Wednesday, December 17, 2008

We need a hard recession...

...Or so I the staff at Dillard's would have me believe.

Last week I went to buy some shoes. Once I stepped into the shoe department at Dillard's everything about me screamed 'buyer.' Not potential buyer. I was a sure bet, yet the three staff members kept discussing something much more important, ignoring me, hidden under an imaginary tent in plain sight.

People cringe every time I say that we need a good recession or even a depression. But if the current state of affairs has not made people value their jobs I don't know what will. I sent all the right signals, yet nobody came to assist me. Once I approached them they seemed slightly annoyed at my presence, yet one of the sales people finally handed me ONE shoe on my size. "I am sorry, I was born like this, with two feet," I blurted sarcastically as I extended my hand for the other shoe.


What will it take for us to proactively offer the two shoes in everything we do?

Is it a lack on the leadership side?

Perhaps poor benefits or wages?

A manager with poor people and communication skills?

Or, could it be, that employers still hiring the wrong people?

In my consulting business, one of the most common inquires I get from small business owners is about finding ways to fire (why beat around the bush with kinder verbiage?) poorly performing employees without facing a lawsuit. That is why I consider taking the time to hire above average employees & using all available resources to do so, is one of the biggest investments an employer should make. Thankfully, it is one of the highest yielding ones as well.

One would thing that what would follow such a diatribe would be key points to take into consideration prior to extending your handshake and employment offer to a potential candidate.

Well, not exactly. Not in this case. Why? The info is out there online, in magazines, in books, for everyone to benefit from it.

If they really wanted to.

I believe that if we only try to follow a guideline to hire the best we’d be taking a simplistic stance on this matter. I also believe we might be making the cardinal mistake of omission by forgetting to ask ourselves the following seven questions:

1. Do we really want to hire the best?

2. When looking at our current balance sheet, are we in the red or are we in the black profitable pool perhaps due to not paying top dollar to hire and keep the best?

3. Would the prodigious employee, seemingly experienced beyond his years, fit in with our current team or will his presence stir things up to the dreaded point of profitability losses?

4. Are our managers prepared to manage someone who may outshine them?

5. Are we conscioiusly or unconsciously trying to maintain the status quo by enjoying our marginally profitable mediocrity?

6. Are we planning ahead and taking the time needed to hire the best, or are we simply taking the stance of worrying about the urgent while ignoring the important?

7. Do we care more about the way we can market and present our team’s accomplishments, even if a thick makeup layer is needed to create the desired perception, or do we truly embrace hiring someone who might shake things up?

For some companies, in their own narrow, horse-blinder wearing view, it might not be as profitable to hire the best employees they possibly could.

In the end, it truly boils down to the fact we sometimes simply lack the cojones (pardon my Spanish) to surround ourselves by the best.

And the main reason is simply fear.

Thursday, October 23, 2008

Listening--Why Bother?

Below is an article that summarizes some key points to help us understand why listening is so important for success. Listening, communication, core values & principles are key aspects of HR Remedies's true North. That is why you will continue to see these as recurring themes in our blog.

The article was written by Bruce Wilson, executive coach & trainer and featured on the business listening site.

Practical Benefits of Better Listening for Leaders and Teams

Besides the deep implications of listening for leadership explored in decades of leadership models, listening has a number of direct, practical benefits for executives, managers, and team members.

Experienced management trainer Madelyn Burley-Allen identifies the following immediate tangible benefits from listening in the work place:

A Bond of Respect. Genuine listening generates respect, rapport and trust between talker and listener. In particular, employees like, and respond better to, supervisors who they think are listening to them.

Productivity. Productivity will be higher and problems solved more rapidly if people working to solve problems are encouraged to explain problems and start working though solutions out loud before "advice-giving" begins

Cooler Heads. Focusing on listening helps both the talker and the listener stay cool--and helps them cool down--when dealing with a crisis or discussing an emotionally charged topic.

Confidence. A supervisor who listens well will tend to have better self-esteem and self-image because they will get along better with others.

Accuracy. Better listening leads to better recollection of important facts and issues later on, resulting in fewer miscommunications and fewer mistakes. Thus, attention to good listening technique is even more important when complex issues are involved.

Parts of this section were inspired by the book Madelyn Burley-Allen, Listening, The Forgotten Skill. A Self-Teaching Guide (Fireside (Simon and Schuster), 1995 (Second Edition)) (>Amazon.com), with interpretation and analysis by Bruce Wilson.
Other motivational benefits of listening in the work place:
Innovative solutions to problems and new production methods are incubated by listening. When a leader tells someone exactly how to do something, or tells them to stop thinking and just keep doing it the way it's always been done, the organization misses out on any improvements that someone might discover by applying their fresh eyes and unique background to solving the problem.

From a different perspective, by not listening to the people who have to get the job done a leader not only chills innovation but also de-motivates by reducing feelings of responsibility, control, and importance.

Finally, it bears noting that Six Sigma, the latest system for total quality management, explicitly recognizes not only the value of the employee viewpoint, but the value to the employee of being listened to. Listening makes employees feel better about themselves and the problems they are working on seem more within their control.

Aren't some of us just too darn effective already to rely much on listening? Even General George S. Patton, the flamboyantly egocentric but highly effective U.S. Army tank commander during World War II, once said:

"Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity."

Cultivating the Work Environment. At IDEO, the company's leaders seek out the creative voice of team members and encourage team members to listen to one another in order to build an office environment that promotes cooperative teamwork and inspired problem-solving.- IDEO uses empathic listening to discover ways to make the work environment comfortable and attractive in order to recruit and retain top people.- IDEO treats the work environment as one of its product development projects. They brainstorm, prototype, and take feedback from team members to zero in on what works.- This approach to work environment encourages a flow of creativity and problem solving rather than focusing team members on barriers and obstacles in their path, such as "who's getting a window office."

Encourage Prototyping. Like brainstorming, prototyping is a way to solicit input from team members and develop empathy with customers. Prototyping is the process of creating and experiencing multiple early versions of your products of services, perhaps with alternative features, before your "final" version is ready for sale.

For example, when facing a one month deadline, try to come up with 5 different flavors of primitive outlines or prototypes after the first week and get feedback from team members about the prototypes to see what directions look most promising. Then prepare a final version. Don't begin by preparing a final version of "best guess" for completion and delivery on day 30, then get feedback after its too late.

Prototyping early and often breaks log jams, builds momentum, and allows course changes before smacking straight into obstacles.

Wednesday, October 1, 2008

Dealing with adversity as a true leader

The following is part of the Listening Leaders Newsletter sent by Dr. Lyman K. Steil & Dr. Richard K. Bommelje. If you'd like to subscribe or check past newsletters please visit their Listening Leaders site.


"Listening Leaders® regularly face the two-edged challenge of simultaneously attempting to accept and address adversity that enters every listener’s life. Adversity resides around every corner in a period filled with worldwide financial turmoil, a downturn in the world economy, excessive unemployment, real-estate foreclosures, health care challenges, international armed conflict, terrorist threats, energy shortages, excessive individual and national debt, and a contentious political season. Danger lurks everywhere, and Listening Leaders® must learn to accept and address adverse moments as they find them.

Obviously, different people deal with moments of adversity in different ways. However, all listeners will be wise to remember the wisdom of the Roman philosopher Lucretius who wrote, “Look at a man, in the midst of doubts and danger, and you will learn in his hour of adversity what he really is. It is then that true utterances are wrung from the recesses of his breast. The mask is torn off; the reality remains.” The ultimate test of listening may reside in how well one listens when the world around them seems to be falling apart in front of their eyes and ears. As we know, it is easy to listen when one is coasting downhill with the wind at our back and the sun in our face. The greater challenge is meeting the task of readiness for the moments when the road turns steep and rocky, and the wind and the rain are in our face. For it is in these moments when Listening Leaders® multitude of honed skills of listening truly pay-off.

Accepting and addressing all moments of adversity becomes easier if one listens with planned preparation, an understanding of relevant listening principles, and practiced listening skills. Preparation is critical as adverse events often appear when one may least expect them. Simply put, wise listeners plan and are prepared for the unexpected. They project negative possibilities and create strategies for rational processing and responding. In the process, Listening Leader’s® build solid foundations from which they can address adverse events.

In addition, the challenges of dealing with adversity require a deep understanding and application of Listening Leader® Principles. Assuming “Primary Responsibility” for effective listening becomes heightened in all adverse moments. Moreover, difficult times demand that listeners “Find and Align the Purpose” of every communication. One cannot run from, or ignore, any significant challenge of the moment.

Finally, listeners will find it easier to address any adverse issue if they develop their skills of effective listening through extensive Practice of “Identifying and Using Structures, and Identifying and Controlling Distractions and Emotions.” The adage, “perfect practice makes perfect” holds great significance in moments of adversity. Prepared listeners who have developed practiced skills will always trump the unprepared and un-practiced listeners. For as the Irish poet, W. B. Yeats observed, “We begin to live when we have conceived life as a tragedy.”

In times of adversity, Listening Leaders® will profit by accepting and adopting the simple observation of the Australian poet, Adam Lindsay Gordon, who wrote: “Life is mostly froth and bubble. Two things stand like stone, Kindness in another’s trouble, Courage in your own.”

So as we continue our quest of “Advancing listening leadership throughout the world,” we challenge all Listening Leaders® to accept and address adversity where you find it.

LISTENING LEADER® KNOWLEDGE NUGGET: Listening Leaders® accept and address adversity.

In the Winter of 1776-1777, Thomas Paine endured the travails of adversity in the dark hours of the Revolutionary War. Conditions were brutal, yet Paine established an invaluable and timely road map for all Listening Leaders® facing moments of adversity.

Paine wrote: “These are the times that try men’s souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands it now, deserves the love and thanks of man and woman. Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph. What we obtain too cheap, we esteem too lightly: it is dearness only that gives every thing its value.

I call not upon a few, but upon all: not on this state or that state, but on every state: up and help us; lay your shoulders to the wheel; better have too much force than too little, when so great an object is at stake.

Let it be told to the future world, that in the depth of winter, when nothing but hope and virtue could survive, that the city and the country, alarmed at one common danger, came forth to meet and repulse it. Say not that thousands are gone, turn out your tens of thousands; throw not the burden of the day upon Providence, but ‘show your faith by your works,’ that God may bless you.

It matters not where you live, or what rank of life you hold, the evil or the blessing will reach you all. The far and the near, the home counties and the back, the rich and the poor, will suffer or rejoice alike. The heart that feels not now, is dead: the blood of his children will curse his cowardice, who shrinks back at a time when a little might have saved the whole, and made them happy. I love the man who can smile in trouble that can gather strength from distress, and grow brave by reflection. ‘Tis the business of little minds to shrink; but he whose heart is firm, and whose conscience approves his conduct, will pursue his principles unto death.”

Two hundred and thirty-two years later, Thomas Paine’s invitation continues to hold value for present day distressed Listening Leaders® everywhere.

LISTENING LEADER TIP OF THE WEEK: Embrace moments of adversity.

GOLDEN CIRCLE LISTENING LEADERS QUOTES OF THE WEEK:

Adversity introduces a man to himself ~ Anonymous

It never rains but it pours ~ Proverb

Prosperity doth best discover vice: but adversity doth best discover virtue ~ Bacon

When sorrows come, the come not single spies, but in battalions ~ Shakespeare

We are all strong enough to bear the misfortunes of others ~ Duc de la Rochefoucauld

We are always in the forge or on the anvil ~ Henry Ward Beecher

The gem cannot be polished without friction, nor man perfected without trials ~ Chinese Proverb

Dealing with adversity as a true leader

The following is part of the Listening Leaders Newsletter sent by Dr. Lyman K. Steil & Dr. Richard K. Bommelje. If you'd like to subscribe or check past newsletters please visit their Listening Leaders site.


"Listening Leaders® regularly face the two-edged challenge of simultaneously attempting to accept and address adversity that enters every listener’s life. Adversity resides around every corner in a period filled with worldwide financial turmoil, a downturn in the world economy, excessive unemployment, real-estate foreclosures, health care challenges, international armed conflict, terrorist threats, energy shortages, excessive individual and national debt, and a contentious political season. Danger lurks everywhere, and Listening Leaders® must learn to accept and address adverse moments as they find them.

Obviously, different people deal with moments of adversity in different ways. However, all listeners will be wise to remember the wisdom of the Roman philosopher Lucretius who wrote, “Look at a man, in the midst of doubts and danger, and you will learn in his hour of adversity what he really is. It is then that true utterances are wrung from the recesses of his breast. The mask is torn off; the reality remains.” The ultimate test of listening may reside in how well one listens when the world around them seems to be falling apart in front of their eyes and ears. As we know, it is easy to listen when one is coasting downhill with the wind at our back and the sun in our face. The greater challenge is meeting the task of readiness for the moments when the road turns steep and rocky, and the wind and the rain are in our face. For it is in these moments when Listening Leaders® multitude of honed skills of listening truly pay-off.

Accepting and addressing all moments of adversity becomes easier if one listens with planned preparation, an understanding of relevant listening principles, and practiced listening skills. Preparation is critical as adverse events often appear when one may least expect them. Simply put, wise listeners plan and are prepared for the unexpected. They project negative possibilities and create strategies for rational processing and responding. In the process, Listening Leader’s® build solid foundations from which they can address adverse events.

In addition, the challenges of dealing with adversity require a deep understanding and application of Listening Leader® Principles. Assuming “Primary Responsibility” for effective listening becomes heightened in all adverse moments. Moreover, difficult times demand that listeners “Find and Align the Purpose” of every communication. One cannot run from, or ignore, any significant challenge of the moment.

Finally, listeners will find it easier to address any adverse issue if they develop their skills of effective listening through extensive Practice of “Identifying and Using Structures, and Identifying and Controlling Distractions and Emotions.” The adage, “perfect practice makes perfect” holds great significance in moments of adversity. Prepared listeners who have developed practiced skills will always trump the unprepared and un-practiced listeners. For as the Irish poet, W. B. Yeats observed, “We begin to live when we have conceived life as a tragedy.”

In times of adversity, Listening Leaders® will profit by accepting and adopting the simple observation of the Australian poet, Adam Lindsay Gordon, who wrote: “Life is mostly froth and bubble. Two things stand like stone, Kindness in another’s trouble, Courage in your own.”

So as we continue our quest of “Advancing listening leadership throughout the world,” we challenge all Listening Leaders® to accept and address adversity where you find it.

LISTENING LEADER® KNOWLEDGE NUGGET: Listening Leaders® accept and address adversity.

In the Winter of 1776-1777, Thomas Paine endured the travails of adversity in the dark hours of the Revolutionary War. Conditions were brutal, yet Paine established an invaluable and timely road map for all Listening Leaders® facing moments of adversity.

Paine wrote: “These are the times that try men’s souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands it now, deserves the love and thanks of man and woman. Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph. What we obtain too cheap, we esteem too lightly: it is dearness only that gives every thing its value.

I call not upon a few, but upon all: not on this state or that state, but on every state: up and help us; lay your shoulders to the wheel; better have too much force than too little, when so great an object is at stake.

Let it be told to the future world, that in the depth of winter, when nothing but hope and virtue could survive, that the city and the country, alarmed at one common danger, came forth to meet and repulse it. Say not that thousands are gone, turn out your tens of thousands; throw not the burden of the day upon Providence, but ‘show your faith by your works,’ that God may bless you.

It matters not where you live, or what rank of life you hold, the evil or the blessing will reach you all. The far and the near, the home counties and the back, the rich and the poor, will suffer or rejoice alike. The heart that feels not now, is dead: the blood of his children will curse his cowardice, who shrinks back at a time when a little might have saved the whole, and made them happy. I love the man who can smile in trouble that can gather strength from distress, and grow brave by reflection. ‘Tis the business of little minds to shrink; but he whose heart is firm, and whose conscience approves his conduct, will pursue his principles unto death.”

Two hundred and thirty-two years later, Thomas Paine’s invitation continues to hold value for present day distressed Listening Leaders® everywhere.

LISTENING LEADER TIP OF THE WEEK: Embrace moments of adversity.

GOLDEN CIRCLE LISTENING LEADERS QUOTES OF THE WEEK:

Adversity introduces a man to himself ~ Anonymous

It never rains but it pours ~ Proverb

Prosperity doth best discover vice: but adversity doth best discover virtue ~ Bacon

When sorrows come, the come not single spies, but in battalions ~ Shakespeare

We are all strong enough to bear the misfortunes of others ~ Duc de la Rochefoucauld

We are always in the forge or on the anvil ~ Henry Ward Beecher

The gem cannot be polished without friction, nor man perfected without trials ~ Chinese Proverb

Monday, August 18, 2008

Imagination & Creativity at Work

“Imagination is more important than knowledge. For knowledge is limited, whereas imagination embraces the entire world, stimulating progress, giving birth to evolution.” --- Albert Einstein

In his book, Benjamin Franklin, An American Life, Walter Isaacson reveals the mind of one of America’s most controversial figures. Ben Franklin is described as America’s best writer, inventor, media baron, scientist, diplomat, and business strategist. It is obvious to see throughout the book that Franklin had a great (sometimes wild) imagination. His response to problems and obstacles was not one of despair but of determination and hope for a solution.

Just as in Franklin’s day, we too face obstacles that threaten to stifle the progress of our businesses. Thankfully, most of what we encounter is not new to the modern world and most solutions exist for us to simply apply to the situation. Sadly, many businesses are crippled because of a lack of energy or imagination to apply even the simplest of fixes.

“The real source of wealth and capital in this new era is not material things.. it is the human mind, the human spirit, the human imagination, and our faith in the future.’ --- Steve Forbes

Some theorist believe that as time marches on, our culture becomes more complacent and content with modern comforts that we no longer have the hunger or drive to use our creativity muscles. Our imagination station becomes Jell-o and we settle for “it is what it is.”

In order to progress in business, we have to resort back to those juices that once flowed in the playground as kids. Like in the movie Big, with Tom Hanks, we need to ask the question “why?” and state “I don’t get it,” until we do get it.

“You can’t depend on your eyes when your imagination is out of focus.” --- Mark Twain

Tom Hanks could get away with the kid’s stuff because his character in the movie, Josh Baskin was a kid, just in an adult body. You have to be careful so that your spouse or co-workers don’t put you in a special padded cell. However, you can still be a kid within your imagination. It is there that your creative ideas are hiding and waiting to be released.

“The only limit to your impact is your imagination and commitment.” --- Anthony Robbins

Ben Franklin didn’t have any more advantages than me and you. In fact, we have more than he ever had. He lived to be 84 years old, which is rare for his time period. Many “experts” contribute his longevity to his constant use of his mind. (Plus he had to walk greater distances than we do!) Franklin was always questioning, always creating, and always wondering. We need to do the same.

“Live out of your imagination, not your history.” --- Stephen Covey

If you are stuck-in-a-rut today with business problems coming out the wazoo, then try this: Escape to a place where your imagination can go wild. If you need to get quiet, then go to a park or library. If you need excitement, go to a Chuck E. Cheese. Just get to where you don’t focus on the problems, but you allow your mind to imagine. Write on the sidewalk with chalk with your kids or roll in the lawn with the dog. Weird, I know, but it works. Your mind begins to think goofy things that lead to creative things, which lead to solutions. Imagine that!

“I paint objects as I think them, not as I see them.” --- Pablo Picasso

Imagination & Creativity at Work

“Imagination is more important than knowledge. For knowledge is limited, whereas imagination embraces the entire world, stimulating progress, giving birth to evolution.” --- Albert Einstein

In his book, Benjamin Franklin, An American Life, Walter Isaacson reveals the mind of one of America’s most controversial figures. Ben Franklin is described as America’s best writer, inventor, media baron, scientist, diplomat, and business strategist. It is obvious to see throughout the book that Franklin had a great (sometimes wild) imagination. His response to problems and obstacles was not one of despair but of determination and hope for a solution.

Just as in Franklin’s day, we too face obstacles that threaten to stifle the progress of our businesses. Thankfully, most of what we encounter is not new to the modern world and most solutions exist for us to simply apply to the situation. Sadly, many businesses are crippled because of a lack of energy or imagination to apply even the simplest of fixes.

“The real source of wealth and capital in this new era is not material things.. it is the human mind, the human spirit, the human imagination, and our faith in the future.’ --- Steve Forbes

Some theorist believe that as time marches on, our culture becomes more complacent and content with modern comforts that we no longer have the hunger or drive to use our creativity muscles. Our imagination station becomes Jell-o and we settle for “it is what it is.”

In order to progress in business, we have to resort back to those juices that once flowed in the playground as kids. Like in the movie Big, with Tom Hanks, we need to ask the question “why?” and state “I don’t get it,” until we do get it.

“You can’t depend on your eyes when your imagination is out of focus.” --- Mark Twain

Tom Hanks could get away with the kid’s stuff because his character in the movie, Josh Baskin was a kid, just in an adult body. You have to be careful so that your spouse or co-workers don’t put you in a special padded cell. However, you can still be a kid within your imagination. It is there that your creative ideas are hiding and waiting to be released.

“The only limit to your impact is your imagination and commitment.” --- Anthony Robbins

Ben Franklin didn’t have any more advantages than me and you. In fact, we have more than he ever had. He lived to be 84 years old, which is rare for his time period. Many “experts” contribute his longevity to his constant use of his mind. (Plus he had to walk greater distances than we do!) Franklin was always questioning, always creating, and always wondering. We need to do the same.

“Live out of your imagination, not your history.” --- Stephen Covey

If you are stuck-in-a-rut today with business problems coming out the wazoo, then try this: Escape to a place where your imagination can go wild. If you need to get quiet, then go to a park or library. If you need excitement, go to a Chuck E. Cheese. Just get to where you don’t focus on the problems, but you allow your mind to imagine. Write on the sidewalk with chalk with your kids or roll in the lawn with the dog. Weird, I know, but it works. Your mind begins to think goofy things that lead to creative things, which lead to solutions. Imagine that!

“I paint objects as I think them, not as I see them.” --- Pablo Picasso

Monday, July 28, 2008

What do your employees really want?

Article by Pam Pumarino, regular contributor to our blog. She holds degrees in business & psychology, and has an extensive background in Customer Service training.



For a while I worked at a Fortune500 HR call center where they did a big hoopla about motivating employees. One of their last attempts was their ‘Fall Challenge.’



Let me say that again, Fall Challenge. Yes, the name alone destined the festivities to the land of despair.



The rules where rather simple, do something right (aka do what you are being paid for at least some of the time) and you’ll get a ticket for a raffle at the end of the busy season.



Great idea, right? Not so fast. The bottom line was that attendance during busy periods did not increase. Morale did not increase. Productivity did not increase. Instead, resentment grew like rampant summer weeds, as good employees watched others--who did one thing right one time--walk away with big prizes.




Why didn’t it work? Well, employees were not asked what they wanted as a reward. Employees were not asked for input for establishing the guidelines. There was a lack of flexibility…one reward seldom fits all—for me it might be money, for you time off might be as good as gold. It created resentment amongst coworkers. It did not take into consideration people who missed work due to important circumstances (kid got chickenpox and husband got foot stuck in the toilet, dog ate shoes, lost both ears rendering self unable to listen to phone calls, etc.).



So what is the lesson learned? Don’t waste valuable time at a corporate table with other managers to figure out what banana you’ll throw your monkeys. Instead, talk with your people, treat them like people, and most importantly LISTEN to what they have to say, as well as what they are not saying. There is no other way for you to find out their wants, needs and motivational hooks. You’ll find that, often, the mere fact of having you truly listen to them might just be what they wanted all along.





LISTEN , LISTEN, LISTEN

Listening is the one activity you do more in life than any other activity except to breathe. How much time and energy do you exert in developing the communication skill that has been with you since birth. Self-leaders capitalize on the power of listening. They listen for what people say, what they don't say, and what they would like to say but don't know how to put into words. When is the last time that you were either involved in or observed a situation in which their was a cost due to a listening breakdown? Most people can identify several recent examples in their own life. The costs can be staggering. SELF-LEADERS LISTEN, LISTEN, LISTEN.



Excerpt from Dr. Bommelje’s Listening Leaders’ website.

What do your employees really want?

Article by Pam Pumarino, regular contributor to our blog. She holds degrees in business & psychology, and has an extensive background in Customer Service training.



For a while I worked at a Fortune500 HR call center where they did a big hoopla about motivating employees. One of their last attempts was their ‘Fall Challenge.’



Let me say that again, Fall Challenge. Yes, the name alone destined the festivities to the land of despair.



The rules where rather simple, do something right (aka do what you are being paid for at least some of the time) and you’ll get a ticket for a raffle at the end of the busy season.



Great idea, right? Not so fast. The bottom line was that attendance during busy periods did not increase. Morale did not increase. Productivity did not increase. Instead, resentment grew like rampant summer weeds, as good employees watched others--who did one thing right one time--walk away with big prizes.




Why didn’t it work? Well, employees were not asked what they wanted as a reward. Employees were not asked for input for establishing the guidelines. There was a lack of flexibility…one reward seldom fits all—for me it might be money, for you time off might be as good as gold. It created resentment amongst coworkers. It did not take into consideration people who missed work due to important circumstances (kid got chickenpox and husband got foot stuck in the toilet, dog ate shoes, lost both ears rendering self unable to listen to phone calls, etc.).



So what is the lesson learned? Don’t waste valuable time at a corporate table with other managers to figure out what banana you’ll throw your monkeys. Instead, talk with your people, treat them like people, and most importantly LISTEN to what they have to say, as well as what they are not saying. There is no other way for you to find out their wants, needs and motivational hooks. You’ll find that, often, the mere fact of having you truly listen to them might just be what they wanted all along.





LISTEN , LISTEN, LISTEN

Listening is the one activity you do more in life than any other activity except to breathe. How much time and energy do you exert in developing the communication skill that has been with you since birth. Self-leaders capitalize on the power of listening. They listen for what people say, what they don't say, and what they would like to say but don't know how to put into words. When is the last time that you were either involved in or observed a situation in which their was a cost due to a listening breakdown? Most people can identify several recent examples in their own life. The costs can be staggering. SELF-LEADERS LISTEN, LISTEN, LISTEN.



Excerpt from Dr. Bommelje’s Listening Leaders’ website.

Friday, July 18, 2008

Improvising Your Approach to Improvement

Improvising Your Approach to Improvement
by Dr. John C. Maxwell

Our well-being and happiness are tied to the notion that our lives can improve. We hope for a better future for our company, our kids, and ourselves. We dream of a tomorrow that's better and brighter than today.

Here are a few improvements many of us desire to see:


We hope to lose weight and improve our fitness
We hope to earn more money and improve our financial standing
We hope to argue less with our spouse and improve our marriage


Over the next year, if we knew our health would deteriorate, our economic situation would worsen, and our closest relationships would unravel, then we'd be depressed. In fact, even if we knew our lives would stay the same, most of us would feel unsatisfied. We're always looking to improve the quality of our lives - it's human nature.

Unfortunately, many of us never go beyond hoping for improvements to actually making them. In this lesson, I'd like to share some insights to help you improvise your approach to improvement.

Develop Habits
The secret of your success is determined by your daily agenda. Leaders who make successful improvements share a common denominator: they form habits of daily action that those who fail to improve never develop. As my friend Andy Stanley says, "Your direction determines your destination." The steps you make each day, for good or ill, eventually chart the path of your life.
Consider the analogy of saving for retirement. Financial advisers counsel us to invest for retirement early in our careers and consistently throughout life. If we do, we can quit working at 65 with a sizeable nest egg. However, if we neglect funding our 401(k) each month, then we end up with nothing. We may still "hope" to win the lottery and secure our financial future, but we've lost the ability to control our fate.

Befriend Discipline
We live in the ultimate quick-fix culture. Everyone wants to be thin, but few people eat healthy and exercise. Everyone wants financial stability, but many refuse to be bothered by a budget. Rather than trouble ourselves with discipline, we opt for diet fads or speculate in the stock market. When we don't see long-term improvements, we discard one fad in favor of another.
In life, there are two kinds of pain: the pain of self-discipline and the pain of regret. The pain of self-discipline involves sacrifice, sweat, and delayed gratification. Thankfully, the reward of improvement softens the pain of self-discipline and makes it worthwhile. The pain of regret begins as a missed opportunity and ends up as squandered talent and an unfulfilled life. Once the pain of regret sets in, there's nothing you can do other than wonder, "What if?"

Admit Mistakes
When trying to improve, we not only risk failure, we guarantee it. The good news is that mistakes generally teach us far more than success. There's no sense pretending we're perfect. Even the best of the best have moments of weakness. That's why it's important to be honest when we fall short, learn from the mistake, and move forward with the knowledge gained.

Measure Progress
You cannot manage what you cannot measure. Identify the areas in which improvement is essential to your success and find a way to track your progress. Keeping score holds you accountable and gives you a clear indicator of whether or not you're actually improving.

Change Continually
Continual change is essential for improvement. One of the great paradoxes of success is that the skills and qualities that get you to the top are seldom the ones that keep you there. The quest to improve forces us to abandon assumptions, embrace innovation, and seek new relationships. If we're complacent for too long, we'll fall behind the learning curve. Once this happens, it's a steep, uphill climb to get back to the top.

The desire for improvement has a degree of discontent in it. Personal growth requires apparently contradictory mindsets: humility to realize you have room to grow but also confidence that improvement is possible.

SUMMARY
Tips for Attaining Improvement:
1. Develop Habits
2. Befriend Discipline
3. Admit Mistakes
4. Measure Progress

5. Change Continually

This article is used by permission from Dr. John C. Maxwell's free monthly e-newsletter, "Leadership Wired," available here.

Improvising Your Approach to Improvement

Improvising Your Approach to Improvement
by Dr. John C. Maxwell

Our well-being and happiness are tied to the notion that our lives can improve. We hope for a better future for our company, our kids, and ourselves. We dream of a tomorrow that's better and brighter than today.

Here are a few improvements many of us desire to see:


We hope to lose weight and improve our fitness
We hope to earn more money and improve our financial standing
We hope to argue less with our spouse and improve our marriage


Over the next year, if we knew our health would deteriorate, our economic situation would worsen, and our closest relationships would unravel, then we'd be depressed. In fact, even if we knew our lives would stay the same, most of us would feel unsatisfied. We're always looking to improve the quality of our lives - it's human nature.

Unfortunately, many of us never go beyond hoping for improvements to actually making them. In this lesson, I'd like to share some insights to help you improvise your approach to improvement.

Develop Habits
The secret of your success is determined by your daily agenda. Leaders who make successful improvements share a common denominator: they form habits of daily action that those who fail to improve never develop. As my friend Andy Stanley says, "Your direction determines your destination." The steps you make each day, for good or ill, eventually chart the path of your life.
Consider the analogy of saving for retirement. Financial advisers counsel us to invest for retirement early in our careers and consistently throughout life. If we do, we can quit working at 65 with a sizeable nest egg. However, if we neglect funding our 401(k) each month, then we end up with nothing. We may still "hope" to win the lottery and secure our financial future, but we've lost the ability to control our fate.

Befriend Discipline
We live in the ultimate quick-fix culture. Everyone wants to be thin, but few people eat healthy and exercise. Everyone wants financial stability, but many refuse to be bothered by a budget. Rather than trouble ourselves with discipline, we opt for diet fads or speculate in the stock market. When we don't see long-term improvements, we discard one fad in favor of another.
In life, there are two kinds of pain: the pain of self-discipline and the pain of regret. The pain of self-discipline involves sacrifice, sweat, and delayed gratification. Thankfully, the reward of improvement softens the pain of self-discipline and makes it worthwhile. The pain of regret begins as a missed opportunity and ends up as squandered talent and an unfulfilled life. Once the pain of regret sets in, there's nothing you can do other than wonder, "What if?"

Admit Mistakes
When trying to improve, we not only risk failure, we guarantee it. The good news is that mistakes generally teach us far more than success. There's no sense pretending we're perfect. Even the best of the best have moments of weakness. That's why it's important to be honest when we fall short, learn from the mistake, and move forward with the knowledge gained.

Measure Progress
You cannot manage what you cannot measure. Identify the areas in which improvement is essential to your success and find a way to track your progress. Keeping score holds you accountable and gives you a clear indicator of whether or not you're actually improving.

Change Continually
Continual change is essential for improvement. One of the great paradoxes of success is that the skills and qualities that get you to the top are seldom the ones that keep you there. The quest to improve forces us to abandon assumptions, embrace innovation, and seek new relationships. If we're complacent for too long, we'll fall behind the learning curve. Once this happens, it's a steep, uphill climb to get back to the top.

The desire for improvement has a degree of discontent in it. Personal growth requires apparently contradictory mindsets: humility to realize you have room to grow but also confidence that improvement is possible.

SUMMARY
Tips for Attaining Improvement:
1. Develop Habits
2. Befriend Discipline
3. Admit Mistakes
4. Measure Progress

5. Change Continually

This article is used by permission from Dr. John C. Maxwell's free monthly e-newsletter, "Leadership Wired," available here.

The Strangest Secret

"The Strangest Secret"
In 1957, Earl Nightingale, speaker, author andco founder of the Nightingale-Conant Corporation,recorded his classic motivational record "TheStrangest Secret." "The Strangest Secret" soldover one million copies and made history in therecording industry by being honored as the firstGold Record for the spoken word. Nightingale,known as the "dean of personal development,"concluded that life's "strangest secret" is that webecome what we think about all day long.

Your belief system, like your computer, doesn'tjudge or even question what you input; it merelyaccepts your thoughts as the truth, the whole truthand nothing but the truth. Think thoughts of defeator failure and you're bound to feel discouraged.Continuous thoughts of worry, anxiety and fear areunhealthy and often manifest in the body as stress,panic attacks and depression.

At the core of Earl's message, he reveals the incrediblepower of positive self-talk, belief and expectation. Whatyou vividly imagine and hold in your subconscious mindbegins to out picture as your reality. Your belief systemnot only defines your reality, but it also shapes yourcharacter and determines your potential.

The Placebo EffectThe ability of the mind to cure a disease even whenthe medicine is known to be worthless is known as the"placebo effect." This occurs in medical trials wheredoctors give patients sugar pills, but tell them they willcure their illness. Often it does, even though the pillscontain nothing of medical benefit. The only thing ofvalue in these medical trials is the patient's own beliefthat the sugar pills will cure them. It's the power of thepatient's belief and expectation alone that produces theimprovement in his or her health.

I recently read a remarkable story about a group ofcancer patients who thought they were being treated withchemotherapy, but were actually given a placebo. Beforetheir treatment began, the patients were informed aboutthe complications associated with undergoing chemotherapytreatment, such as fatigue and loss of hair. Amazingly,based on nothing more than their belief and expectation,nearly one third of the patients who were given the placeboreported feeling fatigued and actually experienced hair loss!

The Power of Affirmation and Positive Self-talkIf you had access to a powerful tool that would enhance yourself-esteem and allow you to reach your full potential wouldyou use it?
A good way to create positive self-talk is through affirmations.An affirmation is a positive statement that represents yourdesired condition or outcome. Interesting enough, yoursubconscious mind doesn't know the difference between areal experience and a vividly imagined "mental" experience.

When he was a struggling young comedian, late at night JimCarrey would drive into the hills overlooking Hollywood andyell at the top of his lungs "I will earn ten million dollars ayear by 1995." When 1995 finally arrived, Jim was the starof the movie "Ace Ventura: When Nature Calls", for whichhe was paid twenty million dollars!

World-class athletes understand the value of affirmation andrecognize the impact of their mental preparation on theirphysical performance. They use the power of positiveaffirmation to reduce anxiety and increase their expectationof achievement. To be of maximum benefit an affirmationmust be simple, encouraging and stated in the present tense.By repeating an affirmation over and over again it becomesembedded in the subconscious mind.
To be effective your affirmation must be stated aloud...

1. In a positive manner with the focus on what you want. Whenyou catch yourself saying or thinking something negative aboutyourself, counteract the negative self-talk with a positiveaffirmation. Start your affirmation with words like "I am..." or"I already have..."
Example:"I close sales with little or no resistance."
"I take good care of my customers and they show theirappreciation by referring their friends to me."

2. In the present tense. Your subconscious mind works in thepresent tense, so avoid words such as can, will, should or could.
Example:"I love doing my work and I am richly rewarded creatively andfinancially."

3. With strong emotion and conviction.

4. Repeatedly. I suggest you read your affirmations eachmorning upon awakening and again each night just beforefalling asleep. Close your eyes and picture the end result.Feel the emotions associated with the affirmation.

Here are some of my favorite affirmations:
"Every day in every way I'm getting better and better!"
"Everything comes to me easily and effortlessly!"
"I love and appreciate myself just as I am!"
"I love doing my work and I am richly rewarded creativelyand financially!"
"I now have enough time, energy, wisdom and money toaccomplish all my desires!"
"Infinite riches are now freely flowing into my life!"
"I am relaxed and centered!"
"I feel happy and blissful!"

Do affirmations really work and can they be used to propel aperson to achieve greatness? As a young boy growing up inLouisville, Kentucky, 12-year-old Cassius Marcellus Clay dreamedof someday becoming the heavyweight boxing champion of theworld. When working out in the gym, Clay would continuouslyaffirm to all within earshot that he was indeed the greatest boxerof all time! While many felt he was brash and boastful, few peopleactually took this 89-pound youngster seriously. Mohammad Aliused his affirmation to become the undisputed heavyweight boxingchampion of the world and arguably one of the most popular andrecognized sports figures of all times!

"Watch your thoughts, for they become words. Choose yourwords, for they become actions. Understand your actions, for theybecome habits. Study your habits, for they will become yourcharacter. Develop your character, for it becomes your destiny." - Anonymous
You show me a salesperson with high self-esteem, a positiveattitude and a healthy work ethic and I'll be able to predict hisor her success in advance... I guarantee it.

John Boe presents a wide variety of motivational andsales-oriented keynotes and seminar programs for salesmeetings and conventions. John is a nationally recognizedsales trainer and business motivational speaker with animpeccable track record in the meeting industry. To haveJohn speak at your next event, visit orcall 877 725-3750.

The Strangest Secret

"The Strangest Secret"
In 1957, Earl Nightingale, speaker, author andco founder of the Nightingale-Conant Corporation,recorded his classic motivational record "TheStrangest Secret." "The Strangest Secret" soldover one million copies and made history in therecording industry by being honored as the firstGold Record for the spoken word. Nightingale,known as the "dean of personal development,"concluded that life's "strangest secret" is that webecome what we think about all day long.

Your belief system, like your computer, doesn'tjudge or even question what you input; it merelyaccepts your thoughts as the truth, the whole truthand nothing but the truth. Think thoughts of defeator failure and you're bound to feel discouraged.Continuous thoughts of worry, anxiety and fear areunhealthy and often manifest in the body as stress,panic attacks and depression.

At the core of Earl's message, he reveals the incrediblepower of positive self-talk, belief and expectation. Whatyou vividly imagine and hold in your subconscious mindbegins to out picture as your reality. Your belief systemnot only defines your reality, but it also shapes yourcharacter and determines your potential.

The Placebo EffectThe ability of the mind to cure a disease even whenthe medicine is known to be worthless is known as the"placebo effect." This occurs in medical trials wheredoctors give patients sugar pills, but tell them they willcure their illness. Often it does, even though the pillscontain nothing of medical benefit. The only thing ofvalue in these medical trials is the patient's own beliefthat the sugar pills will cure them. It's the power of thepatient's belief and expectation alone that produces theimprovement in his or her health.

I recently read a remarkable story about a group ofcancer patients who thought they were being treated withchemotherapy, but were actually given a placebo. Beforetheir treatment began, the patients were informed aboutthe complications associated with undergoing chemotherapytreatment, such as fatigue and loss of hair. Amazingly,based on nothing more than their belief and expectation,nearly one third of the patients who were given the placeboreported feeling fatigued and actually experienced hair loss!

The Power of Affirmation and Positive Self-talkIf you had access to a powerful tool that would enhance yourself-esteem and allow you to reach your full potential wouldyou use it?
A good way to create positive self-talk is through affirmations.An affirmation is a positive statement that represents yourdesired condition or outcome. Interesting enough, yoursubconscious mind doesn't know the difference between areal experience and a vividly imagined "mental" experience.

When he was a struggling young comedian, late at night JimCarrey would drive into the hills overlooking Hollywood andyell at the top of his lungs "I will earn ten million dollars ayear by 1995." When 1995 finally arrived, Jim was the starof the movie "Ace Ventura: When Nature Calls", for whichhe was paid twenty million dollars!

World-class athletes understand the value of affirmation andrecognize the impact of their mental preparation on theirphysical performance. They use the power of positiveaffirmation to reduce anxiety and increase their expectationof achievement. To be of maximum benefit an affirmationmust be simple, encouraging and stated in the present tense.By repeating an affirmation over and over again it becomesembedded in the subconscious mind.
To be effective your affirmation must be stated aloud...

1. In a positive manner with the focus on what you want. Whenyou catch yourself saying or thinking something negative aboutyourself, counteract the negative self-talk with a positiveaffirmation. Start your affirmation with words like "I am..." or"I already have..."
Example:"I close sales with little or no resistance."
"I take good care of my customers and they show theirappreciation by referring their friends to me."

2. In the present tense. Your subconscious mind works in thepresent tense, so avoid words such as can, will, should or could.
Example:"I love doing my work and I am richly rewarded creatively andfinancially."

3. With strong emotion and conviction.

4. Repeatedly. I suggest you read your affirmations eachmorning upon awakening and again each night just beforefalling asleep. Close your eyes and picture the end result.Feel the emotions associated with the affirmation.

Here are some of my favorite affirmations:
"Every day in every way I'm getting better and better!"
"Everything comes to me easily and effortlessly!"
"I love and appreciate myself just as I am!"
"I love doing my work and I am richly rewarded creativelyand financially!"
"I now have enough time, energy, wisdom and money toaccomplish all my desires!"
"Infinite riches are now freely flowing into my life!"
"I am relaxed and centered!"
"I feel happy and blissful!"

Do affirmations really work and can they be used to propel aperson to achieve greatness? As a young boy growing up inLouisville, Kentucky, 12-year-old Cassius Marcellus Clay dreamedof someday becoming the heavyweight boxing champion of theworld. When working out in the gym, Clay would continuouslyaffirm to all within earshot that he was indeed the greatest boxerof all time! While many felt he was brash and boastful, few peopleactually took this 89-pound youngster seriously. Mohammad Aliused his affirmation to become the undisputed heavyweight boxingchampion of the world and arguably one of the most popular andrecognized sports figures of all times!

"Watch your thoughts, for they become words. Choose yourwords, for they become actions. Understand your actions, for theybecome habits. Study your habits, for they will become yourcharacter. Develop your character, for it becomes your destiny." - Anonymous
You show me a salesperson with high self-esteem, a positiveattitude and a healthy work ethic and I'll be able to predict hisor her success in advance... I guarantee it.

John Boe presents a wide variety of motivational andsales-oriented keynotes and seminar programs for salesmeetings and conventions. John is a nationally recognizedsales trainer and business motivational speaker with animpeccable track record in the meeting industry. To haveJohn speak at your next event, visit orcall 877 725-3750.

Saturday, May 10, 2008

Independent Contractor vs. Employee

I've been asked a lot to explain the difference between an Independent Contractor and an Employee. Here is some information that quickly gives an overview of the differences:


Independent Contractors vs. Employees

Are your workers independent contractors or employees? Always a confusing topic which is probably due to the fact that the IRS sets the rules. Nonetheless, the answer can have a profound impact on how much tax you pay as a small business owner.

Knowing whether your workers are or are not employees will affect the amount of taxes you must withhold from their pay. It will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them. Employers who misclassify workers as independent contractors can end up with substantial tax bills as well as penalties for failing to pay employment taxes and failing to file required forms information.

Generally, whether a worker is an employee or an independent contractor depends upon how much control you have as a business owner. Basically, if you have the right to control or direct not only what is to be done but also how it is to be done then your workers are most likely employees. If you can direct or control only the result of the work done, and not the means and methods of accomplishing the result, then your workers are probably independent contractors.

Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be -
An independent contractor
A common-law employee
A statutory employee
A statutory nonemployee

In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

In general, someone who performs services for you is your employee if you can control what will be done and how it will be done.
The courts have considered many facts in deciding whether a worker is an independent contractor or an employee based on these three categories:


1.) Behavioral Control – direct or control how the work is done. Facts that show whether the business has a right to direct and control. These include:
Instructions - an employee is generally told:
When, where, and how to work
What tools or equipment to use
What workers to hire or to assist with the work
Where to purchase supplies and services
What work must be performed by a specified individual
What order or sequence to follow
Training – an employee may be trained to perform services in a particular manner.


2.) Financial Control – direct or control the financial/business aspects of the worker’s job. Facts that show whether the business has a right to control the business aspects of the worker’s job include:


· The extent to which the worker has unreimbursed expenses
· The extent of the worker’s investment
· The extent to which the worker makes services available to the relevant market
· How the business pays the worker
· The extent to which the worker can realize a profit or loss


3.) Type of Relationship – relates to how the workers and the business owner perceive their relationship. Facts that show the type of relationship include:


Written contracts describing the relationship the parties intended to create
Whether the worker is provided with employee-type benefits
The permanency of the relationship
How integral the services are to the principal activity
For a worker who is considered your employee, you are responsible for:
Withholding Federal income tax,
Withholding and paying the employer social security and Medicare tax,
Paying Federal unemployment tax (FUTA)
Issuing Form W-2, Wage and Tax Statement, annually,
Reporting wages on Form 941, Employer’s Quarterly Federal Tax Return.
Example of an Independent Contractor:

Vera Elm, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. She is to receive $1,280 every 2 weeks for the next 10 weeks. This is not considered payment by the hour. Even if she works more or less than 400 hours to complete the work, Vera Elm will receive $6,400. She also performs additional electrical installations under contracts with other companies, which she obtained through advertisements. Vera is an independent contractor.


How should I report payments made to independent contractors?


You may be required to file information returns to report certain types of payments made to independent contractors during the year. For example, you must file Form 1099-MISC, Miscellaneous Income, to report payments of $600 or more to persons not treated as employees (e.g. independent contractors) for services performed for your trade or business.


Who is a Common-Law Employee (Employee)?

Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.


To determine whether an individual is an employee or independent contractor under the common law, the relationship of the worker and the business must be examined. All evidence of control and independence must be considered. In an employee-independent contractor determination, all information that provides evidence of the degree of control and degree of independence must be considered.


Facts that provide evidence of the degree of control and independence fall into three categories: behavioral control, financial control, and the type of relationship of the parties.

Example of an employee:

Example: Donna Lee is a salesperson employed on a full-time basis by Bob Blue, an auto dealer. She works 6 days a week, and is on duty in Bob's showroom on certain assigned days and times. She appraises trade-ins, but her appraisals are subject to the sales manager's approval. Lists of prospective customers belong to the dealer. She has to develop leads and report results to the sales manager. Because of her experience, she requires only minimal assistance in closing and financing sales and in other phases of her work. She is paid a commission and is eligible for prizes and bonuses offered by Bob. Bob also pays the cost of health insurance and group-term life insurance for Donna. Donna is an employee of Bob Blue.


Statutory Employees

If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute ( statutory employees ) for certain employment tax purposes if they fall within any one of the following four categories and meet the three conditions described under Social security and Medicare taxes , below.
A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.


A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.
An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done.


A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer s business operation. The work performed for you must be the salesperson s principal business activity. Refer to the Salesperson section located in Publication 15-A, Employer s Supplemental Tax Guide for additional information.


Statutory Nonemployees

There are two categories of statutory nonemployees: direct sellers and licensed real estate agents. They are treated as self-employed for all Federal tax purposes, including income and employment taxes, if:


Substantially all payments for their services as direct sellers or real estate agents are directly related to sales or other output, rather than to the number of hours worked and
Their services are performed under a written contract providing that they will not be treated as employees for Federal tax purposes.







Independent Contractor vs. Employee

I've been asked a lot to explain the difference between an Independent Contractor and an Employee. Here is some information that quickly gives an overview of the differences:


Independent Contractors vs. Employees

Are your workers independent contractors or employees? Always a confusing topic which is probably due to the fact that the IRS sets the rules. Nonetheless, the answer can have a profound impact on how much tax you pay as a small business owner.

Knowing whether your workers are or are not employees will affect the amount of taxes you must withhold from their pay. It will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them. Employers who misclassify workers as independent contractors can end up with substantial tax bills as well as penalties for failing to pay employment taxes and failing to file required forms information.

Generally, whether a worker is an employee or an independent contractor depends upon how much control you have as a business owner. Basically, if you have the right to control or direct not only what is to be done but also how it is to be done then your workers are most likely employees. If you can direct or control only the result of the work done, and not the means and methods of accomplishing the result, then your workers are probably independent contractors.

Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be -
An independent contractor
A common-law employee
A statutory employee
A statutory nonemployee

In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

In general, someone who performs services for you is your employee if you can control what will be done and how it will be done.
The courts have considered many facts in deciding whether a worker is an independent contractor or an employee based on these three categories:


1.) Behavioral Control – direct or control how the work is done. Facts that show whether the business has a right to direct and control. These include:
Instructions - an employee is generally told:
When, where, and how to work
What tools or equipment to use
What workers to hire or to assist with the work
Where to purchase supplies and services
What work must be performed by a specified individual
What order or sequence to follow
Training – an employee may be trained to perform services in a particular manner.


2.) Financial Control – direct or control the financial/business aspects of the worker’s job. Facts that show whether the business has a right to control the business aspects of the worker’s job include:


· The extent to which the worker has unreimbursed expenses
· The extent of the worker’s investment
· The extent to which the worker makes services available to the relevant market
· How the business pays the worker
· The extent to which the worker can realize a profit or loss


3.) Type of Relationship – relates to how the workers and the business owner perceive their relationship. Facts that show the type of relationship include:


Written contracts describing the relationship the parties intended to create
Whether the worker is provided with employee-type benefits
The permanency of the relationship
How integral the services are to the principal activity
For a worker who is considered your employee, you are responsible for:
Withholding Federal income tax,
Withholding and paying the employer social security and Medicare tax,
Paying Federal unemployment tax (FUTA)
Issuing Form W-2, Wage and Tax Statement, annually,
Reporting wages on Form 941, Employer’s Quarterly Federal Tax Return.
Example of an Independent Contractor:

Vera Elm, an electrician, submitted a job estimate to a housing complex for electrical work at $16 per hour for 400 hours. She is to receive $1,280 every 2 weeks for the next 10 weeks. This is not considered payment by the hour. Even if she works more or less than 400 hours to complete the work, Vera Elm will receive $6,400. She also performs additional electrical installations under contracts with other companies, which she obtained through advertisements. Vera is an independent contractor.


How should I report payments made to independent contractors?


You may be required to file information returns to report certain types of payments made to independent contractors during the year. For example, you must file Form 1099-MISC, Miscellaneous Income, to report payments of $600 or more to persons not treated as employees (e.g. independent contractors) for services performed for your trade or business.


Who is a Common-Law Employee (Employee)?

Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.


To determine whether an individual is an employee or independent contractor under the common law, the relationship of the worker and the business must be examined. All evidence of control and independence must be considered. In an employee-independent contractor determination, all information that provides evidence of the degree of control and degree of independence must be considered.


Facts that provide evidence of the degree of control and independence fall into three categories: behavioral control, financial control, and the type of relationship of the parties.

Example of an employee:

Example: Donna Lee is a salesperson employed on a full-time basis by Bob Blue, an auto dealer. She works 6 days a week, and is on duty in Bob's showroom on certain assigned days and times. She appraises trade-ins, but her appraisals are subject to the sales manager's approval. Lists of prospective customers belong to the dealer. She has to develop leads and report results to the sales manager. Because of her experience, she requires only minimal assistance in closing and financing sales and in other phases of her work. She is paid a commission and is eligible for prizes and bonuses offered by Bob. Bob also pays the cost of health insurance and group-term life insurance for Donna. Donna is an employee of Bob Blue.


Statutory Employees

If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute ( statutory employees ) for certain employment tax purposes if they fall within any one of the following four categories and meet the three conditions described under Social security and Medicare taxes , below.
A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.


A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.
An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done.


A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer s business operation. The work performed for you must be the salesperson s principal business activity. Refer to the Salesperson section located in Publication 15-A, Employer s Supplemental Tax Guide for additional information.


Statutory Nonemployees

There are two categories of statutory nonemployees: direct sellers and licensed real estate agents. They are treated as self-employed for all Federal tax purposes, including income and employment taxes, if:


Substantially all payments for their services as direct sellers or real estate agents are directly related to sales or other output, rather than to the number of hours worked and
Their services are performed under a written contract providing that they will not be treated as employees for Federal tax purposes.







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