We have created a simple spreadsheet that will help you determine how much each of your employee really “earns.”  You can download this spreadsheet at Compensation Calculator.  Some are in the form of benefit programs like health insurance, and others are through statutory benefit programs like social security and medicare.  With some help from your accounting staff and/or payroll company, you should be able to complete most of the gray boxes on the spreadsheet.  Then it will figure out the rest.

Did you know that almost 30% of the average total employee costs are for the extra stuff in excess of salaries, wages, and bonuses.  Click here for a free Total Compensation Calculator.  This calculator, which is in Excel 2007 format, will show you how much of your total employee costs are going toward all of the extras.

Do you know how much you are spending, in addition to annual salaries and bonuses, you are spending on your employees?  Are you using this information to accurately forecast your expenses and cash flow in the future.  I often see this part of a company’s projections overlooked even though it is often one of the company’s largest expenses next to wages themselves.

So, the take-away is two-fold.  First, download this spreadsheet and figure out how much your employees really cost you and then use that in your planning and forecasting.  Second, use the spreadsheet to educate your employees about the total compensation package they receive because of their employment with you.  Even if they do not believe in or buy-into all of the programs and initiatives, the cost is still real – and you need to get credit for it.

An ever-growing section of the labor market has become increasingly more interested in a full-benefits package rather than the size of their paycheck. A growing segment of the workforce is looking at an increasingly distant retirement date, worried their nest egg could vanish at the appearance any medical condition that will require ongoing treatment with a hefty prescription bill to boot. There are many well-seasoned and experienced professionals willing to work for the benefits package rather than higher wages.

Hanging on to your benefits package will give you an opportunity to scoop up these valuable employees at bargain prices when hiring becomes difficult again.

Many start-up and emerging businesses struggle with applying the right resources to the accounting and finance functions of their companies.  As a result, they end up under or over-paying for what they need, and they usually end up without what they really need.  I wrote this article to try and help business owners, CEOs, and entrepreneurs understand how to solve this mystery.

In a recent training retreat I was reminded of this experience as well as the phrase that I kept playing over and over in my head to help me keep my cool while I was attacked: “Feedback is a gift!”  I honestly tried to appraise the situation and understand if there was some way I could learn and improve based on this feedback – the only way feedback can ever be a gift.  If you fail to try and learn and improve from it, then it will seldom add value to your life.

Once this man finished saying what he wanted to say, I communicated my surprise and I told him what I thought I might be able to do in the future to be better based on his feedback.  In fact, I swallowed my pride whole when I said: “Thank you for this feedback.”  My response completely dis-armed him and we finished with a healthy conversation wherein he admitted he was at fault and we resolved to move forward and make things better.

The point of the story is this: whether it is good or bad, feedback is a gift.  If the feedback is neutral or you receive no feedback at all, then you really don’t know where you stand and if you should be changing or improving something.  If you receive sincere positive feedback, then you will know you should do more of the same in the future.  If the feedback is negative, then you know what you should change in the future.  And, let it motivate you to make sure you never get that feedback again.

Either way, it is a gift of knowledge with which you can make the right decisions and take the right actions.  No feedback or insincere feedback (which, in my opinion, is the worst kind of feedback) is useless and should leave us wondering how we are actually doing.

When running a business, feedback should be the number one source of inputs you consider when crafting your strategic and tactical plan to build a successful enterprise.  You will take in qualitative feedback from conversations with and surveys of customers, employees, contractors, suppliers, and vendors.  You need to process quantitative feedback in the form of monthly financial statements, budget vs. actual analysis, daily and weekly dashboards, cash flow projections, and so much more.  Not receiving this information, whether good or bad, is crippling – you have no idea if you are doing well or n0t.

In my experience, the best entrepreneurs and CEOs are those who recognize that feedback is a gift.  They become empowered with real and actionable information from all of the appropriate sources.

So, why don’t many people view feedback as a gift?  Because it is painful.  It is making yourself vulnerable and exposing your weaknesses and strengths to others, and sometimes they will come at you with more negative than you think you can handle.  But if you truly consider feedback as the gift that it is, it will always work to your ultimate benefit.

The person hired to take all of this on quickly begins to wear many hats – receptionist, bookkeeper, accounting clerk, data entry clerk, assistant to the founder, customer service support, marketing support, human resources, sales support, and sometimes they even come in and clean the office on the weekends for a little extra money.  I have found that women are more often hired than men in this position because there seems to be an over-arching stereotype that women manage details better than men.  I neither subscribe to or deny the stereotype – I am merely acknowledging that it exists.  This person will end up with a title like office manager, meaning they handle a lot of the details no one else wants or has time for and they become a critical element of keeping the business running from an administrative stand-point.

As this person absorbs all of these activities their perceived value contribution to the business is high, although they wear so many hats and have to cover so many areas of the business that they really don’t master any of them.  In addition, they usually lack the experience and education to handle certain tasks they’re expected to do, especially when it comes to accounting and finance.

As a business progresses in its life-cycle this person does their best to keep the books in a spreadsheet or a low-cost off-the-shelf accounting software package, like QuickBooks.  While they have done their absolute best to make this effective, their lack of education and experience in accounting means that even with all their effort they are not able to provide much meaningful, timely, or accurate information/data to the people running the business.

This person becomes frustrated because they sense they are not doing enough, even though, considering the circumstances, they work long hours and care a great deal for the company.  Nobody likes a job where they feel inadequate or incompetent.  They may even try to get some training in accounting or the software package the company uses, but the training is usually so generic that it is hard to apply to the actual day-to-day operations and functions of the software in the business.

At this point the business owner is not getting the information he needs to run the business.  So he continues to trust his gut and makes far too many decisions based on the balance in his bank account instead of his actual business performance.  This leads to some bad decisions and the business struggles to grow as a result.  Yes, bad accounting can actually hinder the growth of a company!

The collapse of the Office Manager position comes as parts and pieces of the their responsibilities are peeled off and given to newly hired employees with more experience and expertise in those respective fields.  As this happens, the only work left is the low-paying duties like receptionist and data entry, and they are far over-paid for those functions.  Their position is ultimately eliminated, and very few of the people initially in the role survive with the company.  They were hired to be a “jack” of many trades, but the growth of the company has facilitated specialization and their master-of-none skills leave them without a job.

There is a way to avoid this tragedy, and I will discuss it in Solve the Mystery of Staffing Your Accounting Department on the American Express OPEN Forum.