New leaders, build strong relationships

“Leadership is always dependent on the context, but the context is established by the relationships we value.” ~ Margaret Wheatley

Many people think that they were promoted to leadership positions because they are smarter, better equipped and/or more capable than their peers. They assume that others look to them for guidance and eagerly await their every direction. While that may be true to a degree, leaders need to know that they won’t last very long unless they get to know and respect their people.

The process of connecting with your professional team begins with becoming acquainted with them as individuals. Try to learn and understand their strengths and their goals, professional as well as personal. What are they passionate about? What are their concerns? People appreciate when you take an honest interest in then and demonstrate care. They also love it when you can identify specific qualities and behaviors that make them special.

I remember once sitting around the table with my faculty advisory committee. The committee consisted of four teachers from different grade levels and disciplines in the school and was designed to offer me feedback on various programs and change initiatives as well as be my ears on the ground. At one point, the conversation moved to hand written thank you notes that I had penned for each staff member over the summer and left for them on the first day of teacher meetings.

The text was largely the same for each note, with one unique line for every staff member that highlighted a personal quality. It read: “I really appreciate the way that you…” and would focus on something like a teacher’s passion, creativity, contribution to the team, etc.

One committee member was young and relatively quiet within the group. At one point in the conversation, the topic of the notes came up. She commented on how much the note that she received meant to her. She had posted it on the wall above her desk and looked at it often for inspiration.

There are a number of ways for you to form a more personal relationship with your people. One is to schedule one-to-one meetings in your office. You can also drop in at their workspace for an impromptu chat or even make up to go offsite together. I personally prefer the latter two options because they even out the playing field between you and your reports. Both also offer unique opportunities for the new boss.

If you talk in their office or at their cubicle, perhaps you can use that opportunity to notice something special there, such as pictures that your coworker has displayed, an inspirational quote, or some cute collectibles on her desk. These could serve as interesting conversation builders and also give you valuable insights to tuck away for a later time. Meeting offsite offers a change of pace as well as more focused conversation, far removed from the office hubbub.

Once you have succeeded in developing positive professional relationships, it is more likely that people within the organization will candidly update you on internal developments, warn you about potential challenges or landmines, and even tolerate your mistakes more willingly. This can be very valuable, particularly at the beginning of your tenure.

Learning the culture

During your first few weeks on the job, you also want to learn about the culture in which your new personnel have been operating. Take your time to study the history of the staff and important traditions, symbols, and events that hold meaning for them. Perhaps you can even identify an “official chronicler” who has been around for a while and possesses a balanced, informed view of the organization’s history and cultural development. Such a person can be a tremendous resource as you seek to understand existing mindsets and behaviors. This person can also offer perspective when you are ready to consider new ideas and want to get safe feedback.

Once you understand the culture, seek to embrace it and become part of it, even if it feels a bit awkward at times. One of the hardest cultural components for me during my tenure as head of school was morning lineup. My predecessor had a unique routine that he used for years to kick off lineup; it had become part of the school fabric. For me, the practice was strange and awkward but I knew better than to try to mess with it. For years I followed that time-honored tradition exactly as I had inherited it and did the best that I could to roll with it every day, with maximal energy and engagement.

Transitioning into a new leadership position can be challenging, especially as parties get to know one another and begin to work regularly with one another. Leaders can accelerate this relational learning curve by actively seeking to get to know other their co-workers and what makes them tick.

Naphtali Hoff (@impactfulcoach) served as an educator and school administrator for over 15 years before becoming an executive coach and consultant. Read his blog atimpactfulcoaching.com/blog.

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New leaders, build strong relationships originally published by SmartBlogs

How do you stay calm and collected when business isn’t going well?

The Young Entrepreneur Council is an invite-only organization comprised of the world’s most promising young entrepreneurs. YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses. Read previous SmartBlogs posts by YEC.

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Q. How do you stay calm and collected when business isn’t going well? When is it right to tell your team that you’re off course?

YEC_Joseph DiTomaso1. Check in once a week

Bill (my co-founder) and I ask ourselves these questions at least once a week: Are we on track? Are we allocating our time efficiently? Is the team focused on the right things? Do we have enough money? It is always a delicate and tenuous balance. If you have been open and honest with your team, this won’t be that big of an issue. They will understand and be prepared to change course. – Joseph DiTomaso, AllTheRooms

YEC_Jason Grill2. Go for a jog or hit a golf course

Do something out of the office and take a deep breath — whether that is going on a jog, playing 18 holes or hitting a driving range. Get outside the office and recharge your batteries before talking to your team. – Jason Grill, JGrill Media | Sock 101

YEC_Rob Fulton3. Be honest, but not hopeless

I don’t jump too quickly into “Code Red Situations” emotionally, so I feel like I stay pretty calm up until zero hour. However, when it’s time to inform my team that we’re not doing as well as we’d hope, I do it in a very matter-of-fact kind of way that doesn’t sugarcoat the situation. I try to be very pragmatic by saying, “This is how it is now. How can we improve it?” – Rob Fulton, Exponential Black

YEC_Ben Lang4. Go to Calm.com

Usually I try and literally stay calm. Calm.com is an awesome way to do that. Just open the site or app and your day will brighten pretty quickly. Only after that will I try and decide how to move forward in a bad situation. – Ben Lang, Mappedly

yec_Chris Cancialosi5. Don’t react too quickly

I always react by asking more questions, which gives me time to understand the details, process my emotions and respond in a productive way. Our issues aren’t matters of life and death. As a combat veteran, this helps me put things in perspective, keep my composure and lead my team through tough times. People need to know what’s ineffective and how to change it. It’s never too early to tell them. — Chris Cancialosi, GothamCulture

yec_Ashley Mady26. Plan ahead

Develop a short-term and long-term plan, then focus on what needs to be fixed immediately. Once you have solutions, share the new vision with your team (sooner rather than later) so they can help you get back on track. — Ashley Mady, Brandberry

YEC_Firas Kittaneh7. Remember failure is a choice

You can choose to fail, or you can choose to actively explore ways to be more successful. If sales are stagnant or declining, that is cause for concern, but you shouldn’t alarm your team just yet. Try identifying the root cause. Once you find it, brainstorm remedies. Afterwards, you can share this information with your team, so everyone knows what they can do to support this turnaround. – Firas Kittaneh, Amerisleep

yec_David Hassell8. Communicate early and often

If you wait to communicate with the team until you’re completely off course, then you have waited too long. Communicate targets early and often and enroll the team in shifts as soon as possible. Communicate a lofty goal three months out and stress and fear will arise intensely. People will shut down. With more time, they will have a healthy degree of pressure which leads to great performance. — David Hassell, 15Five

YEC_Natalie MacNeil9. Remember it happens to all great companies

At some point while building a business, things get off course. I remind myself that even the most successful companies like Apple have gone through very turbulent periods. I know there are many lessons to be learned during these times, and I look for the lessons. I am always honest with my team about where we’re at so that we can work on solutions and strategies together. That support is key. — Natalie MacNeil, She Takes on the World

YEC_Mark Ceincola10. Acknowledge that it’s OK to show emotion

Who says you have to stay calm under pressure? Emotions play a part in life and especially as entrepreneurs, we usually have very strong emotions. Pick a few of your trusted employees, advisors or executives which whom you can share your frustrations and you’ll be better prepared to come off as calm and collected in front of the entire team. Don’t always bottle up your emotions or you’ll explode. — Mark Cenicola, BannerView.com

YEC_Brooke Bergman11. Tell your team right away

I’m able to stay calm and collected because I know that we control our destiny. We control our branding and our presence, that’s all us. If something starts to go astray, we get on top of it immediately. We’ll never wait it out and hope that it corrects itself because it won’t — at least not to our standards. It’s an opportunity to not only fix something, but to make it better in the end. – Brooke Bergman, Allied Business Network Inc.

YEC_Andrew Thomas12. Stay focused on the big picture

In many cases, things are never as bad or good as they seem. It’s important to remember this. When you stray off course, remember that it happens and it’s not necessarily the end of the world. Figure out exactly what has happened, why, and the resolution. Communicate with your team when you need to elicit their support. Explain the urgency and your plan. They will likely respond favorably. — Andrew Thomas, SkyBell Technologies Inc.

YEC_Dan Price213. Don’t look in the rear-view mirror

I’ve learned to stay calm and collected when business is going well by focusing on the future. We can only learn from what happened in the past and hope to not make the same mistakes, so we can keep moving forward. Reinforce to the team that everyone should focus on the future instead of focusing on the past. — Dan Price, Gravity Payments

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How do you stay calm and collected when business isn’t going well? originally published by SmartBlogs

Letting Your Employees Review You Can Lead to Personal and Professional Growth

Here are five reasons that you should seek feedback the next time performance reviews come up.

Don’t settle for a less-than-engaging work environment

Is your workplace dull and frustrating, or is it engaging and inspiring?

This is a question I pose to leaders frequently. Most leaders pay more attention to the way their team is performing than to the way their team is operating.

A reader asked me recently about the nature of the “yes or no” answer I was forcing to this question. “What if your company culture is somewhere in the middle?”

My experience and research leads me to believe that most teams, departments, divisions, companies, etc., are somewhere in the middle of this continuum. Your experiences probably mirror mine — you probably see your team somewhere between those “extremes.”

What my experience and research also leads me to believe is that if your team (or department, etc.) culture is at any stage on that continuum that is less than engaging and inspiring, it’s costing you money, eroding team-member engagement and creating lousy customer experiences.

The only good place to be is to have a team culture that is 1) based on mutual trust, respect, and dignity AND 2) demonstrates trust, respect, and dignity in every interaction with peers, customers and even suppliers.

That’s a high standard to strive for! Is it worth the time and energy? Let’s look at some of the “logical consequences” that occur regularly in a less-than-engaging and -inspiring work environment. Note that “logical consequences” are things that naturally occur in work and life. There are good and bad logical consequences. Here we’re looking at the impact that consistently occurs in work environments with less than full engagement and inspiration.

  • A lack of trust means people can’t depend on promises made. Commitments are not kept. Deadlines are missed. Quality suffers. People resort to over-managing activities and tasks to try to keep things on track. Time is wasted. Frustration mounts.
  • A lack of respect means that people are discounted. They are not included in plans, decisions, and actions that affect their livelihoods. People feel invisible, sometimes powerless, a cog in a machine.
  • A lack of dignity means that people’s efforts and accomplishments are not valued. Cruel remarks leave lasting pain.

Is there anything good you have seen that comes from the absence — or inconsistency — of trust, respect, and dignity? I have not heard of any, nor did I see any when I lived in such environments.

The reality is that these negative effects occur anytime there is a less than fully engaging and inspiring work environment.

What are the logical consequences of consistent, authentic engagement and inspiration in a workplace? The proof is apparent in three areas:

  • Increased team member engagement. Team members cooperate to contribute. They enjoy coming to work. They feel valued at work. They align their skills, talents, and enthusiasm to move the organization forward.
  • Increased customer service. Customers are consistently WOW’ed. Team members treat customers — internal ones and external ones — as valued partners. Team members proactively solve customer issues. They like their customers.
    • Increased profits. Engaged team members exceed goal expectations while living the team’s values. They proactively solve problems. They WOW customers. That translates into hard dollar benefits. Expenses are proactively reduced. Projects are done under budget and on time.

Where does your team’s work environment fall on this continuum? How well are peers and customers treated with trust, respect, and dignity? Share your thoughts about this post/podcast in the comments section below.

Subscribe to my free weekly blog & podcast updates for free resources, insights, and news on upcoming events and books.

My latest book, The Culture Engine, helps leaders craft workplace inspiration with an organizational constitution. Get a free sample chapter here.

Podcast – Listen to this post now by clicking here. Subscribe via RSS or iTunes. The music heard on these podcasts is from one of my songs, “Heartfelt,” copyright © Chris Edmonds Music (ASCAP). I play all instruments on these recordings.

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Have you ever had what you would consider a major ethical lapse?

SmartPulse — our weekly nonscientific reader poll in SmartBrief on Leadership — tracks feedback from more than 190,000 business leaders. We run the poll question each week in our e-newsletter.

Last week, we asked: Have you ever had what you would consider a major ethical lapse?

  • Yes — I’ve made a big mistake at least once: 48.59%
  • No — I’ve never had an ethical lapse: 51.41%

To err is human. We all make mistakes. I’ve made plenty. Sometimes we find ourselves in that gray area. The most critical thing we can do at that moment is stop, call the foul, make amends, and seek to put in place safeguards to prevent the issue from recurring. Owning up to an error can be scary and painful. But pointing out when bad things happen or might happen can be a powerful relationship builder. The stronger the guardrails you put in place to keep bad things from happening, the stronger your relationships can end up being.

Mike Figliuolo is managing director of thoughtLEADERS and author of the upcoming book “Lead Inside the Box: How Smart Leaders Guide Their Teams to Exceptional Results” and “One Piece of Paper: The Simple Approach to Powerful, Personal Leadership.”

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Have you ever had what you would consider a major ethical lapse? originally published by SmartBlogs

The crash of Flight 401 and the lessons for your company

Flight 401 NTSB drawing

Graphic from the National Transportation Safety Board’s investigation (click to view full size)

A warm late December evening in Miami awaited the 163 passengers who traveled on Eastern Air Lines Flight 401 from New York to Florida. During the otherwise uneventful trip, marriage proposals were made, a young couple looked forward to introducing their newborn baby to awaiting grandparents, and college students headed back to school after the holidays. But in a few hours, over 100 of the passengers and crewmembers would be dead. The tragically simple cause of their death will not only shock you, but as the leader of your organization, will also provide a fair warning lesson in the problem of over-focusing on one issue or problem at the expense of other risks.

On Dec. 29, 1972, Eastern Air Lines Flight 401 left New York’s JFK Airport and was approaching Miami International Airport at approximately midnight, when the nose landing gear indicator did not illuminate. The pilots had to identify whether the landing gear had indeed failed to extend, or more likely, if the indicator bulb in the cockpit had simply burned out. That bulb was a one-inch square light on the lower right side of the center instrument panel (replacement value of $12) that indicates that the nose gear is down and locked in position for landing. The light should have been on at this point but remained unlit. As a result, the pilots aborted the landing, and the first officer set the autopilot to keep the aircraft at 2,000 feet to allow the crew to sort out the problem.

Shortly afterwards, during a discussion regarding the landing gear, the flight data recorder detected slight pressure on the captain’s control column, coinciding with the captain asking the second officer to check the gear through a viewing bay window. It is likely that the captain unknowingly bumped the control column while turning to speak with the second officer, enough for the autopilot to disengage and change from altitude hold to manual wheel steering, which initiated a gradual descent of the airplane.

Difficulty changing a bulb

Meanwhile, the captain and first officer tried to replace the bulb and confirm that the original had indeed burned out. Cockpit voice recordings revealed that the crew was frustrated with the problem of changing the bulb, as the cover in the cockpit panel had jammed. As the aircraft descended 250 feet below the designated altitude of 2,000 feet, an audio warning from the second officer’s speaker was detected on the cockpit voice recorder, but the crew seemed to be unaware of it, and by that time the second officer was already in the viewing bay. There were at least four indications that the L-1011 was slowly descending towards the Everglades, but the altimeter, vertical speed indicator, captain’s autopilot display, and audio warning all went unnoticed by the crew.

Impact

Just a few minutes later, while the pilots were still working on the light bulb problem, the first officer noticed that the altimeter was indicating a dangerously low altitude, and the radar altimeter sounded an altitude warning. However, by the time the pilots realized their situation it was too late; Flight 401 struck the Everglades in a left turn and began to disintegrate, the wreckage being strewn over an area of 50 square kilometers. It was the first accident involving a wide-bodied airliner, and the most deadly crash in the United States up to that point. While approximately 30 passengers and crew miraculously survived, more than 100 passengers and crewmembers died.

Cognitive tunneling and crew resource management

Investigators were puzzled to subsequently discover that, apart from one burned-out bulb, there was nothing wrong with the L-1011. Tragically, the landing gear was found to be in the down and locked position. The primary cause of this accident was not the aircraft, but the crew — the human factor. Errors committed by the crew were the main cause of the crash of Eastern Air Lines Flight 401; it was a landmark accident in more ways than one. Although the crew members were dealing with the landing gear indicator, they still could have noticed their surroundings and the aircraft’s altitude.

As long as stress levels are not too high, the average human has enough additional information-processing capacity to notice things unrelated to the current task, such as the audio-altitude warning and instruments indicating a descent (Robson, 2008). When stress levels increase, however, it is possible for cognitive tunneling to develop (Chou, Madhavan, & Funk, 1996); this is where one particular task is given a high priority at the expense of other tasks. It can be especially dangerous when the task being focused on is actually less important than those tasks being neglected.

Initially, it may seem that the crew was presented with the simple task of changing a light bulb. However, as the cover had jammed, both the captain and first officer likely experienced cognitive tunneling as they tried to establish a way of replacing the bulb without breaking the cover. In this case, all of their attention was given to this one small problem, at the expense of flying the aircraft.

The crash led to the evolution of Crew Resource Management (CRM) in the airlines industry, in which the captain is responsible for ensuring that monitoring of all indicators and warnings systems are delegated appropriately among the crew. CRM, largely a non-technical breakthrough but rather a human nature innovation, has led to major improvements in airline safety. The first crash of a wide-body airliner provided a strong catalyst for the development of CRM systems, and has served as a strong example for the benefits of CRM training. At the time of flight 401, CRM was not a developed system, and so the crew did not have the opportunity of developing the same effective teamwork skills as modern pilots.

A story in which CRM was successfully deployed occurred in US Airways Flight 1549; Capt. Chesley “Sully” Sullenberger’s successful landing of his disabled airplane in the Hudson River. While Sullenberger took immediate control of flying the airplane, First Officer Jeff Skiles focused his attention on the reference handbook that included instructions for emergency situations.

Conclusion

The implications from this story for leaders of companies are clear — cognitive tunneling can cause organizations and their employees to over focus on one task or goal (e.g. revenue growth, acquisitions) while ignoring the warning signs from other parts of the organization (e.g. safety concerns, regulatory issues), particularly when stress levels are high. Can your company over-focus on one corporate goal or objective (e.g. sales, growth) and fall victim to cognitive tunneling?

Perhaps CEOs and senior management need to ensure that their companies’ warnings systems are being monitored appropriately and deploy a “personal crew” that can help in monitoring these systems — the company’s version of crew resource management to ensure that someone is “always flying the plane.” But how do we implement or maintain an “organizational CRM”? Who are the company’s crew in this regard, and how are they best deployed to watch the various systems in your company that need attention?

Here are seven critical elements of an effective CRM program:

  1. High-level oversight — does your company have an organizational structure led by senior management that oversees issues such as compliance, quality and safety while being able to respond quickly and appropriately to credible warnings?
  2. Training and education — How many of your training programs deal with issues such as safety and quality? How many deal with sales and growth? Confirm if there is a balance in your company between the messages you provide employees about “grow, sell, grow” as compared to the number of programs devoted to safety, quality and compliance?
  3. Auditing/monitoring and risk assessment — risk assessment is the “radar screen” of threats to your company. How are risk assessment, and,more specifically, enterprise risk management (“ERM”) implemented in your organization?
  4. Open lines of communication — Does your company have a hotline that operates 24/7/365 and is staffed by competent individuals who know how to properly receive and triage emergency reports or concerns? Yes, in these many reports will be false alarms and non-emergencies; one CFO told me that someone ordered a pizza on his company’s hotline. But somewhere within these hotline reports will be a pearl of information that just may save the company from disaster.
  5. Written policies and procedures — Does your company have written guidelines that make reporting concerns a job requirement, as well as non-retaliation for doing so?
  6. Investigating reports of concerns — Does your company thoroughly escalate and investigate reported concerns?
  7. Enforcing standards — Is your company prepared, culturally and otherwise, to both set and enforce standards related to issues such as safety, quality and compliance? I’ve often used a phrase with clients that I refer to as a “stop the presses” issue. Is your company prepared to “stop the presses” if a credible warning comes in?

Dave YarinDave Yarin is a compliance and risk management consultant to senior management and directors of large and mid-size companies, and author of the soon to be published book “Fair Warning — The Information Within.” Yarin follows and researches news stories regarding ignored warnings that lead to bad business outcomes, along with the social psychology theories that explain why these warnings were ignored. He lives near Boston with his fiancée and two children. For more information, visit his website, follow him on Twitter, or subscribe to his FlipBoard magazine, Fair Warning

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Footnotes:

1. NATIONAL TRANSPORTATION SAFETY BOARD. (1973). Aircraft accident report: Eastern Air Lines L-1011, N310EA, Miami, Florida, December 29, 1972. Washington D.C: Author.
2. ROBSON, D. (2008). Human being pilot. Cheltenham, Australia: Aviation theory limited.
3. CHOU, C., MADHAVAN, D., & FUNK, K. (1996). Studies of cockpit task management errors. International Journal of Aviation Psychology, 6(4), 307-320.
4. KANKI, B. G., & PALMER, M. T. (1993). Communication and crew resource management. In E. L. Wiener, B. G. Kanki, & R. L. Helmreich (Eds.), Cockpit resource management (pp. 99-136). San Diego, CA: Academic Press.

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The crash of Flight 401 and the lessons for your company originally published by SmartBlogs

Tough is easy

“Are you a tough boss?” asked an interviewer of John L. Weinberg, senior partner and de facto CEO of Goldman Sachs. A former Marine, Weinberg was a blunt-speaking, unabashed, and self-driven man who knew that most of Goldman’s employees sought to work as hard and as wisely as he himself did. During the period of his leadership, Goldman furthered and consolidated its rapid ascent as a global banking powerhouse.

Weinberg answered the question without hesitation. “Oh, tough is easy. Anyone can be tough.” What is really difficult, he explained, was getting a group of workers to perform to their absolute utmost and in coordination with one another. He was right, of course. The challenge facing Weinberg, and many managers, involves establishing an environment in which an already ambitious crew can deliver their best efforts and have those best efforts most advantageously applied. In my years at Goldman, that was our focus — seeking out the most able and appropriate resources within the firm to find solutions for clients and opportunities in the markets.

Weinberg’s interview answer, made while I was a young executive director at the firm, resonated with me. In the following years, as I embarked on investments in other businesses and observed many company cultures and structures, it continually struck me how relatively ineffective the “tough” approach was. Senior managements who demanded much without reason, or without leadership by example, or who used the stick without the carrot in an effort to appear or act tough, accomplished far less than those like Weinberg who realized that acting so was basically the easy way out.

For those not in management but hoping one day to be, the message is clear: Taking on a “tough” demeanor is simply not helpful to your career, and falls into the same distraction category as believing that you must assume a more assertive or aggressive posture in your business dealings with others.

Rather than toughness, I recommend thoughtfulness toward others. It hews much closer to the sharing that you want to be your dominant career activity. Wish people well, from those closest to you to those you do not even know. Ask about their families. Make an effort to remember important things about them (things important to them, not what you think is important.)

Among the praises for Derek Jeter during his farewell tour were the comments from fellow ballplayers telling how when during games against the Yankees they happened to end up on second base, Jeter would come over and ask them how they were doing, bringing up topics specifically personal to them. One opposing ballplayer, accompanied by his wife and young daughter, had met Jeter in the spring. Months later, during the World Series, the ballplayer reached second base against the Yankees. Jeter walked over from his shortstop position. “How is your daughter doing?” he said.

True toughness does exist. It is called discipline. The discipline to identify and cultivate your positive attributes, and then share them as completely as you can, will prepare you to accept and meet larger and larger challenges. That kind of toughness, not one borne of a false demeanor, is the kind that can define you and that will be noticed, respected and ultimately rewarded.

keith danko book cover1Keith Danko is the founder of Witherspoon Partners, a leading player in the alternative asset industry. He has over two decades of experience building and managing businesses, most notably restructuring and serving as CEO of ACAM Advisors. He also served as CEO of CQS US and as an executive director of Goldman Sachs, where he built the firm’s international asset-backed securities business. A Duke graduate with a Harvard MBA, he is the author of “Within Your Grasp,” has written extensively on trends and careers in alternative assets, and has authored the white paper “Portable Alpha: An Updated Perspective.”

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Tough is easy originally published by SmartBlogs

Whether at a Startup or on a Nuclear Submarine, Earn Your Leadership

Barking orders at the people under you may get things done, but will ultimately lead to failure.

From Startup to the White House: 3 Key Campaign Trail Lessons for Entrepreneurs

President Barack Obama's 2008 campaign chief shares what made the operation a resounding success.

Small-business tax preparation: What’s new when filing your taxes?

Let’s talk taxes, and you needn’t flinch. The subject doesn’t have to be all bad news, and isn’t.

There were some changes for the 2014 tax year that you should be aware of as you undertake your small business’ tax prep, some of which may well be to your advantage.

Here’s the good news:

  • The Affordable Care Act and the Small Business Health Care Tax Credit. This credit is now available to you if have 25 or fewer full-time (or full-time equivalent) employees, pay an average wage of less than $50,000 and cover at least half the cost of your employees’ health insurance premiums.
  • Last year, the maximum credit was 35% of any premiums you paid; it’s now 50%. The IRS provides plenty of information on the particulars, and here’s more about the ACA and your business.
  • Another piece of good news: the standard business mileage rate changed in the 2014 tax year to 56 cents a mile. Businesses have the option of using either the standard rate or actual expenses. Your CPA can help you decide what’s best for you.
  • And here’s one that will be of interest to the more experimental among you: The Department of Treasury announced that it will allow companies to file for the Research and Development Alternative Simplified Credit, or ASC, on an amended return. The ASC is a method of computing research and development tax credits. In the past, companies were allowed to take the ASC only on an original return. It’s difficult to qualify for an R&D credit, and many business owners decided it was too much paperwork to pull together without an extension to file an amended return. Now you can get that extra time.

In the wait-and-see realm:

  • Small-business owners may want to keep their eyes on Washington for movement on the “tax extenders” bill that’s been stalled in Congress. The proposal would renew $85 billion for some 50 temporary tax breaks for individuals and businesses. Those breaks expired at the end of 2013; they could be extended for two years or longer.

These we’ll file in the not-so-great-news category:

  • Section 179 of the Internal Revenue Code allows businesses to deduct the cost of equipment and furniture in the year it was purchased rather than spreading out the expense over the years that it’s expected to be in use. In 2013, businesses could deduct up to $500,000; in 2014, that limit plummeted to $25,000. Ouch.
  • The “bonus depreciation” deduction (50% of the cost of equipment purchased and put to use throughout the tax year) is no longer available except for a select few types of property. Ask your CPA if you qualify.
  • The Work Opportunity Tax Credit was a credit of up to $9,600 available to employers who hired and retained veterans and individuals who face significant barriers to employment. That expired at the end of 2013.

And think smart when filing your taxes. Make sure you know the business tax forms you’ll need (here’s a list from the IRS), and be ever on the alert for rules changes. Check with your CPA regularly, and visit the U.S. Small Business Administration to learn more about tax issues faced by small business owners.

And whatever you do, don’t hesitate to ask for help if you need it.

SmartBrief is featuring an ongoing Small Biz Q-and-A series, and we offer free e-mail newsletters on small business and entrepreneurialism. Sign up today.

 

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Small-business tax preparation: What’s new when filing your taxes? originally published by SmartBlogs