There is a lot to do about the bonus culture in the current business environment. Is it pure greed that is driving people when it comes to bonusses? When I reflect on my own career it is pretty simple. When I started in government service working for the tax authorities, salary was not a big thing, for me at least. You knew exactly what you would earn, because every payband was linked to a certain base pay. No bonus system. Then I moved to academia. When I was hired at the university I did not discuss salary at all. Actually, I was rewarded in a lower Payband then I was used to at the tax authorities. That didn't worry me at all. The first time money became important was when I started to work for a consultancy firm called Arthur Andersen. I could pick out a lease car and boy that was exciting. You do get greedy when you can choose a lease car. Everyone in that company was money and status driven. Having money meant being succesful.
The bonus became a fact of life when I made another career move. From consultancy to working as a tax director for a US multinational. I landed right in the middle of a bonus driven environment. Everything was linked to the bonus. If in the third quarter it looked like we would not hit our target at year end, everyone got nervous. The CEO implemented a travel ban and hire freeze straight away. If we missed the target there was a danger we would not receive the full bonus. But let's not forget one thing: in a US company bonusses are considered to be an integral part of the salary. Financial planning is done based on the yearly bonus. Mortgages are paid off by the bonus, contributions are made (tax free) to the pension plan.
What is the lesson to be learned? There are more important things than money, that's for sure. But when everyone around you is caught by the bonus fever, you will be infected by it as well. So get rid of the bonusses. Bonusses influence behaviour. If a sales rep is afraid he will not hit his target and therefore will not receive the full bonus he will do anything to hit the target. Making deals that are too risky, for example. Make sure people receive a fair market value salary. Performance based salary, a high performer should earn more then a low performer. Reward people by creating pleasant working circumstances. There are more ways to reward employees then by money alone.
maandag 6 februari 2012
woensdag 9 februari 2011
Tax Control Framework & Exchange of Information
Tax Authorities are urging companies to enter into agreements called in the Netherlands " horizontal supervision". If a company can demonstrate they have the right controls in place, the authorities come in and audit and if they agree with the controls, a company will be less bothered by tax audits. This all sounds really nice, but there is a downside to this mechanisme. You are obliged upfront to fully disclose all business transactions which could impact the tax position. In other words, you cannot control the timing of disclosing information to tax authorities.
Another consequence relates to the exchange of information. Tax authorities are obliged by law to disclose tax information to other countries. In the EU there is a directive in place since 1977 which more or less forces EU Member States to spontaneously disclose tax relevant information to other Member States. Everything they have on file, they can disclose. So if you entered into an agreement regarding horizontal supervision, all your pro-actively disclosed information to - for example - the Dutch Tax Authorities, are bascially disclosed to all EU tax authorities. A consequence that the Dutch Tax Authorities clearly want to downplay. This is a serious issue, which should be addressed at an EU level. The EU Mutual Assistance Directive (that is the aforementioned directive from 1977) should be adapted in such way that information obtained by tax authorities based on a horizontal supervision agreement should not be regarded as information which can be exchanged.
Let me be straight: tax control is the right thing to do. Companies should have a tax control framework in place, but not because tax authorities like them to. They need to have this in place because they want to have this for themselves. A tax director needs to be "in control", needs to have good tax processes in place with the right controls. I have embarked on a tax control voyage some time ago, and I am really glad I did decide to do this. I was fully supported by senior management, I must say. Because without support from senior management this will not work.
Another consequence relates to the exchange of information. Tax authorities are obliged by law to disclose tax information to other countries. In the EU there is a directive in place since 1977 which more or less forces EU Member States to spontaneously disclose tax relevant information to other Member States. Everything they have on file, they can disclose. So if you entered into an agreement regarding horizontal supervision, all your pro-actively disclosed information to - for example - the Dutch Tax Authorities, are bascially disclosed to all EU tax authorities. A consequence that the Dutch Tax Authorities clearly want to downplay. This is a serious issue, which should be addressed at an EU level. The EU Mutual Assistance Directive (that is the aforementioned directive from 1977) should be adapted in such way that information obtained by tax authorities based on a horizontal supervision agreement should not be regarded as information which can be exchanged.
Let me be straight: tax control is the right thing to do. Companies should have a tax control framework in place, but not because tax authorities like them to. They need to have this in place because they want to have this for themselves. A tax director needs to be "in control", needs to have good tax processes in place with the right controls. I have embarked on a tax control voyage some time ago, and I am really glad I did decide to do this. I was fully supported by senior management, I must say. Because without support from senior management this will not work.
dinsdag 8 februari 2011
How to manage a team
Many managers I know, do not really "manage" their team. If you want a team to perform at its best you need to (1) facilitate the individual needs of each member (2) provide knowledge, in other words teach the team the tricks of the trade and (3) make sure that the team spirit is good.
Every individual needs attention. People who report to you need to have the feeling that their manager is available when they need him/her (from now on "him"), that they can share their concerns with him and that the manager provides guidance and support. This is obviously easier said than done. I have one-on-one's with each of my direct reports every two weeks. I use a standard format for these meetings. I have provided them a powerpoint template where they summarize their objectives and status, their achievements of the previous period and their action items going foreward. This also enables me as the manager to track their progress and at the same time documents it beautifully.
The manager should teach their direct reports as much as possible. Although often team members are more knowledgeable about details, a manager should focus on social behaviour, communication and certainly also about the politics in a company. Be open and share also what you are busy with. Provide training opportunities for the team, be really pro-active about this. Pumping knowledge into the team yields a significant return on the investment, always!
Employees are most happy - I believe - if they have a great manager (the boss), if they enjoy the content of their work and they are being appreciated. A manager should reward the team members as best as possible, obviously within the companies directives. Get the best for your team, you are doing that for yourself anyway. Creating a good team spirit is not that difficult. Simple things as having dinner every now and then is usually very much appreciated. You know the saying: the team is a strong as the weakest link.
Every individual needs attention. People who report to you need to have the feeling that their manager is available when they need him/her (from now on "him"), that they can share their concerns with him and that the manager provides guidance and support. This is obviously easier said than done. I have one-on-one's with each of my direct reports every two weeks. I use a standard format for these meetings. I have provided them a powerpoint template where they summarize their objectives and status, their achievements of the previous period and their action items going foreward. This also enables me as the manager to track their progress and at the same time documents it beautifully.
The manager should teach their direct reports as much as possible. Although often team members are more knowledgeable about details, a manager should focus on social behaviour, communication and certainly also about the politics in a company. Be open and share also what you are busy with. Provide training opportunities for the team, be really pro-active about this. Pumping knowledge into the team yields a significant return on the investment, always!
Employees are most happy - I believe - if they have a great manager (the boss), if they enjoy the content of their work and they are being appreciated. A manager should reward the team members as best as possible, obviously within the companies directives. Get the best for your team, you are doing that for yourself anyway. Creating a good team spirit is not that difficult. Simple things as having dinner every now and then is usually very much appreciated. You know the saying: the team is a strong as the weakest link.
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