You Just Had a Difficult Conversation at Work. Here’s What to Do Next

After most difficult conversations, we generally feel like: “Phew! Glad that’s over. I never want to have to have that conversation again.” But, it’s actually really important to be able to follow up after a tough conversation. What specifically should you do and say to make things less awkward and to move forward, while also making sure that you’re actually making some progress on the points that were discussed? First, it’s important to acknowledge that the conversation happened. Send an email to summarize the conversation and focus on the outcomes all parties desire. Clear communication around next steps can proactively move the conversation forward. Then, focus on building a long-term relationship with the other party. This isn’t always easy, but it is a muscle you can build and it gets easier with practice. It can also give you a reputation as a go-to problem solver and collaborator – key skills for any leader.

We’ve all been there: the fluorescent light flickering above, your stomach in knots, voices at the table becoming raised, including your own. Nearly everyone experiences difficult conversations at work, whether with peers, managers, clients, or direct reports. We know they are difficult conversations for one of the following reasons: we have differences of opinion, something meaningful is at stake, and most tellingly — they bring up strong emotions for the people involved.

Family trusts often cause more harm than good

Dale Boccabella, UNSW

There is very little, if anything, to commend discretionary trusts. The benefits they bring, and it’s hard to see many, are dwarfed by their destructive and damaging features.

Trusts are usually used to allocate money to members of a group, usually a family. Under a discretionary trust, the only way a beneficiary will get income or capital from the trust, is if the trustee chooses to give them something. Family companies are often included as beneficiaries to minimise tax.

The Labor party’s current focus on trusts is warranted because overwhelmingly, trusts are used to minimise tax, avoid paying creditors and to avoid the fair division of property after a relationship breakdown.

Due to a lack of data, it’s hard to estimate the amount of lost tax revenue from the current regime. However, on conservative assumptions, I estimate we are easily losing A$2 billion per year in income tax through discretionary trusts.

If a discretionary trust elects to be a “family trust” under the tax law, it can also access a number of other concessional tax rules. These tax concessions aren’t available to any other entities or taxpayers.

How trusts are used

There are a few other ways discretionary trusts are used. They are also used to frustrate creditors, people who are owed money by the beneficiaries of trusts.

Someone who is owed money by a beneficiary of a trust can’t go to the trust to settle their debt. This is the case even if the beneficiary has received money from the trust in the past and is likely to receive money in the future, after release from bankruptcy (having not paid their debts).

Unsecured creditors, such as suppliers of businesses dealing with a trustee, also cannot settle their debts with a trust if the trustee doesn’t have sufficient assets. Often the trustee will be a company paid to manage the trust, with only a few dollars of share capital.

According to data used in my research from the Australian Taxation Office, a lot of family wealth (aside from the family home) is held in discretionary trusts. On relationship breakdown, one spouse will often argue that because the assets are in a discretionary trust, they are not owned by anyone, and therefore won’t be divided with the rest of the couples’ assets.

The Family Court has wide powers to decide what can be divided, and generally the court included assets in the discretionary trust to be divided, where a spouse is a trustee, or has the means to appoint or remove a trustee. However, if the spouse is “removed” or “distanced” from the discretionary trust, it becomes harder and harder for the court to include these assets to be divided.

Discretionary trusts are also used in succession planning. Where a person has property to give away and wants the flexibility to do it over time. It also allows the payments to change with needs and circumstances. For example, if a trust beneficiary landed a high-paying job, they could be given less. Conversely, they could be given more if they lost their job.

There may be a case for these arrangements when a person has died. By putting assets into a discretionary trust, a deceased person may be able to “tie up assets” for around 80 years (the maximum period permitted). But this sort of flexibility is available to anyone when they are alive; there is no need for a discretionary trust.

So can we just get rid of trusts? Legally, it could be done. But outright abolition is not practically achievable, at least in the short-term.

What to do with trusts

There are broadly two options for tax reform when it comes to trusts. These measures can be implemented while leaving users of discretionary trusts free to enjoy all other legitimate features and benefits.

The first option, which many still seem to favour, is to impose the company taxation system on the discretionary trust (that is, tax them as companies). Due to the presence of the refundable franking credit tax offset rule, taxing trusts as companies would not really address the central issue of tax minimisation.

Trusts would still be able to manipulate allocations of money across low-rate beneficiaries and change allocations from year-to-year to avoid tax. However, it would remove the availability of the capital gains tax discount to discretionary trusts.

Another option is to use an attribution approach to trusts, just as the social security system does and as family law effectively does. Under the attribution model, the person who contributed the assets to the discretionary trust and/or the person who controls the assets in the trust are deemed to own the income and the assets. This would largely reflect general law entitlements of each spouse and very often reflect the economic contributions to building up those assets.

Of course, this model has challenges in design and in enforcement. However, given the complexity of rules in Australia’s income tax and the enforcement issues that confront the Australian Taxation Office in numerous areas, any difficulties with the attribution model are easily overcome. And of course, it’s already part of the social security regime for assets and income tests.

Dale Boccabella, Associate Professor of Taxation Law, UNSW

This article was originally published on The Conversation. Read the original article.

A focus on goals rather than behaviour is creating workplace monsters

Chris Jackson, UNSW; Benjamin Walker, UNSW, and Elliroma Gardiner, Griffith University

Rather than putting the time and effort into promoting self-control, many organisations continue to favour focusing on goals, irrespective of how they are achieved. The general obsession by some organisations with outputs, reports, and metrics, signals to employees that performance is paramount, whatever the cost.

This has led to some spectacular failures in organisations. For example in the ride-sharing business Uber, poor leadership modelled and encouraged poor self-control within the business. Volkswagen’s 2015 emission scandal offers another sobering example of what can happen when there is insufficient scrutiny on how performance targets are met.

Many of us are guilty of having momentary lapses in self-control. This can be anything from procrastinating on facebook instead of finishing a client report or losing our cool with a frustrating colleague. Research shows that poor self-control more generally leads to dysfunctional outcomes.

Our research highlights that destructive leaders lack self-control especially when anxious and the difficulty of tasks is high. Constructive leaders, on the other hand, have much more self-control and are much less easily overwhelmed.

How to turn the focus from goals to self-control

Self-control, our ability to regulate our emotional and behavioural responses, is widely recognised as essential for success in modern organisations. The origins of self-control are thought to be, at least partially, biologically based . So while self-control can be taught, training employees to control their behaviour in the workplace is not always easy.

The usual way businesses gauge employee performance is epitomised by Norton and Kaplan’s Balanced Scorecard. The Balanced Score Card sets a range of balanced objectives that employees and teams need to meet and which cascade up through the organisation so that they are easily monitored.

The reliance on these tools like this can fail to identify, and even encourage poor self-control. It can create an environment of low accountability which paves the way for individuals with low self-control to reach senior leadership positions. Research shows a focus on performance also reduces the learning and development of staff, whereas a focus on effort and good process puts an organisation on a far better footing.

There are multiple ways to encourage self-control among employees and minimise the effect of self-control failures.

One is by developing a culture of participation among staff. In meetings, proper discussion can lead to successful innovation, if everyone is involved in decision making. That’s right, brain storming actually works! This is because the emphasis is on sharing ownership of problems and solutions by encouraging contribution from a diverse group of people who feel empowered to speak.

Mindfulness training is also widely employed to promote self control and emerging evidence suggests that it can improve well-being. The best mindfulness training focuses on good process, reflection and questioning morality, as opposed to simply learning to be more relaxed while following the rules.

Effective organisations encourage self-control, good process, proper discussion and are more driven by growth mindsets than unrealistic performance metrics. The crux of the issue is that whilst performance is important, it shouldn’t come at the expense of process. Promoting and encouraging self-control amongst employees is one way to safeguard good process.

Chris Jackson, Professor of Business Psychology, UNSW; Benjamin Walker, Postdoctoral Research Fellow in Management, UNSW, and Elliroma Gardiner, Lecturer in Organisational Psychology, Griffith University

This article was originally published on The Conversation. Read the original article.

Dick Smith class action to go ahead … Accountants to lose CPA Australia limited liability cover … More Aussies take a second job

SmartCompany / Wednesday, July 26, 2017

By Emma Koehn and Dominic Powell. 

The real costs of cheap surveillance

 Jonathan Weinberg, Wayne State University

Surveillance used to be expensive. Even just a few years ago, tailing a person’s movements around the clock required rotating shifts of personnel devoted full-time to the task. Not any more, though.

Governments can track the movements of massive numbers of people by positioning cameras to read license plates, or by setting up facial recognition systems. Those systems need few people to operate them, automating the collection of information about people’s lives and adding that data to searchable databases. Surveillance has become cheap.

I study the law of identification and privacy, so I pay attention to that trend, and it’s worrying. The data maintained in our individual profiles can be used in making decisions about credit, employment, government benefits and more. What governments and companies think they know about us – whether or not it’s accurate – has real power over our actual lives.

Old-fashioned surveillance

Back in the day, the high cost of surveillance made it not a big deal when the Supreme Court ruled that government agents don’t need a warrant to follow a person in public, to sift through her trash or to fly over her property and observe it from the air.

The effort needed to collect that sort of data meant that governments would engage in surveillance only rarely, and only for compelling reasons. For most Americans, little about their everyday comings and goings, likes and dislikes, hopes and dreams was tabulated and collected in any central source. But that’s now changed.

Because information collection is now so easy and storage is cheap, it makes sense for government to collect much more information. As a result, after 9/11, rather than the U.S. government first trying to figure out who the bad guys might be and then collecting records of who they spoke to on the phone, federal officials simply compiled a database of who every person in the U.S. was speaking to on the phone, updated in real time.

Online tracking

Private companies’ tracking of our lives has also become easy and cheap too. Advertising network systems let data brokers track nearly every page you visit on the web, and associate it with an individual profile. Facebook can follow much of its users’ web browsing, even if they’re not logged in.

Google’s tracking presence is even broader. According to one recent study, Google Analytics tracks users on nearly 70 percent of the top one million websites, and Google subsidiary Doubleclick separately tracks users on almost half of the top million sites. That gives Google – or a subsidiary – access to an extensive list of who visits which websites and when. And the company can combine that information with data derived from people’s use of Google Maps, Gmail and other Google services.

Compiling profiles

Online tracking is even more powerful when it’s merged with real-world information tied to real names and identities. Facebook, for example, combines its data with information from data brokers such as Experian and Acxiom, which compile information from government records, retailers, financial institutions, social media and other sources.

Acxiom claims to have information about 700 million consumers around the world, subdividing its information on U.S. residents into more than 3,000 categories. (That figure may be overstated, but even with a decent discount for skepticism, that’s a lot of information.)

Another company, The Work Number, a subsidiary of credit bureau Equifax, maintains detailed salary and other payroll-related information for more than one-third of working Americans. Retailer loyalty cards are another source of data – Datalogix, a subsidiary of database giant Oracle, aggregates data on consumer purchases, including sales that suggest medical conditions or other personal concerns, such as weight loss pills, allergy treatments and hair removal products.

By combining online and offline data, Facebook can charge premium rates to an advertiser who wants to target, say, people in Idaho who are in long-distance relationships and are thinking about buying a minivan. (There are 3,100 of them in Facebook’s database.) If you want to reach users with an interest in Ramadan who have recently returned from overseas trips, Facebook can find them too.

Taking action

Today, credit bureaus evaluate financial data – income and employment history, debt repayment records and public information like bankruptcy filings and foreclosures – to decide a person’s creditworthiness. But companies and government agencies can crunch through all these data to find correlations they hadn’t recognized before – and then take action based on those findings, sometimes in discriminatory and socially undesirable ways.

For example, online sellers may charge higher prices to customers from poorer ZIP codes, where there is less competition from brick-and-mortar stores. A credit card company downgraded consumers’ creditworthiness if they had used their cards to pay for marriage counseling or tire repair services. A major cable TV company developed procedures to discourage prospective customers with low credit scores from signing up, because data analytics revealed that those customers were less lucrative than others.

United States law – unlike the law in Europe – gives ordinary people no general right to see their own digital profiles, so we have little opportunity to correct inaccuracies. But even if everything in a profile is accurate, there’s still a big problem: Proprietors’ use of our information in this way encodes discrimination in automated decisions. It means that people who have had marriage counseling, say, or who live in poor neighborhoods are treated as second-class citizens in a wide range of everyday transactions and interactions. That’s not a recipe for a healthy society.

The rise of social credit?

All this could spread very deeply into our lives, raising concerns about invasions of privacy. What if credit bureau ratings incorporated the creditworthiness of an applicant’s friends? Or her educational background, the make of her car or whether she uses all capital letters in her text messages? The U.S. Consumer Finance Protection Bureau has opened an inquiry into the dangers such practices might pose.

The People’s Republic of China has begun to construct a souped-up version of the financial credit bureau that, according to some reports, would look even more broadly at a person’s life. In that system, every citizen would have a score incorporating not only financial data, but also “anything from defaulting on a loan to criticizing the ruling party, from running a red light to failing to care for your parents properly.” The score would affect what jobs an individual could get, what schools her children could attend, even whether she could get a reservation at a fancy restaurant.

Those features haven’t been implemented yet; so far, the system is more limited. Western news reports have decried this plan as totalitarian. It’s worth asking, though, what direction we in the United States are headed in.

Indeed, it’s worth thinking about all of this more deeply. U.S. firms – unless they’re managed or regulated in socially beneficial ways – have both the incentive and the opportunity to use information about us in undesirable ways. We need to talk about the government’s enacting rules constraining that activity. After all, leaving those decisions to the people who make money selling our data is unlikely to result in our getting the rules we want.

Jonathan Weinberg, Professor of Law, Wayne State University

This article was originally published on The Conversation. Read the original article.