The Importance of Being Honest

Posted on March 17, 2014 by in Blog

Negotiations concerning your business can be stressful and overwhelming. Many people are under the misconception that anything goes in negotiations, as long as it achieves the desired result. Bluffing, or bending the truth, has been a common tactic of many business owners and lawyers in these negotiations. For most people, fudging a few numbers is a necessary evil when conducting business because they feel it is effective. Turns out, that’s not the case. Research has shown that deception and a lack of ethics in negotiations is actually counterproductive.

The Facts

Your reputation is just as valuable in your negotiations as your bargaining skills. According to Andrea Schneider in Shattering Negotiation Myths: Empirical Evidence of the Effectiveness of Negotiation Style, , there are two types of effective negotiating styles: 1. Problem Solving and 2. Adversarial. The study surveyed 2500 lawyers to gain their perception of the most effective negotiating style.

The following attributes were associated with the Problem Solving negotiators:

  • Ethical

  • Experienced

  • Personable

  • Rational

  • Trustworthy

  • Realistic

  • Confident

  • Self-controlled

  • Accommodating

  • Astute about the law, etc.

The Adversarial negotiators:

  • Egotistical

  • Demanding

  • Ambitious

  • Experienced

  • Forceful

  • Arrogant

  • Irritating

  • Argumentative

  • Manipulative

  • Suspicious

  • Bluffer, etc.

Essentially, the lawyers associated with the problem solving attributes were considered to be more effective than the lawyers with the adversarial attributes. Schneider also found that the problem solving negotiators focused on ethical conduct, maximizing the settlement, meeting the client’s needs, avoiding litigation and a good use of legal skills. While the adversarial negotiators also wanted to maximize the settlement and meet their client’s needs, they also focused on outdoing the opposing counsel and obtaining a profitable fee.

The perception of the negotiator is important to the proceedings and effectiveness of that negotiator, so it’s important to care about the negotiating relationship as much as the outcome of the negotiation.

In conclusion: if a group of lawyers can agree honesty and creating good negotiating relationships is more effective than bluffing and dishonesty, then perhaps that’s an approach that can benefit any business.

Ethical Negotiations Add Value

All successful organizations understand the importance of networking to create strong and reliable partnerships. Owners, directors and managers from all kinds of companies attend conventions and meetings in the hopes of creating relationships they can leverage in the future. That should absolutely be taken into consideration when you are negotiating. You never know when you’ll encounter someone you’re negotiating with again. In all practicality, if you’re selling your company, your buyer is more willing to accept your estimates and numbers if you tell the truth all of the time. Remember the importance of being honest (your lawyer too), and you’ll get the results you want from your negotiations.

If you or your company would like a free consultation on these or any issues, please contact me at mmurrah@outsourcegc.com

New Resources From EEOC (Religious Dress, Grooming Practices, Background Checks)

Posted on March 13, 2014 by in Blog

The Equal Employment Opportunity Commission (“EEOC”) has recently issued new publications, including one jointly with the Federal Trade Commission (“FTC”), offering guidance on certain workplace rights and obligations of employers.

1. Religious Garb and Grooming in the Workplace: Rights and Responsibilities

This EEOC handbook helps to answer employers’ questions regarding how federal employment discrimination laws apply to religious dress and grooming practices and how employers can stay on the right side of federal law. As the handbook states:

“Examples of religious dress and grooming practices include wearing religious clothing or articles (e.g., a Muslim hijab (headscarf), a Sikh turban, or a Christian cross); observing a religious prohibition against wearing certain garments (e.g., a Muslim, Pentecostal Christian, or Orthodox Jewish woman’s practice of not wearing pants or short skirts), or adhering to shaving or hair length observances (e.g., Sikh uncut hair and beard, Rastafarian dreadlocks, or Jewish peyes (sidelocks)).

In most instances, employers are required by federal law to make exceptions to their usual rules or preferences to permit applicants and employees to observe religious dress and grooming practices.”

A free downloadable copy is available here.

2. Background Checks: What Employers Need to Know

The EEOC and FTC have jointly published a handbook on background checks. While the hiring process necessarily prompts employers to see out all available information about prospective employees, including the person’s work history, education, criminal record, financial history, medical history, or use of social media, there are federal restrictions on what kind of data and questions can be sought. Anytime a company uses a job applicant’s background information to make a hiring decision, the company must comply with federal anti-discrimination law (including protections against discrimination based on race, color, national origin, sex, or religion; disability; genetic information (including family medical history); and age (40 or older).

Additionally, when a company runs a background check through a credit agency, one must comply with the Fair Credit Reporting Act (FCRA). The FTC enforces the FCRA. The FTC portions of the handbook explain compliance procedures.

A free downloadable copy is available here.

As a reminder, these handbooks only apply to federal law. Be sure to check state and local regulations that may also affect these areas of hiring and workplace standards.

If you or your HR department have any questions in these areas, please feel free to contact me at mmurrah@outsourcegc.com

Royalty Fraud

Posted on March 12, 2014 by in Band Jam, Blog, Case Studies

The article, “Royalty Fraud” by Cooper CPA Group member, David Acosta was published on Music Think Tank last week.

From cheating managers and promotors to IRS issues and straight up financial mismanagement, there are many reasons the list of music legends who have lost it all is a long one.  David Acosta, CPA is an expert in helping music artists navigate and protect themselves from the financial downside of the music industry. Here’s what he has to say regarding royalty fraud.

How does royalty fraud happen?

There are many variables when it comes to royalty distribution and the calculation of rates. It is an extremely complex and controversial process.  Not only do rates vary by type (CDs, digital, streaming, television and film, video games) but the calculation of royalties is different for songwriters, publishers and the recording artist. As Courtney Love pointed out in her letter to music artists, “Record companies also reduce royalties by “forgetting” to report sales figures, miscalculating royalties and by preventing artists from auditing record company books.”

How is royalty fraud detected?

It starts with the contract. Negotiate terms that lend themselves to accounting controls such as demanding payments and summaries at regular intervals with detailed backed up. Review the summaries immediately and carefully to ensure contract compliance.

How are royalties distributed?

Royalties are typically paid either monthly, quarterly, or annually.  Royalties are paid after all the deductions are calculated.  Some artists never see any royalties because of recoupment.

How do you calculate lost revenue? 

Most analyses use a combination of historical or past performance. In some instances, we have to project what income the artist could have made but for the actions of the record label.

How do you recover lost revenue? 

As accountants, we start by conducting an audit. If the numbers differ from the record label’s numbers, we make a demand for any money owed.  Unfortunately, this is when lawsuits arise.  If we have a solid case, it is likely to settle for an amount usually less than 100 percent of what is owed.

Who manages royalty compliance? 

Lawyers are usually involved during contract negotiations, but in terms of compliance, it is usually the business manager who keeps track of royalties owed.  Unfortunately, many business managers aren’t savvy when it comes to keeping up with complicated royalty formulas.  It’s best to have a CPA on the team. That’s why they call it royalty accounting.

David Acosta, CPA has more than 25 years of accounting experience and serves on the Board of Directors of the Texas State Society of Certified Public Accountants and the Board of Governors of the Texas Chapter of the National Academy of Recording Arts and Sciences (Grammy Awards©). www.CooperCPAGroup.com

Did you know that Gary N. Cooper, CPA is also a successful inventor?

Posted on March 10, 2014 by in Blog

The article, “Chatterbats ‘Shake Up’ Baseball Promotions” originally appeared in the Houston Chronicle in November of 2006:

Rookie Company Finds Success in the Major (and Minor) Leagues

HOUSTON, Nov. 13 /PRNewswire/ — For baseball teams looking to give their fans and sponsors something more to cheer about, a new promotional product is meeting with resounding success. It’s called Chatterbats, and this novel item is becoming increasingly popular with major and minor league teams.

Chatterbats are 16 inches long and have the wood grain appearance of a real bat. They are constructed of soft plastic and have navy beans inside a hollow chamber designed to produce a soft SHUSH sound.

“Chatterbats were a great lift to our team during the 2006 season,” says John Sorrentino, Vice President ofBusiness Development for the Houston Astros. “The distinctive sounds that come from the Chatter Bat can excite and ignite the crowd. When we ran out, many fans were disappointed in not getting their Chatter Bat. It was a hit!”

The restaurant chain Boston’s, The Gourmet Pizza, sponsored a fan giveaway promotion featuring Chatterbats at a Texas Rangers night game. Mary TerryNational Marketing Manager for Boston’s, who was at the game, had this to say: “I watched and heard the fans’ response with the bats and I knew we had hit a home run.”

As far as the Rangers were concerned, the evening was a tremendous success. In addition to an attendance lift attributed in large part to the promotion, Jeff Cogen, President of Texas Rangers Baseball Club stated: “we generally believe the atmosphere created that night will create return business given the fan’s game experience and the unique buzz created with (Chatterbats).”

Chatterbats have been featured at many Major League Baseball parks including at Minute Maid Park, Ameriquest Field and at Dodger Stadium during the 2006 playoffs against the New York Mets.

The AAA team, Frisco RoughRiders also used the bats with success. “Not only did these fun products enhance the experience for the fans, but also provided them with a great souvenir to take home.”

Chatterbats are available in five colors: natural, red, blue, white and black. Sponsor logos and slogans are placed on the bats in a high performance ink that is safe and has a high color-rich quality.

For more information, contact Gary Cooper, Managing Partner of Chatterbats at 713-243-8591 or visit the Chatterbats Web site at http://www.chatterbats.com.

 

Issuance of Ukraine-related Executive Order

Posted on by in Blog

An Executive Order was signed by the President in response to threats to the stability of Ukraine. The Order is also in response to efforts to assert authority over the Crimean Region without the approval of the Government of Ukraine.

It also allows the US to sanction persons who were involved in the misappropriation of state assets of Ukraine or have asserted governmental authority over any part or region of Ukraine without the authorization of the Government of Ukraine.

This Order has authorized sanctions against persons (still to be identified) associated with the instability in the Ukraine and also has authorized expanded visa restrictions blocking entry of certain persons into the US. So far, this is only the authorization to impose sanctions; no persons have been specifically named yet. The EU has imposed some sanctions also against named members of Ukraine’s former government and related persons, and is considering further sanctions along with the US.

The Office of Foreign Assets Control (“OFAC”) of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. (OFAC Sanctions)

Just a reminder, these OFAC sanctions apply to US persons (citizens, residents, corporates organized under US law and their subsidiaries), no matter where they are located. They also apply to persons traveling in the US. In addition, in recent years, State, Treasury and Justice departments have prosecuted non-US entities/individuals that ‘facilitate’ or cause violation of US sanctions by others. For example, an entity that allows routing of payments through a US bank without telling the US bank that the beneficiary or sender is an OFAC blocked person or country.

All US companies who might be dealing with Ukraine or Russia should pay close attention as this develops, as current rumors and press reports indicate that certain Russian persons will also be blocked by these authorized sanctions.

All non-US companies who might interact in any way with the US in their dealings with Ukraine and Russian persons should also pay close attention. This would include routing payments or shipments through the US, involving US entities in manufacturing components later shipped to blocked persons, etc.

If you or your company would like a free consultation on these or any issues, please contact me at mmurrah@outsourcegc.com or my colleague, Kristen Geyer at kgeyer@outsourcegc.com.

Why an Effective Social Media Policy and Checklist are Essential

Posted on March 3, 2014 by in Blog

There’s no denying it; social media is an integrated part of the way we do business today. For businesses of all sizes, social media platforms like Facebook and Twitter have proven to have a great ROI, not only for marketing purposes, but for a business’s connection with its current and future customers and clients. For example, Ford began marketing its Fiesta model over a year before it entered the USA using social media. The YouTube promotion alone generated 6.5 million views. Approximately 50,000 non-Ford drivers requested information about the vehicle, and when the vehicle finally went on sale, they sold more than 10,000 in the first week.

The Internet Doesn’t Forgive, and it Never Forgets

Despite the obvious benefits of a strong social media presence, there are inherent risks. A mistake made on the Internet is an especially detrimental one. You can’t ever really delete the mistake. The illusion of delete buttons and undo functions on the web has been debunked, particularly by Twitter.

In 2012, Kitchen Aid was caught in a Twitter scandal when one of their employees, using their company handle @KitchenAidUSA, tweeted:

“Obamas gma even knew it was going 2 b bad! ‘She died 3 days b4 he became president’. #nbcpolitics”

Although Kitchen Aid attempted damage control by deleting the post and apologizing, the post had already been retweeted and gone viral. This instance is cited as one of the worst social media mistakes in history. Your business should avoid ever being in such a position.

3 Things You Need to Create a Successful Social Media Policy

1. Develop a stand-alone social media policy. You might think it’s common sense, but it’s not. Developing a stand-alone social media policy that defines appropriate employee use of social media is critical. This should include:

  • The Company’s expectations of any employee using social media
  • Anti-harassment policies should extend to social media. That means, the response to traditional workplace harassment on the part of the Company should be the same for social media harassment
  • Be plain; are employees allowed to use social media on Company property? Yes or no?
    • Property includes physical equipment, as well as electronic information and communication systems
  • If it is on the Internet, it is not private. If an employee uses Company property and violates policy, they can, and will be, disciplined according to Company policy
  • Being an employee means loyalty. Personal account or not, posting confidential Company information, or bad-mouthing on social media platforms violates their loyalty agreement
    • Make it clear that violating their confidentiality agreement in any way, including social media, has serious consequences

2. Your employees are a direct representation of your business. The reality is, the people you hire and put your name on are a reflection of the kind of business you run, at least to your customers and/or clients. Promote a positive image by:

  • Prohibiting defamation using social media*
  • Inform employees they should respect customers, clients, business partners etc. by avoiding offensive postings (i.e. ethnic slurs, sexist comments, obscenity etc.)
  • Include post-employment obligations not to denigrate the Company or any affiliates*
  • Again, social media harassment policy of fellow employees or any Company affiliates should be consistent with any existing workplace harassment policies

* Ensure you are not violating employee rights under the First Amendment, NLRA, or whistleblower laws.

3. If you expect them to know it, you need to train it. People make mistakes; however, providing your employees with the appropriate training can greatly reduce the number and severity of these mistakes. Make sure you:

  • Provide training on the appropriate use of social media, perhaps during onboarding
  • Train all levels of management and HR on how to properly enforce these policies

Getting Started — Contact me today for your complimentary Social Media Checklist at mmurrah@outsourcegc.com. This invaluable tool will help you tackle and simplify the seemingly daunting task of developing an effective Social Media Policy.

5 Attributes to Look For in High Performing Employees

Posted on February 26, 2014 by in Blog

Since you can’t clone yourself, what should you look for when hiring high performing employees? Is a great article written by Ryan Caldbeck on Entrepreneur.com .

With so much attention paid to innovations and disruptive business models in the venture capital and startup world, it can be easy to overlook the vital importance of great people.

I keep a quote from legendary venture capitalist Arthur Rock in mind when hiring: “What I’m interested in is investing in people.”

Of course, every company wants stellar employees who are impactful, high performers. Identifying those high performers, however, takes hard work in recruiting, screening resumes and interviewing.

Here are five key attributes that CircleUp looks for in candidates, in no order:

Horsepower: I’ll take intelligence over experience any day of the week. Job descriptions alone can intimidate a lot of people — particularly younger people, who often feel that they lack the experience that the job description suggests they will need. That’s unfortunate, because I’ve found that most of the time intelligence trumps experience. An intelligent candidate can quickly learn a job and frequently ends up doing it better than someone (less intelligent) who has been doing a similar job elsewhere. Experience is certainly valuable, but brains are the horsepower that drives the business.

Ownership and pride: “Run the mile you are in.” This is a distance-running mantra from Runner’s World Editor-in-Chief David Willey that I think applies to many aspects of our personal and professional lives. No matter your current job or where you are in your career, are you focused and engaged and do you take ownership? Do you have pride in what you are doing? Do you have pride in your colleagues and your company? “Run the mile you are in” applies not only to distance running; it applies to life, and it applies to how you will succeed — or not — as a teammate in business.

Work ethic: What we are doing — redefining the private equity investing model and bringing fresh capital to consumer goods startups — requires both smart and hard work. We achieved strong growth in 2013, our first full year in business, because our team works very hard. It’s more than that, really. It’s teamwork that is self initiated. The valued employee is not only the one willing to work hard; she is the employee who searches out ways to contribute most. She should have a work history of having demonstrated not only a willingness to contribute, but a desire to lead, come up with ideas on her own and to grasp fully the feeling of pride in his or her accomplishments.

Integrity: This is an attribute that is not always easy to flesh out. But it is too important to gloss over in the interview process. I try to gauge integrity by asking interviewees for examples of difficult decisions they have had to make or ethical dilemmas they’ve faced. I’m looking for candid responses as to how they handled these situations. What was their decision-making process?

Teamwork: This is my version of the ‘no jerks’ rule. So much of what we do involves collaboration that we must have team players across our business. It is good for business results and our corporate culture. I’ve met nice people who just weren’t effective teammates, but I haven’t met a lot of great team players who were jerks. This is what Reed Hastings, in his manifesto Netflix Culture: Freedom & Responsibility, calls selflessness. I want people who are ego-less and put the interests of the company above their own and are eager to share information and help their co-workers.

This year, we will hire a substantial number of new employees. We’ve had great success in our first two years recruiting fantastic talent. I see it in our productivity and growth, and in the endorsements we receive both from investors and startups. It is also evident in the engagement and enthusiasm I see among our team members — smart, hard-working people thrive alongside other smart, hard-working people.

Read more: http://www.entrepreneur.com/article/231383#ixzz2uTAQvHDr

Legal Risks at The Trade Show

Posted on February 24, 2014 by in Blog

Spring is the time of year for trade shows to start up again. Houston will host one of the largest in the country in May (the Offshore Technology Conference). I have to admit that until recently I had not considered the possibility of theft at trade shows as a huge risk for companies. Not theft of physical assets, but the stealing of intellectual property assets. Intellectual property theft is the most common theft occurrence at trade shows.

As the Houston law firm, The Buskop Law Group (www.buskoplaw.com), stated in a recent white paper:

“The theft of Intellectual Property costs American corporations in excess of $250 billion every year. Small and medium sized companies are hit particularly hard because they often lack the resources or the knowledge to combat the theft. According to a study conducted by the U.S. Patent and Trademark Office, 85 percent of exporting small and medium sized businesses failed to recognize that their U.S. patents and trademarks did not protect them overseas, thereby jeopardizing ownership of their own products and services in global markets. In addition, many business owners are unaware of the recent changes made to patent law regarding the disclosure of unprotected property. Disclosure without protection can now jeopardize your ability to receive patent protection.”

According to the FBI, “Domestic and foreign companies may try to illegally acquire your company’s information. Foreign nations that seek to improve their economies and militaries target U.S. technology companies.”

I consistently recommend to the companies I represent that they need to 1) identify their intellectual property and 2) protect their intellectual property. I’m adding a special note to all my clients this spring to make sure they take steps to protect their intellectual property at trade shows.

Buskop Law is offering a free seminar on how to better protect one’s company before a show on Thursday February 27, 2014 with an exclusive webinar designed especially for exhibitors entitled:

“DANGER at the Trade Show”

Discussed will be areas of exposure, types of protection,
and some simple guidelines to follow.

Check out www.buskoplaw.com for more information.

I encourage you to check it out. I will be.

If you or your company would like a free consultation on these or any issues, please contact me at mmurrah@outsourcegc.com