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Monthly Archives: July 2010

Reviewing performance reviews
June 18, 2010

Yes, it’s that time of year again. Managers hate giving them because usually they are badly prepared to give them and besides, they have so many other things to do. And performance appraisals make employees nervous. Most tell me that it usually comes down to your relationship with the boss. If you don’t get on, it can ruin your life.

Performance reviews have been around forever. As have the suggestions to get rid of them. Is that too extreme? So what do we do?

Tara Parker-Pope in the New York Times says experts reckon it’s time to end performance reviews because they’re a health hazard, creating massive stress for no reason. Some say it’s better to replace them with an ongoing contract with the manager that would provide constant feedback and coaching. It’s called having a conversation, something that seems to be missing in many offices.

Dr Samuel Culbert, an author and professor of management at the UCLA Anderson School of Management in Los Angeles, says we need to get rid of them. Training managers to give them will not help. The system is just wrong, he says, and you can’t bake a cake if the milk is off. “Performance reviews instill feelings of being dominated. They send employees the message that the boss’s opinion of their performance is the key determinant of pay, assignment, and career progress. And while that opinion pretends to be objective, it is no such thing. Think about it: If performance reviews are so objective, why is it that so many people get totally different ratings simply by switching bosses? … Forget, for a minute, the damage it does on a personal level — the way it makes work lives miserable, the way it leaves employees feeling depressed and anxious, the way having to show so much tolerance at work leaves them with too little tolerance at home. Just think about what it does on a corporate level, the enormous amount of time and energy it wastes, and the way it prevents companies from tapping the innovative, outside-the-box thinking that so many employees are capable of. If only, that is, they weren’t so afraid.”

One of my favourite posts on the subject came two years ago from commentator Dan McCarthy who described 10 ways to screw up a performance appraisal. I loved his take on it because this stuff actually happens: make sure your employees have no goals, standards or clear directions and just set them loose with a pep talk; get the employee to fill in their own performance appraisal, but give them a day’s notice and don’t schedule too much time for discussion. About 10 minutes is more than enough. How many performance reviews have you had that are like that?

Of course, employees need to be appraised and evaluated. This is why HR managers say performance appraisals are the way to go. In fact, they have put out a survey, reported here, saying that three out of four employees found them valuable. Yeah right. As if we can trust any HR manager. I have always argued that performance appraisals are a creation of the human resources industry. Many HR managers are highly political and obsessed with bureaucratic form-filling. They remind me of Soviet cadres who used to spout the ideology and then do the exact opposite, as required by their political masters.

I am not against performance appraisals per se. We need some sort of method to evaluate learning opportunities, career paths and succession planning. Maybe we need to tweak the system to create an ongoing conversation with the manager, and perhaps recognise other ways of rewarding performance outside of compensation.

Whatever the answer, the system is not working. We need something to replace it.

How have you found performance appraisals? Are they worth it or ar they a waste of time? Would you get rid of them? How would you fix them? Let’s hear some ideas.

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Julia’s brilliant backflip
July 2, 2010 – 1:18PM

Mal Maiden dissects Julia Gillard’s new mining tax. What does it mean for business and who is going to pay?

Is this a massive backflip by the government or a brilliant piece of re-engineering that sets Julia Gillard up for an early election? Both.

The new Minerals Resource Rent Tax is almost unrecognisable from the Resources Super Profits Tax it replaces.

Instead of being applied across the entire resources sector, it focuses on only two mining businesses, iron ore and coal, with the existing Petroleum Resources Rent Tax extending to the domestic oil and gas industry, including the fledgling coal seam gas projects in Queensland.

Prime Minister Julia Gillard and Treasurer Wayne Swan at today’s announcement. Photo: Andrew Meares

Instead of being an elaborate scheme that sees the government take 40 per cent of mining profits but also assume 40 per cent of the development costs and risk on each project, it simply taxes the miners at the mine gate, for 75 per cent of their income at that point, at a rate of 30 per cent.

This concession, that the miners pay only 30 per cent of 75 per cent of their income at the mine gate after costs to that point are deducted means that the real new resources rent tax rate is about 22.5 per cent, not 30 per cent as advertised.

Instead of forcing the big miners into a resources tax regime with the big mines still valued at book value, a fraction of their real worth, it gives them a choice (it’s complicated, but here goes): either bring their existing mines into the scheme at book value, in which case they will be able to aggressively create depreciation tax deduction over just five years, and will not be liable for the 30 per cent resources tax until their mine returns have exceeded the 10-year Commonwealth bond rate plus 7 per cent (about 12 per cent currently), or bring the mines in at market value (defined as cash flow plus the risk value of the resource) but write the value down in smaller increments over a longer period, up to 25 years, and have the tax imposed without a hurdle rate. It’s likely that the big miners will opt to inject their assets in at market value. In either case, they can claim what they invest in their mines as they go.

Inspired move

And instead of applying to all mines, the tax also exempts iron ore and coal miners with profits of less than $50 million. This is an inspired idea, and like the proposal to limit the scope of the tax and exclude not just quarries and other low value operations but copper, nickel, gold and bauxite mines it came from the big three miners who were negotiating the deal, BHP Billiton, Rio Tinto and Xstrata.

These two measures see the number of companies affected by the new tax fall from about 2500 under the original proposal to about 320, significantly reducing the risk that the deal will be seen as one cooked up by the big three miners for the big three miners.

The existing 40 per cent Petroleum Resources Rent Tax is also being extended, to cover not just offshore projects but the entire Australian oil and gas industry, including the merging coal seam gas producers and exporters in northern Queensland, and the oil and gas groups will also be able to elect to inject their assets at market value, and expense their development costs as they go.

Gillard makes the call

So if radical change to the original proposal qualifies as a backflip, this certainly is one. But it’s a backflip from a tax proposal that was launched and prosecuted by Kevin Rudd, not Julia Gillard. Treasurer Wayne Swan was involved in the talks this week, but the key figures were Gillard, who in personal calls to BHP chairman Jac Nasser and other convinced the big miners that she was genuine about settling the dispute, and resources minister Martin Ferguson, who Gillard inserted into the process after her appointment as PM.

And it is one that has been achieved at a manageable cost to the budget. The tax take in the first two years to 2013-14 falls by $1.5 billion to $10.5 billion, as the government loads in higher commodity price assumptions that are closer to what is actually being achieved this year, cuts its linked cut in corporate tax by one percentage point to 29 per cent, and axes its poorly received exploration tax rebate.

The deal seems to cover all the bases. It satisfies Gillard’s only condition, that the government’s tax take from the resources boom rise. And it exempts most mines from a new tax, while charging those captured by the regime less than the 50 per cent plus total tax rate they faced under the Rudd version.

The iron ore and coal miners will pay corporate tax after the resources tax has been paid, and when coal and iron prices are high as they now, will face a total tax bill of more than 40 per cent, with a maximum above 45 per cent, according to one person close to the negotiations.

There’s a way to go. The Greens have been making ominous noises about blocking a compromise, for example. But Gillard’s backflip is politically marketable – and an election campaign must surely now be just around the corner.

mmaiden@theage.com.au

Leon Gettner
June 30, 2010

Lying about careers is common. Two years ago, I did a blog entry looking at how more people were now lying on the CVs, making up stories about their academic background and achievements.

But then, embellishing the truth a little might be part of human nature, something I examined here. That suggests there are plenty around who bend the truth about their career. How far do people go? When do white lies become a problem?

According to Forbes, the most common porkies on people’s CVs are about academic qualifications, playing with dates, inflating your previous salary, making up job titles you never had, lying about technical abilities, claiming language fluency, providing a fake address and inflating your academic performance.

Of course, there are many who say you shouldn’t do it. For example, this piece from The Wall Street Journal warns that honesty is the best policy and you’ll be found out anyway.

Similarly, academics from the Wharton Business School in the United States warn that it’s dangerous. “Embellishment is part of human nature, experts say, and almost everyone is guilty of it at one time or another. Left unchecked, however, exaggerations that seemed innocuous at first could result in serious, potentially career-ending consequences … In today’s work environment, where no one comes in for a job interview without being Googled first — and where small talk in the elevator or comments made at a staff meeting are just a Twitter post away from reaching a global audience — it’s easier than ever to get caught in an exaggeration”

But others take a more nuanced view. Kelly Magowan in the Six Figures blog asks, for example, whether it’s actually lying if we gild the lily a little to make the CV look more interesting. “A bit of embellishment and ‘white lying’ make it far more interesting for the reader and more likely to get you the job. Let’s face it – we all lie. Albeit, the frequency and degree to which we all lie may vary.”

Writing in the Financial Times, columnist Lucy Kellaway says embellishing the truth comes naturally for many. “Lying is surely caused as much by pragmatism as fear. In my experience, it can be jolly useful. And tests have shown that it doesn’t always catch up with you at al.” Kellaway says comoulsive truth tellers don’t last very long in any office. Sooner or later, they are forced out because no one can work with them. “Offices are glued together with lies. We pretend to like people we work with. We must pretend to be satisfied with our jobs. We must pretend to think our company is better than the competition. By accepting a place in any hierarchy, you are bending yourself out of shape.”

At the same time, you would have to say that that in today’s work environment where there is so much pressure to perform, the temptation to bend the truth has never been greater.

So what would you do if there is an inconvenient truth in your past? Do you gloss over it, make something up or come clean? What do you think about bending the truth on a CV? Is it ok, or unacceptable? Do you know of anyone who has? Or have you done it? What did you say?