President’s Message – October 7th, 2014

I’ve been wondering about bringing family members into my business. Seems like a mighty nice thing to do. Trying to see this decision in 360 degrees, I came upon this thought: Will adding family to my company become a competitive advantage or a constraint? Can my thoughts of business continuation and also serving my blood line best be served by bringing familyin and hoping they excel or by bringing in the best candidates available and letting the company profits serve my family? I don’t know yet. How have you addressed this?

“If you want to go fast, go alone.  If you want to go far, go together.  CFBC, 20 Years Deep”

Bob Carmody President Signature 2014

Posted in News, Uncategorized | Tagged , , , , , , |

Social Security Claiming Strategies for Married Couples

Social Security Claiming Strategies for Married Couples
Brought to you by Darrin J. Shallcross, In conjunction with Lincoln Financial Advisors, a registered investment advisor.Deciding when to begin receiving Social Security benefits is a major financial issue for anyone approaching retirement because the age at which you apply for benefits will affect the amount you’ll receive. If you’re married, this decision can be especially complicated because you and your spouse will need to plan together, taking into account the Social Security benefits you may each be entitled to. For example, married couples may qualify for retirement benefits based on their own earnings records, and/or for spousal benefits based on their spouse’s earnings record. In addition, a surviving spouse may qualify for widow or widower’s benefits based on what his or her spouse was receiving.Fortunately, there are a couple of planning opportunities available that you may be able to use to boost both your Social Security retirement income and income for your surviving spouse. Both can be used in a variety of scenarios, but here’s how they generally work.

File and suspend

Generally, a husband or wife is entitled to receive the higher of his or her own Social Security retirement benefit (a worker’s benefit) or as much as 50% of what his or her spouse is entitled to receive at full retirement age (a spousal benefit). But here’s the catch: under Social Security rules, a husband or wife who is eligible to file for spousal benefits based on his or her spouse’s record cannot do so until his or her spouse begins collecting retirement benefits. However, there is an exception–someone who has reached full retirement age but who doesn’t want to begin collecting retirement benefits right away may choose to file an application for retirement benefits, then immediately request to have those benefits suspended, so that his or her eligible spouse can file for spousal benefits.

The file-and-suspend strategy is most commonly used when one spouse has much lower lifetime earnings, and thus will receive a higher retirement benefit based on his or her spouse’s earnings record than on his or her own earnings record. Using this strategy can potentially boost retirement income in three ways.

  1. The spouse with higher earnings who has suspended benefits can accrue delayed retirement credits at a rate of 8% per year (the rate for anyone born in 1943 or later) up until age 70, thereby increasing his or her retirement benefit by as much as 32%.
  2. The spouse with lower earnings can immediately claim a higher (spousal) benefit.
  3. Any survivor’s benefit available to the lower-earning spouse will also increase because a surviving spouse generally receives a benefit equal to 100% of the monthly retirement benefit the other spouse was receiving (or was entitled to receive) at the time of his or her death.

Here’s a hypothetical example. Leslie is about to reach her full retirement age of 66, but she wants to postpone filing for Social Security benefits so that she can increase her monthly retirement benefit from $2,000 at full retirement age to $2,640 at age 70 (32% more). However, her husband Lou (who has had substantially lower lifetime earnings) wants to retire in a few months at his full retirement age (also 66). He will be eligible for a higher monthly spousal benefit based on Leslie’s work record than on his own–$1,000 vs. $700. So that Lou can receive the higher spousal benefit as soon as he retires, Leslie files an application for benefits, but then immediately suspends it. Leslie can then earn delayed retirement credits, resulting in a higher retirement benefit for her at age 70 and a higher widower’s benefit for Lou in the event of her death.

File for one benefit, then the other

Another strategy that can be used to increase household income for retirees is to have one spouse file for spousal benefits first, then switch to his or her own higher retirement benefit later.

Once a spouse reaches full retirement age and is eligible for a spousal benefit based on his or her spouse’s earnings record and a retirement benefit based on his or her own earnings record, he or she can choose to file a restricted application for spousal benefits, then delay applying for retirement benefits on his or her own earnings record (up until age 70) in order to earn delayed retirement credits. This may help to maximize survivor’s income as well as retirement income, because the surviving spouse will be eligible for the greater of his or her own benefit or 100% of the spouse’s benefit.

This strategy can be used in a variety of scenarios, but here’s one hypothetical example that illustrates how it might be used when both spouses have substantial earnings but don’t want to postpone applying for benefits altogether. Liz files for her Social Security retirement benefit of $2,400 per month at age 66 (based on her own earnings record), but her husband Tim wants to wait until age 70 to file. At age 66 (his full retirement age) Tim applies for spousal benefits based on Liz’s earnings record (Liz has already filed for benefits) and receives 50% of Liz’s benefit amount ($1,200 per month). He then delays applying for benefits based on his own earnings record ($2,100 per month at full retirement age) so that he can earn delayed retirement credits. At age 70, Tim switches from collecting a spousal benefit to his own larger worker’s retirement benefit of $2,772 per month (32% higher than at age 66). This not only increases Liz and Tim’s household income but also enables Liz to receive a larger survivor’s benefit in the event of Tim’s death.

Things to keep in mind

  • Deciding when to begin receiving Social Security benefits is a complicated decision. You’ll need to consider a number of scenarios, and take into account factors such as both spouses’ ages, estimated benefit entitlements, and life expectancies. A Social Security representative can’t give you advice, but can help explain your options.
  • Using the file-and-suspend strategy may not be advantageous when one spouse is in poor health or when Social Security income is needed as soon as possible.
  • Delaying Social Security income may have tax consequences–consult a tax professional.
  • Spousal or survivor’s benefits are generally reduced by a certain percentage if received before full retirement age.

CRN-1008350-090914

Darrin  J. Shallcross is a registered representative and investment advisor representative of Lincoln Financial Advisors Corp., a broker-dealer (member SIPC) and registered investment advisor, 568 Pennsylvania Ave Glen Ellyn, Il 60137 630-469-7526, offering insurance through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances. The content of this material was provided to you by Lincoln Financial Advisors for its representatives and their clients.

 

Posted in Shallcross Financial Planning | Tagged , , , , , |

President’s Message – September 9th, 2014

Last month I was contemplating the effect of personal tech devices on us and wondering if the way folks live with their smart phones is as wrong as it feels to me or if it’s really a revolution or perhaps an evolution? Since then, I came across this paragraph in The Fish That Ate the Whale: The Life and Times of America’s Banana King by Rich Cohen and it wrapped around my business strategy thinking like a big octopus. I wonder what your reaction to these words are.

“A corporation is a product of a particular place and a particular time. U.S. Steel was Pennsylvania in the 1890’s. Microsoft was Seattle in the 1980’s. It’s where and when their sense of the world was fixed. The company brain is hardwired. Which is why a corporation, though conceivably immortal, tends to have a life span, tends to age and die. Unless remade by a new generation of pioneers – in which case it’s a different company – most corporations do not outlive the era of their first success. When the ideas and assumptions prevalent at the time of their founding go out of fashion, the company fades.”

If you want to go fast, go alone. If you want to go far, go together. CFBC.

Bob Carmody President Signature 2014

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Draft Instructions for Employer Reporting of Health Coverage Released

  • On Aug. 28, 2014, the IRS released draft instructions for 6055 & 6056 reporting.
  • Draft versions of forms for 6055 & 6056 reporting were released in July 2014.
  • These instructions are draft versions only, and should not be relied upon for filing.
  • Both the forms and instructions will be finalized later this year.

The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056. Under these new reporting rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees.

On Aug. 28, 2014, the Internal Revenue Service (IRS) released draft instructions for the forms that employers will use to report under Code Sections 6055 and 6056.

  • Instructions for Forms 1094-B and 1095-B: These forms will be used by entities reporting under Section 6055 as health insurance issuers, sponsors of self-insured group health plans that are not reporting as applicable large employers (ALEs), sponsors of multiemployer plans and providers of government-sponsored coverage.
  • Instructions for Forms 1094-C and 1095-C: These forms will be used by ALEs that are reporting under Section 6056, as well as for combined reporting by ALEs who report under both Sections 6055 and 6056.

These instructions are draft versions only, and should not be relied upon for filing. The IRS may make changes to the instructions prior to releasing final versions.

Draft versions of Forms 1094-B, 1095-B, 1094-C and 1095-C were released in July 2014. The IRS expects both the forms and instructions to be finalized later this year.

Overview of Sections 6055 & 6056
The Code Sections 6055 and 6056 reporting requirements are intended to promote transparency with respect to health plan coverage and costs. They will also provide the government with information to administer other ACA mandates, such as the employer and individual mandates.

Code Section 6055 requires health insurance issuers, self-insured health plan sponsors, government agencies that administer government-sponsored health insurance programs and any other entity that provides minimum essential coverage (MEC) to report information on that coverage to the IRS and covered individuals.

Code Section 6056 requires ALEs subject to the employer shared responsibility rules to report information on the health coverage offered to full-time employees to the IRS and covered individuals.

Filing Requirements
Under both Sections 6055 and 6056, each reporting entity will be required to file all of the following with the IRS:

  • A separate information return for each individual who is provided MEC (for ALEs, this includes only full-time employees); and
  • A single transmittal form for all of the returns filed for a given calendar year.

Filing Due Dates
Under both Sections 6055 and 6056, the return and transmittal forms must be filed with the IRS on or before Feb. 28 (March 31, if filed electronically) of the year following the calendar year of coverage. However, if the regular due date falls on a Saturday, Sunday or legal holiday, entities should file by the next business day. For calendar year 2015, these forms must be filed by Feb. 29, 2016, (or March 31, 2016, if filing electronically).

These forms are not required to be filed for 2014. However, in preparation for the first required filing (in 2016 for 2015 coverage), reporting entities may voluntarily file in 2015 for 2014 in accordance with the draft forms and instructions. More information about voluntary filing is available on the IRS website.

Statements Furnished to Individuals
All entities reporting under Section 6055 or 6056 must furnish a copy of Form 1094-C or 1095-C, as applicable, to the person identified as the responsible individual named on the form. Statements must be furnished by mail, unless the recipient affirmatively consents to receive the statement electronically.

The statement must be furnished on or before Jan. 31 of the year following the calendar year of coverage. The first statements are due to individuals by Feb. 1, 2016.

Where To File
Any reporting entity that is required to file at least 250 returns under Section 6055 or 6056 must file electronically. The 250-or-more requirement applies separately to each type of return and separately to each type of corrected return.

Reporting entities that are filing on paper will send paper returns to the address provided in the instructions, based on where their principal business, office or agency (or legal residence, in the case of an individual) is located.

Instructions for Forms 1094-B and 1095-B
Under Section 6055, every person that provides MEC to an individual during a calendar year must file Forms 1094-B (a transmittal) and 1095-B (an information return). This includes:

  • Health insurance issuers or carriers;
  • Self-insured health plan sponsors;
  • Government agencies that administer government-sponsored health insurance programs; and
  • Any other entity that provides MEC.

However, ALEs subject to the employer shared responsibility rules that sponsor self-insured group health plans will report information about the coverage in Part III of Form 1095-C, instead of on Form 1095-B. In general, an employer with 50 or more full-time employees (including full-time equivalents) during the prior calendar year is considered an ALE.

Instructions for Forms 1094-C and 1095-C
All ALEs subject to the employer shared responsibility rules must file Form 1094-C (a transmittal) and Form 1095-C (an information return) for each full-time employee for any month.

  • Form 1094-C is used to report summary information for each employer to the IRS and to transmit Forms 1095-C to the IRS.
  • Form 1095-C is used to report information about each employee.

These forms help the IRS determine whether an ALE owes penalties under the employer shared responsibility rules, as well as whether an employee is eligible for premium tax credits.

How to Complete Forms
ALEs that sponsor a self-insured health plan must also complete Form 1095-C, Parts I and III, for any individual (including any full-time employee, non-full-time employee, family members and others) who enrolled in the self- insured health plan. If the employee is full-time for any month, the ALE must also complete Part II. If the employee is not full-time for all 12 months of the calendar year, the ALE must complete only Part II, line 14, by entering code 1G in the “All 12 Months” column.

For other types of coverage, the issuer or plan sponsor will provide the information about their health coverage to any enrolled employees. The employer should not complete Form 1095-C, Part III, for those employees.

For other types of coverage, the issuer or plan sponsor will provide the information about their health coverage to any enrolled employees. The employer should not complete Form 1095-C, Part III, for those employees.

Authoritative Transmittal for ALEs Filing Multiple Forms 1094-C
A Form 1094-C must be attached to any Forms 1095-C filed by an ALE. An ALE may submit multiple Forms 1094-C, each accompanied by Forms 1095-C, for some of its employees, provided that Forms 1095-C are filed for each employee for whom the ALE is required to file.

ALEs must file a single Form 1094-C reporting aggregate employer-level data for all full-time employees, identifying the form, on line 19 of Part II, as the Authoritative Transmittal. One Authoritative Transmittal must be filed for each ALE, even if multiple Forms 1094-C are filed by and on behalf of the ALE. For example, if an employer has prepared a separate Form 1094-C for each of its two divisions to transmit Forms 1095-C for each division’s full-time employees, one of the Forms 1094-C filed must be designated as the Authoritative Transmittal and report aggregate employer-level data for all full-time employees (for both divisions).

One Form 1095-C for Each Employee of Each ALE
There must be only one Form 1095-C for each full-time employee of an ALE. For example, if an ALE separately reports for the full-time employees of its two divisions, the ALE must combine the information for any employee who worked at both divisions during the year so that there is only a single Form 1095-C for that employee which reports information for all 12 months of the calendar year. In contrast, a full-time employee who works for more than one ALE that is a member of the same aggregated ALE group (that is, works for two separate ALE members) must receive a separate Form 1095-C from each ALE member.

More Information

Please contact GCG Financial, Inc. for more information on reporting under Code Sections 6055 and 6056.

Posted in GCG Financial, Uncategorized | Tagged , , , , , , |

President’s Message – August 5th, 2014

I’ve been contemplating our membership statistics; one in particular points out a great opportunity. Over 80% of our members are “Family” businesses while less than 20% are “Entrepreneurs”, like myself.  Why is that?  Could it just be our name?  Could it be that is our intent?  Or could it be that we just don’t think about marketing our great opportunity to that group of entrepreneurial business owners as aggressively as we do to family businesses? In thinking about the people you’d like to have join us, do some of those folks come to mind? If so, let me know and I’ll be very happy to talk with them.

It is my second month in office and I already have another honor. We are very pleased and excited to announce Prism Insights as our newest Strategic Partner focusing on marketing. Patty Rioux is President. Thanks to the CFBC team who worked on the intricate process of finding, vetting, interviewing and choosing our new partner.  Welcome to the Prism team and thank you for your commitment to the CFBC.

My final thought for the month: I’m lamenting the disappearance of boredom.  What do you think when you see virtually everyone around you paying total attention to their smart phone?  Music, phone calls, texting, email, internet, games, etc.  When conversation stops, the phones come out. Sometimes they don’t even wait for the conversation to stop.  At a stop light yesterday, I observed nine people, some of them couples, standing at all four corners of this intersection.  ALL staring at their smart phones, not one of them engaged with the situation or the beautiful day.  You’ve all seen it, we’ve all done it.  At the crosswalk, at dinner, maybe church.  So what?  Well, it bothers me and I just realized why.  I suspect that no one really gets bored any more.  No one gets to say, “I have nothing to do, I’m frustrated and I wonder what I should do now.”  Maybe I’m saying that the skill and practice of thinking is being traded in, abandoned for iTunes.  No boredom, no thinking, no invention/creativity?  Is it concerning enough to do something about?  Maybe thinking isn’t so important?  What do you THINK?

“If you want to go fast, go alone.  If you want to go far, go together.  CFBC, 20 Years Deep”

Bob Carmody President Signature 2014

Posted in News | Tagged , , , , , , , |

Taxpayer Identity Theft: Avoid Becoming a Victim

Each year, millions of consumers have their identities stolen.  Simple everyday transactions, such as applying for a credit card, writing a check, or using a credit card online or in a store provide opportunities for identity theft.  While we often hear of bank and credit card fraud as results of identity theft, taxpayer identity theft is unfortunately becoming more prevalent.

What is Taxpayer Identity Theft?  Typically, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.  This is often done early in the filing season, as the thief is trying to gain access to your prepaid tax dollars before you can file a return.  You will generally be unaware that this has happened until you file your return later in the season and discover two returns have been filed using the same social security number.  If you electronically file your tax return, or have it electronically filed by a tax preparer, you will know within hours if this has occurred, as your return will be rejected and the reason will be duplication of social security numbers.

How does identity theft happen?  Thieves use both high-tech and simple methods to steal identities.  Some methods include:

  • Phishing – The act of sending an e-mail to a user and falsely claiming to be a legitimate company or organization in an attempt to trick the user into providing private information.  The e-mail may also lead victims to false websites that are used for identity theft.
  • Trojans and spyware – These are programs that can attach to your computer when downloading software from the internet or when clicking on a link from a malicious e-mail.
  • Dumpster diving – Thieves sort through garbage cans looking for personal information.
  • Stealing your wallets or purses containing identification cards, credit cards and bank information.
  • Taking personal information you share or post on the Internet.
  • Completing a “change of address” form to redirect your mail.

How can we prevent identity theft?  While it is impossible to eliminate the possibility of becoming a victim, we can take steps to minimize the chances.  Some steps include:

  • Do not carry your social security number or card in your wallet or purse.
  • Don’t give your social security number to a business or anyone else just because they ask; always challenge the request.
  • Protect financial information in your purse or wallet while at work.
  • Check your credit report every 12 months.  Every U.S. resident can get one free report from each of the three major credit reporting bureaus per year.
  • Shred bills or other documents that provide personal information.
  • Password protect personal documents when sending through e-mail.
  • Use a password on your smartphone.

If you believe you’re a victim of identity theft

  • If you have not yet received an IRS notice, contact the IRS Identity Protection Specialized Unit at

800-908-4490 immediately so that they can take steps to secure your tax account and match your social security number.

  • If you receive a notice from the IRS that indicates fraudulent activity, respond immediately to the number on the notice.
  • Fill out Form 13049, Identity Theft Affidavit.  This affidavit requires that you also file a report with the local police and obtain a copy of the report for your records.
  • Report incidents of identity theft to the Federal Trade Commission at www.ftc.gov/idtheftor the FTC Identity Theft Hotline at 877-438-4338.
  • Contact the fraud departments of the three major credit bureaus

o    Equifax – 800-525-6285

o    Experian – 888-397-3742

o    TransUnion – 800-680-7289

  • Report misuse of your Social Security number to the Social Security Administration

Be vigilant!  The IRS does not initiate contact with taxpayers by email, telephone or social media tools to request personal or financial information.  The Chicagoland area in particular has reported a large uptake  in fake IRS calls and emails.  Remember to always guard your personal information and trust your instincts.

We hope this information is helpful.  If you’d like to discuss this information, or feel you have been a victim of identity theft and would like our assistance in working with the IRS, please contact Karen Snodgrass or Deanna Salo from Cray, Kaiser Ltd. (630-953-4900), a strategic partner with the Chicago Family Business Council.

 

Karen Snodgrass CPA
Cray, Kaiser Ltd.

1901 S. Meyers Road
Suite 230
Oakbrook Terrace, IL 60181
Phone: (630) 953-4900 x248
Fax: (630) 953-4905
Email: ksnodgrass@craykaiser.com

 

Deanna L. Salo CPA
Cray, Kaiser Ltd

1901 S. Meyers Road
Suite 230
Oakbrok Terrace, IL 60181
Phone: (630) 953-4900 X210
Fax: (630) 953-4905
Email: dsalo@craykaiser.com

Posted in Cray, Kaiser Ltd. | Tagged , , |

Traditional Fixed Term Borrowing vs “Synthetic Fixed Rate” Term Borrowing

What is “Synthetic Fixed Rate Borrowing”?: A creative way of obtaining fixed rate borrowing at desired terms with lower overall fixed rate costs.  Rather than borrowing with a traditional fixed rate term note, commercial borrowers can borrower on a VARIABLE RATE basis and then use an INTEREST RATE SWAP to fix the rate.

Among the most popular of derivative hedging instruments, interest rate swaps are used by corporations, government entities, and financial institutions to manage interest rate risk. Swaps can be applied to a wide range of hedging needs and can be easily tailored to match a specific risk profile. Their simplicity and flexibility have made them the workhorse of the risk manager’s toolbox.

What is a “swap”?: A swap is an agreement to exchange interest payments for a stated time period (the borrower pays a fixed rate of interest, the bank a floating rate). The swap agreement is a separate contract from the loan and its terms are customized to meet the borrower’s specific risk management objectives (terms include start and end dates, settlement frequency, the notional amount on which swap payments are based, and reference rates on which swap payments are determined.

How is it used?: Generally commercial borrowers will use the swap agreement to hedge against rising interest rates and reduce borrowing costs. Among other applications, swaps give commercial borrowers the ability to:

  1. convert floating rate debt to fixed
  2. cap a floating rate
  3. lock in an attractive interest rate in advance of a future funding

Benefits of the “Synthetic Fixed Rate” strategy: The primary benefits to borrowers of the synthetic fixed-rate loan compared to a traditional fixed-rate loan are:

  • Lower fixed rate. Variable-rate borrowing with a swap frequently costs less than a traditional fixed-rate loan.
  • Longer term: The synthetic fixed rate strategy allows banks to commit to longer terms vs the traditional term note (e.g. 10 years vs 5 years)
  • Flexible structuring. Borrowers can choose to fix a portion of their debt (e.g. fix 80% of borrowings, float on the other 20%)
  • Two way prepayment provision. Prepaying a traditional fixed-rate loan often requires paying a yield maintenance prepayment penalty, which can be significant even when market interest rates do not change. Prepaying variable-rate debt does not involve a material yield maintenance prepayment penalty, but prepayment may require a swap termination payment, which can be either a cost or a benefit to the borrower based on market rates. Some borrowers prefer to take swap termination risk since it relates to market interest rate changes without an extra payment to maintain a yield.Swap rates higher = benefit to the borrower
    Swap rates lower = cost to the borrower

Common Swap Structures
The most basic swap is an exchange of floating-rate interest payments for fixed-rate payments. For example, a company which has cost-effective floating rate bank debt can use its floating rate borrowing power to create fixed rate debt. To do so the company enters into a swap to the target maturity (e.g. five years), agreeing to exchange floating-rate payments based on LIBOR for a five year fixed rate. Through the swap the company avoids the costs of issuing long-term debt, gains the protection of a fixed rate, and retains the cost advantage its bank debt enjoys.

Other Typical Swap Applications Include:

Fixed-for-floating swaps which allow a company (generally larger corporations that issue bonds or private placements) to lock in liquidity through issuing long-term debt, but to pay a floating rate. The swap positions the company to gain from a decline in short-term interest rates.

Forward-starting swaps to lock in the rate today for an asset or liability to be created or sold in the future. A company that plans to borrow  at a future date can use a forward-starting swap to hedge the future funding. Forward-starting swaps allow companies to take advantage of favorable rates when the market offers them – not just when coming to market. Locking in the forward financing costs or investment yields allow the hedger to accurately budget cash flows and expenses related to future projects.

Swaps with imbedded options to fit unusual financing structures. For example, borrower may anticipate possibility of an early debt repayment and may choose to include a “call feature” into the swap.

Other swap structures can be created to meet different needs. This flexibility is why many companies find interest rate swaps are an invaluable tool in managing the financial balance sheet.

Posted in American Chartered Bank | Tagged , , , , |

President’s Message – July 3, 2014

I’m honored to have this opportunity to share my thoughts with you. Today, our CFBC is in great condition. Membership is growing  as planned. New forums are showing great strength and commitment. Satisfaction and excitement with our events is continuing to rise. Our financial condition and strength is healthy. Appreciation is due to our wonderful staff, all the folks that have chosen to be involved in our committees and to our Strategic Partners. We are all moving in the same direction.

Membership-driven and this strong after 20 years is nothing less than a glowing testament to the fundamentals that we’ve all adopted. If there is to be a time for celebration, it’s now. Next week you’ll be receiving a few messages from the CFBC containing details about our plans for this anniversary year. I hope it gives you as much pride and good feeling as it does me. One of the jewels that we’ve acquired is the Microsite specifically for this year.  It’s loaded with our history and strong evidence of our resolve to continue improving and understanding. It’s a joy, please take advantage of it. The microsite can be viewed here.

You’ve been learning about our Celebration Gala to be held on October 10, 2014. Please make plans to share that evening with us all. What a great way to express ourselves and kick off the holiday season with a bang! This celebration party is self-funded. Other than the time our teams are putting into it no CFBC funds are being used.

My Dad told me the best way to make and keep a friend is to ask them for help, for a favor. I believe that. So I’m asking each of you this favor. Two or three MINUTES of your thinking. Don’t you agree that there is no one better to know who should be members of CFBC than you? The power of our forums and the positive life changing things that happen to us all- we each know them. Who of your associates should be a part of this? Who do you know that should come and share their experiences with us? We’ve developed a program to help prospective members understand what we do, to answer the single biggest question that they rightly have: “What’s forum all about, what happens, how does it work?”. The “We’re In This Together (WITT)” programs are working well for this. Through these programs, qualified candidates are getting a solid vision of just how forum works and, from that vision, have been able to join us more quickly  than our previous pace.

We need your involvement in WITT.  It is a panel discussion evening. Three or four of us are interviewed by Deanna Salo in a forum-like way. We really want you to come to be on that panel. Don’t be selfish, share!  Please consider it and if you will, send me a note.

It’s already an exciting time, the rest of this year is poised to be fantastic. I’m honored and very lucky to be in this position  this year. Thank you for giving me this opportunity to serve. I couldn’t be more proud. I’ve adopted this phrase when thinking about us:

“If you want to go fast, go alone. If you want to go far, go together. CFBC, 20 Years Deep”

Bob Carmody President Signature 2014

Posted in News |

Top 5 Things That Are Bugging Your Employees And How They Directly Affect Your Retention Rate

Are you interested in discovering your employee’s most serious complaints?  Knowing what makes employees unhappy is half the battle when you think about employee retention, work satisfaction, morale, and motivation.

Organizational issues such as training time and investment; lost knowledge; insecure coworkers that are left behind and an expensive replacement candidate search is costly. Various estimates suggest that losing a middle manager costs an organization up to 100% – 200% of the individual’s salary.

Employee retention is critically important for a second reason.  Over the next few years while Baby Boomers (ages 40 to 58) retire, the upcoming Generation X population numbers 44 million people (ages 25-34), compared to 76 million Baby Boomers available for work.  Simply stated:  there are going to be a lot fewer people to work in an already challenging talent landscape.

From my experience I have learned that the list below are the top 5 reasons why employees leave companies or causes them to peer over the fence to see if the grass is really greener.

  1. Lack of Clarity from Management – People leave managers more often than they leave companies.  It is not enough that the manager is well liked or a nice person.  Managers need to set clear expectations for each employee. There has to be clarity about job expectations, earning potential, performance feedback, and a framework which the employee perceives they can succeed.  When all these items are in place, it gives employees hope for a brighter future and a desire to do more for the company.
  1. Cultures That Do Not Encourage Open and Honest Communication – Does your organization solicit ideas and provide an environment in which people are comfortable providing feedback?  If so, employees will offer up ideas, feel free to criticize and commit to continuous improvement.  If not, they bite their tongues or find themselves constantly in trouble – until they leave. 
  1. Internal Pay Equity – Employees are quite concerned about pay compression, the differential in pay between new and longer term employees.  In organizations, with the average annual pay increase for employees around 3%-4%, employees perceive that newcomers are paid better – and often they are because the renewed hiring boom is making it increasingly more difficult to find great candidates and stay competitive.
  1. Mediocre Benefit Programs – Most employees feel their health insurance costs too much, especially prescription drug programs, when employers pass part of the rising costs to employees.  That is when health/dental insurance, retirement and Paid Time Off plans can make a difference to an employee when they are considering the pros and cons of staying at your company.
  1. Human Resource Department Response to Employees – HR Departments need to be more responsive to employee questions and concerns. In many companies, HR is perceived as policy making, policing arm of management.  In forward thinking HR departments, responsiveness to employees needs is one of their cornerstones which can make or break someone’s career.

The desire to leave, or the temptation to do so, is at the heart of the problem. You can pay people to do a piece of the work but that does not automatically buy passion or loyalty.

A PowerPoint presentation in the boardroom will not remove the problem of people retention.  Success has to do more with the each line manager and how they engage and develop their employees.  This attitude must start at the very top of the organization and be projected and persistently pursued.

Ultimately, these issues are not that complex and can be overcome.  During my daily work as an executive coach I am convinced that there is huge potential and great opportunities for every business leader to conquer these challenges.

Posted in Kiara |

President’s Message – May 6, 2014

I have been wondering what my life would have been like had I not joined the Family Business Council (now, CFBC) 18 years ago. I had been drafted into a 50-year-old business at the age of 44, with a young family and no prior business experience (I had been practicing poverty law and computerizing law offices.) My business day was then filled with learning to manage two distribution businesses and one manufacturing business. I was dealing with my family in a business situation, learning my own style of management, managing fifty people, dealing with supply chains, customers, vendors and banks. I needed help.

Had I not joined the Family Business Council I would have missed entering the atmosphere where new strangers trusted me with their business and personal information and issues in such a way as to encourage me to do the same. Had I gone to business school instead, I would have learned from books of general experience, rather than from people who were becoming friends, who reported their shared experiences and offered insights that books would never reveal.

At one point, my father asked why I was spending “so much money” on my FBC membership. When I explained the value of the peer groups, my ersatz board of directors, and the value of the presentations at the large group functions, he was satisfied with that answer. Other organizations were much more expensive and, most likely, I would have been forced to quit. Other organizations also saw turnover in their peer groups to the point where the lack of continuity would likely have moved me to quit. I think FBC was a strong fit.

At one point, most of the customers of one of our divisions were moving production to the Pacific Rim. It was devastating our business. Had I not been in the FBC, I would have drifted alone with only “stay the course” advice from our long-term trusted advisors. Sigma forum members met at my office ad hoc, asked questions, asked for reports, and then directed me to specific help to save the company. Without FBC, my company might have failed at that time and I would be back practicing law.

I have had a number of employee issues ranging from behavior problems to supply availability to customer service. Knowing how to listen, ask clarifying questions, share my experiences, set expectations, and respect the opinion of others has empowered me within my business. My employees enjoy our meetings. That carries over to their contact with our customers. Without FBC, my people (and I) would never have elevated our emotional intelligence. PDEI has also passed from me through my employees to their families as well. Without FBC, our interpersonal skill set would have been distracted, disorganized and dysfunctional.

I am a lucky man. And CFBC is one of the treasures in my lucky life.

JF - signature_cvent

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