28 Dec
Articles

Motivation & Quality

mo·ti·va·tion
/ˌmōdəˈvāSH(ə)n/

Noun

  1. The reason or reasons one has for acting or behaving in a particular way.
  2. The general desire or willingness of someone to do something.
    Oxford Dictionary

When talking Quality, there is an intended result and a process to get there. Many processes are people dependent and the more redundant the process or task, the greater the difficulty in keeping an engaged workforce that produces as intended 100% of the time. So, the critical question is, how do you effectively motivate your workforce to improve quality? Afterall, quality is what drives customer satisfaction and helps your business continue to grow.

Learnings below are my take aways from Dan Ariely’s book Payoff – The Hidden Logic (Simon & Schuster 2016).

Repetitive work, day in and day out without other meaning attached to it is grinding, hence the Sisyphus principle – the Greek King Ephyra, who’s punishment was to push a large boulder up a hill, only to have it roll down every time he neared the top. Rinse and repeat for eternity. Suckville. Many people find themselves in this continuous slog without some attached meaning to the work.

Fact #1: People value things they produce themselves; even if it’s not something done exceptionally well, it’s sentimental. Ariely and his colleagues performed an experiment: Origami novices were given directions to follow to produce an animal. Afterwards, they talked an expert through the same process. They read the directions and the expert produced a more aesthetically pleasing verion. When asked which Origami product the novice would pay more for, they placed a higher value on their own work despite it being obviously flawed.

Application Example A: A Quality Engineer or Manager meets opposition when someone is directly accused of doing a poor job or not following procedure. The approach is key to these discussions and avoiding confrontation. Mistakes will happen and that is how we learn. So, approach these conversations carefully and with caution on wording, making sure intent is on figuring out a way to prevent issue in the future versus making accusations of faulty work.

Application Example B: Another way to view this is attain the workforce input while designing and implementing a process so there is buy in – if a person has a hand in making the process from the start, they are more inclined to maintain and improve it.

“IKEA effect” – people value things they have invested time and labor into creating.

Fact #2: People react best to intrinsic motivations versus extrinsic. Ariely’s team reviewed a company that incentivized people with money for increased production and paired that against other methods of rewards: Pizza Vouchers (intrinsic and extrinsic – can provide family something near term and tangible from work they did), Text or verbal praise (intrinsic), Cash Reward (extrinsic), Control Group (no reward). Not surprising, “No Reward” performed the worst of the groups. The result of the other (3) groups is interesting:

Reward Week 1 Week 2 Week 3
Pizza Voucher for employee and their family 6.70% < 1% <1%
Text / Verbal Praise 6.60% < 1% <1%
Cash reward 4.90% -13.20% -6.20%

Figure 1 – Reward system week over week change

Learning: Most companies jump to monetary incentives to motivate personnel, thinking a paycheck bump is the most effective way to coerce the workforce into meeting targets. Profit sharing is one method, and it is effective to an extent, but as you can see above, it’s not sustainable. The Pizza Voucher touches multiple points for motivating someone and a simple text with praise was effective, and also sustainable.

Conclusion: In application, recognition and praise goes a long way. Cash is not a sustainable means for motivating people. At some point, without recognition, the will to produce diminishes. Praise is a powerful tool; my only caution is this: know the person’s personality, as some people do not like public recognition but prefer to be praised one-on-one and others vice-versa. This is where I recommend using premium HR tools like Predictive Index, an application that identifies personality characteristics of your employees and how best to interact with them. In my experience, Predictive Index has been impressively effective in providing this information for managers. Companies have a lot to gain from effectively learning to motivate their teams and keep morale up. Double digit improvement is not unheard of. If you would like to talk more about how to implement metrics and objectives and motivate your team to achieve those goals, feel free to contact us for a free 1-hour consultation.

References:

Payoff – Hidden Logic That Shapes Our Motivations, Dan Ariely 2016

TED Books Simon & Schuster

ISBN 978-1-5011-2004-6

Predictive Index
https://www.predictiveindex.com

28 Dec
Articles

Leaving Money on the Table? R&D Tax Credits

R&D Tax Credits

By: Jared Warrick, Principal Consultant OPSQC INC

Date: December 11, 2020

Key Words: R&D, Tax, Credit, Development, Business Group Resources, Small business, Engineering

 

Most people are not aware of what extent small businesses power our economy: it’s estimated that in 2020, over 99% of all businesses in US are small businesses1, meaning they have < 100 employees and 80% of those businesses have < 10 employees2. 2020 has been extremely unpredictable with some small businesses seeing reduced revenues of more than 30%, and in some cases forcing the owners to close shop and walk away3. In short, small businesses are bearing the brunt of the COVID-19 economic impact. At OPSQC INC we look for ways to weather storms like this and this article will provide some insight into one method of putting some cash back in your pocket.

 

Small business owners wear many hats and one key skill is knowing when to do it yourself and what can be delegated or outsourced to those who specialize in certain activities. One item I recommend outsourcing is accounting & tax preparation so the owner, can focus on what they do best. With that in mind, there are specialists within the tax preparation process who are able to provide considerable value by helping to uncover tax credits and incentives companies didn’t even know they were entitled to claim.

 

Per my discussion with Jeff Hyde of Business Group Resources 3 “Assuming you are revenue positive (not a pre-revenue start-up), and have paid taxes for the last 3 years, you should really dig into R&D Tax Credits. If you are growing, you are experimenting with new products, processes or services and there are costs, resources and time associated with those efforts and “qualified research activities” that can translate into real cash value to small business owners. Taking advantage of these government incentives can result in cash ‘refunds’ from the IRS.” In our discussion, we covered that many companies, due to COVID-19, have been very busy figuring out ways to optimize their products, processes and services, so there is ample opportunity to qualify for these tax incentives.

 

Below are just a few of the activities eligible for the Tax Credit (not a complete list):

  • Engineering and Design of a new product.
  • Conducting research aimed at uncovering new knowledge.
  • Searching for ways to apply new research findings.
  • Designing product alternatives.
  • Significant modification of an existing design or product concept.
  • Design, manufacture and testing of prototypes
  • Engineering activities to advance product design and point of manufacture
  • Experimenting with new technology
  • Experimenting with new material and integrating the material to improve end products
  • Developing new production processes for prototyping and pilot phases
  • Developing and modifying research methods, formulations, products
  • Outside consultant / contractor costs to do any of the above

 

“Chances are companies are not fully taking advantage of the above credits and most likely do not have the time to dig into all of these opportunities.” Jeff continued, “it’s estimated that only 5% of eligible companies take advantage.” I can tell you from first-hand experience, that some organizations ask Engineering or  Quality Teams to prepare a list of potential R&D activities performed during the year that could be pursued as part of the Tax Credit. But without being fully aware of what is included in the IRS code, the teams were confused on what exactly to include. After my conversation with Jeff, I now know our list was incomplete relative to what would be allowed.

 

And don’t think just Manufacturing or Technology companies can utilize this credit. Dentists, doctors, and construction companies often qualify as well. I reflect back on my last dental visit, where my dentist made a crown using a CNC machine in his office and then cured it on the spot with UV light. They also did the 3D scan of the existing tooth before removing it, so the crown was an identical image. This is definitely a system that could qualify.

 

Business Group Resources (Irvine, CA), in partnership with Business Incentive Solutions, has representatives nationwide that have the expertise to maximize your R&D Tax Credit. With 15 years of experience and over 5000+ case studies, these are the guys to turn too. In addition, consulting costs for companies like OPSQC INC can be used as part of your Tax Credit submission.

 

Note: Special Thank you to Jeff Hyde – Business Group Resources. Feel free to reach out to him to learn more.

 

Jeff Hyde

Account Executive

(847) 970-0650

Business Group Resources™

www.businessgroupresources.com

jeffhyde@businessgroupresources.com

https://www.linkedin.com/in/jeff-hyde/

https://youtu.be/CN73-7YuGEk  (Two minute video on R&D Tax Credit program)

 

Conclusion: Now is the perfect time to reach out to Business Group Resources for professional assistance to see if you qualify for R&D tax credit and lower your tax liability.  In 2021, consider OPSQC INC for contract or consulting work to address bottlenecks and gaps in your operation.

 

References:

  1. https://www.oberlo.com/statistics/number-of-small-business-in-the-us
  2. https:.//sbecouncil.org/about-us/facts-and-data
  3. Data source: Personal network. Acquired 11/1/2020 – 12/8/2020. 30 data points.
  4. https://businessgroupresources.com
28 Dec
Tools of the Trade Series

Expensify – Article 1 of 6

Tools of the Trade (TotT) Series – Expenses are not expensive with Expensify (that’s fun to say)

Small business owners know that its a waste of time doing menial tasks, but do not always have the time and wherewithal to investigate how to best eliminate , automate, or outsource these critical but repetitive functions. To exacerbate the problem, enterprise tools exist for effectively every single operation that a business performs. There are so many tools for each operation in a business that it can be difficult to choose between the options, especially when the tool functionality and costs are difficult to understand until after they have been deployed. To cut through some of the opacity surrounding these tools, this series will present tools that can impact a small business by presenting their function, cost, and potential return having experienced them first-hand. This series will focus on tools useful for small enterprise, and will directly address the up-front implementation costs, and costs of operating them to provide the reader with a concise view of the utility of the tool presented.

By: Zach Detweiler, Ph. D.

www.linkedin.com/in/zach-detweiler

Tags: Expensify, receipts, expenses, Expensify, software, apps

As much as 69% of small businesses waste their time and money with manual and spreadsheet methods for managing business expenses.1

 

At some point in life, you’ve likely had to keep track of receipts, and submit periodic reports to receive reimbursement for expenditures.  If you have done so manually, or even tracking those expenses with spreadsheets, you distinctly remember the pleasure that expense management can provide. /s (see Urban Dictionary – “sarcasm switch”)

 

Large enterprises are wise to the cost of managing expenditures, using dedicated expense management software or tools at a rate of 67% when revenues are over $500M/yr, and a rate of 83% when over $2B/yr!1  Clearly big businesses understand that there is profit to be retained by stream lining the expense management system.

 

The question that follows: Why do so many small businesses not do the same?

 

Certainly, part of the reason large companies use a consolidated approach is due to the savings from consolidating travel costs at discounted rates from committed volumes (e.g. corporate accounts with car rental agencies and/or airlines).  However, it is estimated that expense management costs up to 5 hours per employee per month, which translates not only to hours of salary, but the lost opportunity cost in productivity, both of which scale directly with your operation.2  At $20/hr wage, and 50% overhead, every hour that can be removed from that process represents $360 per yr, per person.  With that in mind, dropping the average time spent from five hours to just one hour for each of 25 employees at an organization saves as much as $36,000/year in direct savings and claws back 100 hours in productivity!

 

In addition to these costs, spreadsheets and manual processes make transparency into overarching trends in expenditures more difficult to observe and can even make potential fraud more difficult to spot.

 

In my personal experience, the likely reason that people still use spreadsheets or manual processes for expense management is probably because they haven’t heard of or used Expensify.  If they had, they would never want to do it the old way again. 

 

Expensify is an internet-based software tool that brings all expense related requirements into one place and can cost less than a fraction of an hour of work per employee.3  The software can be accessed on your browser, or through an app that can be loaded onto your phone.  The genius of Expensify is the ease and success of the automated expense capture process.  Once you have created an account, if you take a picture of a receipt through the app on your phone it automatically collects, reads, and stores your expense.  The same happens when you capture an expense with the internet plug-in, or email a receipt to receipts@expensify.com from your Expensify associated e-mail account. The receipt scan auto-populates fields such as vendor name, receipt total, date filed, and attaches the scanned document directly with these parameters.

 

Rules (called “policies” in Expensify) for expenses can be set up, or changed by the account administrator to help categorize and flag expenses.  All approvals can be performed through the software, and notifications are automatically triggered when actions such as submissions of a report, approvals, or payments are performed.  It integrates seamlessly into accounting and payroll, allowing you to directly report out to Quickbooks, Oracle, Sage, Microsoft Dynamics, and more.4  The receipts exported from Expensify can act as permanent records in other software or systems, and Expensify currently retains all documents entered into the platform indefinitely if you maintain an active account.  Expenses remain visible after reimbursement, and trend visualization tools are integrated in the software, so it is easy to sift through old and current spending to observe trends and highlight oddities.  The functionality of the software continues to grow as they now provide credit cards, support corporate cards, and integrate into travel concierge and HR functions.

 

There are larger organizations that provide similar services as Expensify, and they may be equally great, but everyone I’ve spoken to prefers Expensify to other platforms (n=5 FYI).  Personally, I have only used Expensify, and not only was graduating from spreadsheets to Expensify welcome, I use Expensify “For Individuals” in my personal life to track receipts (free under 25 scans per month)!

 

If you do not currently use any expense management software, you owe it to yourself, your coworkers and your bottom line to sign up for this Grade-A tool (EXPENSIFY) yesterday.

 

References:

(1)        9 Expense Management Strategies for CFO’s – Control and Reduce Expenses. ProcureDesk, 2019.

(2)        Calculate Cost of Using Spreadsheet Expense Reports – SAP Concur https://www.concur.com/en-us/expense-spreadsheet-reporting-cost-calculator (accessed Dec 11, 2020).

(3)        Expensify – Pricing https://www.expensify.com/pricing (accessed Dec 11, 2020).

(4)        All Integrations https://use.expensify.com/all-integrations (accessed Dec 11, 2020).