David Piccione.com

One of the blogs I frequent often is JohnChow.com. Normally, this fellow Vancouverite is a wealth of information on using your website to generate income.

This past week however, John’s taken some pot shots on the minimum wage and notion of progressive taxes. John’s pretty conservative in his thinking, so that makes him pretty predictable in is stands; support of a flat tax in place of our current progressive system included.

Of Flat Taxes and Economic Fairies

Flat tax systems suggest replacing our progressive tax brackets (of which Canada now only has four - 15.5%, 22%, 26%, 29%) with a one size fits all rate, usually floating around 15-20%. Benefits often touted are a reduced bureaucracy, and well, less tax for the upper brackets.

John feels that the government currently has it backwards, and that progressive tax policies “reduce economic growth by creating strong disincentives to hard work, savings, and investment.”

Fortunately, the truly innovative aren’t going to let 29% get in their way. “Ernst & Young estimated there were 315,000 millionaires in Canada at the start of 2001…The consulting firm forecast that the number of Canadian millionaires would grow to 900,000 by the year 2010″. Seems like a good deal of us are willing to live with the incentive as it currently exists.

In addition, unprotected capital gains in Canada are only taxable to 50%, a huge incentive for investment and savings.

Gold on the Surface, Green Underneath

Aside from a straight monetary comparison for taxpayers, flat tax systems take a huge amount of flexibility and power away from the government. Libertarians no doubt will argue that this is a good thing in all cases, but those of us who are a little more concerned with the the neighbourhood outside of our walls tend to think a little bigger.

Progressive systems work well because the government can use the built in system of incentives and disincentives to encourage certain behaviour it deems beneficial to the country.

At a time when we will be undergoing massive social, environmental and technological change, this is a key benefit. The Conservative government’s transit pass and child benefits are perfect examples of ways a government can effect positive change using the tax structure. So called “sin taxes” on cigarettes have helped (pdf) lower smoking rates - specifically among teens.

This influence disappears in a flat tax system.

Four Brackets is Simple

The most commonly used argument in favour of flat tax systems is that they bring simplicity. Of course, often left out is the fact that simplicity has absolutely nothing to do with whether you have one rate or four, or fifteen for that matter. It has everything to do with who and what is taxed. New Zealand, for example, has simplified their system a great deal, yet it remains progressive.

On the other hand, a flat tax implementation with certain caveats and incentives remaining will be just as complex and difficult to navigate as our current setup.

Even worse, given government’s pension for staying in power, how long do you think a flat tax system would be “flat” for? How long before one person, one price is replaced with a big asterisk? I don’t know about you, but I’d give it one election.

Want Relief? NIT-Pick

For those (John included) that are serious about tax reform that is more than just getting a bigger refund, I’d suggest exploring some form of Negative Income Tax. Canada, as it stands is in a perfect position to benefit from a NIT policy, since we have already have a generous social net and have mean incomes that are well above the poverty line.

Flat tax is often seen as a cure all every April. Unfortunately, our tax system is complex because our county is complex. Those who would change it hold very different views of what our country should be. Others perhaps just don’t get a chance to look at the negatives. Either way, we’re much better off staying with what we have than looking for a silver bullet in a flat tax system.

I am starting to get a little more regular in my posting around here. I promise. From now on, every Friday I’ll post the “Friday File” - a list of articles and blog posts from others that I found interesting, informative or just amusing.

Okay, Friday File Edition 1 begins now…

A $1.9 Million Dime Flies Across the Country. - A rather quirky story of the journey of on of the rarest coins in existence. You’d think they’d have picked a guy with a little more mettle.

Big Bang vs. Darwinian Marketing Strategies - The always insightful Dharmesh Shah on why he thinks “Darwinian” marketing is the way to launch a new business venture.

Mark Hurst at GEL talks about focusing on the customer experience, using examples of companies that rely solely on word of mouth advertising, and the strength of their product.

The human side of marketing, or, Capitalizing on your mistakes - A great example of why admitting you’re human - and doing it with a personal touch - can actually be a form of effective marketing.

Steve Pavlina, a blog I’ve been reading for quite some time gives his take on Quality and Contribution and The Abundance Mindset. Well written and though provoking as always.

How to become Assertive - Leadership Turn has a great piece on the difference between assertive, aggressive and passive behaviour.

And Finally, the Angry Aussie gives his take on Project Management. A highly entertaining and humourous read, from a highly entertaining and humourous website.

Enjoy the weekend!

Teams are interesting creatures. I say ‘creatures’ because once a team is formed, it becomes its own entity, living and breathing as a distinct animal. And like any animal, teams must be nurtured from birth, they will mature and then they’ll die.

As leaders it’s important to note that as unique as we feel our teams are, their existence is always built from a predictable pattern of general behaviour. Each team is created, lives and dies in the same pattern; the same cycle.

This cycle is controllable however - good leaders will be able to mold it to maximize output and accomplish the goals that the team exists to achieve. (Importantly, “team survival” should never be one of those!) Poor leaders fall victim to it, and end up struggling to react.

The Cycle, Explained

The Team Lifecycle is a simple yet often overlooked reality. All teams, in every endeavor follow this exact same pattern:

Building - Bringing a team together, where members are still feeling each other out, and trying to merge their own personal style and habits with those of others. At this point, the team is very much a collection of individuals, and will remain so - effectively - until a leader guides them. The larger the team, the longer the building stage takes to complete.

Performance - Once built, the team achieves peak performance and produces high quality output. The team comes into its own, acting in unison. Team members start to anticipate each other’s actions and take pride in the fact that they are simply a part of something bigger than themselves. Leaders start to find that they can become more strategic than tactical, and focus more on the “bigger picture”.

Conversion - Conversion can occur instantly or over several weeks; from within or as a result of an external process. In certain, task oriented teams, it is an anticipated event. More often though, conversion catches leaders off guard. It’s this state that is the most taxing on leaders and teams alike, and the only certainty is that it occurs. The team will adapt, though sometimes through complete destruction. Conversion requires constant management and tough choices.

Nurture and Release - Molding Yourself to Your Team’s Cyclic Point

Ideally, a leader wants to live as long as possible in the performance stage. Each stage in the cycle is self sustaining, meaning that the longer you allow a team to spend in it, the harder it will be to break into the next stage.

It’s important to embrace each cyclic point however. Building a team takes time, and if it isn’t done correctly there can be lingering animosity that will undermine the team and cause unintended - and undesired - conversion events. At the building stage, the team as an entity is weak and relies on its leader for direction, purpose and support. At the same time, it needs to grow from within, each member establishing a natural hierarchy that will serve it in the next phase. Too much leading, and the team will be lost without you, too little, and the connections within the team will not form correctly.

Just as important is the leader’s ability to recognize and switch styles as the team begins to gel. You’ve been encouraging and developing your team - let them perform! With a team at peak performance, the leader’s job is to keep them there by properly distributing work, making decisions and generally staying out of the way.

Keeping out of the day-to-day events is the only way you’ll be able to start thinking strategically about situations. It’s up to the leader to anticipate the inevitable conversion stage.

Forecasting and Directing Conversion

Although all teams must go through a conversion event at some point, if it’s handled well it doesn’t need to be completely destructive. By definition, conversion will mean change, and the team will not be the same as it was prior. Remember, it’s a cycle. After every conversion, there will be a rebuilding process. If as a leader, you’re capable of recognizing - even anticipating - conversion events, you’ll be able to direct the outcomes and strengthen the team.

Take a look at the following sketches:

These graphs are overly simplistic, but they illustrate the principle properly. By recognizing and anticipating conversion events, the leader can cascade a successive series of changes into a positive direction for the team and it’s members. On the contrary, a leader that does not make himself aware of the natural cycle can at best find himself reacting to cascading negative events, and at worst, making decisions that serve to amplify them.

You can’t deny change, it’s going to happen and it’s going to cause your team to move into the conversion point of the cycle. How you handle it is what will make the difference.

Common Traps and Pitfalls

Many active leaders fail to grasp the natural cycle of the team. Others recognize stage transitions and attempt to stop them. Others still have problems conferring the right style for the applicable stage. Specifically, here are some of the main traps and pitfalls that can befall an ignorant leader:

• Seeing a natural stage adjustment as avoidable/undesirable
• Denying the state that the team is in
• Under managing during the building stage
• Keeping the team in the building stage too long
• Over managing during the performance stage
• Attempting to stop a conversion event (e.g. not allowing an earned promotion)
• Amplifying destructive conversion by failing to anticipate
• Not recovering using constructive conversion techniques
• Seeing conversion events as end points

The Leader is Key

As always, your ability as a leader will determine your ability to navigate the team life cycle. As a new leader, you should focus on building a team for high performance. As your team develops confidence, extend responsibility and allow team members to begin solving their own problems, while you keep your eye out for conversion events. You’ll probably find yourself reacting to the first one.

Understanding the cycle will put you ahead of most and get you back into the rebuilding mode. Go with the flow, accept the inevitability of the cycle and your choices will become much clearer.