Return to Work Owner’s Guide

Return to work policies are a new COVID-related minefield for business owners to negotiate. As more states make COVID control measures less restrictive or optional, the “requirements” of a safe workplace, and what we can demand of employees, are becoming even less clear than before.

The companies I work with range from essential industries, where full production has never paused, to tech companies where their office hasn’t seen a live human being in over a year. All are wrestling with return to work or relaxation of restrictions policies. After dozens of conversations, here are a few guidelines.

You Aren’t a Judge

return to workPerhaps the most important rule for staying out of trouble is to avoid making any decisions about what constitutes a “valid” employee issue or excuse. One employee’s child care challenges may seem more difficult than another’s. Some children have returned to school, others are being taught remotely. A number of daycare centers have reopened but many haven’t.

Some folks are still fearful of going out at all. Others have been socializing for months. You may have employees who fear mingling with those who haven’t been as diligent about protection. Nonetheless, returning to the workplace is a line in the sand. If you are going to demand the presence of some staff, the criteria have to be the same for everyone.

If you will permit remote working for some employees, it should be defined by specific job descriptions. For example, if customer service people have to be present, then all customer service people need to be present. Allowing telemarketers to work from home should mean that they all can. (We will deal with remote working requirements in a moment.)

Remember, if an employee was hired for a job requiring his or her presence in the workplace, it’s legitimate to say that the job still requires that presence in the absence of a pandemic.

Remote Working Policies

Remote working is a counterforce to company culture and employee retention. Severing the social fabric of the workplace is perhaps the most damaging effect of remote work.

That said, over 90% of employers say they don’t expect to return all employees to in-person physical presence, ever. Every survey of remote workers says that they would like to go to an office two days a week, but thirty percent of them say that having to return 100% of the time would be a reason to seek another job.

If you will permit some employees to work continue working remotely, it’s time to define the parameters.

  • Can the employee demonstrate an appropriate, dedicated remote workspace? When we went home with little warning or preparation, a lot of offices were on kitchen tables. That is probably not satisfactory for long-term professionalism.
  • Are there measurements of productivity? Some employees were more productive at home, but others were far less so. What metrics will determine whether or not an employee retains the flexibility of remote work?
  • Is there any required presence at your workplace? Some companies have specific days for everyone, or for sub-groups of employees. It should be plain that required days are just that. Attendance isn’t optional.

Infection Control Policies

Thankfully, it appears that the difficulty of proving a point of contagion has scared off most of the personal injury attorneys. You still need to demonstrate appropriate caution, both for liability protection as well as for the confidence of concerned employees.

  • If employees are utilizing the same space on different days, demonstrate a commitment to sanitizing in between users.
  • Have each employee sign an absence-of-symptoms form and check temperatures upon entry every day.
  • Allow space for social distancing in meetings. If sufficient space isn’t available, use a video conference application even for internal meetings.

Here are the CDC infection guidelines.

Return to Work

Even with clear policies and procedures, coming back will be disruptive, and not “just like before.” Here are a few unrelated tips some others have used.

  • If you are reconfiguring space, think carefully about the real need (besides prestige) for private offices. One employer has told executives “If you absolutely require full-time space dedicated for your sole use, we will require that you be here full time.”
  • Many days can be wasted as employees introduce or reintroduce themselves to one another and catch up on personal news. Consider having a restart event, where each employee answers 4 or 5 questions (either together or virtually) about their time away and changes in their lives.
  • Requiring vaccination is a tricky area, but one employer is making them a prerequisite for paid quarantine time after exposure. Those who been vaccinated will be paid until they receive negative results from an immediate test. If you haven’t, your 10 to 14 days quarantine is unpaid leave.

Return to work is a far more complex issue than just naming the date. Some preparation and advance communications will save a lot of time and headaches when the day arrives.

 

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Internal Leaders Affect the Value of Your Business

Internal leaders may not be obvious. They may not even have a “leadership” title. Make no mistake, however; internal leaders are critical to value and attractiveness when it comes to selling your business.

In Super Bowl 55 we saw the impact of an internal leader. Tom Brady has the highest winning percentage of any single athlete in major professional sports. The Tampa Bay Buccaneers have (or at least did up until this season,) the worst win/loss record over their entire existence of any major professional sports team. Yet one man changed the culture of the organization almost overnight.

Remember, for all the accolades being heaped on Brady, he is an employee. He doesn’t own the Buccaneer enterprise or negotiate any contracts other than his own. He didn’t choose the team’s logo, uniforms, location, or coaches.

Tom Brady is paid to fill only one of 53 player positions in the organization. There are also 31 coaches on the team, whose jobs are to teach and give direction to those 53 players. Although every player will acknowledge that winning is a team effort, none will argue the impact of one strong internal leader on his 83 coworkers.

Internal leaders can be good or bad

When I was a very young business owner, I hired an experienced salesman. He was an alcoholic, and began inviting other employees to his house for a cocktail after work. It took me some time (too long) to realize that he was plying his coworkers with free booze while he ranted daily about how poorly the company was being run.

I couldn’t understand why there was so much resentment among my team. They seemed to resist any direction I gave them. Finally, one person was kind enough to explain to me what was happening. Because this salesman was my top producer, I was afraid of the impact on revenues if I fired him.

He didn’t want my job. In fact, he didn’t want any of the responsibility that should go with leading. He had merely discovered one of the biggest truths about leadership. It’s easier to tear something down than build it up. People love to hear that things could be better. It’s making them better that is the tough part.

Tom Brady made the Tampa Bay Buccaneers better. Like any good internal leader, he didn’t limit his contribution to his job description as Quarterback. He helped recruit and train the people around him to build a better team.

Identify your internal leaders

An army dispatches its troops under the leadership of its lieutenants, but it succeeds on the ability of its sergeants. As a business owner, you can inspire with core values and set great goals. Whether you reach them, however, will be determined by your internal leaders.

When it comes time for your transition, they are more important than ever. If you are selling to family or employees, they may not expect to be included in equity, but they will determine the acceptance of those who are.

If you are selling to a third party, his or her achievements following the sale are conditional on the support of your internal leaders. They can prop up an inexperienced owner, or sink him without a trace.

If any part of your proceeds from exiting depend on the continued success of the business, you would be wise to identify your internal leaders, and make some provision for their continued loyalty after you are gone. If they don’t buy in, you could see the value of your enterprise (and your payout) decline substantially.

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The Coaching Skill in Exit Planning

The single most important talent in your exit planning team is coaching skill. I’ve written often in this space about the need for multiple talents, from taxation to legal, financial planning, and risk management. None, however, is more important than coaching.

Let me put it this way. Your planning team can be led from any position, as long as the person leading has coaching skill. If he or she doesn’t, all the clever tax advice or ironclad documentation in the world won’t lead to your successful transition. But if the person leading the team is an experienced coach, you’ll probably be okay.

What is Coaching Skill?

coaching skillLet’s make it simple. Coaching is asking questions. An experienced coach will ask the questions that no one else does, preferably in a way that doesn’t offend.

Do you want to save money on taxes? Of course, and that should be apparent to every professional involved. Do you want to maintain control until you are paid what the company is worth? Sure. Do you want to ensure that your family is taken care of? Naturally.

These aren’t the questions that derail a transition plan. Here are a few that, left unasked, will.

Is there something more important to you than the proceeds from selling? Is there a part of your legacy that must be preserved if at all possible? Are there non-financial or non-equity stakeholders whose welfare must figure into the plan? Is your family on board with this?

These are the questions that an advisor who is focused on the technical complexities of exiting will often omit.

The Most Important Question

What will you do when you no longer own this business?

For many entrepreneurs, that’s the stumper. Unless you can answer it comfortably, your plan is very likely to fail. Most advisors will ask it in a casual way. “So what will you do next?” They may react little or not at all if your response is “I don’t know.”

When I was active as a business broker, I would decline a listing if an owner couldn’t enunciate a plan for life after the business. In my first book, 11 Things You Absolutely Need to Know about Selling Your Business, I describe a case where an owner declined two offers, each for twice his company’s estimated value. He simply didn’t know what he would do next.

I don’t know” is a signal that the owner can’t envision life without the activity of the business.

Sometimes the answer is too facile. “I’ll play a lot more golf!” Nice try, but I’ve heard many a retiring owner tell me “I never thought I could play too much golf.” Here is an exercise I use with clients to help them visualize the next phase of their lives.

Filling in the Week

Start with the time you currently spend at the business. Include that “quiet time” at the beginning or end of the day when you like to think. Add in answering emails and texts at home or reading reports and articles on the weekend. Let’s say, conservatively, that you are engaged with your business for 50 hours a week.

Now, let’s start retirement with golf every Monday, Wednesday, and Friday. That’s a lot of golf, but we have only consumed about 15 hours of your workweek. What else?

Many folks will say they want to do more community service. Unless you plan to take on the full-time responsibility of running a charitable organization, let’s try simple volunteering to start. Two half-days a week? That’s another ten hours. We are up to twenty-five.

Travel is a big goal. How do four, two-week trips a year sound? That’s an average of another 8 hours a week.

Now you have two months of traveling, 150 golf outings, and 100 days a year working for charity. That only leaves you with about 17 hours a week to fill. Sleep in, exercise more, catch up on your reading?

There are lots of ways to fill the remaining time, but remember we are starting with someone who has a lot of plans. Many business owners have none.

Unhappy Exits

According to a survey by the Exit Planning Institute, up to 75% of former business owners are unhappy with their exits one year after selling.

I don’t know of any of my clients who are unhappy with the results. Perhaps that’s just luck, but I like to think it’s at least partially due to my coaching skill. The technical and financial complexities of a successful transition are nothing to sneeze at, but helping an owner be prepared is so much more than that.

Posted in Exit Planning, Exit Strategies, Life After | Tagged , , , , | 1 Comment

One Response to The Coaching Skill in Exit Planning

  1. Valerie Koenig says:

    Great points, John.

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Ebenezer Wasn’t the Only Boss

Each year I reprint a post from 2013 about the underappreciated boss of A Christmas Carol, Mr. Fezziwig. I hope that you enjoy it. Merry Christmas!

This week was the 177th anniversary of the publication of Charles Dickens’ A Christmas Carol (December 17, 1843). The immortal words of Ebenezer Scrooge are ingrained in the memory of the entire English speaking world. I’d venture to guess that “Bah, Humbug!” can be correctly identified as to source and speaker by over 99% of those reading this.

The novella, serialized in five parts, was not a commercial success. Unhappy with the sales of his previous novel (Martin Chuzzlewit– no wonder!), he refused his normal fee from the publisher in favor of royalties on the proceeds, which proved disappointing. Critical reception was favorable, although it didn’t catch on in America until much later. The New York Times first published a review in 1863, 20 years after its publication in England.

Like most of Dickens’ work, A Christmas Carol clearly includes an indictment of the social inequalities of the Industrial Age; child labor, workhouses, and debtors’ prisons. It stands out, however, because of the lessons taught by its memorable ghosts, and the redemption of its main character in only 113 pages.

During the Protestant Reformation in England and Scotland, Christmas had become a period of penance and reflection. A Christmas Carol is credited by many for leading the return to a celebratory holiday, focused on appreciation and thanks for family and friends.

Modern Ebenezers

Modern filmmakers have returned to the straight-ahead plot and uplifting storyline (not to mention the recurring royalties available year after year) with a frequency that helps Ebenezerstamp the legend in our psyche. After seven silent and four “Talkie” versions, the first big sound production was the 1938 Reginald Owen version (originally released as “Scrooge”) and then the 1951 Alistair Sim classic. The character of Ebenezer has been tackled by actors ranging from George C. Scott to Michael Caine (with the Muppets.) Ralph Richardson, Frederick March, Basil Rathbone,  Patrick Stewart, Kelsey Grammar and Rich Little (in various celebrity impersonations) have taken a shot, as have Mickey Mouse, Mr. Magoo, the Smurfs, Barbie, Oscar the Grouch, Yosemite Sam, Dora the Explorer, and The Flintstones.

Let’s not forget the variants; Bill Murray in “Scrooged”, or Boris Karloff, Benedict Cumberbatch and Jim Carrey in versions of “How the Grinch Stole Christmas.” In all, IMDB lists almost 200 filmed variants of the story.

Unfortunately, the characterization of Scrooge has become ingrained in the minds of many as a stereotype of all bosses who dare to focus on margins and profit. How many employees identify their bosses with Fezziwig, who took pride in making his employees a happy group, even though Scrooge dismissed it as “only a little thing?”

FezziwigInstead of focusing on the things that allow Fezziwig to spend lavishly on his employees (a motivated workforce, honesty, doing what’s right, profitability), we prefer to fantasize about a boss who expresses sudden enlightenment by unexpectedly bestowing gifts and extra days off (well, actually just one day off.) Fezziwig is relegated to an afterthought, an overweight doting uncle with no visible reason for his success.

Most of us are far more Fezziwigs than Scrooges. Oddly, if we celebrated the season of giving by handing our employees a list of all the extra things we’ve done for them during the year, we’d be considered more akin to Ebenezer. We bow to the popular myth, give even more at the holidays, and hope it has some carryover of appreciation into the New Year.

Just remember to remind your employees when you are being Fezziwig the rest of the year. A Christmas turkey for Tiny Tim isn’t as important as being a good boss.

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The Dismal Ds and Exit Planning

The “Dismal Ds” is an inside joke in exit planning. Every industry and profession has them. In some, it’s “You can have it done well, done fast, or done cheaply. Pick any two.” In planning it’s “Sooner or later, every owner exits his or her business… 100% guaranteed.”

Clearly, that refers to the unplanned but inevitable departure from the biggest D – Death. That isn’t the only D, however. There are others, NONE of which lead to a controlled, lucrative, or enjoyable transition. Most start with dis- defined as “dis– 1. a Latin prefix meaning “apart,” “asunder,” “away,” “utterly,” or having a privative, negative, or reversing force.”

The other Dismal Ds include:

  • Disease – the critical illness of the owner or an irreplaceable employee.
  • Dissension – between partners, shareholders, or family members
  • Disaster – Fire, flood, storm, or accident
  • Disability – An owner’s inability to oversee operations
  • Disinterest – of the founder or next-generation ownership
  • Distraction – When an owner’s focus is elsewhere. (frequently love or bar ownership)
  • Disarray – More simply, bad management
  • Dishonor – financial fraud or other skulduggery
  • Disenchantment – A fancy word for burnout
  • Divorce – a bitter fight over the business asset or its value
  • Debt – Leverage taken on in good times but no longer sustainable
  • Depression – Economic malaise (think hospitality in 2020.)
  • Defection– The poaching or bolting of a key employee, frequently in sales
  • Defenestration – Getting thrown from a window

(Okay, I may have gone too far with that last one, but I couldn’t resist.)

Planning – The Cure for the Dismal Ds

The point is, there are many ways of a forced exit from your business due to circumstances. Some might be beyond your control, but most can be avoided.

  • Disease – Have solid business continuity instructions in place
  • Dissension – Start with a good buy/sell or shareholders’ agreement that makes it plain how disagreements will be handled
  • Disaster – Fire, flood, storm, or accidents can be insured, including for loss of revenue.
  • Disability – Business continuity instructions again
  • Disinterest – Start implementing an exit plan before your business shows the effect. In brokerage, we used to say “Show me an owner who says he is burned out, and I’ll show you financial statements that evidenced the problem three years ago.”
  • Distraction – Don’t buy a bar. Don’t buy another business. Don’t have an affair.
  • Disarray – Get help. Consulting, coaching and peer groups all work.
  • Dishonor – Have an outside party check your systems and security.
  • Disenchantment – See Disinterest
  • Divorce – Settle the value of the business first, preferably before the lawyers do it for you.
  • Debt – Limit your debt to half what your current cash flow can service.
  • Depression – If you have to cut expenses, do so deeply and quickly.
  • Defection– Two words- employment agreements
  • Defenestration – Stay away from the Departed, or Irish, Italian, and Jewish mobsters in general. Alternatively, live where there are only low-rise buildings.Dismal Ds

I obviously have my tongue firmly planted in cheek for this column, but my point should be clear. Your business is probably the most valuable asset in your life. Losing it to unplanned events hurts. Even if you are no longer in the picture, you have some responsibility to your family, employees and customers.

A good exit plan, whether it’s for implementation now or years down the road, should take many, if not all of the Dismal Ds into account. All entrepreneurs want control over their future. That is why they are entrepreneurs. Planning isn’t merely an intellectual exercise. It’s all about control.

Posted in Building Value, Entrepreneurship, Exit Options, Exit Planning, Exit Strategies, Management | Tagged , , , , , , , , , , , , , , | 2 Comments

2 Responses to The Dismal Ds and Exit Planning

  1. Valerie Marie Riefenstahl says:

    Tongue-in-cheek or not, this is a good follow on to your comments about, “Today is the First Day of Your Exit-Planned or Not.”

  2. Kerri Salls says:

    Excellent list, John. All too true and need to be considered. With planning there are alternatives to every one.

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