This is about sustained creativity and innovation. 

But first let me contextualise.  A big thank you to the almost 40 business owners who braved the mid winter chill to come along to Thursday’s Business Owners Forum.  As always, there was plenty of quality content – and some healthy dissention amongst the panel.

The topic was close to the hearts of many business owners – motivating and rewarding your team and keeping the crew fired up.  On the panel was:

David Grindle, a partner with Webb Ross Lawyers, who were awarded the New Zealand Legal Personnel Employer of Choice at the 2007 Law Awards.  Webb Ross takes motivating and rewarding their team very seriously – and David’s story of their journey in this area was inspiring.

Rebecca Brennan, a director of Elevate CA Limited.  Rebecca is an experienced leader and motivator of high performing teams and she shared some of the tips and traps gleaned from practicing her lead-from-the-front ethos.

Michael Masterson, a director of LookAt Limited shared his keep-it-simple philosophy for building great teams and great cultures as a way to achieve an advantage over your competitors.

A remark by David Grindle got me thinking.  He was talking about Webb Ross’ success three years ago as the Legal Personnel Employer of Choice – and he remarked that the challenge has been not so much achievement of that award, but sustaining the same level of excellence over time.

This is a common scenario – and I’m thinking generally now, not about David or his firm and not even about this Business Owners Forum topic.  I’m talking about the world of difference between reaching upwards and achieving excellence – and the continued act of sustaining that achievement.  It’s all very well achieving excellence, but really the objective must be to sustain it month in and month out – and year in, year out.  And to continue pushing forward.  Because yesterday’s excellence soon becomes today’s mediocrity.

That requires a completely different mindset to the one-off supreme effort of breaking through to a new level.  And the sustained result elicits a completely different sense of achievement to the endorphin-rich buzz of a one-off achievement. 

This is something we talk about often at our weekly directors’ meetings here at Elevate CA.  We opened our doors just over a year ago – and we have ridden a wave of near euphoria with huge support from just about every quarter of the local business community.  We are new, we are energetic – and we are different to the establishment accounting profession.  The positive energy and massive goodwill is still flowing 15 months after we opened the doors, but how long will the honeymoon last?  Will we begin to fade into mediocrity?  Has that already started to happen?  How do we keep ourselves and our business fresh and exciting indefinitely?

This is not just about Elevate CA.  The questions I’m pondering are more general:  You can’t bottle creative energy – but can you systemize it?  Or does any attempt to do so serve only to stifle creativity even more quickly?  How do you keep those around you fired up, buzzing and excited as time goes on?  How do you keep things fresh in the eyes of your clients or customers – and the community at large?  Where is the right balance between putting energy into answering these questions for your business – and putting your head down and generating revenue?

And would anyone be interested in attending a Business Owners Forum event that further explored these very questions?  Let me know.

There will be significant system and accounting issues facing every business with the GST changes taking effect on 1 October.  Maybe it’s time to shift to an online system like Xero? 

Xero is an online accounting system that gives you – and us – easy access to your transactions and reports from your PC, Mac, i-phone or Blackberry from anywhere in the world with an internet connection.

Some other advantages of an on-line system are these:

Entering journals to reconcile your system with our end of year financial statements will be a thing of the past as we can work directly on your ledger directly through our browser. Even while you or your staff are logged in and working on your data file.

An on-line accounting system also eliminates the need for you to back up your accounting data as everything is securely stored in a data centre rather than on your server.

Using an online accounting system means you will be well prepared for the GST change on 1 October as the upgrades will occur automatically without the need for you to purchase and install an upgrade to your existing software. In fact updates will be a thing of the past entirely as all enhancements and upgrades are taken care of. This is increasingly an advantage with upcoming changes to business tax as announced by the IRD in May.

“Making Tax Easier” is the IRD’s new initiative to transform a predominately paper based process to one which is entirely electronic. The IRD’s goal is that all businesses and individuals will be required to submit their tax information electronically, either by themselves, or through an agent.

For most businesses, the cost of Xero is around $40 per month on a subscription basis. There is no need to purchase additional software to install onto your server. We have the opportunity to become a Xero Certified Partner, which we will do if we have enough support from our clients. Let us know if you’re interested in exploring this further.

On-line products such as Xero seem to us to be the way of the future. If you’d like to explore Xero, we can introduce you and have you up and running in no time – and ensure you are ready to go to file your 30 September returns and be prepared for 1 October.

Are your kids bored in school or failing their exams?  Far from being a cause for alarm, these may be early indicators of entrepreneurial traits.  Cameron Herold makes the case for parenting and education that helps would-be entrepreneurs flourish and to see entrepreneurship as a career they could aspire to – in the same way they may aspire to be lawyers, doctors, dentists, teachers, writers, actors or whatever.

An interesting talk.  And I’m all for showing kids how they can make the very best of their creative and entrepreneurial traits.

But I was particularly fascinated by the correlations Mr Herold draws between entrepreneurship and conditions such as ADD and bipolar.  He suggests that we shouldn’t medicate kids for ADD, bipolar or depression unless it’s really bad.  He said that bipolar is nicknamed the CEO Disease, and a lot of great things can come out of a different way of thinking.

Hyperactivity followed by prolonged depression appears to be more prevalent in highly creative people.  Some of the most creative minds in the business world like Ted Turner, Bill Liechtenstein and all three of the founders of Netscape are likely to have bipolar disorder.

And Richard Branson is almost a textbook case of an ADD entrepreneur.  His rule breaking behaviour as a youth served him well as an adult entrepreneur who is unafraid of breaking conventions to reinvent his businesses in a highly creative and radical new way.  Even today his office is described in his biography as “cluttered” and his desk “virtually invisible under a sea of papers” – a common state for many adults with ADD! 

Other creative thinkers and entrepreneurs whose likely ADD traits have proven an advantage include Bill Gates, Henry Ford and Albert Einstein.

And the symptoms of bipolar disorder are common among successful CEOs – perhaps because mania helps them to be passionate about their ideas, almost to the point of being zealots.  That mania is often what draws those around them to follow; they want that passion and that fire.

An interesting concept – and one well worth thinking about if your child is bored in school, highly impulsive, unable to focus, manic or diagnosed with ADD.

Considering a bonus structure for your team?

Employee bonus structures can be fraught with problems – but for the right person (ie a hungry and motivated high achiever) they can sometimes be an effective way to drive performance.  The problems I have seem with bonus structures fall into four main categories:

1.  Expectations are unrealistic.  Bonus structures should of course reflect payment for a stretch beyond a reasonable expectation – but they should also be realistically achievable, or the result will be a person who doesn’t feel good about their achievement and who will ultimately become demotivated.  It’s a delicate balance, and more often than not one of the parties ends up feeling aggrieved. 

2.  Where employees are rewarded for a particular KPI (for example, say net profit), it can be demotivating for that person if they don’t have control over what drives that KPI (for example – costs incurred in the business).  A demotivated team member is certainly not what you’re looking for when setting up a bonus structure!

3.  Where employees are rewarded for a specific KPI, they will be motivated to focus on that KPI perhaps at the expense of the big picture.  For example profit for a given year may be maximised – but at the expense of marketing efforts in the last quarter.  Potential result: A good bonus for the manager – but a problem for the business in the following year.

4.  A person may make a great bonus in a particular month or quarter – but achieve below expectation in the month or quarter either side of that.  If there is cash at stake, performance can usually be maximised in a given period – perhaps at the expense of the previous or following periods.

Here’s my advice if you are considering bonus schemes for some members of your team:

1.  Think carefully about whether a bonus will genuinely motivate this person to up the ante in excess of what you already expect of them. 

2.  If the answer is yes, think about the drivers of profit in your particular business. Keep it very specific – such as “gross profit on sales made by that manager for the year” or if staff turnover is an issue you wish the manager to focus on, maybe “annual staff turnover under x%” – or perhaps “acquisition of new clients of at least $x per annum” is more appropriate in your case.  Consider rewarding on these drivers rather than the likes of “net profit” – which may be a bit of a blunt instrument.

3.  Ensure the KPIs are entirely within the manager’s control.

4.  Make sure the KPIs you’re paying bonus on are annualised and cumulative so your managers aren’t rewarded for a great result followed by a poor one.

5.  Ensure bonuses are conditional on achieving minimum expectations in all other aspects of their job – not just the ones they are rewarded on.  Nothing will bug you more than paying a bonus to someone who cherry-picks the areas to put their efforts into depending on the cash bonus it will earn them.

In a nutshell, tread carefully – and remember that typically “you get what you reward”, so be very careful about quantifying what you reward.  If you decide to head down this path, be sure to give us a call to help you fine tune your KPIs and incentive structures before you roll them out.  Rebecca Brennan is our guru in this area.