Another Reason to Keep Employees Happy?

Inc. magazine reports on it's website that while job-related fatalities declined by 6% in 2007 to 5,488 in the US, workplace murders increased 13% to 610.

Another reason to consider Open Book Management or at least focusing your efforts on maintaining a good HR department?

Benefits of Open Book Management

Secrecy is one of the enduring factors for family-owned companies, and for privately owned companies in general. Command and control is the norm, giving workers only the information they need to know for their direct job functions. The problems of this approach are described nicely in Ann Meyer's Chicago Tribune article Keeping workers in the know this week. She describes how small business owner Paul Scriba overcame his challenges by employing Open Book Management ("OBM") techniques. And recent studies have confirmed that firms employing OBM realize accelerated top line growth and higher productivity from the workforce.

A definition of OBM could include these factors:

* Give employees training to understand the financial information
* Give employees all relevant financial information
* Give employees responsibility for the numbers under their control.
* Give employees a financial stake in how the company performs.

Point four is optional, but at a minimum the company needs to address the top three issues. Benefits accrue from employees who take the responsibility for results under their control. And "relevant" means pertinent, no they don't need to know your salary, but if you are running a leaky ship with unadvised payments to family members, maybe OBM is not for you, but then again neither is running a vibrant company.

Gaining Capital without Losing Control

From Forbes

A nice quick read from Jim Casparie, a founding principal of Angel Strategies (the first national organization for angel investors) about convertible notes.

As discussed, this is a great way for newish companies, which need an infusion of capital, to raise funds without having to prove that your growth will actually occur. An investor may be willing to lend money, with a belief in some upside. In the meantime you are paying them are regular debt return in interest. But at their option (in the case of good performance or when a venture capitalist is coming on board) to convert their investment to equity at a favorable price. In effect, you can price the conversion to get the maximum at the conversion date, say in two years when things are singing along! In the meantime the note should have an interest rate below what you would normally pay without this option.

Your CFO should be aware of these types of options as you approach the market for funds.

Sobering View

With a tip of the hat to one of my favorite bloggers The Big Picture, here is a sobering 3 minute review from the International Herald Tribune as to where we are now due to the housing crisis, which is effecting everyone.

The SBA and How This Administration Does Business

I cannot tell you how peeved I am at the SBA. Big supporter up to now as a solid option for small businesses who need capital. Still a supporter, but as a tax payer very mad. This excellent expose by Gretchen Morgenson looks at the recent fraud involved with a big operation active in Michigan which leaves the tax payers with a huge, albeit local, possible loss, reminds me of the days of the Savings and Loan bailout. She describes the nut:

"The S.B.A.’s own Office of Inspector General examined the agency’s oversight of BLX (recently the 2nd largest SBA lender in the country!!). That inquiry preceded the federal investigation of the company in Michigan, which found that BLX’s operation in that state had made $76 million in fraudulent loans. Last year, Patrick Harrington, a former BLX executive, pleaded guilty to fraud. Since then, 35 people not employed by BLX have been indicted and charged with being co-conspirators, Michigan prosecutors said."

Unbelievable, and she makes a case for very lax oversight. And to think I thought the SBA was underfunded - now we see some very badly mismanaged situations. To allow this much fraud to go on, and to not immediately fix it, is outrageous. Fat chance Congress will be impressed with the recent for increased funding.