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Lessons on Workplace Culture From the Happiest Country in the World

Posted: 14 Feb 2020 03:49 PM PST

The country of Finland has held the title of Happiest Country the past two years running. As mental health and employee burnout become bigger and bigger issues in the U.S., we wanted to take a peek at what Finland has done to promote such well-being and how to translate this into the workplace. 

As the CEO of Vincit California – a subsidiary of Vincit, which not only started in Finland but has been awarded Best Workplace in Europe and in Finland three years in a row – I'll walk through the secrets to Finland's happiness and how you can apply them to improve your company's workplace culture.

Why Finland is the happiest country 

Each year, the World Economic Forum puts out an in-depth study measuring satisfaction and life fulfillment based on community and categorized by country, called the World Happiness Report. Finland is the reigning champion, grabbing the title both in 2018 and 2019. 

Although the top 10 happiest countries are all sufficiently affluent countries, the authors of the World Happiness Report insist Finland's claim to the happiest country is not just about the money. For reference, the U.S. lands at No. 19 on the list of happiest countries, while having the highest GDP. 

Despite not having the highest GDP, Finland tops the list of happiest residents because of how the country chooses to use its wealth to support its citizens. What pushes Finland to the top is its social safety net, personal freedom and work-life balance.

The social safety net in Finland provides universal healthcare, safe communities and access to education. One example of this safety net and education is a free artificial intelligence course published by Finland for its citizens so that they could stay ahead of AI technology. 

This social safety net means citizens don't have to deal with the day-to-day stress of locating and paying for the right doctor, insurance, education, day care, etc. that many Americans face. This is an example of how Finns can enjoy this sense of personal freedom; they aren't consumed by these daily burdens.   

Compound this social safety net and personal freedom with the Finns' healthy outlook on work-life balance and you get the happiest country. Companies in Finland not only offer benefits and time off, but Finnish culture promotes a culture of achieving success without sacrificing your personal life or health.

Anu Partanen acknowledges the underlying kernel of truth to Finland's success in the Happiness Report is: 

Finnish society has been built in such a way that people are supported by governmental programs, yet still feel like they have control over their lives without sacrificing choice.

Bringing Finnish happiness into the workplace

At Vincit, we learned this lesson the hardest way imaginable. In 2013, we were still only in Finland, and the company was starting to show signs of slowing financial performance, so we polled our office to get a glimpse of what was going on. The results showed that our workers were miserable. It blindsided us to learn that our business had such low morale and a negative work environment.

We had all the right technical support and traditional structures that a typical business offers, yet employees still expressed being stifled, bleak, and unmotivated. The source of unhappiness was in large part due to overload of our managers, who felt like they were not able to focus on what they did best. They had been trained to be developers, not to be managing people. 

We quickly learned, as the Harvard Business Review has found in their own studies, that managers are often terrible at designing jobs in the name of productivity. They don't think of the employees happiness or future development. In an experiment where participants were to design jobs for their peers, HBR found almost half (45%) of the participants who designed jobs for others make them out to be even more boring than need be. 

So, not only did managers feel unhappy in their roles, they were designing unfulfilling jobs for their peers and feeling distracted from important work. Subsequently this created an entire workplace that furthered employee unhappiness. We were stressing both our supervisors and subordinates. Vincit had to make a radical change to uplift workplace happiness, fast.

So we looked to the lessons that our own country had applied to the Finnish society.

Ignoring standard KPIs and focusing on people

As we mentioned before, the World Happiness Report showed economic profit drivers are not directly correlated to happiness and the same was for our business. 

Vincit management quickly shifted outlook. We wanted to let our employees focus on what they were good at, which was technology and development, not job designing or management. We moved growth, sales, and profitability to the back burner. We also removed middle management. 

We decided to focus instead on two major Key Performance Indicators:

  • Employee satisfaction
  • Client satisfaction

We stopped the emphasis on sales, profits and management. We moved toward letting our employees focus on what they were good at, while also developing programs to help support them. 

Giving employees control over their professional lives

As Anu Partanen cited, the key to the happiness of Finland is to give people the feeling of control over their lives and outcomes. In order to improve the happiness of our employees, we rapidly began creating programs to help them have more impactful control of their professional lives.

The following are programs that have been vastly successful for us and that you should consider as well:

Developer/employee-chosen teams

Developers get to choose which projects or clients they want to work on. As stated in the Harvard Business Review, "a large body of research on organizational behavior [shows] that most people want some form of choice and voice in what they do at work, and that this can spark greater commitment and improve performance." 

Instead of managers assigning developers to projects, we started providing the option to choose for developers. This allowed them to have more say and control. Employees know best where they want to take their career and so by allowing them a choice of projects, they could feel more control in where they were ultimately going professionally. 

This allows employees, rather than leadership, to design their jobs and feel that they have more purpose and autonomy. 

By allowing your teams to pick the projects they want to work on they will ultimately feel that they have more control in their professional lives, which translates to feeling more fulfilled because they have a say in their future.  

Leadership as a service (LaaS)

Another program Vincit developed was to open up an e-commerce webshop that the company provides to the employees. It's called Leadership as a Service, or LaaS for short. This allows workers to order all the complimentary services the company offers. Currently LaaS has over 100 services to choose from, for example, massage therapists, babysitting services, sport clubs, performance analysis, salary discussions, career and other types of coaching. 

Employees can then directly be in control of their own unique needs while also having the company's support to invest in their own personal growth. 

We chose to do this because, as published by Inc Magazine, "The world is increasingly hyper-personalized, and employees are beginning to expect this level of personalization in the workplace, too."

Forbes also found that employees feel much more motivated and engaged with their workplace if they feel that their leaders are genuinely interested in them as a person and their career growth.

That was the aim of our programs, and still is, to focus on letting our employees take control of their lives with the support of the company. We let them choose what benefits are best for them and we provide the resources promptly.

As you can see there is a theme of allowing employees choice and the company responding quickly. It's not about providing the standard benefits and standard job responsibilities; that does not work anymore. In fact, it made our employees unhappy. 

Rather, it's about providing the options for customized choices and benefits for our employees who each have their own unique individual professional aspirations and personal needs.

Lessons to take away 

Finland's happiness comes from the balance between stability and social safety net for its citizens while also having the freedom to pursue personal goals and wishes. When addressing your own workplace culture, think about the lessons from Finland and the ones Vincit had to learn the hard way. 

Don't just buy beer kegs and nice ping pong tables. Go to the root of your workplace. The more you can implement freedom rather than policies, rules and restrictions on employees, the happier your workplace will be. Create a workplace and programs that allow employees the opportunity to affect their workplace and ultimately their own professional lives. Only then will you start to push your workplace into a happier place.

Scaling Your Business in 2020? Think Less Data Center and More Cloud

Posted: 14 Feb 2020 03:25 PM PST

Scaling is more important than ever as enterprise companies and large businesses take aim at increased profitability in 2020. One of the most advantageous ways to approach scalability is via the cloud. In the not-so-distant past, boosting data center capabilities was the solution. However, this will simply not do the trick anymore.

Data centers are now too costly and clunky to stay competitive. Purchasing server hardware, acquiring disk arrays, and staffing professionals to manage data center operations are no longer reasonably sustainable. There are many issues data centers present in today's fast-paced digital era and one reason why it is recommended to move to the cloud.

According to statistics provided by Jfrog, Cloud DevOps is one of the ways companies are addressing these issues. In fact, 75 percent of companies have adopted cloud technology for both increased scalability and improved business agility.  

Performance issues, application lockouts, security breaches, and errors occurring during customer use are all problems that may arise with traditional data centers. It is also true that businesses may have vastly different needs from one month or even one week to the next.  The cloud provides businesses with a far more agile way to adjust to those changing requirements.

If you want an example of the rapidly changing scalability needs of a business, you need to look no further than Black Friday or the holiday shopping season in general. Scaling resources like computing, storage, and security during seasonality shifts like this is essential for ecommerce businesses. On the flip side, businesses utilizing data centers will have much more trouble growing or diminishing their capacities.

A strong scalability business plan that includes the implementation of cloud concepts across all applications (e.g. database, storage, computing resources, etc.) can help you quickly overcome a number of different obstacles.

The strategic anatomy of cloud scalability

There are generally two primary strategies for scaling your business. If you have any experience with scaling, then you have probably heard the terms vertical scaling and horizontal scaling. When you scale vertically, you are said to be going up or down while horizontal scaling can be described as going out or in.

At first glance, this can seem somewhat confusing, but these are important concepts to know when it comes to scaling your business via the cloud in 2020. To clear up the confusion, let's take a closer look at vertical and horizontal scalability below. 

Vertical scalability using the cloud

Vertical scalability via the cloud typically refers to increasing or decreasing your existing server's resources or even upgrading to a server with more capacity to handle larger workloads. In fact, you can think of vertical scalability as an upgrade (or downgrade) to those already existent processes and resources like CPU, I/O resources, and memory or storage.

With vertical scalability, you are not adding any new code or infrastructure that would fundamentally alter how the system runs and works together. The reason vertical scalability is described as scaling up or down is because you are essentially building off the same system without adding any new servers.

Vertical scaling is limited by the size of the server. This means that you can only upgrade or add resources to your software or hardware if the server has the capacity for it. Of course, as mentioned above, it is still considered vertical scaling if you replace one server with another without actually adding new infrastructure to the system.

Either way, the ability to vertically scale your business via the cloud is easy because it often involves increasing the size of instances in existing infrastructure. It is far easier and more cost-effective to do this with the cloud rather than any other method. That being said, horizontal scalability is often a more convenient option for most businesses.

Horizontal scalability using the cloud

Horizontal scalability refers to adding or removing infrastructure from a current system. This generally involves adding or removing servers that are designed to work and communicate together. This is differentiated from vertical scalability because you are adding or removing new instances or applications to the system rather than just upgrading or downgrading them.

Horizontal scalability is described as scaling out or in because you are adding or removing infrastructure, not simply stacking up resources onto an existing infrastructure. You can think of this like adding more lanes to a highway to accommodate increased traffic. While this is a simplification, it gives you a basic idea of how horizontal scalability works.

Many businesses (particularly those in the ecommerce sector) employ horizontal scaling as needed. It is usually easier to use horizontal scaling versus vertical scaling because vertical scaling requires downtime to add new resources. Horizontal scaling, however, does not require existing servers to be shut down in order to add new ones.

Horizontal scalability in the cloud also allows you to adjust on the fly based on your unique needs throughout the year. If you anticipate an uptick in orders or clients during a particular season, you can add new infrastructure that communicated with existing infrastructure without having any downtime in the process.

You can also employ a tactic known as diagonal scaling which involves a combination of both vertical and horizontal scaling. This means you can increase resources while adding new infrastructure (or vice versa). In any event, knowing more about horizontal and vertical scaling can help you down the road when it comes to your own cloud scalability in 2020.

Scalability made easy via the cloud

One of the most enticing features cloud scalability provides is the ease of use for business owners. For instance, you can make changes in your cloud environment manually or by automating the process.

  • Scaling manually utilizing the cloud. As the name suggests, this type of cloud scalability allows you to make changes on your own. Instead of dealing with data center challenges, you can easily scale through the cloud with press of a button. There can be some drawbacks, however. Depending on the type of business you have, managing the vertical and horizontal scaling needs every minute can be challenging. You also risk incurring issues related to human error, which could reduce the cost-effectiveness of this strategy. But with the cloud, you can easily automate these types of processes.
  • Automated scaling with the cloud. Automated scaling via the cloud is often the best way to approach your business' daily, weekly, and monthly needs. By predefining a set of rules, your business can scale resources like computing power, databases, storage, and security without a human needing to monitor those resources 24/7. For instance, if your CPU needs reach a certain predefined limit, your cloud environment will automatically scale (or autoscale) for you. This option eliminates a lot of the management and costs you may currently have.

The cloud: Staying competitive and cost-effective for 2020 and beyond

Features like the above make utilizing the power of the cloud essential for businesses in 2020. You can be sure your competitors are already using the cloud or planning to implement it. Shifting the business mindset from data centers to the cloud certainly has powerful business benefits. With that said, only one question remains: are you ready to make the switch?

Can SMBs Adopt Data Analytics for Better Decision Making?

Posted: 14 Feb 2020 10:00 AM PST

In a world where technology integration plays a pivotal role to both create innovative solutions for business and increase market share, the demand for business intelligence and analytics is on the rise.

Prediction is at the core of all analytics and will become one of the key differentiators for companies in the SMB space. The intelligence generated by machine learning, when applied correctly to a real-world business situation, is empowering organizations and customers alike with new level of trust, customization and empathy. 

SMBs cannot afford to sit on the sidelines and watch today's technologies transform into tomorrow's opportunities. With this in mind, companies need to ensure they are in on the ground floor of the new opportunities that these technologies hold for them. AI and Machine Learning are growing fast and innovation in the space will only increase over the coming years.

Access to insights unimaginable decades ago

The rapid technology advancement in data science and analytics now provides us with a range of solutions, large and small, that combine technologies we have always known to work in different combinations. Because of the vast amount of data that can be processed nowadays, we are also encouraged to take this data to the next level by aggregating and integrating numerous data elements into digital dashboards to analyze the pattern and trends in data. 

Data analytics allows companies to make better business decisions by providing them with essential insights; insights that can have a phenomenal effect on how businesses improve their earnings as well as improve their competitiveness in the market. By applying statistical methods to extract information from numerous sources, companies can produce and compile actionable business outcomes. The goal is to provide fast, accurate and actionable recommendations that improve workstreams and outcomes.

One of the advantages of modern analytics methods is that users get insight into their business that they need to reach more profitable business plans. Additionally, these tools are being implemented in a range of industries from tech to banking, manufacturing, and government. Data analytics has become a key part of our modern society - from ad agencies to the government. 

But what exactly do companies do when they've managed to accumulate this data. And more importantly, how much data do they need to accumulate?

How do analytics tools work?

Data analytics tools are designed to help people make better decisions with the right information at their fingertips. Predictive analytics helps identify patterns in data and allows us to use it to guide people, or predict events or behaviors based on past history and prior business activities. We may have seen some of these concepts already: modeling as a method to gain information, optimization as a formula to find patterns and guidance, statistical modeling to demonstrate historical patterns, and predictive modeling to predict the future.

Generally speaking, developing these tools from scratch require specialized skills, in particular data scientists with a wide range of technologies. These individuals typically understand and can execute across multiple disciplines, including data analytics, business modeling, data visualization, advanced analytics, statistics, computer science, engineering and statistics.

For SMBs with limited resources, hiring a dedicated analytics team might be considered a luxury. However, many options are still available for a more cost-effective solution. Partnering with external data consultants, experimenting with self-serve data reporting tools, and even using products powered by advanced analytics are all scalable options available for any budget. One word of caution here – it's important to ensure that you don't draw the wrong conclusions from any ad-hoc analysis, especially when using self-serve tools.

Immediacy

Because the relationship between data and the enterprise is more immediate and transparent, a data scientist can add answers to problems that previously had business leaders spending time and energy endlessly debating. Moreover, if these data scientists have access to data across different departments or functions, they can cross-correlate their findings, leading to real root-cause analysis.

Using data, data scientists can be deployed across every department, as often as needed and at varying times. Big Data analysts understand and can validate operational data, which is exactly why information systems data management and the business result management process are vital to generating consistently accurate decision making.

Big Data is a key data asset for businesses and individuals. Ultimately, our ability to leverage it will be our biggest asset.

Impact everywhere

In the era of big data, every aspect of business is being impacted by innovative thinking to extract business insights through data. As we work to apply advances in technology, we see our future businesses reliant on data for continuous analysis to solve business challenges.

It takes real motivation to transform and pivot a business from a legacy system to an innovative analytics-driven digital business model.

Of course, few businesses will ever be as big as Google, Apple or Facebook. But every business has its own unique data collection regime and what is inferred from it to provide insights and solutions might be vastly different than other companies.

As more businesses continue to digitize, the expectations are that the relevance of these data will improve at every turn. While being able to accurately measure and predict both the positive and negative impact of any action would help improve all enterprises, there will always be winners and losers with which these analyses will be muddled.

Today's businesses will engage with Big Data – if only slightly in reaction to what Big Data has done for them. In the early part of this decade, business owners were dumbfounded by the power of Big Data and how it could help us predict, engage with and positively affect our audiences. In recent years, the transformative power of Big Data has come to be understood more and businesses are making it into a consistent part of the planning process. We've created context around data and have better information to make more informed decisions, which leads to business outcomes that provide better customer experiences, loyalty and ultimately profitability.

Wrapping it up

Business planning and decision making have evolved over time. Companies that employ advanced analytics have the advantage of prioritizing the most critical information while providing the right course of action.

Most importantly, we will have analytics enable intelligent decision making and exploitation of every possible outcome and impact on the customer experience. Using big data to raise the end-to-end quality of insights will drive the next level of innovation and success.

One can think of data analytics as an iterative process:

  1. Make better business decisions based on data analysis
  2. Accelerate decision making with predictive capabilities
  3. Improve leadership quality by improving decision-making ability.

Whether it is customer relations management, the development of content marketing, business insights, revenue optimization or customer relationship management, all aspects of businesses operate under a constant need to gather, organize and analyze information in order to improve business performance. The continued automation of this process will free up business leaders to focus on developing strong and strategic relationships with their customers.

For smaller organizations, there exists a real opportunity to get ahead of the curve. Generally unencumbered by massive legacy systems, these companies will be able to execute much faster than their larger competitors, and set themselves up for bigger success as they grow.

Hidden Gotchas in Your Business Loan Repayment Terms

Posted: 14 Feb 2020 07:00 AM PST

  • Lenders analyze factors like income, debt-to-income ratio, your credit score and collateral to determine whether to extend funding to a borrower.
  • Different lenders offer different terms. Watch for hidden terms and fees that could end up costing you more.
  • Prepayment penalties, yield maintenance fees, origination fees and points are some of the terms you should look out for.
  • Always have an attorney and/or accountant review the loan agreement before signing.

Business loans are often an important part of launching and growing a small business. However, it can be easy to get in serious trouble when taking on debt. Some lenders may include terms and hidden fees in loan agreements that cause debt to balloon and could put your business into serious financial trouble.

By closely reviewing loan agreements a lender offers (along with having a professional attorney and accountant review them, too) you can arm yourself against an unfair repayment program. Know your loan repayment options and when it's time to seek funding elsewhere. This guide will introduce you to the concept of business loans, as well as some hidden terms and fees to look for.

Editor's note: Looking for a small business loan? Fill out the questionnaire below to have our vendor partners contact you about your needs.

 

How does business loan repayment work?

So you need a business loan. The process begins with a loan application, generally submitted to a bank, credit union or private lender. The lender then considers the borrower's application, often assessing factors like income, credit score, cash flow, cash reserves and collateral, when applicable. Based on these factors, a lender might approve a borrower's application and extend a certain set of terms: a lender offers X dollars at Y interest rate over Z months or years.

"Once funds from an approved loan are disbursed, interest begins to accrue immediately and is usually expected to be paid monthly," said Larry Fuschino, owner of Raider Consulting. "Principal of the loan is to be repaid based on the terms of the loan, which can vary with each situation and borrower. However, these terms will be disclosed in the documentation provided by the lender."

There is more to it than that. In addition to the principal, interest rate and repayment term, many lenders include other fees and terms in their loan agreements. For entrepreneurs, it is crucial to understand every aspect of the agreement before accepting a loan, as they can sometimes contain hidden gotchas that balloon into significant expenses.

"I'd advise other small business owners to comb the repayment terms … Better yet, have a professional look over everything," said Jesse Silkoff, founder of MyRoofingPal. "While you may be using a reputable lender, it never hurts to make sure you're getting a fair deal. Don't let a lender exploit the fact that you need this loan. There are always other options out there if they aren't willing to give you fair terms." 

What is a loan repayment term?

One of the most important elements of a loan is the repayment term, which is the amount of time you can expect it to take to fully repay the loan debt and the interest associated with it. In some cases, the loan can be repaid before it reaches maturity; in other cases, loan borrowers face a steep penalty for doing so.

"The repayment term is also known as the loan period, or the duration of time over which the borrower will complete repayment of the loan to the lender," said Jared Weitz, founder and CEO of United Capital Source.

The terms can vary depending on the nature of the loan you are taking out. However, understanding the repayment term and whether you have the option to repay the debt early without penalty is a key element to determining whether or not a business loan is right for you.

How long can you finance a business loan?

Whether you need a long- or short-term business loan, there is likely a financing option out there that suits your business. Conventional business loans tend to have longer repayment terms and lower interest rates, while short-term loans often come with higher interest rates.

It also depends on your financing partner. Conventional lenders like banks and credit unions, for example, will likely have different types of business loans available than private lenders, who are generally more flexible but also more expensive.

"The term of a business loan is usually matched to the underlying reason for it," Fuschino said." If a business needs to buy a new warehouse, the term of the loan could be five to 15 years. If the business needs to buy extra inventory to be sold during the next season, the lender may only allow a three- to six-month term."

Some business loans have even longer repayment terms, stretching to 25 or 30 years, much like a home mortgage. Before committing to a long-term loan, have a plan in place to meet the monthly payments. A loan is a big commitment and, while the funding might be necessary to grow your business successfully, it should never be taken lightly.

Is a loan repayment tax-deductible?

Many entrepreneurs wonder if loan repayments are tax-deductible. To many small business owners, loan payments feel like a business expense. While you can deduct interest payments from your taxes (interest is, after all, the cost of borrowed money,) the principal value of the loan is not deductible.

"The interest paid on the loan is usually considered an accounting expense. It is usually a tax-deductible expense as well, but be sure to discuss this with your accountant [or] tax preparer," Fuschino said. "Principal payments are a cash outflow but [are] not considered an accounting or tax expense."

Repayment terms that may be hidden in a business loan

The terms you'll come across in a loan agreement can sometimes be vague and confusing. What passes as common terminology for many lenders, may be inaccessible jargon to many entrepreneurs. When you need money quickly, it can be difficult to read between the lines, but the devil is in the details. Keep an eye out for the loan repayment terms listed below, which could result in you spending more money for a loan.

Prepayment fees

Prepayment fees are a notorious gotcha that appears in many business loans. A prepayment fee is incurred if a loan borrower pays off the outstanding balance of a loan prior to the loan's maturity date. Prepayment fees reimburse the lender for lost interest when a borrower pays the loan back early.

"When a loan is paid prior to the repayment period, there is the chance the lender will charge a … fee," Weitz said. "Read through all loan documentation prior to signing to understand whether this fee would be applied in the event you wish to pay off the loan prior to the scheduled completion date."

If possible, avoid taking a business loan that charges a prepayment fee.

Yield maintenance fees

A yield maintenance fee is similar to a prepayment fee. Yield maintenance fees are specific to commercial real estate prepayment fees and can vary depending on several factors.

"Yield maintenance fees are a complex calculation that banks have to calculate for borrowers," said Rob Stephens, founder of CFO Perspective. "Yield maintenance fees are calculated as the difference between the total interest you owe on the remaining term of your current loan and what the bank can earn at current loan rates."

Yield maintenance fees are difficult to get waived, even if you refinance your loan, so carefully consider your options before accepting a loan with a yield maintenance fee.

Origination fees

Some lenders might build "origination fees" into your loan. These fees are designed to cover the costs involved in processing your loan application. These fees comprise a series of multiple charges related to the underwriting of your loan, the processing of your application and the application itself.

Points

You might also encounter a "fee" that is referred to as "points." Points are essentially an additional percentage of the value of the loan paid above and beyond interest and other fees. Often, points are paid at the end of a loan term. If a lender charges one point on a $100 loan, for example, that equals an additional $1 due on top of the principal and interest payments repaid during the term of the loan.

"Something to remember is that consumer protection regulations at the federal and state level often do not apply to business-to-business transactions," Fuschino said. "Business owners are expected to be sophisticated and able to understand issues and negotiate with lenders as necessary. While online lenders may not negotiate their 'one-size-fits-all' process, business owners may have more success with local lenders."

If you are curious about what additional terms and fees are included in your loan, consult the Loan Estimate and Closing Disclosure. This document contains a detailed breakdown of all costs associated with the loan. It is best to have a professional attorney and accountant review this document before signing the agreement.

Be careful when accepting a business loan

When accepting a loan, it's important to ensure you will make payments on time. Never take on debt that you can't service. However, it's also important to be sure you're getting a fair deal. Just because a lender is extending funding to your business doesn't mean they're doing so on fair terms. There is more to a loan than paying the monthly installments – closely review any loan agreement you sign.
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