A few question about business practices

Discussion in 'Growing and Managing a Business' started by inexperienced, Jul 18, 2012.

  1. inexperienced

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    Jul 18, 2012
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    Hi everyone, I'm a recent college grad working for a small IT company in TN that acts as an outsourced IT department for small and medium businesses: places that are large enough that they need IT, but small enough they don't want to hire on full time staff. I'm a Systems Analyst and work on projects that involve integrating, evaluating, and updating software and hardware systems. Over the past few months, I've started paying more attention to the business side of things (I'd someday like to start my own business or move up to an IT managerial position), and have noticed a few oddities that I'd like to get some feedback on. I'm sure a lot of college grads feel this way when they first step out into the real world, and I have taken that into consideration when reflecting on the following points.

    1. The bonus system

      Being a small company, each of us wear many 'hats': some days I could work as an internal IT person, helping our own staff with their problems, other days, I could be working on a project for a customer. I don't actively seek out new projects with our customers, that is done by our project manager. When a project is agreed upon, I am then assigned tasks within that project. Depending on what I'm actually doing on that project, I get billed out at a different rate.

      When I first started working at this company, the bonus system was covered and it seemed like a good idea: the more billable hours that I accrue, the bigger my bonus at the end of the month. This seemed really cool when I was going over it with HR, but after a few months, something seemed sketchy. Every day, I record each of my tasks: when I started, when I finished. Each day over the past few months has been fairly consistent: I spend about 60% of my day working on billable tasks. The other 40% may be doing R&D for systems I am inexperienced in, checking email, in meetings, etc. Given that I'm fairly consistent, I would expect my bonus at the end of each month to be roughly the same. Well, it isn't. When I get my bonus, I also get a print out of my billable hours through out the month, often with notes by our billing department and the PM. Some of my hours will be completely slashed as they have been "discounted," (either credited to our customer, or billed at a lower hourly rate). I'm never given any explanation as to why this has been done, but think I know why:

      Our PM and Sales Manager come up with unrealistic projects. Neither the PM or Sales Mananger have much technical experience, and will draft a project and guesstimate how much time and money something will cost. Before the department I work for even sees this project draft, it has already been agreed upon and signed by the customer.

      Lets say a customer wants a new email system. The PM and SM say we need $10,000. The PM then breaks the project up into different tasks, and assigns each task a certain amount of hours. Again, not being very technical, these hours are unrealistic. My coworkers and I will start working on tasks, and, of course, realize the tasks are going to take that much more time. The more time we spend on a project, the lower our billable rate is, in turn, that reduces the amount of money going towards my bonus.

      Another problem: Say I'm assigned a task that has been allocated 10 hours. I finish the task in 5 hours. My coworker has been assigned a task that has been allocated 5 hours, but do to poor planning, it realistically takes him an additional 5 hours (10 all together) to finish his task. He now has more billable hours towards his bonus.
    2. Selling value vs. selling cost
      We're constantly up-selling things which to me, is not ethical and rather sneaky. I'm constantly reminded that we need to sell the value of something, and not the cost. A customer wants some mundane feature added to an existing system? We'll charge 10x what it should really cost them, because we're selling value. I'd love it if anyone could point me to some books or resources justifying this.
    3. Bottlenecks
      My boss doesn't like to micro-manage, or at least that's what he likes to tell us. Sure, he doesn't tell us how to do everything while we're actively doing it, but all work needs to be run by him. At this point, he'll make decisions about whether things were done 'his way' or not. I don't feel he trusts any of his employees to make smart decisions, and this is in turn hurting him and the company a lot. Since everything has to go through him, projects are constantly being paused while he takes time to make a decision.

    This has kind of been a rant, and it's not as cohesive or comprehensible as I had hoped for, but I'm not going to spend any more time being mad about it for tonight.

    I'd love to hear any feedback concerning the issues above.

  2. StewardHill

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    Jul 2, 2012
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    Congratulations on your Graduation.

    First, if you are having second thoughts about your salary, you need to speak up and express your concerns to the manager. Do not just kick in to his office and yell, be reasonable and explain what you think and how you feel. I always stress communication! It can help you a great deal at your workplace. Also, if one of my employees comes to my office and wants to discuss his/hers working hours, work rate and salary...it tells me that they are interested in what they do and self-confident. If they present good argument, I am more than open to duscuss some benefits or raise. Maybe your manager is the same :)

    About selling cost/value...that's business, my friend. Company needs to make money and needs to charge more for less. Having second thoughts about that is a good thing and it tells something about what kind of person you are - honest, but in the world of business.."simple" employee is not able to do much.
    Bosses being stubborn has always been a very common phenomenon. You will be considered lucky if you find a job and your boss will be "normal". I am a boss...and I am sure I am not normal myself.

    The main thing you have to do is...are you able to put in work as you have been doing now, knowing you are not satisfied with how the company is being run and how you have been rewarded?
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