Sunday, April 12, 2015

Fairness in the Workplace

I usually enjoy links that Influencers on LinkedIn that I follow, like Richard Branson, post, but today I came across an atrocious piece from Virgin that gave me a visceral reaction, thus inspiring me to write this blog instead of going back to sleep on a Sunday morning.  The article was on the topic of fairness in the workplace, and was part of a larger series about the future of work.  I was intrigued by the title because I have been a victim of unfair treatment in the workplace, in my and many others' opinions.  What's more, I have since found refuge in a company culture that is almost completely the opposite.  But as I read the article, while there were some interesting ideas in there, like a tab at the local pub compliments of the company, all I saw was that perks and benefits were being equated to fairness.  Listen, perks are nice, benefits are great, but they do not level unfair playing fields.  Fairness is about being paid for the value you bring, being promoted based on your merits and accomplishments, equal opportunities and clear career path options.  

In fact, some of the perks and benefits listed have the potential to only widen the fairness gap instead of solving for it: the tab at the local pub may be appealing to someone who likes to relax with a drink, but what about people who don't drink?  What about recovering alcoholics?  What about people who are trying to lose weight by not drinking so much?  I'm not going to say that this alone is BAD, that drinking is BAD, but I am going to say that it sends the wrong message.  I think people who want to drink will drink, and let them do that on their own dime (myself included).  Sure, I paid for my employees' drinks when I ran a brewery tour company, but drinking was part of the job, in that case.  In general, I think companies should promote things that are good for you: free or subsidized salad bars and gym memberships, or gyms at the companies' facilities, discounts on 5k and marathon races, financial support for Weight Watchers or AA or other support groups, medical benefits, etc.  Most companies have some sort of medical benefits and short-term and long-term disability, so I think it makes sense from a long-term financial view to support things that make your employees healthier, avoiding higher medical expenses down the road.  That's a win-win.  Paid time off for volunteer work is another great one, good for your employees and for the community.  

The article talks about how fairness is hard to quantify, and I agree.  It also points to it boiling down to people saying they love their jobs or not, and that also makes good intuitive sense, as long as there are no but's after the phrase, "I love my job."  But I think we can also do better.  I know some companies try to measure workload by inventory dollars or SKU counts in supply chain, but even that can lead to unfair results; certain SKUs may be worth more to the company or be more difficult to manage for various reasons (quality, supplier relations, lead times, etc).  Some companies use more direct surveys to ask their people if they feel they are paid fairly and treated fairly in terms of promotions, etc.  I used to be a little cynical about this: does anyone ever feel that they are paid "enough" for the crap that they endure for the company?  But now I'm a little more optimistic, I think it is possible to compensate employees in such a way that they are happy in their jobs, and that is fair.  At least one company I worked at had a measure called "regrettable attrition," and the fact only that this measure existed bothered me, especially because it was my understanding that they never fought to keep those who would fall into this measure, they just accepted it as a consequence of an unfair work environment.  And sure enough, when I left, nobody asked me what it would take to keep me.  I certainly believe that I was another tick in that regrettable attrition measure.  

What was so utterly shocking to me when I finally told the world I was leaving my previous company was the responses I got.  Normally, people say things like, "Congrats on the new role," and "Best of luck in your future endeavors."  Not for me.  The people who knew me well, the people who worked with me, said things like, "I'm happy you're getting out," and, "Congrats on escaping," and, "You deserve better."  It gave me the eerie feeling that I had put up with the BS for far too long, that I should have thrown in the towel long before I did.  And they were probably right.  I had let the negative feedback get to me, my ego wanting to prove them wrong, and so I had worked harder and done better only to continue to be put down over and over again.  Perhaps I shouldn't have wasted my time.  There is no proving them wrong in an unfair environment: where gender has more to do with promotability than accomplishments, intelligence, and capabilities, where leadership is judged by how much of an asshole you are instead of your ability to influence and complete collaborative initiatives, where fingers are pointed in all directions but nobody claims responsibility.  

I think one of the best philosophies on fairness that I've heard came from Michael Dell, and I heard this a long time ago from someone else so I have no idea if its valid anymore (or if it ever was).  The idea was simple but shocking: when someone does a good job, promote them and cut his or her responsibilities.  It's a jarring idea because usually promotions come with more responsibility, but the idea is that you are freeing high-potential people to fulfill their potential, instead of burdening them with more work because they've done well with less.  Another great idea comes from Google, and no its not the free food, but the ability to spend some work time on whatever projects the employees want.  I think its something like 70% of their time is spent on projects, and 30% of their time they spend how they choose, related to work of course, but their own ideas instead of assignments from higher-ups.  This speaks volumes in contradiction to the micro-managing and slave-driving we see at other companies.  

One thing that has always bothered me, just a slight itch and not something I would lead a massive war campaign against, but still bothered by, is the idea of maternity leave.  Some companies are making it more fair by allowing paternity leave as well, and I think that's a good first step.  But this means that people can leave their jobs for several months, and come back with no consequences.  So if you have a lot of kids, you will keep leaving your job and coming back, yet if you choose to never have kids, then you're always working except for your allotted vacation time.  Now I get the reasoning behind it, you aren't going to put a newborn into daycare on day 3 of its life.  And I wouldn't want people to lose their jobs because they decided to have a family.  And I get that maternity leave isn't the same as vacation, that motherhood is challenging and is a different kind of work.  But still, it is time away from one's career that is only granted by having a baby.  All I am saying is that not being a parent shouldn't work against you.  Some companies have sabbaticals during which its employees aren't allowed to work, and are encouraged to travel or relax or do whatever.  I would make the argument that, in the spirit of fairness, sabbaticals should be granted in lieu of maternity or paternity leave every so many years to non-parents.  You can choose to have a baby and go on leave, but if, in three years say, you haven't happened to have a baby, we'll give you a sabbatical, maybe only 5 or 6 weeks, but something to get you out of the office for a while, to reinvigorate you.  If we can get that, I'd say that would be a nice fair equalization.  My next step would be to get sabbatical showers in lieu of wedding and baby showers, but that's for another day.  

There was a great reward system at one of my previous companies: if you did something extraordinary, i.e. beyond your job requirements and something that has no impact to your performance and accomplishments, someone could nominate you for an award.  They called them "Bravo Awards," and there were bronze, silver and gold levels.  They came with monetary rewards, so it wasn't just a silly piece of paper.  I think it's important to make it easy for people to reward one another, and encourage them to do so, because it gives helpful people a reason to be helpful.  Otherwise, when you're just tasked with helping all the time, with no reward, no acknowledgment or appreciation, it just becomes a burden to be helpful, and become less inclined to help others.  Some of the smartest people I know resisted being helpful to others, because if you help them once, you are burdened to help them all the time.  The people that receive this kind of help I refer to as leeches.  They always need help, and once they find someone smart, they will task them with every problem they have.  Imagine if you had three such leeches, people who always interrupt your work for whatever issue they think is a catastrophe on their desk, and come to you weekly or daily for help, even though you are not an expert in their problem or have already taught them how to fix it before.  How productive are you going to be if you constantly have to help everyone else you work with to do their basic jobs?  At a minimum, the reward system will at least prevent smart people from hiding and resisting being helpful, because it at least incentivizes them to be helpful (if they get recognized on a regular basis).  But I would take it a step further: find the people who are being rewarded a lot, and ask them who is a burden.  Maybe those burdens need more training and development, so you can focus in on your weak links and build them up; or maybe they are just weak links and need to be let go.  Either way, use the reward system to root out the leeches, they are not serving your company well if they cannot do their jobs without constant help, and reward the most helpful people by freeing them of their leeches so they are not discouraged from helping others.  And for the people who are getting rewarded a lot, give them opportunities to do less tactical work and do some teaching and development for the group, or free them to create the tools and processes that make the job better as a whole.  Find out what they want to do, and give them the time and space to do it.  

Promotions are a sore subject for me.  To an extent, I think promotions should be more team-based, almost voting-based.  A manager two or three levels up may not be aware of all the nuances of the team dynamics, but the team does.  So if a new leader of a group is needed, shouldn't the group at least have a say in who is to be their new manager?  If you were to put it to a vote, and the entire team wants a specific team member to take over, and the hiring manager was going to take a person from another department and put him or her in charge, wouldn't you second guess that decision?  Certainly, I think the hiring manager should have the last say, veto power if you will, but getting the team involved in the decision can dissolve some of the political nuances.  After all, people talk a big game can do so in interviews or with colleagues they rarely interact with, but if you work with someone every day, you know what they are really like.  It also could encourage the team to be better team players; if they want a promotion in the future, they better be good to their colleagues or they won't get their votes.  The same goes for outside the team, too; if you want to become the head of another team, show those people you would be a good addition to their team well in advance of the job opening.  I think it would change the whole dynamic in the work place if you knew that your future promotions depended on people voting you in, not just an interview with the hiring manager.  Now, to the point of the hiring manager, I got burned because apparently mostly-positive reviews with one less-than-perfect score on them prevented the hiring manager from promoting me, as an HR rule supposedly.  I don't know how much of that was politicizing or whether there was a completely different truth behind those stories, but nevertheless, the bottom line for me is that a hiring manager should be able to promote or hire whomever he or she chooses.  If the selection goes against what the entire team wants, maybe some justification is needed, but hiring managers need to have the final say.  

I think there's still more work to do on fairness beyond these ideas.  It's a tough concept to address, no doubt, especially because people measure fairness differently.  One person may see hours worked as the measure: if I'm working 55 hours per week and you're only working 40, then I must have an unfair amount of work to do.  Other people may see it as productivity: if I can handle 5 product lines and you can only handle 1, then I have an unfair amount of work.  Even physical labor is challenging: if Josh can move 50 units an hour and Melissa can only move 35, then Josh is doing an unfair amount of work.  I think the only way around these judgments is clear policy by company.  I am whole-heartedly against the institution that you have to work x amount of hours.  If I feel satisfied with the work I've done for the day, and its only been 7 hours, or 35 hours for the week, why must I stay and make up things to do or play games in a secretive way?  I've known people who monitor the parking lot, waiting for their boss's car to leave, and then they leave five minutes after.  I tried this a few times, myself, and then realized that my boss drives really slow and goes the same way home, so I would catch up to him and could get "caught" unless I always drove like molasses.  But if a company states clear goals and objectives, and allows individuals to work whatever hours necessary to achieve those, then there is no question as to what is fair.  I have done x, y, and z, and even though it is only 2:30 pm, I am leaving.  Conversely, if the company wants to measure hours, then say so.  We work 45 hours per week, and no more, in order to ensure our employees are productive at work.  Studies show that working 55 to 70 hours per week actually decreases your productivity per hour, so this has merit.  If the policy is set by number of hours, than more productive employees will have to find projects to work on, take on more responsibility or maybe slow their work down and do better quality work, but whatever it is, that is simply the expectation.  If you don't like a company's fairness policy, find another one.  That, I think, is the future of work in regards to fairness.  

Saturday, April 4, 2015

The Three Things Everyone Should Learn: Numero Dos


I never wanted to be a programmer, and I MOST DEFINITELY never wanted to be a financial accountant.  Borrrrr-ing!  But this blog series isn't about things that I hate, it's about things that I think everyone should learn.  And guess what, finance is numero dos!  No matter what you do to make money, or if all you do is spend it, there are a few monumental aspects that invariably penetrate your lives: (1) budgets and cash flow, (2) interest rates, (3) and (4) taxes.  Because these things have a way of creeping into our lives, I think it is imperative that everyone understand how they work, instead of turning away from them because they are not well understood.  In fact, the less you understand these things, the more you should study them.  It is scary to me that some people just ignore them when they don't understand.  That's like laying in bed when a serial murderer walks into your room, and because you don't understand her motives, you just roll over and go to sleep.  Maybe I've been watching too many episodes of The Following lately, but finance can be devastating if you don't address it. 

Unfortunately, it seems that personal finance classes are not required to graduate high school or college, unless you happen to be a business major in college.  What this means is that we are not often presented with requirements to really learn and understand finance.  My first finance class wasn't until I was doing an MBA at the age of 23, and if I hadn't known better prior, I could have gotten myself into a bad situation financially well before that.  Finance should not be one of many topics in school that can be selected for study; it should be a core requirement to become an adult.  I do not understand how people don't understand interest rates.  And to be honest, I'm probably not the right person to actually put on a full introductory course to personal finance.  But I will do my best to provide some tips and tools so that there are at least some actionable things coming out of this post. 
First topic is budgeting and cash flow.  If you want to get control of your finances, or save up for a specific goal, or need to pay off some debt, a great place to start is  This tool is free, and especially useful if you pay your bills and make most of your purchases through online or with credit or debit cards.  In other words, if you use cash for a majority of your transactions, will not really help much, but if you do not use cash for most of your transactions, it will.  To get started, you create an account and connect your bank accounts, credit card accounts, loan accounts, etc., to Mint and it will gather your transactions and put them into buckets.  This will give you a starting point to understanding how much money you spend on, say, food, for a month, and where all your other money is going.  It will show you a net picture of if you're spending more than you're bringing in.  Once you get a feel for where your money is going and how much you need to cut out, you can create a budget for yourself right on Mint.  Once your budgets are all set up, Mint will track your monthly activities and show you how you're tracking against your budget.  Mint can even alert you when a large bill is coming up, or when you've spent over your budgeted allowance in a certain area.  I also use it to track expenses that I will report on my taxes at the end of the year; more on that to come later. 
The one thing I think lacks is a cash flow feature.  I do this on my own in an Excel worksheet, and I've created a dummy worksheet for you to download and use.  The basis is that my money is better employed not sitting in my checking account; either paying off debt or going towards investments that will return something greater than the puny .00001% interest rate earned in most checking accounts.  Thus, I do not keep a large balance in my checking account, so I need to manage the daily in's and out's in order to not overdraft the day before I get paid, for example.  This is called cash flow.  Cash flow can burn you even if on a net level, you make more money than you spend, so it's important to watch the daily transactions. 

You probably hear a lot of advice about how it is important to save.  But, what is hidden in that advice is that simply saving is not actually helpful - you want to put money into an account that will provide interest.  Most checking accounts, as I mentioned earlier, have puny little interest rates.  It is the equivalent to stuffing money into your mattress these days.  They are not meant to be the vehicle for saving, they are meant to help you pay bills and receive your paycheck.  There's this big bad wold called inflation, so if you were to save money in your checking account, not only are you not getting any real interest off of that savings, you are actually losing money.  Over the last ten years, the US inflation rate has bounced around between 0 and 4%, and averaged right around 1.9%.  The rule of thumb that I learned is to expect about 3% inflation.  What this means is that if you have $100 today, and inflation stays around 3% for 10 years, that $100 will only be worth about $73.74 10 years from now.  If your back pays you .01% interest, then it will be worth only 8 cents more. 

To combat inflation, then, you need an account that will at least match inflation, and preferably beat it at least slightly in order for your money to grow.  So if you're assuming inflation of 3%, look for an account that can get you 3.5% or 4% to save in.  This is the interest rate you are looking for.  At 3.5% interest rate with 3% inflation, $100 will be worth $105.11 in 10 years.  There's no major growth, but at least you don't lose money.  At 4% interest with 3% inflation, $100 will be worth $110.46 in 10 years.  The trick to saving is not to put a small bundle in and wait for it to grow, though.  The trick to saving is to put a little in every period, like every month.  So let's say you put $100 in every month for 10 years, at 4% interest with 3% inflation.  You will have put in an actual amount of $12,000 over the course of those 10 years, but you will end up with the equivalent of $12,725.50, a gain of about $725.50, even in the face of 3% inflation.  Take that, big bad wolf! 

Now that you know you can't usually trust your checking account to combat inflation, and that you need to combat inflation, you need to know where to find these accounts that can beat inflation with their interest rates.  In college, I was referred to a Money Market Mutual Fund, and while I am not in a position to make any official financial recommendations, it may be a good place to start.  The MMMF I participated in had around 3.75% interest, and I paid into it every month for a few years.  When I graduated college, I had enough money for a small down payment on my house and to cover the fees of buying the house.  I saw it as a great way to "pay yourself first", put money towards a future goal, and it was as simple as writing a check to get the money back out when I was ready to buy my house.  But again, I am not in a position to make an official recommendation, so all I can officially say is that it is probably worth it to sit down with a financial adviser and discuss options for saving. 

While saving money is the upside to interest rates, we also pay interest whenever we carry loans or debt.  If you have a credit card and don't pay the full balance every month, you are spending money on interest.  So if you are trying to get out of debt, you need to pay very close attention to those interest rates, and pay down or get out of the highest ones first.  Some credit cards can have astronomically high rates, in the 20 - 30% range, while others my be single digits.  If you can move your high interest debt to a lower interest debt account, even if it costs a little bit of money to transfer it, that may make sense in the long run in order to not continue paying a high interest rate. 

Some debt may be at such a low interest rate, it is not financially worth it to pay it down right away.  For example, PayPal credit and appliance stores can often do 0% interest rates for 6 months on large purchases.  So if you have your savings account at 3.5% or 4%, you are better off putting money into your savings account until the 6 months is up on the PayPal credit, then you can pay it off with your accumulated savings before the interest rate gets jacked up.  This takes close monitoring to manage, but if you stay on top of it, these 0% interest rates are a great way to finance something even if you have the money to buy it outright, because you can earn with the money that you would have otherwise spent. 

When considering financing for a car, many dealers try to sell you on the "low monthly payment", drawing your attention away from the total price of the car, the interest rate, and the length of the loan.  It is nice to know that you can afford the low monthly payment, but it is CRUCIAL you understand the deal you are getting, in order to compare it to other offers.  Always do your homework before signing a financing deal: get offers from your bank, any credit unions you have access to, as well as the dealerships you are considering working with.  A quick google search can get you to various calculators that can help you compare different offers.  I like this one:  Remember that the loan amount is the difference between the price of the vehicle and your down payment; the larger your down payment, the less principal you have to pay interest on. 

Finally, a pet peeve of mine is how people get so excited when they get a huge tax refund in April.  Listen, I get that everyone likes to get money, but this is not free money like you may think.  This is money that you paid into the government throughout the year, meaning you had less money to do things
like save or pay down your debt, and now the government is graciously giving some of it back to you.  What's worse, the government doesn't pay you interest.  Think about it: while you're trying to pay down your debt at 5% and 8% interest maybe, you're also giving Uncle Sam some of your precious income at 0% interest for months and months and MONTHS!  From a purely economical sense, it would be better to pay minimal taxes throughout the year, meanwhile saving the additional money that you would otherwise have been paying to Uncle Sam in a high interest account, and then to owe at the end of the year.  The awesome part is that even though you technically may owe as of Jan 1, Uncle Sam gives you until Apr 15 to actually pay it.  That's more free money, if you owe.  Put the money in an investment and grow it, instead of paying it on Jan 1.  Conversely, if you wait until Apr to do your taxes, and you're due a refund, you've let the government keep your money for an additional 4 months interest free. 

Now, I don't particularly like writing checks to the government, either, so my goal is to have a small net tax refund.  This usually works out for me with a large tax refund from state, and owing the federal government a not-so-large amount, so I can file state right away, get my refund, use that money for a little while, and then in April, I use some of the refund from state to pay what I owe to Federal.  I rejoice when I get this right, because I think it's the sweet spot.  I don't have to worry about how much to save to pay for what I owe, but I also get more money throughout the year and let the government have less money interest free from me. 

Getting into the details of taxes, I recommend at least trying to do your own, even if you are going to go to a tax advisor eventually.  Doing your own helps get you prepared, and helps you estimate what you owe or will get back, and then your tax advisor can potentially find more for you.  Also, when you try it on your own, try doing the full deductions instead of taking the standard deduction.  This is where is very helpful, because you can tag transactions throughout the year as tax deductions and tax credits.  Use to track all your charitable contributions, your medical payments and pharmacy expenses, purchases for a home office and purchases for work, professional dues, etc.  If you keep your notes updated in, it is easy to then download the transactions and sum the tax deductions and tax credits using Excel. 

There are a lot more topics within personal finance, but I think these three are the most critical for everyday life and non-finance and non-investment-savvy people.  If you want to learn more about investing, for example in the stock market, there are plenty of resources, but one thing I would recommend is to try a stock market game app to get a feel for it before you dive in with real money. And if something I said above is confusing or you didn't quite get it, I highly recommend that you do more research on your own to learn and understand these concepts more thoroughly. 

In addition to personal finance, I think it's also important when you work at a company to understand corporate finance.  Not every job is easily directly tied to the bottom line, but understanding how you can influence it, either by reducing costs with improvements and efficiency, or by increasing the revenue or margins, can help you shine above your peers.  The higher up in the corporate ladder you go, the more important it is to be able to quantify activities in terms of dollars.  Managers, Directors, and Vice Presidents speak in financial terms, so if you want to impress them, it is always good to tie back whatever you are talking about to dollars.