Archive for December, 2011
Is a Roth IRA Good or Bad?
Like a knife, a Roth IRA is neither inherently good nor inherently bad. In the hands of a thug, a knife can be a deadly weapon. In the hands of a skilled surgeon, a knife is a life-saving device!
Roth IRAs are a special type of individual retirement account (IRA). When “traditional” IRAs were originally made available, it was on a tax-deductible basis. You could contribute up to $3,000 and if you were not participating in another retirement plan or did not make too much money, you could deduct the $3,000 on your tax return.
For 2010 and 2011, the amounts are $5,000 for people under 50 years old and $6,000 if you are 50 or older. If you are a participant in another retirement plan, you cannot contribute to a normal IRA if you make more than $109,000 in AGI (married filing jointly), or $66,000 (single). In a Roth IRA, you cannot contribute if you make more than $177,000 in AGI (MFJ) or $120,000 (single).
Under a Roth IRA, the difference is that these contributions are NOT tax deductible. The tradeoff is that if you meet certain conditions, such as holding the account for at least five years, then the increase in value of the account (interest, dividends, and capital gains) are ALSO not taxable!
Generally, the younger you are, the better it is to start putting into a Roth. The number of years of tax-free earnings will far outweigh the benefit of a traditional IRA. Conversely, the older you are, the less advantageous the few years of tax-free earnings will be. Your income tax bracket also comes into play here. If you are going from a high income tax bracket in your earning years and into a low one in your retirement years, perhaps the deferral is not as attractive.
In 2010, there was a big frenzy to convert traditional IRAs to Roth IRAs. The government was putting this forth as a taxing measure to offset some spending. If you converted to a Roth IRA, be sure to speak with a tax advisor to get the best tax treatment on the conversion. Read the rest of this entry »
Developing Hiring Standards For Better Hires
In my former life as a field manager and executive I would find myself working with plant locations that needed help. Maybe they were missing their sales and growth goals. Maybe they were missing their profit and quality objectives. Some were missing everything.
No two situations were exactly the same. But they all had two things in common… poor employee relationships and poor hiring and staffing decisions. When these combined, the locations were always characterized by high employee turnover. I learned very quickly that if we solved the hiring problems and improved employee relations, we nearly always cut employee turnover in half.
Cutting employee turnover has an immediate impact on operating costs. Expensive employee replacement costs are drastically reduced. Costly mistakes made by new employees nearly disappear. Lowering employee turnover allows managers to spend more time working with customers and coaching employees instead of recruiting and interviewing. Quality improves which reduces service costs and makes for very happy customers. What I didn’t know at the time, because of our accounting methods, was the impact that lower employee turnover was having on healthcare benefit costs and other operating problems related to health issues – like presenteeism and absenteeism.
Leaders have the responsibility to develop peak performing, “winning” teams. Whether we are running a small business or a department with a few employees – or a large operation with hundreds – the responsibility of developing people and improving performance is the same. Great leaders make good hiring and staffing decisions. They consistently select the right people for the right job.
Who we hire has more to do with the ultimate outcome of performance than anything else we do as leaders. More than anything else, our hiring practices and personal hiring skills impact our team’s success…or failure.
A poor hiring process increases employee turnover, which is death to any initiative to improve productivity. Bad hires don’t last – they leave or are asked to leave. Sometimes they leave when they realize they don’t like the job, the company, or the people. In these cases, the new hire “fires” the company. They’re asked to leave when they can’t learn, won’t learn, commit some violation, or demonstrate some character flaw. Then the company fires them. Under weak management non-performers linger on to become “deadwood”. In any case, they were miscast, and set up for failure from the beginning. Whose fault was that??
In most cases the company. The company may not have developed a hiring process – or the people using the process didn’t do their job. In the final analysis, a recent hire is out of work and going through the trauma and stress of job change, because of your mistake! Read the rest of this entry »
Are You Promoting Your Employees for All the Wrong Reasons? The 411 on Employee Promotions
Supporting and encouraging career development of your staff undoubtedly goes a long way towards increasing employee satisfaction and engagement. And in most cases, it can certainly make you look good!
But is your decision to move forward with employee promotions flawed? Here are some reasons why you don’t want to promote you employees:
As a knee jerk reaction to your employee announcing that they just got another job offer:
Think long and hard about throwing more money or a new title at employees who may be on their way out the door. You certainly want to keep your best employees, but think about it… Offering a staff member more money or a new title after they’ve told you that they have another job offer not only looks desperate; it reflects poorly on your ability to be proactive about growing and developing staff who are working hard, (with no plans on leaving anytime soon). This isn’t lost on your employees who will feel like the only way to develop in one’s career or to get a raise is to say that you have another job offer. It can feel like subtle blackmail.
Because your employee wants to make more money:
Yes, there are managers who will inflate an employees’ job description just to guarantee that the employee will receive a bump in salary to reflect the “new” responsibilities. This tactic can backfire big time and affect the morale of your other staff when they learn that their colleague got an increase and is essentially doing the same job. (Many employees do compare salaries and job duties as much as we’d like to think that this information is kept confidential).
Your employee has been in the same position since forever.
This on the surface actually seems to be a very good reason to give someone a promotion, but more thought needs to go into moving forward.
Working in the same position when the tasks and responsibilities of the job have not changed over time is not a valid reason to promote your employee. Read the rest of this entry »