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| Welcome |
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If you stacked up all the books and articles that have
been written about leadership, the pile just might reach
the top of Taiwan's Taipei 101, the tallest skyscraper
on earth. I was convinced the world needed a break from
leadership books until I read The Measure
of a Leader by Aubrey Daniels.
In this month’s interview, Daniels lays out an
innovative approach for measuring the effectiveness
of a leader.
As
a follow-up to last month’s article on health
care insurance for consultants, we have an article on
retirement planning for consultants. Author and financial
planner, Frank Armstrong, guides us through the ins
and outs of pension planning for the self-employed consultant.
In
December 2005, some of our subscribers participated
in a study on “Increasing Marketing Effectiveness
at Professional Firms,” undertaken jointly by
Expertise Marketing LLC and Larry Bodine Marketing.
This month we report on their findings about the importance
of measuring what your marketing investment is doing
for your business.
And if you’ve ever considered adding executive
coaching to your repertoire, you should read the tips
on becoming an effective coach from Omar Khan, founder
of Sensei International.
Finally,
we’ve got some great advice on managing price
integrity from Jeff Thull, a management consultant and
frequent contributor to Management Consulting
News.
Enjoy
the issue. And send me an email
if you have comments.
Mike
McLaughlin
Editor, Management Consulting News
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| Interview:
Aubrey Daniels |
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Aubrey Daniels, author of The
Measure of a Leader, believes many
businesses are facing a leadership crisis. He believes
that the typical measures of leadership effectiveness
are perpetuating, not solving, the leadership problem.
We talked to Daniels about a new way to measure leadership
effectiveness that can drive strong business performance
and prevent the emergence of another Enron.
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| How to Prevent PowerPoint Overload |
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 If
you’ve ever felt like dozing off during a presentation,
research suggests that it’s not your fault. The
conventional bullet-point approach to presentations
can overload our ability to understand information—and
that causes us to hit the snooze button. But you can
grab and hold an audience’s attention by using
a few simple strategies and tools.
Join
Cliff Atkinson, author of the bestseller Beyond
Bullet Points, for a complimentary
Webinar to help you transform a traditional PowerPoint
presentation into a clear and persuasive presentation.
The
one-hour Webinar will be held on Thursday, March 23,
2006, at 9:00AM Pacific Standard Time. Register
for “How to Prevent PowerPoint Overload.”
You
can learn
more about Cliff Atkinson by reading his Management
Consulting News interview.
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| Retirement
Planning for Self-Employed Consultants |
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by
Frank Armstrong III
Like
many people, more than a few consultants haven’t
saved enough for retirement. But, unlike most corporate
types, self-employed consultants with no employees can
design almost any kind of pension that they want.
The
advantages of pension plans are obvious: forced savings,
tax deductions, tax deferral of gains, and the ability
to pass on tax-deferred assets to future generations.
You may think pension plans are only for employees of
large corporations. Wrong! A single-participant plan
is very easy, economical, and effective to set up. If
you don’t take care of your own retirement, who
do you think is going to do it for you?
In
the distant past, when it came to retirement plan options,
the self-employed or members of a partnership were at
a distinct disadvantage relative to corporations. Although
over time, those restrictions have been removed, the
perception of limited choices still lingers. That’s
unfortunate because now you have plan flexibility that
would make the average corporate employee turn green
with envy.
It’s
great being the sole decider. You can design a plan
that meets your needs exactly without negotiating with
others who have different objectives and financial situations.
And with no employees, there are no pesky top heavy
or cross testing issues to complicate plan design and
administration. Best of all, 100% of the pension deposit
goes directly to your own account.
Designing
and maintaining your own plan doesn’t have to
be time consuming or expensive. All the major discount
brokerages have a full spectrum of pre-approved plans
that you can adopt with just a few check marks. Pre-approval
means that the IRS has already accepted the plan, so
the hassle of filing for a “determination”
letter is not required. Opening an account for most
pension plans shouldn’t take more than a few minutes.
Unless
you have complex needs, retirement plans can be very
economical. For instance, Vanguard will set up a profit
sharing plan for you with their funds that will allow
you to defer up to 25% of your net income (with a limit
of $42,000 in 2006) for no additional administration
or custody fees. At the end of the year, they will send
you all the information you need to file the required
IRS form 5500. Alternatively, you can use TD Waterhouse
or Fidelity Brokerage to open up the entire universe
of investment choices.
The
variety of plans to choose from is mind-numbing and
includes IRA, Roth IRA, SEP-IRA, Simple IRA, 401(k),
Roth 401(k), profit sharing, money purchase pension
plan, and defined benefit plan. If you find the benefits
and features of the options confusing, the Department
of Labor publishes a concise table comparing plans at:
www.dol.gov/elaws/pwba/plans/final.asp.
The
401(k) has two neat properties that are certainly worth
considering: First, when you are more than 50 years
old, you can make an additional $5000 a year “catch
up” contribution to your plan. Next, as of January
1, 2006, you can make Roth contributions to your plan.
While these get no current deductions, the funds can
later be withdrawn tax free, and they are never subject
to the minimum distribution rules. If you expect to
be in a higher income bracket later, or if you predict
tax rates in general will go up, this is an especially
good way to leverage the tax code.
With
all those choices available, how should you decide which
one to select? A good starting point is to determine
how much you can save comfortably for your retirement
goal, and then pick the least cumbersome plan that allows
for that level of savings. As in many other facets of
life, simple is best.
If
you are older, behind in your retirement savings, and
would like to sock away lots of your income, consider
defined benefit plans. While large corporations are
terminating their plans en mass, small employers are
taking advantage of the ability to shelter significant
amounts of income for their highly compensated principals.
For instance, we just designed a single-participant
plan for a self-employed 55-year old physician/consultant
that allowed him to defer just over $162,000 a year
for the next ten years.
Don’t
get bogged down in minutia. The overwhelming issue is
not the fine points of difference between pension plans,
but whether or not you are saving enough so that you
can live with a certain amount of class and comfort
later in life.
Unless
you are very confident of your investment skills, it
makes sense to utilize an investment advisor to tend
your nest egg. Just make sure you avoid commission-based
brokers and stick with professional-fee-only advisors
so that you get objective advice. For a match to qualified
professional-fee-only advisors, check www.napfa.org
or www.paladinregistry.com.
The small additional cost will be well worth it.
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Frank Armstrong III, CFP, AIF, is the founder and principal
of Investor Solutions, Inc. and the author of The
Informed Investor: A Hype-Free Guide to Constructing
a Sound Financial Portfolio. Find
out more about Armstrong and his services at www.investorsolutions.com.
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| Measuring the Effectiveness of Marketing |
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Professional
firms could earn more revenue from their marketing and
sales efforts if they just did one simple thing: measure
them effectively. This is among the insightful findings
of the new research report, “Increasing Marketing
Effectiveness at Professional Firms,” published
jointly by Expertise Marketing LLC and Larry Bodine
Marketing.
The
study reported that collectively the respondents spent
a paltry sum—less than one-tenth of a percent
of an aggregate $93 billion in gross revenue—on
formally measuring marketing and business development.
Among
the fifteen key findings of the report:
- Respondents’
highest ranking initiatives reveal a strong link between
marketing and sales.
- Professional
firms that said they were extremely effective used
these three client-focused metrics in combination:
a) Growing client revenue: “Did you grow revenue
with your client or not?”, b) Moving the phases
of a sale through a pipeline: “Did you close
the sale or not?”, and c) Listening to the client:
“Did you listen to your client or not?”
- Only
20% said they were “extremely effective”
in growing revenues against rivals; nevertheless,
the more client metrics a firm used, the more it said
it was extremely effective in growing revenues against
rivals.
The
report goes into depth on which marketing initiatives
are the most effective. It also singles out the three
worst: forecasting (i.e., envisioning future economic
and business scenarios), analyzing market share, and
alumni outreach programs.
Management
Consulting News readers may download
a summary of the report at no cost. This download
has information specific to management consultants.
The complete
report is also available, for a fee.
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| Memo
to Marketing Consultants |
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As
marketers accelerate their investments in Web-based
marketing, they’re facing tough dilemmas that
consultants can help resolve.
In
the 2006
CMO Web-Smart Report, more than 80 percent
of the 250 marketing executives in the survey rated
their organization’s ability to measure the effectiveness
of Web-based marketing programs as either needing improvement,
weak, or non-existent.
Making
matters worse, marketing executives rated their staff’s
level of expertise in Web marketing as 5.5 on a 10-point
scale.
To
align staff capabilities with today’s marketing
strategies, marketing executives will need to develop
education and staff recruitment initiatives. And, as
measuring the ROI of Web-based marketing becomes a CEO’s
demand, rather than a request, marketing executives
will look for help in designing business processes to
meet those needs.
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| Are Performance Appraisals Useless? |
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Ask
most people what tops the list of things they dislike
about work, and performance appraisals will be up there.
Managers dread performance review meetings as much as
anyone; and HR managers spend lots of their time policing
the performance appraisal process.
In
spite of the widespread use of performance appraisals,
only six percent of CEOs find the process helpful. In
a study by PeopleIQ, executives reported that performance
appraisal systems are cumbersome to use, fail to provide
relevant performance feedback, and don’t clearly
differentiate high performers from others.
HR
managers are also hurt by this perceived failure of
employee performance management. More than 80 percent
of the survey’s respondents blame their low opinion
of human resources partly on poor performance appraisal
systems.
Software
vendors peddle performance appraisal systems that can
remove some of the administrative chores from the process,
but a system is only a small part of the solution to
this problem. What’s needed is an objective appraisal
process that separates an employee’s professional
development needs from performance reviews that are
used to determine compensation.
For
many organizations, an end-to-end redesign of the performance
appraisal system is the only answer.
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| Coming
Attractions |
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 “Buyers
of complex products and services buy in a two-step process:
screening and selection. Screening is largely rational;
selection is heavily nonrational.” – Charles
H. Green
Next
month, our guest will be Charles H. Green, founder and
President of Trusted
Advisor Associates, author of Trust-based
Selling, and coauthor of The
Trusted Advisor, with David Maister
and Robert Galford. Green, a speaker and seminar leader
for consulting organizations, spent nineteen years in
consulting with the MAC Group and Gemini Consulting.
We’ll
talk to Green about why, as he says, “The words
sales and trust are seldom used in
the same sentence,” and what consultants can do
to align their own needs with those of their clients.
Look
for the interview with Charles Green in the next issue
of Management Consulting News
on April 4, 2006.
Until then, have a look at Green’s earlier article
in Management Consulting News,
Should
Clients Trust Your Sales Pitch?
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Leadership
is not a personality trait. But charismatic profiles
tend to make people believe that’s all there
is to it.
