For most firms, payroll is the largest operational expense and making payroll mistakes can have a significant impact on business – a dent in cash flow, an investigation by the taxation authority, even a court case with a disgruntled employee.

Payroll is at the heart of any relationship between employer and employee and mistakes are not only embarrassing, but sometimes costly. You need to work on this at two levels – setting up fair and transparent polices about pay, and setting up a system that minimizes the chance for error.

Pay policies

1.    Have a pay policy and put it in writing. Not being able to point to the firm’s policy on why some people got a raise and others didn’t is a sure way of setting yourself up to have a group of unhappy team members, complaints, and maybe even legal action. Come up with a policy that describes the bases for giving bonuses, rises and promotions – and then put it in writing. For example, you may state that pay will be based on their role, their level of competency, and their level of responsibility. However, it won’t be based on how long they have served with the company, or their age or sex. Policies based on objectively assessed performance keep you within the law and out of court.

2.    Implement pay changes at the correct time. It’s not uncommon for there to be a disconnect between the process of awarding a pay increase and getting that information into an employee’s payroll record. If that increase doesn’t turn up in the employee’s bank account at the agreed time you’ve sent some bad messages about your reliability and what you think of their interests. Another example of this sort of thing is the sales executive who knows the customer has paid, but doesn't get his commission on time because the information hasn’t filtered through to the payroll system. This person will eventually become fed up and look for another company that treats its employees better.

3.    Deal with overpayments immediately. Research has found that almost half of employees have been overpaid at some time in their work life, but a third didn't own up and pocketed the cash. Payroll mistakes like this cut two ways – they can undermine an employer’s trust in their team, and they can, if not handled correctly when recognized, damage the employee’s feelings about their employer. Demands for immediate and total repayment may be perceived as unfair and imposing a real burden for instance.

4.    Assess termination pay accurately. Take the time to find out exactly what a terminating employee is entitled to. Mistakes can go in either party’s favor but you probably won’t get back an overpayment while you can find yourself in trouble over an underpayment.

If you are preparing your own payroll you’ll know just how much time it takes to monitor this crucial, yet recurring task. And maybe you’ve decided that in fact it’s taking up just too much time. Options?

Basically two – buy a suitable payroll software system or outsource the whole thing to an agency.

Even small companies can save money by outsourcing their payroll processing. In most cases, a professional payroll processor will calculate the payroll each pay period, prepare employee earnings statements, provide direct deposit arrangements, determine and deposit necessary taxes and file tax returns for your business. All of these can save your business time and help avoid payroll mistakes and late or inaccurate tax filings.

Payroll services aren't everyone's best option, however. It makes sense to keep doing it yourself if you:

·       Have a relatively simple payroll, and

·       Can get good help understanding the thicket of rules and regulations that go with payroll.

If you opt to do it yourself with a payroll software program, the system you choose must be able to calculate all employee payroll obligations, payroll deductions and payroll tax obligations, as well as record and update all payroll information in a general ledger. You would file taxes yourself in this case, usually with the help of your accountant who specializes in payroll.

If payroll is becoming too complicated and too time consuming then there are options – but whether you go for outsourcing or software, seek some independent professional advice and do your homework thoroughly.

Top performers almost always exceed the performance of average workers by a significant percentage. But developing top team members takes a lot of time, money and effort, so it’s in your best interests to hold on to them!

Here are a few easy to practice tips on improving the workplace atmosphere and your relationship with top performers that will maintain their commitment to you.

Get to know them

Take a little time to get to know your team members. Try and meet their partner if they have one, find out what their interests and personal goals are – right now are they interested in buying a house or saving to travel the world?. Being able to relate personally is great for morale and a sense of belonging. This is good advice to use with all your team.

Understand what drives them – and provide it

Second, you have to understand what drives top performers. There are 5 common drivers operating in the workplace - achievement, recognition, money, security, and status. You will find that top performers tend to draw their motivation from the first two sources. Rarely is money a critical influence (though of course it is an influence!). And security conscious people don’t over perform – they sit and play it safe. Status seekers you’ll need to watch. They can be high performers, but a team member driven by status is more interested in the job title on their business card than anything else. They want to rise quickly in the organization, and faster than their peers. Status seekers generally are not a positive influence in a business, as they often put their own interests ahead of those of the organization. To get the best out of a status seeker and still maintain a good culture in the business you’ll need to:

·       Clearly indicate how they might achieve promotion

·       Emphasize the type of behavior they need to display in order to achieve promotion – i.e., great team work and helping others, not just results

·       Clearly indicate that any anti-social behavior will definitely not lead to promotion.

Encourage input and participation

Top performers are ideas people – and they need a channel for getting them across and recognized.

You probably have a mechanism for gathering ideas from the team - when you get one from one of your top performers give it serious consideration. Then, if it’s viable, make sure that due recognition is given for it. Recognition is just what these people thrive on. Good communication is a hallmark of high retention firms.

With top performers you can take this further and get even more buy-in by giving them the opportunity to actually be involved in the decision making processes of your company. If they feel they have a say in the way things are going they are more likely to stay interested and committed.

Challenge them

Top performers are that way because they like challenges – allow boredom to set in and they’ll be looking for something more interesting elsewhere. It may be a challenge for you to design work so that this happens, but if you can’t, then you can’t expect them to stay. Even in tight labor markets a top performer has the initiative and belief in their own ability to risk trying elsewhere.

Compensate them well

While money isn’t what drives a top performer, the recognition represented by a bigger pay packet or bonus is. A salary system based on performance is not only perceived as fair by people but will allow you to structure it so there is a recognizable advantage for top performance. When you deal effectively with poor performing employees, and this should be in all areas, not just compensation, your actions reinforce your commitment to a high performing culture and help generate goodwill among your better performers.

Don’t fetter them

Give them the tools they need to do their jobs effectively. Yes, you have to watch expenses carefully – every expense. But if your expense cutting causes your best people to wish they were somewhere else, then they soon will be.

And don’t bog them down in form filling and other bureaucratic tasks. There's nothing more frustrating, when you clearly see the big picture, than to have someone insist that every decision must be pre-approved in triplicate. In too many workplaces empowerment is a myth. Wherever possible loosen up the bureaucracy and provide room to move for those who have shown they can be trusted with responsibility.

Without question, maintaining the passion and commitment of your top performers requires exactly the same behavior from you. So a lot of it comes down to you – your vision, and the ability to infect others with it, your behavior in recognizing and rewarding top performers, and your passion for excellence. You must believe in them, you must be proud that they are working for you, and you must give them due recognition.

Success in retaining top people ultimately turns on creating a culture that nurtures high performers. There’s a lot of truth in the old saying – ‘Employees don't quit their jobs, they quit their bosses’.

To build a business you have to be good at marketing yourself, your experience and your skills. This requires a mix of strategies – some traditional, some innovative. Here are some suggestions that can help.

Define your vision

To know what you have to offer, determine the unique qualities you can attribute to your business and yourself. Look at the type of business you have, your experience in the industry, your position in the market, the special knowledge of your team members, and the business location. These are the elements of what you have to ‘sell’ to customers – existing and new.

Clearly articulate the long-term view that you hold for your business. Don’t allow yourself to be focused on short-term needs or personal ambition.

Involve others in your planning and be open to their ideas. Talk to your team members and your customers for some fresh insights and ideas.

Establish your brand

Now that you know what you have to offer customers and where you want to be in the long-term, you can begin to market your business and make it grow in a structured way.

Develop your ‘brand’ – a logo, a corporate look, perhaps even a slogan. Be visually unique and have a style that represents what you are and where you’re going. Carry this through into a corporate brochure and a website.

Get more business from your existing customers

It’s always easier to sell more to an existing customer than to create a new customer. Ensure all your team members know the complete range of products and value adds you offer so that nobody misses an onselling opportunity with a customer.

Take some time in your team meetings to develop and introduce new products and services you would like to promote to your customers. Tell your team how to spot potential opportunities and create awareness with customers.

Ensure that you regularly raise awareness of your products and services among your existing clients through direct mailouts and email newsletters. Keep in regular touch with customers and don’t give them a reason to look elsewhere.

Go after new customers

Look for opportunities to promote yourself and your business to potential customers. Get involved in local business and social groups. Offer your services as a speaker, or organizer. Spend time, not money, and become a part of your community. (This also helps with your existing customers, of course.)

Approach local newspapers about providing an advisory column in your areas of expertise. Offer to answer readers’ questions on your industry. Become recognized as a source of information.

People like to buy from someone they know. For most small to medium-sized enterprises there’s no better way to build a business than by marketing yourself. Define your vision, establish your brand, then go out there and get the customers!

Not all customers have equal value to your organization. The 80/20 rule – that 80 percent of your sales come from the top 20 percent of your customers – applies to most small businesses. Identifying that top 20 percent will allow you to focus your marketing programs on the customers who REALLY drive your company’s profitability, as well as identifying customers who may simply return so little as to be not worthwhile keeping. But what is a ‘profitable’ customer and how do you identify them?

What is a ‘profitable’ customer?

Let’s just consider first what we are talking about here. It’s not enough to look just at the bottom line and see what a customer has spent with you. That ignores the fact that there were costs in acquiring that customer in the first place, and continuing costs in maintaining the account – everything from dealing with their complaints to taking them to lunch. All these represent costs attributable to that customer and need to be considered against what they spend with you – because these costs can add up to a significant amount, possibly enough to tip the balance and make the customer just too expensive to maintain in some cases. So profitability does not necessarily equal the amount of money a customer gives to your business. In many businesses, smaller sales can be highly profitable, while larger sales can cost the company a lot to administer or deliver, and therefore provide a smaller profit margin. So how do you discover your ‘profitable’ customers?

How to calculate the ‘profitability’ of a customer

Estimating ‘profitability’ consists of calculating the two main cost areas associated with a customer – their acquisition cost and the cost of supporting them ongoing. This need not be too difficult; in fact, it may even prove easier for the smaller firm than the larger. But it probably does require some professional help in assessing all the costs that go towards the acquisition cost and then tracing other expenses associated with retaining a customer. The system doesn’t need to be complex and much of the raw material to trace costs to customers probably already exists in your systems, albeit in forms requiring transformation. For example, customer transaction histories show all orders, returns, and collection efforts and you can use that information to create lookup tables in your database that map activity codes to activity costs.

Putting the information to work

If for every ‘profitable’ customer you could get another one just like them, would you agree that your reward would be greater profits? One of the powerful things about profitability analysis is that it can lead on to looking at the common characteristics and behaviors of your top customers – of profiling them. Do they fit into specific demographic or geographic categories? Do they have certain shared attitudes or values? Do they make their buying decisions in a similar way?

Profiling customers like this will help you develop the most effective marketing programs to not only extend the value to your company of current high profitability customers, but also to target and attract new ones.

“Don't argue for other people's weaknesses. Don't argue for your own. When you make a mistake, admit it, correct it, and learn from it - immediately.”

– Stephen Covey (Author of The 7 Habits Of Highly Effective People)