from? The flip side is that journalists often hate to hear your story from PR folks. So feel confident that you are the right person to be leading your PR efforts.

2. Do your homework.

You know your customer better than anyone else, so figure out where he or she spends their free time. Are they on fashion blogs, glued to CNBC, or watching the Today Show? Once you figure that out, develop a list of your media targets (magazines, TV shows, blogs, etc.). Make a long list because this process isn't easy! Once you have that list, you'll need to dive deeper and try to find the individuals at each outlet who cover your industry. Be sure to read their articles, follow their tweets, or watch their show regularly, so you know their beat or their interests well.

3. Track down contact information.

This will most likely be your toughest challenge. The benefit of a big PR firm is their hefty Rolodex and their relationships with journalists. But don't despair-thanks to social media, it's easier than ever to find someone's contact information. Check their company's web site first. If there's no clear contact information on their corporate site, move on to Facebook, LinkedIn and Twitter. See if you can find a direct email on Facebook. You can even try to get their attention by tweeting at them about your company. Often calling the main office number and being friendly to the operator can yield the best results about who covers what you are pitching and how to reach them. Finally, we often check helpareporter.com. Journalists post detailed queries for sources and anyone who signs up can email a pitch if they think they're right for a certain story.

4. Fill their niche.

Once you have contact information for the journalists you want to reach or once you get a meeting, be sure to have a story to offer that will fit the content of the publication. Journalists need to constantly fill the pages of their magazine or the segments on their show. When we pitched O Magazine, we knew they did a regular story on women who switched careers. It was the perfect page for us since we'd left Fortune Magazine to create Altruette.com, our philanthropic line of charms. And eventually they profiled us in that section. Make their job easier by tailoring your pitch and you'll improve your odds of getting your story told.

5. Don't take silence as a rejection—but definitely take the hint.

No response? Keep trying. You're message probably isn't getting to the right person or he or she is simply too busy. As journalists we found the most effective PR people used the "pleasant pest" approach. They checked in often and stayed on our radar, but never got annoying.

Getting any press coverage can take a long time. But if you're willing to be persistent—and patient—DIY PR can truly pay off.



Categories: Business News

Inspire People to Follow: Practice Humility

Thu, 05/17/2012 - 16:15

Humble leaders are in charge, yet open to asking for help. They're human, but respected.

Leaders who value humility are the ones other people want to follow.

This was a lesson I observed while listening to Denes Kemény, president and head coach of the Hungarian national water polo team, speak at a recent leadership conference in Budapest. Under Kemény's leadership, the national team has won three Olympic gold medals. Water polo, as I learned, is Hungary's claim to sports dominance and that makes Kemény a national icon, the equivalent of Duke basketball coach, Mike Krzyzewski.

While Hungary is now a democracy and embraces free market economics, vestiges of autocracy remain prevalent in many organizations. The person at the top is the chief decision-maker; distributive decision-making is not the norm. And in this regard, Hungary is not unique. Such top down leadership is standard practice in most governmental organizations both abroad and here in the United States.

So when a leader who as revered as Kemény speaks, as he did, of the leader's need to be humble, listeners take notice. He talked movingly about his appointment as a manager of the team, but said he was not the team's leader until he had proven that he was worthy of being trusted and followed. Humility is integral to the development of that earned trust.

Humility, as I have said many times, is not something taught in business schools but it may be one of the most powerful attributes a leader can utilize. But leaders who do not readily accept it may not always be to blame.

What is important to understand is that very often leaders fear humility. I find this is especially true in autocracies where a leader is expected to "know it all and do it all." A leader who is not in total command of facts as well as the levers of power may be viewed as one not worthy of respect. So leaders who act with excessive bravado, even when in over their heads, are doing what is expected of them.

Sadly they view humility as a sign of weakness. They fail to understand that the humble leader is one who can open the door to improved levels of followership. Humility is integral to "Level 5" leadership, a term that Jim Collins uses in his seminal book, Good to Great, to describe those leaders who not only guide but inspire their organizations to achieve superior results.

Keep in mind, a humble leader is fully in charge. She doesn't back down from challenges or fear adversity. She is the one to whom others defer when tough decisions must be made. She is respected. What distinguishes her is perhaps a sense of openness. She is candid, and self-aware. That is, she knows what she can do, and what she can't. Humble leaders surround themselves with people who are encouraged to speak up, especially when they have alternative points of view. Humble leaders are so self-assured that they are willing to seek help when necessary as well as to step up to big challenges that arise.

When a leader expresses humility it opens the door for greater levels of understanding and productivity. "Do you wish to rise?" asked St. Augustine. "Begin by descending. You plan a tower that will pierce the clouds? Lay first the foundation of humility."

Humble leaders are those that others not only want to follow but enjoy following because of strong leadership as well as strong humanity.



Categories: Business News

How To Become An Online Personality

Thu, 05/17/2012 - 15:22

Cultivate more business by becoming the online face of your company. Tips from Shira Lazar, co-founder of WhatsTrending.com, and Scott Gerber, founder of the Young Entrepreneur Council.



Categories: Business News

Told You So! Early Facebook Doubters Eat Their Words

Thu, 05/17/2012 - 14:25

Who knew what Facebook would become when Mark Zuckerberg launched it in 2004? Not these guys.

Hindsight is 20/20. And sometimes, it's just plain funny.

With Facebook's blockbuster IPO upon us, let's take a look back through the company's eight-year history at some of the people and companies who were doubters, haters, and nay-sayers.

Sure, in 2004, no one really expected the then-22-year-old Mark Zuckerberg's student-only social networking site to become a multi-billion dollar company with hundreds of millions of users. Or that that fledgeling start-up would someday grow to make a public stock offering bigger than that of Google.

But in the age of the Internet, it's so easy to say: "Told you so."

Check out some of the worst offenders.

1. Saying Facebook is So Last Year

"For many in the dotcom world, 2007 was dominated by one story: the rise of Facebook. The success of the social networking service has increased optimism about the internet industry. After all, if Microsoft is prepared to buy a 1.6% share for $240m (£121m), there is evidence that good ideas can be worth a lot of money. It is no surprise then that investors are looking for the next big thing--and these are some of the favourites." —The Guardian, 2007


2. Predicting Facebook Will Become Stagnant

"The context of Facebook is 'social networking.' It's all the rage right now--the novelty of connecting or reconnecting, of building your network, of watching the torrent of trivia flow to and from your network of peeps. But ultimately we as people--at least most of us-aren't social networking hobbyists....While it is likely that Facebook will find a viable and scalable business model somewhere within the monthly engagement of 200 million people, its future is anything but certain." —Jim Banister, SpectrumDNA CEO and entrepreneurship professor at UCLA, 2009


3. Listing the Top-10 Reasons Facebook Sucks

"Facebook is a fad. Yes, a FAD!!! You couldn't give a single legitimate argument to prove otherwise (and don't try to feed me that crap line about social networking being around long enough to no longer be a fad… Facebook, a single company, doesn't equate to 'social networking'). People who waste their time chasing fads (especially in marketing) always get burned, wasting more time than they can justify in the long run." —SocialRealist.com, 2007


4. Saying Facebook Has Bland Ambition, and Lackluster Growth Numbers

"Facebook can't afford to screw up. Facebook's U.S. user base grew 56 percent to 22.5 million in April from 14.4 million during the year-ago period, according to Nielsen Online. That was down from a blistering 98 percent growth a year earlier." —Forbes, 2008

5. Predicting Facebook Wouldn't Be Worth $2 Billion

"Ross Levinsohn, president of Fox Interactive Media, told an investors conference in New York yesterday, 'It's a great site and I know the guys there well. We're certainly not paying $2 billion for Facebook.'" —MarketWatch2006




Categories: Business News

Email Doesn't Have to Suck

Thu, 05/17/2012 - 13:33

There's a better way to manage your inbox--let SaneBox do most of the work for you.

Email is a pain. There are simply too many messages to handle—and I'm not even talking about spam from marketers (I use a separate address to collect those emails). The headache is the increasing number of legitimate business messages—it's a humongous time-suck that only seems to be getting worse.

Two years ago I answered nearly every message. A year ago I downgraded to at least trying to read them all. Last winter I started scanning the sender subject fields concentrating on the ones coming from people I knew or looked like they might contain information I needed. And lately, I've been considering closing my account and starting over with a private address reserved for only work colleagues and select sources.

Until, that is, I tried SaneBox.

It's like Gmail's Priority Inbox feature in that it looks at your messages and prior history engaging with those senders and decides which emails you're likely to deem most important.

When you turn on the Priority Inbox feature in Gmail, Google separates your email into three categories: Important and unread, Starred, and Everything Else; all the mail is still in your inbox, but the important messages are up top.

SaneBox is a bit different in that it removes less important messages from your inbox completely, moving them to an @SaneLater folder that you can peruse whenever you want. If SaneBox puts an important message into that folder you can move it to your inbox and it remembers the action so the next time you receive a message from that person, it will go to your inbox.

Priority Inbox is trainable in this way, as well; the more you move stuff around, the better it gets at categorization. But I prefer SaneBox.

SaneBox vs. Gmail's Priority Inbox

SaneBox gives you a custom dashboard including a timeline that graphs how many important and less important emails you get every day. My current average, according to SaneBox, is 81 a day. If I took a minute to read, digest, and respond to each one of them, that's nearly an hour and a half a day going through email. If you figure there's at least 250 work days in a year, I'm spending 375 hours annually on email. That's not acceptable.

In addition to the @SaneLater folder that stores non-essential messages, you can also enable folders such as @SaneNews for newsletters and @SaneBlackHole for those messages you want to send straight to your Trash. (Ha! Finally I'm getting revenge on a certain five-letter-titled fitness magazine that has not let me unsubscribe to its newsletters for two full years!)

Automated nagging!

And it also has a nifty feature that lets you CC or BCC a message to @SaneBox.com to remind you if someone doesn't respond.

So let's say you need an answer from your boss about a project and you need it no later than two days from now. In the CC field just include the address 2days@SaneBox.com and in two days SaneBox will put the message back in the top of your inbox if she never replied to it. This way you remember to bug her again.

SaneBox also creates an @SaneRemindMe folder that lets you keep track of all the messages to which you still need replies. Use oneweek@SaneBox.com, June5@SaneBox.com or 5minutes@SaneBox.com; it doesn't matter, SaneBox will figure out the time frame you need.

The service is $5 a month and works with email clients such as Microsoft Outlook, Apple Mail, iPhone, and Android and as well most email services like Microsoft Exchange, Yahoo, AOL, and Gmail. The only service it doesn't currently support is Hotmail.



Categories: Business News

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Thu, 05/17/2012 - 13:33
Categories: Business News

Tie Compensation to Firm-Wide Returns: 6 Steps

Thu, 05/17/2012 - 12:45

Pay bonuses based on your company's overall financial success, and get your employees pulling in the same direction.

As a business owner or manager, one of the most difficult things to oversee is compensation and expectations at employee review time.

Initially we at User Insight did the same thing most companies do: a review after an employee's first six months, with annual reviews every year after that. Along with the review usually came some type of bump in an employees' base pay. But as a consultancy, we have the added complexity of ebbs and flows in the amount of work we are servicing. Inevitably, employee review times would be fall during the slowest periods of the year.

This caused several issues. As a business owner, it's difficult to increase overhead at times when business is slow. Even if you know you're just in the down part of a regular business cycle, it still makes your judgment more conservative. So, we found once a raise was in place, business would inevitably heat up, and an employee wouldn't experience a financial impact that was in sync with his harder-working performance. He didn't directly feel a reward for his work. In fact, I often heard groans when we signed a big round of new business.

To resolve these problems, we sought to tie a large portion of our employees' compensation to the performance of the company. Our operations manager at the time, Rachel Walsh, proposed how it would work.

Here's how:

1. We now conduct quarterly reviews.

2. As a company, we set a revenue target each quarter.

3. We take part of the money we had budgeted for raises and instead pay it out on a quarterly basis tied to company performance.

4. Each employee is given a goal that is a percentage (about 10%) of his or her salary.

5. As the company achieves the quarterly goal, each employee can achieve the equal percentage of his or her individual target.

6. We allow the achievable percentage to rotate above 100% if the company outperforms expectations for a given quarter.

Though these tactics were hard to adjust to at first–not having a known dollar "number" was frightening–we put the program in place. And it has been very successful. Conversations about compensation are now rare at User Insight, and only when an employee takes on a substantial new level of responsibility.

We've had times when bonuses have been paid out at more than 150% of expectation, but that worked because the company was doing well and employees had stepped up to deliver the work that was needed. Likewise, when the company is not mapping to goal, we save money on overhead.

The quarterly reviews have also been very helpful. The results allow us to look at the organization overall on a more frequent basis, determine what's going well, and discover ways to improve. We have a better understanding of how we're doing as a company. We regularly release the percentage of revenue target we have achieved, so employees know right away if we are ahead or behind.

The best thing that changed: Now everyone cheers when we sign a new deal.



Categories: Business News