Business


Since landing in the UK seven months ago, one of the first habits I quickly reestablished were my regular Starbucks runs. Now, I am not a coffee snob – in fact during the first years of my morning coffee runs with my Principal Global crew (shout-out to TP and BD!!), all I ordered was hot chocolates. (stop right now….shut it down….no judging!) Then I moved on to Chia Lattes. And finally, it was quite the momentous occasion when I finally progressed to caramel lattes!! (again…no judgement). I plan to graduate to full adulthood on the coffee continuum when I turn about 75.  HiRes

In any event, this is not a post to debate the merits and quality of Starbuck’s products, but rather a case study in…my name. That’s right…my name. For those that don’t know, the name ‘Randy’ in British culture has a, um, unique meaning. One that was clearly explained in any of the Austin Powers movies (YouTube as necessary). So there was some actual concern that when we moved here, that I would need to utilize a different name. However, we decided that since I would not be dealing primarily with teenagers day-to-day, we would charge ahead and just use ‘Randy’. (Although, in interest of full disclosure, April and the kids refuse to introduce me at school by anything other than ‘Randall’).

But back to our story…I’m in London. I’ve reestablished my Starbucks runs. However…I notice that the baristas seem to be uncertain, unclear or unwilling to spell my name correctly. Not just one or two or ten times. So below, I provide you with the 23 alternatives we have encountered thus far. I would love to know your favorite version. Cheers!

Wayni Willy Wexen Runie Rudy Rowlene Riny2 Riny Riely or Ridy Reynold Relly Redix Redie Rany Randi Ranch Ramel Raimy R.. R. P.. Briny ???

 

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Having recently celebrated my 15th year of employment with a Fortune 500 company, I came to the stark realization that I had spent my entire career in the ubiquitous “corporate world”.  Large corporations with thousands of employees have their own distinctive environment, culture and atmosphere.  And after spending 15 years ofBuilding my life in just such an environment and culture, I have learned some unique lessons. Some the easy way.  Others in a more painful way.  So given this career milestone, I thought it fitting to record some of the lessons I have learned over the years.  These lessons are not universal across all employment situations.    But hopefully there is enough wisdom in these experiences to provide insight (and maybe warning) to those that find themselves in similar situations.

1.  Continuously put yourself in a position to win

One of the biggest lies of the corporate world is that that you can make your own luck.  But that is not the case – you cannot control timing.  All you can do is prepare, prepare and prepare. And then, if and when a situation finally arrives for you to perform, you will be ready to excel.  Now let’s be clear – that time may never actually come.  There is no dishonor in that and that is not a reflection on your skills.  But if you fail to prepare and that time to perform time DOES come, you will fall flat.  That is what you want to avoid.  And trust me, don’t try to scenario-out and speculate if a situation is “the big one”.  On two separate occasions, the most innocent, throw-away projects that were assigned to me turned into the biggest wins.  Many times you just can’t tell, so prepare for all of them.

2.  Don’t burn bridges

“Take this job and shove it” is great for movies…and that’s where it should stay.  People have long memories and I have witnessed people leave for jobs and try to come back, but fail because of the relationships that were damaged.  I have seen people lose opportunities because of comments made after an interview when they thought no one was listening.  To this day, I have my mental list of people that have burned bridges with me and those memories are hard to forget.  So act professional at all times.  And if you still insist on burning brides, make sure you are comfortable risking never returning to that situation again.  Ever.

3.  There really are bad people who will try to hurt you and your career…

Immoral.  Unethical.  Even illegal.  I have seen it all.  In a fallen world, sin will occur because every business, government, group and situation is comprised of flawed people.  No one is immune.  Some people act in these ways and just hurt themselves.  Others will attempt to get you to join them.  And then there is the group that will truly try to destroy you.  Be prepared and plan for how you will response to all three.  Because in the heat of the situation, your initial response may surprise you.

4.  …but there are also a few good people that will try to help you

Do you best to find your circle of trust – this is your inner circle of advisers that will speak truth TO you.  If you surround yourself with sycophants who only tell you what you want to hear, they will turn out to be frauds and will fail you at some point guaranteed.  However, an inner circle that speaks truth is invaluable.  And if possible, find a worthy mentor.  A more-experienced, wiser (does NOT have to be necessarily older) person that is willing to answer questions and provide guidance.  But as you ask questions, have a limited, specific plan of action.  The more low maintenance the time commitment you make it, the better.  Always be time sensitive and always be specific.  And NEVER try to manipulate the situation – if you attempt that, see lesson #2.

5.  Always, always, always develop new skills and improve yourself

I have witnessed so many people fail at this for reasons that I still cannot comprehend.  If you are ever offered a training opportunity or are being encouraged to develop a new skill, take on a new project/task or pursue more education, always try to do it (if you are able).  It is the easiest two-pronged attack plan:  internally, it shows that you are engaged, interested in development and have initiative to grow.  And to the external world, it makes you more marketable and valuable.  It is one of the few win-win situations you will encounter in the corporate world.

6.  Ears open, eyes open, mouth shut

Confession #1 – stole this saying from a former major-league baseball player who was attending his 1st All-Star Game and asked about his experience.  But the wisdom is universal.  Listen, observe and repeat.  If necessary, talk.  You will learn more things than you can imagine and you will prevent yourself from looking foolish as well.  You will grow into “your voice” – just make sure the one you grow into has credibility.

7.  You will make mistakes, even MAJOR ones.  But the key is what you learn and how you respond

Yes, you should try to never make mistakes.  And yes, you should try to never make the same mistake twice.  But as you are building your career, what you learn from those mistakes and how you respond to those mistakes will make all the difference.  Humility will serve you better than anger.  Introspection will be a better guide than self-denial or blame-shifting.  It won’t minimize the pain and, at times, the embarrassment of a situation, but it will give a direct path toward your ultimate goal:  growth and maturity.

8.  Decide early how you want to respond to injustice

The hardest lesson to plan for is how you intend on responding to injustice.  That includes injustice against you and injustice against others.  It could be discrimination, harassment, bullying, an illegal activity, and ethical breach or dozens of other possible examples.  And this goes beyond just the formal steps that should be undertaken given your corporate code of conduct.  This involves the ultimate question:  what are you willing to sacrifice in your response to an injustice?  A relationship?  Your reputation?  That next raise or promotion?  Your entire employment and means of support for your family? A case study in an employment law class is one thing – being confronted with actual real-life choice with tangible consequences is another.  Prepare yourself so that you don’t respond in haste and set off a course of events contrary to what you intended.

9.  Prioritize your worry/caring

Confession #2 – stole this one directly from one of my bosses over the years.  And at first, it sounds a bit mean-spirited.  But once you break it down, it actually makes sense.  This doesn’t mean that you don’t worry about your job or performance or care about people.  It’s just the acknowledgement of the fact that you will have the option to worry or care about a LOT of things – the key is focus on the important ones and ignore the silly stuff.  It’s all about priorities.  Remember that inner circle of trusted friends…that’s a good place to start.  And remember the intangibles like integrity, faith, reputation – the ones that are almost impossible to repair if allowed to be damaged.

So after 15 years, that’s my list.  But let me be perfectly clear about two items.  First, the only reason I have a list is that I have failed many, many times and it has been through my own errors and trials that I have been able to finally see how I should have acted.  To this day, I have regrets regarding situations where I should have been a better employee, a better friend, a more positive influence to my colleagues.  And secondly, I am still learning.  Each day brings a new opportunity to apply lessons from the past or establish new lessons for the future.  I am grateful for the experiences God has given me to provide for my family and provide value to my employer.  Onward to the next 15…or so.

It was quite the week for legendary Berkshire Hathaway CEO Warren Buffett as one of his top lieutenants, and rumored leading succession candidate, unexpectedly resigned amid allegations of insider trading.  Despite Mr. Buffett’s repeated claims of no laws being broken, a matter the SEC will likely weigh in on, many are questioning for the first time Mr. Buffett’s character, reputation and ethics.  As a good example, I would recommend Joe Nocera’s inaugural New York Times column entitled “From Buffett, Excuses, Excuses, Excuses”.  However, this is not the first time that the Oracle of Omaha has seemingly been confused on the facts of a situation when it is convenient for him.

One of the most infamous statements ever made by Warren Buffett is one focused on tax policy.  In an oft-repeated statement, Mr. Buffett has publicly claimed (such as at a $4600-a-seat political fundraiser in 2007) that:

“The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent”.

Later in that same speech, he stated that he was taxed at 17.7% on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent.  Setting aside his obvious attempt to shock as well as the strikingly condescending attitude regarding “our receptionists” and “our cleaning ladies”, let’s examine his claim in further detail.

  • The $60,000 that the secretary earns comes exactly from one source – current wages as a secretary or, as the tax world classifies it, ordinary income.  Thus, those wages are taxed at the marginal tax rate for a $60,000 earner (30% in 2007 according to Warren but 25% under current law…and from I can find, it was 25% in 2007 as well, but we’ll let that one slide).
  • Now let’s look at Warren’s income of $46 million – where does that come from?  Well for years, Mr. Buffett has received a very below-market salary as head of Berkshire Hathaway.  As CEO, he currently receives $100,000.  That $100,000 is taxed at 28% – if that was his only income.
  • So on the apples-to-apples comparison of individual salaries, Mr. Buffett is taxed at a higher rate than his secretary.  In addition, if Warren received a fair salary from Berkshire for his role of CEO – which would likely be MUCH greater than $373,000 (the amount it takes to get you to the top tax bracket currently) – he would be taxed at the 35% rate.
  • Therefore, if Mr. Buffett pays 35% on his $100,000 salary, how can he claim that he only paid 17.7% on $46 million of income?  Simple – he is purposefully mixing his ordinary income (what us normal people would call “salary”) with income from capital gains.  Mr. Buffett is a very asset-rich person – consider his 31% ownership of Berkshire Hathaway valued well north of $40 billion.  He receives a variety of interest payments, dividends and other capital gains on his entire investment portfolio.  These capital gains are either taxed at the short-term capital gain tax rate of 35% (all short-term gains are taxed at the person’s ordinary income rate, which for him, is 35%) or the long-term capital gain tax rate of 15%.

So what does this all mean?  Well if you run simple math at these tax rates, one can easily determine that Mr. Buffett claims to have paid $8.14 million in taxes on his $46 million of “income” or 17.7%.  Assuming his earnings of $100,000 as CEO at Berkshire (taxed at 35% since his other ordinary income would push him to the top bracket), another $6.1 million earned in short-term capital gains and other ordinary income (taxed at 35%) and $39.8 million in long-term capital gains (taxed at 15%), his total tax bill would be $8.14 million or 17.7% of $46.0 million.

So let’s examine Mr. Buffet’s claim that he does not pay enough in income taxes.  And for illustration purposes, let’s jack up his ordinary income rate (and thus also his short-term capital gain rate) to 100%.  That’s right – every dollar earned is immediately paid in taxes!!!  Sounds ridiculous right?!?!?  Well, it is.  But even assuming a 100% tax rate on the income breakdown shown above, do you know what Mr. Buffett’s all-in effective tax rate would be?  26.5%!!!  It would STILL be less than the 30% tax rate that he claims was paid by his secretary in 2007 (and hardly different than the 25% the secretary would pay now)!!!  There is absolutely nothing one can do to the ordinary tax rate to achieve what Mr. Buffett desires! So please Mr. Buffett – argue the facts, not the emotions.  If you want to change the game and pay more in taxes on a percentage basis than your secretary, the debate MUST be focused on long-term capital gains and not ordinary income.  The majority of Americans NEED their salary.  They need it to live on it, pay expenses with it, save some of it, invest in their children’s education and to do a wide variety of other things.  We are NOT asset-rich like you are!  The government can raise the ordinary income rate as much as you want and you’re exactly right – it’s not going to hurt you, Mr.  Buffett! But it’s going to destroy the rest of us that don’t have the stock ownership, assets and the long-term capital gains that you have!! So let me ask you this – are you willing to start paying more taxes on your $39.8 million of long-term capital gains?  How is that going to affect your business and your long-term investment prospects?  Are you willing to make that sacrifice?  If you are ever willing to accurately shift the debate to that topic…just let me know.