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| John Calia |
It’s that time again.
Time for the annual ritual of New Year’s resolutions.
Bored with it? Too
busy? Well, I say never let a good
ritual go to waste. It’s a great
opportunity to refocus your team and engage the entire company in the
priorities you consider most important in the coming year.
With that in in mind, here are three priorities that should
top your list.
Cash is King: Will a deal on the Fiscal Cliff include
a major change to the corporate tax code?
And, how would that change the way in which you invest your
capital. Both the President and
Republicans have suggested we need an overhaul.
The code is arcane to say the least. We have the highest tax
rate among OECD countries, but actual revenue collection is low due to
loopholes and deductions. Companies have responded aggressively. Scads of lawyers and accountants seek
offshore tax havens. Many locate jobs
overseas.
Small businesses, most of which are
eligible for S-Corp tax treatment, are most likely to be negatively impacted by
a fiscal cliff deal, affecting investment in the demographic segment most
likely to generate jobs. If the tax rate
on the highest earners goes up (as seems likely), it will negatively impact business
investment.
Will all this uncertainty have an
impact? You bet. Even small businesses without well-documented
business plans rent space and buy equipment.
But, they don’t if they aren’t sure how they will be taxed.
The pundits might whine and the public
may shake their heads, but CFO’s should consider the old adage “Cash is King”
as a guiding principal during the coming year.
Cash is a cushion in the event of a downturn driven by Mid-East unrest
or EU insolvency. Cash is protection
against the impact of fiscal contraction.
Cash is a hedge in a near zero interest rate environment.
In 2013, hold on to cash.
Obamacare: now it’s serious. Those who were awaiting the outcome of the
election and hoping for at least a partial repeal know that’s not going to
happen. But, what will happen?
Well, it’s still hard to say. A major bill of nearly 3,000 pages creates a
lot of work for regulators who are still writing the rules to implement it. Among the great mysteries is what form the
new insurance exchanges will take. Is
your state among those that will set up an insurance exchange? If not, there may be a tax imposed. How will that impact employers? No one is quite sure.
Meanwhile, costs are projected to rise by 7.5%costs are projected to rise
by 7.5% in 2013, according to a report by PricewaterhouseCoopers.
While we contemplate the costs and
benefits of the new law, an approach taken by major employers Sears and Darden
may become a template for many. They
will contribute a fixed amount to an exchange managed by AON Hewitt, who in
turn will offer a choice of plans to employees.
The approach doesn’t necessarily shift more cost to employees but forces
them to take more responsibility for their choices.
Solutions of this sort will be the
order of the day as we approach full implementation of Obamacare in 2014.
In 2013, it’s time to color outside the
lines. Consider new and different
options for providing benefits to your employees.
The
Mobile Wave:
for the first time in history, consumer preference is driving change in
corporate IT infrastructure. Nearly all
application development is taking place on mobile platforms. Even if you are not in a consumer business,
there is a consumer – corporate or individual -- at the end of your supply
chain. And, consumers are increasingly enabled
by mobile apps.
As access to corporate and personal
data extends outward, concerns about data security will heighten. A recent whitepaper by McAfee Corporation
concluded, in part, “Fortune Global 2,000 firms [can be divided] into two categories: those
that know they’ve been compromised and those that don’t yet know.”
If we don’t know what’s hit us, how can we defend ourselves? And with the advent of Near Field
Communications, mobile banking and electronic medical records, it can’t get
better. It can only get worse.
Is your data encrypted? Do you
have a contingency plan to guide your company in the event of a data breach?
Typically, data security is owned by the IT department (which may report
to the CFO). But, the policies relating
to data security must be embraced by the entire organization. Last year, a security test at the U.S. Department of Homeland Security resulted in over 60% of government employees,
who found a thumb drive on the ground in the parking lot, plugging it into
their computer in the office. Sounds
like a much easier way to hack the system than trying to untie the Gordian Knot
of firewalls and VPN’s.
Frequent review and update of your corporate data security policy must
be high on your list of New Year’s resolutions for 2013. Every disruptive technology creates new
risks. Make sure your IT team is up to
date and don’t scrimp on bringing in outside experts to review what you have
done.
In 2013, it’s time to defend the ramparts.
Like every year, 2013 will present new challenges. Are you ready? If it turns out the Mayans are wrong, you’ll
have to be.
John Calia is a partner in
The SCA Group (www.thescagroupllc.com) a provider of interim
C-Level management and strategic advisory services. He is also a partner in the McCracken
Alliance (www.mccrackenalliance.com) and author
of a blog on leadership, “Who Will Lead?”(www.whowilllead.blogspot.com)
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