Podcast (practical-tax): Play in new window | Download
Meghan Watkins of CEO Coaching International joins us this week to discuss the intricacies of managing your businesses growth and productivity.
Episode Transcript
Intro:
Welcome to the Practical Tax podcast, with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz, LLP, a tax law firm.
Disclaimer:
The information contained in this podcast is based upon information available as of date of recording and will not be updated for changes in law regulation. Any information is not to be considered tax advice or legal advice and does not form an attorney/client relationship. Further, this podcast may be construed as attorney advertising. You should see professional consultation for your individual tax and legal situation.
Chip Franklin:
Welcome to another edition of Practical Tax with tax attorney Steve Moskowitz. I’m your co-host Chip Franklin. That would be the host to my left or right there. You get it. I love talking about productivity because I know that there’s a lot of different ways to measure that, right, Steve? I mean-
Steve Moskowitz:
Absolutely.
Chip Franklin:
Yeah. And as a business grows, obviously they want their people to be more productive. One of the things though about coaching and training employees is, are you ready for success? I mean, a lot of people, they’re worried about what’s coming around the corner, of the bad thing, but sometimes successes then comes, and you find out that you’re just not ready for it. Well, joining us to start this show is somebody that does this for a living. She’s a CEO of Coaching International with more than two decades in building cohesive teams, and she’s very passionate about this. Meghan Watkins, it’s nice enough to join us. Hello, Meghan.
Meghan Watkins:
Hey, good afternoon-
Steve Moskowitz:
Hi, Meghan.
Meghan Watkins:
… [inaudible 00:01:14] Steve, nice to see you.
Steve Moskowitz:
Pleasure.
Chip Franklin:
Good. Thank you for being with us. Let’s just jump right into that. I mean, because you both have a lot of experience in this. Steve has had many employees over the years. Your job has been to try to get employees to be top producers. But there’s another caveat that too, you want to be happy. How is that, how do you achieve that balance, Meghan?
Meghan Watkins:
Yeah, I mean think it’s really, I think that a lot over the last couple of years has really encouraged leaders to understand that really knowing their team, and taking the time to really understand what motivates their team, is really vital to the overall happiness. And for some that are looking for maybe the opportunity to work from home, that could be really something that’s really important to them. And others really actually want to have the ability to work together in an office. And so what we found is typically that hybrid model is usually the most optimal, and sort of allows the ability to have a level of accountability with their team, but also give them that level of flexibility that a lot of people are really demanding at this point.
Steve Moskowitz:
That’s what we have in our office. Prior to the pandemic, as a traditional law firm, everybody was under one roof. With the pandemic, we all had to go home initially for three weeks, we were told. And then when the pandemic dragged on, a lot of people got used to working from home. And a lot of clients said, “Wow, you mean I can just talk to you on the phone or your computer?” Just like we’re doing now. Physically, where are you?
Meghan Watkins:
Physically, I am in Dallas, Texas right now, and I’m in my home office, but I also do have a shared workspace that I go to as well. And that really speaks, I think to, at the root of it, what we’re all craving. We’re all ability to have flexibility in our day to day. But we’re also still humans that crave the ability to connect directly with others, and be able to interact with others face to face on occasion as well. So for me, it kind of gives me the best of both worlds.
Chip Franklin:
Have you ever read the Peter principle, you guys?
Steve Moskowitz:
Yes.
Chip Franklin:
Okay.
Meghan Watkins:
I am not familiar. I’m very intrigued.
Chip Franklin:
It’s a book that’s 65 years old. This is, it says that person will rise to their level of incompetence. And in essence, here’s the perfect situation. You have a great group of salesmen, really sales people, really good people. So you want to promote one to a management. Well then they’re no longer selling. And because they’re so good at selling, and they see the ins… And everybody knows a great salesperson, the people that are not as good as the others, well they just become, they’re a poor manager. They’re no longer selling. So what they end up doing is they promote the people who aren’t great salespeople, who are inferior, who aren’t as good, to management positions. And then the salespeople resent it.
And so you have this thing, and it seems to me it’s like for you guys trying to understand this and define an answer here, I mean a nihilist would say, just promote the best person and let it all work out. And that’s kind of how I look at it. I don’t want to go too deep on that. I’ve hired people before from a 10 minute meeting. I look for the cues. Talk to them about their parents, talk to them about their goals, and try to get an insight. But Steve, you’ve hired dozens and dozens of people over. How do you solve the Peter principle problem?
Steve Moskowitz:
So the first thing is, this isn’t real scientific, but probably, for me, would be gut feel.
Chip Franklin:
Well, social science is both of those. It’s social and science.
Steve Moskowitz:
And also talking to people with what’s really important to you. For example, suppose somebody says, “Look, what’s really important to me is skiing on the weekend.” Well, okay, so they’re really happy Monday through Friday, but they’re not going to be available for much things outside of traditional business hours. Somebody else says, “What’s really important to me is producing the absolute maximum. And I’ll be there day and night.” Well, that person could fulfill a different role. Also in the, not just the hours they’re working, which is part of it as lawyers, but also what do they like or dislike doing? You could have somebody say, I like doing A, B and C, but I hate X and Y. Well okay, is there something we can do to have you really concentrate on A, B and C. And X and Y, you know what, there’s a guy sitting next to you. It’s like when I started my practice, [inaudible 00:05:56]-
Chip Franklin:
Can I interrupt you, Steve? How do you know they don’t like X and Y?
Steve Moskowitz:
They tell you.
Chip Franklin:
I mean if you’re not a boss that allows that kind of communication, how do you know? They just do bad?
Steve Moskowitz:
You find out the hard way.
Chip Franklin:
Yeah. Okay.
Steve Moskowitz:
You’ll find out. What I’ve always said with my employees is the worst thing you can do to me is lie to me. I’ll eventually find out and we’ll both suffer. If you tell me the truth, we could both avoid the suffering. And that’s really worked out well. And the bottom line is that’s so important because I started out, when I started my office many years ago by myself, and then I started hiring people. And I’m not so foolish to say that I know how to do everything or like everything. And I’d say, “Well, all right, I like doing this and that. And I don’t like doing so and so. I’m going to look for somebody that likes doing what I don’t like to do. And he or she can do that. And we’ll both be happier and more productive.”
And think about it, if you have an employee that can spend a hundred percent of his or her time doing what they’re best in, measure the productivity against another employee with equal skills that you force them to do something they hate. They do it because they need the paycheck until they can find their next job. Look at the productivity.
Chip Franklin:
Well can I ask you this, Meghan, and Steve too, I guess in a way. So how do you balance pushing teamwork but also rewarding individual accomplishments and achievements?
Steve Moskowitz:
So first you can have team meetings where you discuss things, and you say, “Look, I really hate to do X.” And somebody says, “Well I actually like X.” And you can shift as much as you can. And there’s also practicality. Sometimes you have to do something that you don’t like to do or hate to do for the good of the team, but can we limit it? Okay, is there a project where you have to do x? I know you hate X, but we really need it done and we need it done by next Thursday. But it’s rare that we get a case like that.
Chip Franklin:
Were you doing this personally, Steve, or did you have an office manager doing this?
Steve Moskowitz:
I learned the hard way, Chip.
Chip Franklin:
Okay. Meghan, real quick. So is that a real problem about rewarding, talking about, everybody talks about the team, but then you see somebody, like I go back to my Peter principle thing, somebody that you think is not as good as me gets the job above me. That seems to me that when you grow, sometimes you grow so fast, you’re not prepared and you make the wrong decisions here. How do you not make those wrong decisions?
Meghan Watkins:
to me to say that they are disappointed in someone’s performance and that they’re not meeting expectations. And then I will go back and say, “Can you show me the job description laid out for that individual?” And I’ll take a look at the job description and I’ll say, “Okay, what part of this is not meeting expectations?” And often they’ll have forgotten about the job description. They don’t even realize what’s on that job description. They probably didn’t even write the job description.
And so truly the expectations that that manager has in place for their employee is often very much like this. And so it’s really coming back to understanding that we need to really make sure that we have crystallized the expectations for our team, that they understand what that is, and that on a consistent cadence we are updating them on whether or not they are meeting or exceeding those expectations. And if they’re not doing either, then what are we doing to sit down and have that conversation to understand why, and what’s getting in their way from achieving what has been laid out for them to be able to accomplish.
Chip Franklin:
Hey Steve, when, to those points, when a corporation is just starting, small business or mid midsize business, how important it is to have financial planning and tax advice in the early days before that growth happens?
Steve Moskowitz:
It’s always important. The number one reason why most small businesses go out of business is because they don’t have the capital. They don’t have the money. And something about banks, it’s a joke, but there’s a lot of truth to it, if you want to borrow money, you have to prove to the bank why you don’t need it. And that is a problem. So if you get into this financial part first, that’s so valuable. For example, I think I’ve told you about a client that was a fantastic cook, fantastic cook. And he decided to go in into the restaurant business. And he found the place that he liked. And fortunately for him, he asked me to view the place with him before he signed the lease. And I said, “This is a great place. But it’s so small, if you fill the place seven nights a week, you won’t even be able to cover your rent. Not to mention your groceries and your salary. And you might like to take a little something home for yourself. You can’t have this place, it physically won’t work for you.”
Chip Franklin:
Do you guys ever see the movie Up in the Air with George Clooney? Basically, if you haven’t seen it, Steve, during the recession, they were hired to fire people. They’d come into General Motors or something, they would fire people. And there’s a scene with JK Skilling, who you’d know him, he’s a bald guy from the Farmer’s commercials. And so he is firing him, and he says to me, and the guy’s upset because his kids, he is lost his job and they’re giving him paperwork on that way out the door.
And George Clooney, he says, “So I understand you think your kids respect for you means a lot.” And he goes, “Well it used to.” And he goes, “Well I doubt they ever respected you at all.” And he goes, “Hey, blank blank, aren’t you supposed to be making me feeling good?” And he says, he looked back in his resume, and he saw that he studied as a sous chef, and that he’d gone to, he didn’t just do it to make money, he really loved it. And so when he was sending this guy out the door, he was giving him hope. And I always thought to myself that this is something that that guy’s going to, if he succeeds, and you hope he does, at least this was the corporation had a view larger than just their bottom line and that they were looking outside their own walls to-
Steve Moskowitz:
Some do, some don’t.
Chip Franklin:
Yeah, but it’s a good way to go. Meghan, that’s the part of coaching people is trying to grow outside their shell, right?
Meghan Watkins:
A hundred percent. It’s being able to be vulnerable enough to let somebody else kind of come in and be able to call out those blind spots, to be able to help us become the best version of ourselves. And is, that’s a hard thing for some people to be able to let go of and be able to embrace into their life. But I use an analogy that it’s similar to, coaching and meditation are very similar in that nobody needs a coach and nobody needs to meditate. But those that engage in either one of those and really commit to that practice, historically, will show really, really exponential improvement.
It’s really, really powerful what can come out of really committing to something like that because we are all trying to be the best versions of ourselves. But if we don’t have somebody letting us know what those things are, and then holding us accountable to ensure that we are on a path to improvement, it’s really hard to do. And as CEOs, you typically have a lot of confidence, and there’s egos at play that don’t necessarily want to admit these things. So it’s very helpful.
Chip Franklin:
Well maybe [inaudible 00:13:20]-
Steve Moskowitz:
[inaudible 00:13:20] egos. And I have known some attorneys, they were brilliant people, absolutely brilliant. But they were so arrogant and thought they knew more than God, and that’s what always brought them down.
Meghan Watkins:
Yeah.
Chip Franklin:
Well I can envision Warren Buffet renaming Berkshire Hathaway to Berkshire Hathaway Namaste. Maybe that’s the right direction. Meghan, you rock, thank you so much for being here.
Meghan Watkins:
Thanks, Chip. Nice to see you, Steve.
Steve Moskowitz:
Pleasure.
Meghan Watkins:
Thanks for having me.
Chip Franklin:
Thank you. I’ll get you back soon. Thank you. Be well. Bye bye. Thanks. Yeah, that would be something. Although you know what, if anybody has the capability to that kind of insight, it might be Warren Buffet. Again he was the, when they were talking about wages and glass ceilings, I think he showed a certain amount of humility and honesty about the problems that corporations faced.
Steve Moskowitz:
One of the things we should remember about Warren is, although he’s a fantastic investor, he’s lost a lot of money too. Now what he’s gained has offset his losses. But Warren never claimed he was perfect, with all the investments he made that he lost money, but that was okay. He didn’t give up and he said, “Well okay, learn from that. Move on.” And made lots of money net even though he had the losses.
Chip Franklin:
Well obviously, I heard somebody say once that the one thing about hitting the bottom, you have something to push off. All right, time now for Ask a Tax Attorney with tax attorney Steve Moskowitz.
All right Steve, I’ve started a new business. Should it be an entity? First of all, what is an entity? And should it be one?
Steve Moskowitz:
An entity is something like a corporation or an LLC. And there’s a lot of advantages to having entities. Once again, we’ll go back to my beloved retirement accounts. And although a non entity can definitely have a retirement, an individual can definitely have a retirement account, there’s actually advantages if you’re an entity that you can have even more through the entity. Another big reason people form entities is for limited liability. Because, unfortunately, in our society, people love to sue and one lawsuit can wipe out a lifetime of earnings. So for example, with entities, one of the things we do, suppose you are landlord, you have three rental properties. We’ll set up three entities for you, like LLCs or other entities. And the reason for that is if you don’t, if you own the property in your own name, and you have a tenant that gets rip roaring, drunk falls down, and sues you, and the jury says, “Okay, we’re going to award an amount in excess of your insurance.” One lawsuit can wipe out a lifetime of earnings and savings.
Whereas if you had an entity, the max the plaintiff can take is the equity of the entity. That’s it. That’s why you want, if you had three entities, you put them in, excuse me, if you had three real properties, you put them in three entities. Because sometimes people say, “Well, couldn’t I just put all three properties in the LLC?” Sure you could, but then you’ll lose all three if something goes wrong. So entities are very, very valuable. And the whole theory of corporations is that, if you make an investment that you’re limiting your loss to what you’ve invested in the entity, not everything you own.
Chip Franklin:
And is it true though that in order to have that corporate veil that protects you from lawsuits, you have to follow a certain procedure to that. Because a lot of people, they start an LLC and they think that’s going to protect them from being sued. But that’s not always true, right?
Steve Moskowitz:
Well anybody can sue you for anything.
Chip Franklin:
Right.
Steve Moskowitz:
Somebody can sue you for being too handsome. You still have to answer the lawsuit, although I think…
Chip Franklin:
Easy now, easy now. Be nice, it’s Friday.
Steve Moskowitz:
But the bottom line is you follow the format. So basically your lawyer does it for you. It’s like with clients. We have the annual meeting, and the minutes, and all that. Because what will happen, exactly what you said, if you get sued, the enemy lawyer will ask for all that, and say, “Well wait a minute.” They’re trying to prove that even though you formed it, you’re not really following the rules, and therefore he doesn’t want you to have the protections of it. So that’s why we do the things for the clients, like the meetings and the minutes. They say, “Oh no, wait a minute, I had my meetings, I had my minutes.” And then you’re protected if you otherwise qualify.
Chip Franklin:
Well, you know how attorneys can be. There’s a whole new field now where people are trying to sell people doing podcasts podcast insurance. I mean they see, I know you roll your eyes, but it’s actually, they’re sell… If you go online, if you put that in there, and they’ll tell you… I mean I guess most people worry about losing everything they’ve built up in their lives.
Steve Moskowitz:
That can happen.
Chip Franklin:
But for the most part, obviously, if somebody’s like Alex Jones out there, and saying and doing things that are damaging people, it makes sense. But if you’re doing a podcast and you’re not slandering people, if you’re just doing… And maybe you’re talking about a particular business, and not one, not a business and say, but the business… If you’re talking about insurance agencies and you’re saying, “I think they’re such ripoffs.” And a couple of them get together and come after you. I mean there’s actually a case before the Supreme Court now that might limit the safety behind satire and parody. How many people, really, that are starting small businesses really should incorporate?
Steve Moskowitz:
I say everybody should.
Chip Franklin:
Really?
Steve Moskowitz:
Remember, there’s a variety of reasons, including having additional benefits in your retirement account. There is limited liability. And it’s more difficult for somebody to take everything away from you. They may sue you, but it’s more difficult for them to take things away. So the bottom line is, it’s like everything else, Chip, is like driving a car. You drive a car, there’s a risk that a truck will hit you and kill you. Does that mean you’re never going to leave your house? So you say, well all right, you’re going to always be sober when you drive, and you’re going to obey the speed limit, and you’re not going to text and drive, and do all the things. So you have the benefit of driving and you minimize the chances that somebody’s going to kill you.
Chip Franklin:
One last question along these lines, and it’s kind of an odd question to ask you. But what about these websites like LegalZoom and that thing. Can somebody go on there if they want to create a small LLC? Or is it much smarter to go to an attorney [inaudible 00:20:07]-
Steve Moskowitz:
You can also defend yourself in a murder case if you want to, but I wouldn’t recommend it. The problem is, a lot of times as lawyers, we clean up the mess when somebody saves a few dollars up front to be a do it yourselfer, and cost him or herself a fortune, that could have been avoided had they just taken some different steps. So I realize I’m an attorney, but it’s like going to the doctor, there’s a real benefit in seeing a medical doctor. And there’s a real benefit in seeing a lawyer and everything else. And this is, and especially in our society, the way it is today, because somebody is always looking to take something away from you and nitpick on something.
Chip Franklin:
My doctor says how many patients come in… He’s a friend of mine and we were playing golf and he said, “I get about three out of four people come in, and said, ‘I was on Web MD.'” And he’s like, “Don’t go on WebMD. If you really are worried, give us a call and we’ll fix it.” That’s Ask a Tax Attorney with tax attorney Steve Moskowitz.
Well that’s another addition of Practical Tax with your tax attorney, Steve Moskowitz. Chip Franklin too. We’ll see you next time. Thanks.
Steve Moskowitz:
Thanks.
Outro:
Thanks for joining us on the Practical Tax podcast with tax attorney Steve Moskowitz. To hear more and view more podcasts, go to moskowitzllp.com/practicaltax.