Can you cut your payroll and still keep employees happy?

Most small businesses have already done some belt tightening this year. We’ve trimmed dead wood, become a more lean machine, and every other metaphor you can apply to spending less money. Still, when we see our final projections of where our year-end financials will end up, we might  wonder if we should cut a little more.

Sylvia Ann Hewlett, founder of the Center for Work-Life Policy, wrote in the New York Times this weekend about a creative approach to cutting costs by trading employees money for time. She cites the example of KMPG, the giant accounting firm, and their solution to cutting payroll costs without losing star talent. They presented 11,000 employees with a Chinese menu of choices: work a four-day week and take a 20% pay reduction; take a short sabbatical while earning 30 percent of their base salary; both of those options; or neither of those options, retaining their regular salary for their standard work week. Over 80% of them chose one of the flex options.

Hewlett points out that because KPMG positioned these options as “a strategic response to the downturn, rather than a ‘benefit’ for working mothers, it has gone some distance to legitimizing flex time. Taking this option has become an honored choice — a way to save jobs. As a result, overloaded men as well as overloaded women have felt free to vary their schedules.”

I’ve seen one small company try a flawed version of this plan with disastrous results. Faced with the need to reduce payroll and loathe to eliminate jobs, the business owner asked everyone in the company to take a 15 percent pay cut, assuring them that she was taking the same reduction in salary. She hoped they would see this as a good way to help all their coworkers keep their jobs.

It didn’t work that way. Morale plummeted and some of her best talent jumped ship. Months later, when she was able to reinstate full salaries, she didn’t score any points with her staff because the damage was already done.

The crucial elements of cutting payroll while retaining employees are 1) giving them something back, i.e. time, in exchange for giving up some of their salary, and 2) giving them the choice of making that trade or not. Asking employees to help suck up your losses by getting paid less for the same work week is only going to hurt the company in the long run.

The thing about being an entrepreneur is that you have the potential to make a lot of money in good years. You also have the potential to lose money in the bad ones. We all willingly take that risk, but it’s not fair to expect our employees to share in the down side. On the other hand, in 2010 or 2011, when we see year-end projections that show us closing the year with gobs of money, we’ll benefit nicely from the upside of that risk-reward ratio.


Online or in person: Don’t make it all about you.

When we talk about social media at Tribe, one of our strongest recommendations is to make sure you don’t talk about yourself too much. We encourage people to make comments on other people’s updates and blogs, to retweet or post about others’ work, to spend some time promoting others. If it’s all about you all the time, you’ll wear people out. Even more importantly, you’ll be missing an opportunity to create a connection and build a relationship.

Same thing applies to actual face-to-face networking. I had lunch today with someone referred to me by an old neighbor. He recently moved from San Francisco to Atlanta and his work has some overlap with ours, so she thought I might be able to connect him with some people in town he’d like to know. (I’m not naming any names, but Michael, you know who you are.)

This guy is filled with energy and ideas and plans. Over our Flip burgers and Cokes, he talked about innovation and change and shaking things up. He talked about a major conference he’s planning. He talked about his speaking career. He talked and talked and talked.

At the end of our lunch, I told him I was going to give him some unsolicited advice. (My business partner said, fairly loudly, she claims, “Don’t do it.” I didn’t hear her, but I’m not sure that would have stopped me anyway.)

I will introduce you to a few people I think you’d enjoy knowing, I told him, but you have to promise to let them talk about themselves a little. I pointed out that we’d been at lunch for over an hour and he had not asked either of us one question. Not about our company, not about either of us personally, not even about where we managed to find a parking place.

Easy mistake. One I’m sure I’ve made myself. But driving back to the office, it struck me once again. Courtesy is courtesy, whether you’re online or sitting across the table from someone. You have to flip the focus back to the other person once in awhile. Like your mother always told you, it’s important to be a good listener.

A Book For Christmas Elves, Created Overnight

Have you seen these Christmas elves? I think the Magic Elf craze originated in the Southeast several years ago, but has grown in popularity and geography since. They’re sort of rag-doll like elves that visit each year during the holiday season and play pranks each night until Christmas Eve, when they return to the North Pole with Santa.

My son’s elf is named Cameron. A friend of his got an elf named Mansfield. My nieces’ elves are Colette and Megan. Some kids from our church have an elf that arrived with the unfortunate name of Enus. Each elf has his or her own personality, and the kids’ bound out of bed each morning to see what those nutty elves have been up to while the rest of the house was asleep.

That’s all very magical for the kids, but for the parents, it’s hard work. Night after night, you have to come up with trick after trick after trick. Often, I find myself heading upstairs for bed when I suddenly remember I haven’t done the elf. My sister has been known to pitch hers out the back door when she’s particularly tired, and then tell the girls the next morning that the elves must have wanted to play in the backyard. Wouldn’t it make things easier if parents had a whole bunch of tricks all figured out ahead of time?

Today we launched an e-book called “50 Elf Tricks: The Busy Parent’s Shortcut to Christmas Elf Magic.” Actually, Tribe is not really in the business of creating content for kids; Most of our clients are more the Fortune 500-type. But we have a policy of looking for where we can help, and this seemed, in its own small way, like something we could do to help.

Each of the 50 tricks includes a rhyming note for the elf to sign, explaining his or her tricks that range from leaving a trail of baby carrots to lure reindeer inside to a special shaving cream message written in shaving cream on the bathroom mirror. There are quick and easy tricks for nights when parents are particularly exhausted and more meaningful tricks that encourage the spirit of giving — or even good habits, like teeth brushing.

The e-book is $9.95 at the site we created for it ( and 50% goes to Santa. We’ll be able to donate half of each purchase price to the Emmaus House Christmas program, where Santa Claus will hand out gifts to over 700 kids who otherwise might not have much magic in their holiday.

This is one of the things I love most about owning a small company. You can think something up and make it happen. I had the idea driving home last Tuesday and a week later, the e-book is written and art directed and for sale on the worldwide web. So fast, it can be almost like having elves at work during the night.

Paid ads in Twitter updates: Trust busters?

What do you think of a Twitter update that’s a paid advertisement for M&Ms or Cheese Doodles? Brad Stone’s column yesterday in the New York Times explored this new trend, which seems to be an anathema to the whole spirit of social media. At least at first glance.

The idea is that “people trust recommendations from those they know and respect, while they increasingly ignore nearly every other kind of ad message in print, on television and online,” according those interviewed for Stone’s article.

Then again, a social media update that’s actually a paid ad could quickly erode that trust. At Tribe, we counsel our clients to confine the sales messages to their websites, and not to use their blogs or social media updates as free advertising. Social media is for  starting conversations, building relationships, and offering your expertise, we tell them.

But really, most grownups who are blogging and tweeting are doing so to build their business. It’s an indirect form of sales, but behind all that social media you’ll generally find specific business goals which include increasing sales. We are all working to be helpful to others and engage in dialogue and connect with people beyond our existing circle. But it would be dishonest to say we’re doing that just to be nice. We’re doing it to attract clients and customers.

So maybe the paid ad for M&Ms is more honest in the long run. A tweet that begins with a hashtag like #ad or #sponsored is at least transparent. What do you think? Is a paid ad in a personal update a slap in the face of social media’s non-commercial spirit? Would you unfollow someone on Twitter if they sent you an ad? If you were asked to promote a product to your followers, for a fee, would you refuse?

Small Business Wisdom: How To Ruin Years Of Effort With One Dumb Mistake

directionsThis is how you can make years of progress toward a goal and then ruin your chances with one stupid mistake. We completely blew a meeting yesterday with a prospective client. The client’s assistant had sent us typed directions for several possible routes to their office, but no one at Tribe had stopped to read them very carefully. An hour or so before the meeting, we briefly discussed as a group which set of directions we should take and decided on one. Then my business partner and I set out for the meeting, an ample 45 minutes ahead of time.

The route we chose was the wrong one. Instead of the 20 or 3o minutes the trip should have taken, we drove around our elbow and through four counties (I’m serious), all the while following our typed directions. At five minutes before our meeting was scheduled, we were still whipping along some distant suburban highway and trying to come to terms with the fact that we were going to be late. We had GPS, we had our iPhone Map application and we had the office on the phone. All three assured us we were heading in the right direction, but we had a long way to go.

We apologized profusely and the prospective client was very gracious about it. But it’s a tough first impression to overcome. We were also rattled in the meeting and I’m sure we were not anywhere near the top of our game. The client turned out to be someone we enjoyed immensely. She was smart and energetic and funny and we would probably love working with her, but I’d be very surprised if we ever landed any of her business. And that’s completely our fault.

Our dumb mistake has much larger repercussions than one meeting. The drive back to our office (taking another of the listed routes on the assistant’s sheet) took less than 20 minutes. The crew back at Tribe understood that we’d shot ourselves in the foot with that meeting, but I don’t think they truly realized that we’d blown much more than one hour of a prospect’s time.

The effort it took to land that meeting began years ago. That prospective client works for a large Atlanta company which has been on our hit list since 2004 . For five years, my business partner has been reaching out to them with mailings and promotional pieces and emails and phone calls.

Over a year ago, in August of 2008, I finally connected on LinkedIn with Jo Ann, the then-marketing director of the company. Six months ago, Jo Ann left the company to start her own business and emailed to see if I’d like to get together for lunch or a glass of wine. Three weeks later, we finally met for lunch. She asked some advice on running her own company; In return, she kindly offered to set up an introduction with Leigh, the marketing director who took her place at her old company. Several weeks later, the introduction was made. It took my business partner a month after that to get Leigh to agree to a meeting. The meeting we had with her yesterday.

So there was a long road to that meeting yesterday, and I don’t mean the one we were following through four different counties. What we blew wasn’t one meeting. It was the years of effort to create a long series of very tiny movements toward that meeting.

Moral of the story: There’s so much a small business can’t control about whether a client hires us or not. Let’s control the ones we can. For instance, check out your directions ahead of time.


Sustainable Startup: Worthwhile Wine From South Africa

Tom_Miranda_Zumas_smallTom Lynch’s new company really began on a father-daughter trip. He and his 13-year-old Miranda were planning a trip to South Africa, and decided they should spend a week of their time there doing something to help. They ended up in Nzinga, a remote village of mud huts, where Miranda read books to the children and helped out in the school while her dad was put to work planting potatoes and working in the communal garden.

On the trip home, Miranda told her father they couldn’t just leave and do nothing else. She wanted to keep working to help this village. Tom agreed to help her launch a non-profit, which Miranda named Isopho, a Zulu word for “gift” and the children’s nickname for Miranda. While they were sitting there waiting for the plane, Tom searched for available URLs and registered then and there.

Eventually, Tom began to feel a disconnect between his work with Isopho on nights and weekends and his daytime job as a VP of Strategy & Planning for a large digital agency. Doing more of the same each day at work felt insufficient, in light of the challenges he’d accepted in Nzinga. When the company began to consider layoffs, he suggested a mutually beneficial exit agreement for himself so that he could spend more time on Isopho.

He also began thinking about starting a company that might be a better complement to Isopho. On one trip to South Africa, he stayed an extra few weeks to visit an extensive list of wineries he had culled from an even larger list.  His first requirement was that the vineyard consistently win awards for great wine. And the second was that it contribute to sustainability in some major ways. Despite its unfortunate history, the South African wine industry is now one of the most progressive in the world.

The result is Tom’s new company, Worthwhile Wines, which will import 261 sustainable wines from 21 different South African Vineyards. Although the history of winemaking in South Africa is oppressive at best, the vineyards Tom selected are doing things like putting a third of the land in the names of the Black workers, providing school and decent housing for the families working there, developing ways to use fewer pesticides, using organic grapes and employing Blacks in management roles.

Most of us would choose a sustainable product over a similar one that’s not sustainable. But few of us want to go to much trouble to figure that out. Choosing a bottle imported by WorthWhile Wines will be a quick and easy way for consumers to know they’re a) getting a good wine, that B) is from a vineyard that ‘s doing good.

Worthwhile Wines will also be a way Tom Lynch can a) run a good business that b) does some good in the world.

The Weird Resumes That Lead To Successful Entrepreneurs

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Marilou (in white) hurdles toward her future startup

The path to entrepreneurship often covers exactly the right ground, in ways we could never predict. Interests and experience that seem to be unrelated eventually turn out to be precisely the preparation a specific new venture requires.

Marilou McFarlane, for example, has recently launched Vivo Girls Sports, an online community for athletic girls aged 13-22. If she had known when she was a kid that this was the company she’d start at age 48, she could not have plotted a more useful resume of stepping stones to this moment.

Sure, Marilou played sports as a girl. Soccer and track and tennis and more. She also grew up around college sports, since her father, Jim Heavner, announced many of the Tarheel games for WCHL,  the radio station he started in Chapel Hill. (Being the daughter of an entrepreneur also helps pave the way for starting your own gig later.) After college, she worked for Turner, back when Ted still owned it all, so that gave her some good experience in media, as well as a chance to work for another entrepreneur who thinks big. Later, in San Francisco, she was a media rep for KCBS for many years, before she started her own company, McFarlane Marketing. She had two daughters, both athletic, and was involved in season after season of their sports. For two years, she served as president of their soccer league, a full-time volunteer position she handled while continuing to build her marketing company. She also started an offshoot of  her marketing company that targeted colleges specifically. And now her oldest daughter, Kelly, will be playing for the Tarheels in Chapel Hill starting next year — on their very impressive women’s soccer team.

Marilou knows sports and she knows marketing. She understands teenagers and college students. She has a deep affinity for the issues that girls in those age brackets are facing. She’s savvy to the incredible buying power of this group and its appeal to marketers. And she’s not afraid to start something  new.

Starting a company is not just a way to make a living. Sometimes it’s how we reconcile and integrate everything we are.