Treat Employees Like Business Owners, do it basic, simple and straightforward.

Treat Employees Like Business Owners, do it basic, simple and straightforward.

The rest is boredom and noise, keep it far away

Employee loyalty and engagement are hot topics, and for good reason. Companies want to attract and retain talented people who really dig into their work. But most employers ignore two of the most powerful tools for making that happen.

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Tool #1 is enabling employees to build real ownership in the business.

Of course, many public corporations offer stock-purchase plans or the like as part of their retirement benefit. And everyone knows about the options collected by a select few in Silicon Valley and other tech centers. But meaningful ownership — sizable grants of stock to rank-and-file employees year after year, to help them acquire a significant stake in the company — is all too rare.

It doesn’t have to be. Many large corporations manage to find big bundles of shares (and huge amounts of cash) for executive compensation, even though there’s little relationship between senior-management pay and financial results. A portion of those assets can be redirected to regular stock grants for employees. And companies — except for the very smallest — can implement an employee stock ownership plan (ESOP), often funded through borrowing. So long as it’s sufficiently generous, either approach gives employees the kind of stake that makes them feel like true owners.

Just look at the supermarket industry to see such ownership in action. H-E-B, the big Texas-based chain, recently announced that it would give up to 15% of company shares over time to 55,000 of its employees, distributed according to a formula based on salary and seniority. That’s a chunk of stock estimated at more than $1 billion. Publix, a large chain headquartered in Florida, is majority owned by its employees and regularly makes the annual “best companies to work for” lists. And there’s WinCo, a grocery retailer based in Boise, Idaho, with 14,000 employees and 86 stores spread across eight western states. Every WinCo employee is an owner. Cathy Burch, who has worked there for 20-some years as an hourly employee, now has close to $1 million in her retirement account.

You don’t think that kind of generosity builds commitment and passion? “We work our tails off,” an employee with 28 years at WinCo told Forbes. “We’re more of a team than just working for a typical company. There’s a carrot out there you’re working for, for the rest of your life.”

Tool #2 goes by different names: open-book management, economic transparency, ownership culture. Whatever you call it, it means encouraging employees to think and act like businesspeople rather than like hired hands.

If you work for a conventional organization, your job is to show up at the appointed time and perform certain tasks. At open-book companies, it’s part of everyone’s job to contribute to the success of the business. Managers help employees understand, track, and forecast key numbers. They welcome ideas for improvement. They reinforce the ownership mindset by sharing profit increases with everyone, usually through bonuses funded by the increase itself. Many of these businesses also have a stock plan in place.

The approach is easiest to understand in a small company. The Paris Creperie, a Boston-area restaurant that’s about the size of a McDonald’s outlet, recently adopted open-book management. Creperie employees learned the basics of the restaurant business, including determinants of profit such as cost of goods sold (COGS). Then, last summer, they launched an initiative to reduce COGS, cutting food waste, reconfiguring some dishes, and coming up with ways to operate more efficiently. COGS dropped from roughly 30% of revenue to 26.5% over a four-week period, and continued to hold in the mid-20s. Operating profit rose by more than 10 percentage points in just four months and has stayed in the 18% to 20% range, compared with a restaurant-industry average of less than 4%.

This year, employees there are on track to get bonuses averaging $6,000. “Any other restaurant, I would just be scraping by,” shift supervisor Amanda Norton told theBoston Globe. “Seeing those bonuses really helps me breathe easier, knowing that it’s not the end of the world when I have to pay bills.”

You can imagine what all this does for employee loyalty and commitment. “Actually,” says Harvard Business School professor Leonard A. Schlesinger, “when employees know more about the business and have an economic stake in the outcome, there’s a high probability that turnover rates would go down exponentially.”

These tools also address two fundamental challenges of today’s free-enterprise system. An ownership nest egg helps mitigate inequality by putting more money in the hands of rank-and-file employees. And open-book management teaches people the basics of business, so they can thrive when they have to change jobs, as most inevitably will in our fast-changing economy. “People are learning what it means to run a business,” says Joe Grafton, a consultant who works with the Creperie. “That’s something they can take with them as they move forward with their careers.”

Both measures give people a stake in the system and the wherewithal to live a more secure life. A company that puts these tools to work helps its community while helping itself.

What is education for? The beauty of a PhD is that it is a place where individuals can immerse themselves in learning without focusing on where this will take them.

Building social capital isn’t the focus of most education systems. The beauty of a PhD path is that it is a place where individuals can immerse themselves in learning without focusing on where this will take them.

Last year, Mark Carney, Governor of the Bank of England, gave a speech in London called “Inclusive capitalism: creating a sense of the systemic.”

Carney’s 2014 speech is worth reading in full, but it is his remark that “we need to recognise the tension between pure free market capitalism, which reinforces the primacy of the individual at the expense of the system, and social capital which requires from individuals a broader sense of responsibility for the system” that resonates most strongly. Carney then goes on to say, “a sense of self must be accompanied by a sense of the systemic,” a theme threaded throughout much of the speech.

As an entrepreneur, it matters to me that every ambitious person with the talent, imagination and drive to turn ideas into reality is provided with opportunities to succeed. This is what makes capitalism an “engine of broadly shared prosperity,” and that is the reason for countless innovations that have changed how we live. Indeed, although we cannot guarantee the outcomes of such efforts, we should be confident that capitalism can help all people flourish regardless of their age, race, gender, place of birth or level of education.

However, in looking at how our public conversations about education are transforming, it is deeply worrisome that we are focusing on the wrong things, moving farther and farther away from a world where equal opportunity between individuals is possible. In a society where education is seen as a means to a job, and where higher education is seen as a path to a particular kind of employment, we miss what education is actually for. Moreover, the things that contribute to the full development of a person, such as an appreciation for philosophy, science and history, fall to the wayside as we place greater emphasis on subjects with short-term returns.

When a person focuses on achieving a particular end goal, they narrow themselves to the opportunities for exploration and experimentation around them. The beauty of higher education is that it is a place where individuals can immerse themselves in learning without focusing on where this will take them. The writing and ideas of Aristotle, Nussbaum, Sen and Oakeshott might not help students achieve particular outcomes, but they contribute to the development of a particular kind of person. It is regrettable that in most conversations I have on this topic, most people give a funny look when the words “intrinsic value” or “philosophy” are uttered.

Equally, I have found the same to be true in terms of how young people think about careers. Constantly focusing on the “next step,” we fail to reflect on the whys and for what purposes we are working. It is only after dropping out of Oxford, working as a sous-chef, living as an amish farmer and dabbling in governmental and advertising work that David Ogilvy founded the ad firm Ogilvy & Mather – at the age of 37. Had Ogilvy cared about short-term career prospects, he would have joined a consultancy.

Along with issues such as climate change and artificial intelligence, inclusive capitalism is among the most pressing of our time. But we will only re-instil trust in capitalism, and develop an inclusive society built on equal opportunity, if individuals possess what Carney calls “a sense of self… accompanied by a sense of the systemic.” Developing a sense of self requires thinking about who we are, a question that requires experience gained over many years through consistent introspection. But we cannot predict, optimize or aim at this experience; Bandura is right when he writes that many of the most influential moments in a person’s life arise through the most trivial of circumstances.

There are thankfully positive examples to which we can refer: in late July 2015, close to 120 young leaders from across North America converged in Calgary, each representing their city hubs in the Global Shapers network. A specific example that comes to mind is Arjun Gupta, curator of the Toronto Hub which has raised over $1 million for the Sick Kids Hospital and built multiple successful companies – demonstrating the curiosity, selflessness and drive we should see out of society’s young leaders.

Broadly stated, education is a means to developing an inclusive society over the long-term. However, it can only take place through a renewed focus on teaching what is fundamentally important. Focusing on jobs and short-term success is what leads us to pursue growth for the sake of growth; a deeper appreciation for learning allows us to ask what growth is for.

We need business leaders like Carney, as well as Lynn de Rothschild and Paul Polman, who continue to ask basic and yet fundamental questions regarding the purpose of wealth. Business should be seen as a vocation, as they have already written. But we also need university presidents and provosts, politicians and civil servants doing the same. “What is education for?”, “What kinds of people do we wish to develop?” and “How do we collectively engage in this dialogue?” might not contribute to GDP, but they will help us build a more powerful engine in the long-term, and more importantly, a society where equality of opportunity exists.

Malta: the best Non-dom Regime in Europe

Malta: the best Non-dom Regime in Europe, with MALTAway advise and solutions

…from Finance Malta

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Maltaway is your gateway to access the global and Malta’s opportunity to relocate and protect Yourself, Your Family, Your Business, Your Asset

The UK General Election held in May brought about a surprise outright Conservative Party victory which has been swiftly followed by a Summer Budget from George Osborne which itself contained a few surprises of its own. Whilst some further changes to the ‘non-dom’ regime were expected it is perhaps without exaggeration to suggest that of all the announcements the swift cutting of permanent non-dom status may hurt those affected the most.

Non-dom status in the UK has hitherto provided a very attractive proposition for wealthy individuals able to attain that status and conferred upon them, rightly or wrongly, a number of tax benefits otherwise inaccessible to UK resident and domiciled individuals.  In broad terms, the changes announced in the Budget mean that a non-dom is no longer able to remain resident in the UK for any more than 15 years before paying tax in the UK on all of their worldwide assets.  The ability to previously shelter non-UK assets from UK tax coupled with all the non-tax benefits of living in the UK has made it a very attractive base for UHNWIs and their families to reside, invest and build businesses there.

So, if the tax changes erode the attractiveness of the UK as a place for non-doms to live, is there a viable alternative and where will this non-dom ‘flight of capital’ flow to?
Malta is consistently ranked as one of the best places in the World to live and offers a high quality Mediterranean lifestyle in a stress-free environment. Malta is a member of the EU and operates a favourable tax regime for individuals and businesses alike.

From a personal tax perspective, Malta offers an attractive non-dom regime whereby expatriates who take up residence in Malta are only taxed on foreign source income to the extent that this is remitted to Malta, whilst capital transfers into the country are not taxable at all.  This is a basic feature of Malta’s tax system which was inherited from the British, albeit Malta’s non-dom regime does not carry any annual charge and provides certainty insofar as an individual being able to maintain non-dom status permanently.

Many expatriates choose one of Malta’s attractive residency schemes to benefit from the non-dom rules.  As a resident of Malta, a primary residential address is required there.

However, it is not uncommon for many individuals to regularly travel overseas and simply use Malta as their home base.  There is no statutory, minimum limit on the number of days a person is required to be in Malta and so in general terms one simply needs to avoid spending too much time in any one other country to avoid the risk of being deemed a dual tax resident.

Below is a summary of the main residence options available in Malta:

  1. Ordinary residence in Malta: This is available to both EU/EEA/Swiss and non-EU/EEA/Swiss nationals, although the qualifying criteria are much easier for the former than for the latter.
  2. Special residence programme (for both EU and non-EU nationals): Beneficiaries are subject to a beneficial flat tax rate of 15% on foreign remitted income, with a minimum tax liability of €15,000 p.a.
  3. Malta retirement programme:  Beneficiaries are subject to a beneficial flat tax rate of 15% on foreign remitted income that is received by them or any of their dependants, subject to an annual minimum tax liability of €7,500 and an additional €500 for any dependant / special carer.
  4. Highly Qualified Persons programme (for senior professionals in the Financial Services, Gaming and Aviation industries, both EU and non-EU): Eligible applicants enjoy a beneficial 15% tax on their employment income for a specified number of years, and pay no income tax on any earnings exceeding €5,000,000.
  5. United Nations pensions programme (for both EU and non-EU nationals): This new programme exempts beneficiaries who are in receipt of a pension or a widow(er)’s benefit from the United Nations, and offers a beneficial flat tax rate of 15% on any other foreign remitted income.

In addition to the above, Malta offers an Individual Investor Programme (IIP) which allows for the granting of full citizenship status, through a certificate of naturalisation – subject to a very strict due diligence process – to individuals who make a contribution to the economic and social development of Malta.  This is an attractive proposition for wealthy non-EU citizens who wish to benefit from full EU citizenship, which confers a number of important rights, including the right to move freely in all 28 EU countries and visa-free travel to more than 160 countries.

So, whilst London may be seen as a ‘cooler’ place to live than Malta, you can still have your cake and eat it by moving there and enjoying its wonderful lifestyle and still being able to spend time in London, Paris, Milan …… Malta gives you choices that non-doms in the UK are fast running out of.

Yellen a revolutionary Fed chair. She wants labor to get a fairer share of the fruits of the economy’s productivity

Yellen a revolutionary Fed chair. She wants labor to get a fairer share of the fruits of the economy’s productivity
She is forcing the financial markets to rethink assumptions that have dominated economic thinking,arguing that fast-rising wages, viewed for decades as an inflationary red flag and a reason to hike rates, should instead be welcomed, at least for now

Pattern of subdued real wage gains suggests that nominal compensation could rise more quickly without exerting any meaningful upward pressure on inflation

In fact, real wages have been rising less rapidly than productivity growth and what we’ve seen is a shift in the distribution of national income away from labor and toward capital