Resilience Is About How You Recharge, Not How You Endure

As constant travelers and parents of a 2-year-old, we sometimes fantasize about how much work we can do when one of us gets on a plane, undistracted by phones, friends, and Finding Nemo. We race to get all our ground work done: packing, going through TSA, doing a last-minute work call, calling each other, then boarding the plane. Then, when we try to have that amazing work session in flight, we get nothing done. Even worse, after refreshing our email or reading the same studies over and over, we are too exhausted when we land to soldier on with the emails that have inevitably still piled up.

Why should flying deplete us? We’re just sitting there doing nothing. Why can’t we be tougher — more resilient and determined in our work – so we can accomplish all of the goals we set for ourselves? Based on our current research, we have come to realize that the problem is not our hectic schedule or the plane travel itself; the problem comes from a misunderstanding of what it means to be resilient, and the resulting impact of overworking.

We often take a militaristic, “tough” approach to resilience and grit. We imagine a Marine slogging through the mud, a boxer going one more round, or a football player picking himself up off the turf for one more play. We believe that the longer we tough it out, the tougher we are, and therefore the more successful we will be. However, this entire conception is scientifically inaccurate.

The very lack of a recovery period is dramatically holding back our collective ability to be resilient and successful. Research has found that there is a direct correlation between lack of recovery and increased incidence of health and safety problems. And lack of recovery — whether by disrupting sleep with thoughts of work or having continuous cognitive arousal by watching our phones — is costing our companies $62 billion a year (that’s billion, not million) in lost productivity.

And just because work stops, it doesn’t mean we are recovering. We “stop” work sometimes at 5PM, but then we spend the night wrestling with solutions to work problems, talking about our work over dinner, and falling asleep thinking about how much work we’ll do tomorrow. In a study released last month, researchers from Norway found that 7.8% of Norwegians have become workaholics. The scientists cite a definition of “workaholism” as “being overly concerned about work, driven by an uncontrollable work motivation, and investing so much time and effort to work that it impairs other important life areas.”

We believe that the number of people who fit that definition includes the majority of American workers, including those who read HBR, which prompted us to begin a study of workaholism in the U.S. Our study will use a large corporate dataset from a major medical company to examine how technology extends our working hours and thus interferes with necessary cognitive recovery, resulting in huge health care costs and turnover costs for employers.

The misconception of resilience is often bred from an early age. Parents trying to teach their children resilience might celebrate a high school student staying up until 3AM to finish a science fair project. What a distortion of resilience! A resilient child is a well-rested one. When an exhausted student goes to school, he risks hurting everyone on the road with his impaired driving; he doesn’t have the cognitive resources to do well on his English test; he has lower self-control with his friends; and at home, he is moody with his parents. Overwork and exhaustion are the opposite of resilience. And the bad habits we learn when we’re young only magnify when we hit the workforce.

In her excellent book, The Sleep Revolution, Arianna Huffington wrote, “We sacrifice sleep in the name of productivity, but ironically our loss of sleep, despite the extra hours we spend at work, adds up to 11 days of lost productivity per year per worker, or about $2,280.”

The key to resilience is trying really hard, then stopping, recovering, and then trying again. This conclusion is based on biology. Homeostasis is a fundamental biological concept describing the ability of the brain to continuously restore and sustain well-being. Positive neuroscientist Brent Furl from Texas A&M University coined the term “homeostatic value” to describe the value that certain actions have for creating equilibrium, and thus wellbeing, in the body. When the body is out of alignment from overworking, we waste a vast amount of mental and physical resources trying to return to balance before we can move forward.

As Jim Loehr and Tony Schwartz have written, if you have too much time in the performance zone, you need more time in the recovery zone, otherwise you risk burnout. Mustering your resources to “try hard” requires burning energy in order to overcome your currently low arousal level. This is called upregulation. It also exacerbates exhaustion. Thus the more imbalanced we become due to overworking, the more value there is in activities that allow us to return to a state of balance. The value of a recovery period rises in proportion to the amount of work required of us.
So how do we recover and build resilience? Most people assume that if you stop doing a task like answering emails or writing a paper, that your brain will naturally recover, such that when you start again later in the day or the next morning, you’ll have your energy back. But surely everyone reading this has had times where you lie in bed for hours, unable to fall asleep because your brain is thinking about work. If you lie in bed for eight hours, you may have rested, but you can still feel exhausted the next day. That’s because rest and recovery are not the same thing. Stopping does not equal recovering.

If you’re trying to build resilience at work, you need adequate internal and external recovery periods. As researchers Zijlstra, Cropley and Rydstedt write in their 2014 paper: “Internal recovery refers to the shorter periods of relaxation that take place within the frames of the workday or the work setting in the form of short scheduled or unscheduled breaks, by shifting attention or changing to other work tasks when the mental or physical resources required for the initial task are temporarily depleted or exhausted. External recovery refers to actions that take place outside of work—e.g. in the free time between the workdays, and during weekends, holidays or vacations.” If after work you lie around on your bed and get riled up by political commentary on your phone or get stressed thinking about decisions about how to renovate your home, your brain has not received a break from high mental arousal states. Our brains need a rest as much as our bodies do.

If you really want to build resilience, you can start by strategically stopping. Give yourself the resources to be tough by creating internal and external recovery periods. In her upcoming book The Future of Happiness, based on her work at Yale Business School, Amy Blankson describes how to strategically stop during the day by using technology to control overworking. She suggests downloading the Instant or Moment apps to see how many times you turn on your phone each day. The average person turns on their phone 150 times every day. If every distraction took only 1 minute (which would be seriously optimistic), that would account for 2.5 hours of every day.

You can use apps like Offtime or Unplugged to create tech free zones by strategically scheduling automatic airplane modes. In addition, you can take a cognitive break every 90 minutes to recharge your batteries. Try to not have lunch at your desk, but instead spend time outside or with your friends — not talking about work. Take all of your paid time off, which not only gives you recovery periods, but raises your productivity and likelihood of promotion.

As for us, we’ve started using our plane time as a work-free zone, and thus time to dip into the recovery phase. The results have been fantastic. We are usually tired already by the time we get on a plane, and the cramped space and spotty internet connection make work more challenging. Now, instead of swimming upstream, we relax, meditate, sleep, watch movies, journal, or listen to entertaining podcasts. And when we get off the plane, instead of being depleted, we feel rejuvenated and ready to return to the performance zone.


Published by Harvard Business Review, Written by Shawn Achor and Michelle Gielan | June 2016

On the relevance of IFRS financial statements

It is amazing what one can tell about a company from a deep and thorough analysis of its financial statements. Wayne van Zijl, a CA(SA) and a senior lecturer at Wits University, shares his views on IFRS.

As a financial accounting lecturer at Wits, I get excited in class while explaining how a keen-eyed chartered accountant can pick up things that, in all likelihood, accountants without detailed technical accounting knowledge would miss. With some dedication, IFRS can give one insight into even the management teams at the various companies.

Despite the billions spent each year both preparing and auditing financial statements, why do so many people question IFRS-compliant financial statements’ relevance and usefulness? In this article I interrogate two common reasons given for IFRS’ declining relevance, discuss two additional considerations and make some suggestions.

I usually hear the same two complaints about IFRS financials. Firstly, preparers and some auditors complain that IFRS financials are just so complex that they are now not understandable to their users. Secondly, preparers complain that IFRS requires so many adjustments that don’t accurately reflect the business operations and need to be reversed by users.

Let’s first look at the allegation of IFRS being too complex. If we look at a simple fish and chips shop, how complex would those financial statements be? Revenue, even under the new IFRS 15, is so straightforward I don’t think even first-year accounting students would struggle to get the right answer. The same goes for short-term trade receivables and long-term loans. This simple business is straightforward and, consequently, so are the resultant financial statements.

Now contrast the fish and chips shop with the financial services industry or multi-national conglomerates. These companies often employ highly complex contracts designed to achieve specific risk-reward payoffs. Think back to financial engineering with straddles, strangles, valleys and a plethora of other structures. Many people struggle to understand the transactions. Can one then really blame IFRS for the resulting complex set of financial statements? I have selected extreme cases, yes, but the point remains. The complexity of financials under IFRS is often a function of how complex the underlying business operations and structures are.

In addition, I suspect that preparers and auditors often project the difficulty of preparing IFRS financials onto their assessment about the difficulty in reading and extracting useful information from financials. Making a cell phone is difficult, using one is easy.

Let’s now look at the second complaint that IFRS adjustments distort the business’s operations. A CEO recently said in an interview that if he borrows R100, how much does he owe. R100, obviously. But then argued that IFRS says that R100 must be fair valued and so all of a sudden, the “IOU” is not R100 anymore. This happens often. The statement is partially correct. The issue is that the context is absent. In a plain-vanilla loan of R100, the fair value is also R100, leading to the correct initial recognition of R100 (IFRS 9). If you lend R100 and agree to pay back R100 in two years, interest-free, then the case is not so straightforward. Here is where I think IFRS is great at helping us understand the underlying economics of what we are entering into.

Agreeing to repay someone R100 over two years, means that the value you are indebting yourself to now is only R88 (PV of R100 at n=2). So, you receive R100 today and have a liability of R88. In other words, if you had to pay someone else to take over that obligation at inception, you would only need to pay R88. This genuinely means you made a day one gain of R12 as cash increases by R100, but your liabilities increase by only R88 (income definition: a net increase in assets). This demonstrates that the company did receive a benefit in obtaining an interest-free loan. Simply recognising R100 at initial recognition and then derecognising the R100 liability after two years would not tell users if this benefit management was able to negotiate and the cost of borrowing money. IFRS’s adjustments don’t give nonsensical answers. Would you lend money to a third-party interest-free? Probably not.

I think the interest-free loan example reinforces my earlier point that IFRS is as complex as the transactions it must present to users. I think it also highlights that we are, perhaps, too quick to latch onto a complex example, get frustrated and then (mistakenly) use it to argue why IFRS is nonsensical in general. There are some peculiarities in IFRS that I question (they are usually anti-abuse mechanisms). But importantly, these are few and the exception rather than the norm. Tweet me @CCAAR_SOA_WITS with any examples you have of peculiar accounting treatments, and I will be happy to look at those with you.

While the two concerns discussed may be partially true, I think two other factors affect people’s perception of IFRS’s relevance. Firstly, users need to invest time in learning how to read IFRS financials. More importantly, they need to understand how to extract value from the financials (and this is not the same as knowing how to preparing financials). Secondly, there are now so many sources of both financial and non-financial information that IFRS financials are competing against. This results in a trade-off between the ease of use of the various sources and their depth of information and credibility.

IFRS’s Conceptual Framework states upfront that it is meant for informed and diligent users (CF, 2.36). Comments that laypersons would not be able to understand IFRS are correct and by design. Reiterating my comment earlier, if a layperson cannot understand the underlying transactions, it is obvious that they would struggle to understand the financials. But would a layperson be able to compare high-level metrics from IFRS financials to make a decision that aligns with his or her competencies and ability? I think they would. They could compare base metrics such as profitability, assets, cash balances and cash flows. More sophisticated investors can dig deeper into the notes and use their existing economic and industry knowledge to interpret and analyse the financials to make more informed decisions in line with their competencies and ability. These users have the technical competencies, time, and motivation to do so.

What we should consider is whether the current providers of capital (users) would want to tip the scales of the trade-off between detailed financials and understandability more towards the understandability side. This may result in less detail but increase the financials’ understandability to more laypersons. I question whether laypersons even want to interrogate financials, but this question leads us to the final point.

There has been a shift in the corporate reporting environment. Now, there are multiple sources of financial and non-financial information that are updated more regularly. The fast pace and globalisation also mean there are more investors to compete against, driving the demand for more information that is updated more regularly.

Examples include integrated, sustainability and environmental reports; company websites; stock exchange news services; financial press; XBRL and social media. These sources offer management teams great flexibility over what information to provide and how to present it. These sources are especially attractive to non-sophisticated users that do not have the skills, time, and motivation to dedicate to performing a thorough analysis of financial statements. They are also useful to sophisticated users to supplement the financial statements via both their ability to allow management to have their say and as these are updated more frequently. The trade-off of the greater frequency and understandability of these sources is that they are also less credible (un-audited), comparable and detailed than financials. For these reasons, I propose that IFRS financials are still fit for purpose.

In closing, IFRS, in general, results in financial statements that are as complex as the underlying operations of the company it is depicting. IFRS, in my opinion, does represent the economics of a company’s transactions and events with limited exceptions. IFRS financial statements are not meant to be understandable by the laypersons – the layperson wouldn’t understand complex businesses anyway. Sophisticated investors need detailed, accurate and credible information that is, currently, only provided by financial statements. These users need to spend time mastering how to read and interpret IFRS financials to extract value. I think we are perhaps missing a degree or diploma specifically designed to teach people how to use IFRS financials (not how to prepare them). It should teach people where to start, how to approach the analysis, industry-specific concepts to understand first and how to complement the analysis with other sources of information. Lastly, in the competitive global environment we find ourselves in, each reporting source has its place. One cannot expect one source to satisfy all one’s needs.

Released by SAICA | Published by Biz Community | Written by Wayne van Zijl

Foreign Exchange (FX) in a Post-COVID World, Digital transformations and new market dynamics

Businesses are changing their foreign exchange (FX) hedging strategies in response to the post-pandemic world. What does that mean for banks and their FX sales teams?

The enormously disruptive events of the past year and a half have forced businesses across all industries to rethink their ways of working. Banks are no different. “The COVID-19 pandemic has taught us that what we wake up knowing in the morning isn’t necessarily what we go to sleep knowing at night,” says Mpume Myeza, Head of Corporate FX Sales: Inland at Absa CIB.

She’s right: a business’s operating environment at 5pm on a Friday could be quite different from the new reality of 9am on Monday. All it takes is a presidential announcement and a change in national lockdown levels.

The same is true for global currency markets. A few hours can make a world of difference in the FX markets as currencies respond to various news flow from all over the globe.

“The market is so volatile,” Myeza says. “From the bank’s perspective, our clients have to be constantly informed of the changing market dynamics. Before, it might have been enough to only call your clients with an update once a day. Now, the situation is completely different by the time you close your day. That’s really when your sales team needs to kick in, updating clients about the changing environment and explaining how the bank will support them. It’s proactivity, taken to the next level. We always have to be plugged into the news cycle and remain agile and nimble.”

In these times ruled by extreme volatility, it is crucial for the FX sales teams to have an in-depth understanding of clients’ strategic hedging policies in order to service the clients in the most efficient way.

A consistent banking experience

With all that volatility and all those moving parts, banking clients need a consolidated view of their operating environment. Digital technologies allow for that, enabling Absa’s FX teams to keep clients constantly plugged into the movements in the market and able to capture the opportunities.

“In this virtual, digital world, we are looking to deliver end-to-end FX solutions for our clients,” says Myeza. “As teams in the FX value chain, we are good at what we do, but we need to combine that into a single package. Banks tend to segment FX into various departments – international banking, payments and so on – but our clients see it all as a single entity. Absa Access allows us to deliver this end-to-end solution to our clients – from securing an exchange rate to making the actual payment. We also offer our clients various ways of executing trades with us – through our single dealer platform in Absa Access and across multiple aggregator platforms. This allows us to always remain relevant to our client base.

Myeza says that in a post-Covid world, banks have had to change the way they view client relationships and how they build new ones. “In the past, relationships were built and maintained in face-to-face meetings and engagements. Building these relationships virtually has meant that we have had to move away from a siloed way of thinking to a more collaborative approach. Clients want to know that the level of superior service they have received and come to expect is going to be maintained. The challenge to the bank is how to use our resources to ensure this remains top of mind for them.”

That also speaks to the individual relationships that clients have with their contacts at the bank. “Traditionally, a client would have one salesperson at a bank, and maybe one other person to whom they would speak if that person was not there,” Myeza explains. “But the way things are moving, you need to be more dynamic. The client must get the same high level of service, no matter which salesperson they speak to. The old, siloed way of thinking has to go.”

It must go because it no longer works in a world that requires instant, constant, always-on engagement. As Myeza points out, “Things are changing at a rapid pace. We must anticipate the needs of our clients and offer tailored solutions for their businesses. The combination of our superior digital offering and the dynamism of our sales teams ensures that we remain top of mind.”

That’s not to say that the digital age will spell the end of traditional banker-client relationships. If anything, it emphasises the need to establish new relationships and keep existing ones going. “You could never replace people and personalities,” says Myeza, “but in terms of the business, and the outputs we as a bank give to the client, it must be a consistent experience and it must be immediate.”

Article published by: Mpume Myeza, Head of Corporate FX Sales: Inland ABSA | 6 August 2021

Global financial reporting agenda set to change – how will South African companies be impacted?

From 2022, the global financial reporting agenda is set to change. This change comes as the global standard-setter, the International Accounting Standards Board (IASB), is embarking on its third agenda consultation. Much like the changes which were brought about by the second agenda consultation, the new global financial reporting agenda may result in a significant impact on how some transactions are accounted for and thereby impacting companies in various ways, writes Bongeka Nodada, SAICA Project Director for Financial Reporting.

Through this third agenda consultation, companies, auditors, regulators, and users of financial statements are provided the opportunity to drive the global financial reporting agenda. Consequently, this could improve financial reporting by companies.

This process is important to South Africa because the Companies Act 71 of 2008 requires some companies to apply the global financial reporting standards, International Financial Reporting Standards (IFRS).

Furthermore, the consultation process enables all the role players in the financial reporting ecosystem to influence the strategic direction and balance of the IASB’s activities, criteria that will be applied to assess which projects should be prioritised and advise the IASB as to which projects should be taken onto the global financial reporting agenda.

Current standard-setting activities entail the following: development of new IFRS standards, maintenance and major amendments to IFRS Standards; maintaining IFRS Standards and supporting their consistent application; developing and maintaining the International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs); supporting digital financial reporting by developing and maintaining the IFRS Taxonomy; improving the understandability and accessibility of the Standards; and engaging with stakeholders. The global standard-setter is seeking views to determine how its resources should be allocated among the different activities.

Initial outreach activities conducted prior to the commencement of this agenda consultation identified a myriad of potential financial reporting projects that could be added onto global financial reporting agenda. These potential projects will either serve to address gaps that exist within IFRS Standards or enhance the reporting requirements. No doubt that, much like the major overhaul of the revenue, leases and financial instruments Standards which culminated from the second agenda consultation and which significantly impacted many companies in South Africa, some major projects taken onto the future agenda may have a similar effect on companies locally.

Projects which have been put forward thus far for consideration include accounting for cryptocurrencies, accounting for inventory, going concern disclosures and the accounting basis to apply when entity is no longer a concern, accounting for income taxes, accounting for internally generated intangible assets such as brands, and the statement of cash flows and its relevance for companies such as financial institutions.

Companies, auditors, regulators, and users of financial statements have until 27 September 2021 to provide input that will drive the financial reporting agenda for the five years commencing from 2022.

More information on the third agenda consultation can be obtained from the IFRS Foundation website.


The South African Institute of Chartered Accountants (SAICA), South Africa’s pre-eminent accountancy body, is widely recognised as one of the world’s leading accounting institutes. The Institute provides a wide range of support services to more than 50 000 members and associates who are chartered accountants (CAs[SA]), as well as associate general accountants (AGAs[SA]) and accounting technicians (ATs[SA]), who hold positions as CEOs, MDs, board directors, business owners, chief financial officers, auditors and leaders in every sphere of commerce and industry, and who play a significant role in the nation’s highly dynamic business sector and economic development.

Chartered Accountants are highly valued for their versatile skill set and creative lateral thinking, that’s why all of the top 100 Global Brands employ Chartered Accountants.

Published by SAICA | June 2021

Don’t Just Tell Employees Organizational Changes Are Coming — Explain Why

Employees around the world are reporting that big organizational changes are affecting their jobs. From leadership transitions and restructurings, to mergers and acquisitions, to regulatory changes, there seems to be constant unrest in the workforce. But according to one survey of more than half a million U.S. employees, almost one-third don’t understand why these changes are happening.

This can be detrimental for any company trying to implement change. When employees don’t understand why changes are happening, it can be a barrier to driving ownership and commitment and can even result in resistance or push back. And employees’ resistance to change is a leading factor for why so many change transformations fail.

Executives and those responsible for leading change cannot assume that employees understand the reasoning behind them. You must spend time explaining the changes and why they are important. Based on my experience supporting organizational change initiatives, there are four key aspects to helping employees understand change, to drive commitment, and to ultimately contribute to your success.

Inspire people by presenting a compelling vision for the future. During times of uncertainty, people experiencing change want a clear view of the path ahead. It’s important to share what you know – including what’s changing, when, and how. But for most change initiatives, it is also helpful to start with a narrative or story that clearly articulates the “big picture” – why change is important and how it will positively affect the organization long-term. This should serve as the foundation for how you communicate about the change moving forward.

To be successful, your story needs to start with the company’s core mission and then offer a compelling and inspiring future vision. You want to answer: How are the changes you make today helping you achieve your vision for tomorrow?

For example, in 2017 our client FMC Corporation was preparing to acquire a significant part of DuPont’s Crop Protection business, which would transform FMC into the fifth-largest crop protection company in the world. As part of their change story, they developed a unifying internal communications campaign called the “Nature of Next” that articulated the reasoning and vision for the acquisition.

The campaign explained how FMC would gain a broader product portfolio, an expanded global footprint, and full-discovery R&D capabilities – all of which helps them achieve their aspirations of helping customers feed a growing population in a sustainable way. While the integration is still underway, the campaign generated excitement for the acquisition among employees, and is still used today to communicate the promise of the new FMC.

Change events are often uncertain, unstable, stressful, and risky. But having a clear meaning or purpose behind the change will strengthen your case. If you can clearly articulate this case, employees will also build a better understanding of the business strategy.

Keep employees informed by providing regular communications. Change communications is never a one-and-done event; keeping employees informed is something that you will have to do throughout every step of the change process. Studies have found that continual communication is a leading factor in a transformation’s success. When thinking about how to communicate, keep the following in mind:

Be clear and consistent: All of your communications should tie back to the narrative that you developed, reiterating the case for change and presenting a compelling future vision.

You will not have all the answers: Often times, you will not have all the answers employees are looking for, and that breeds anxiety and uncertainty. It’s important to focus on what you know, and be candid about what you don’t. If you do not have an answer, say so. When this occurs, it’s important to let employees know you are committed to communicating openly and transparently, and will follow-up as soon as you know more.

Don’t forget to articulate “What’s in it for me?”: One of the most important phrases you may come across in change communications is “what’s in it for me?” If your employees understand what’s in it for them personally, you’re more likely to see individuals commit to and own the change. Failing to articulate “what’s in it for me” will only hinder your efforts.

A few years ago, I supported change communications for the integration of two leading companies in animal health. A leader at one of the organizations was exceptionally good at communicating how individual employees would benefit from the merger. And it wasn’t just about new job opportunities or increased market share. He reinforced how it would carry out their shared passion for keeping animals healthy, and how together, the two organizations would be able to offer new solutions, products, and technologies to customers that would not have been possible before.

Empower leaders and managers to lead through change. Major changes or transformations often require asking employees to adopt specific behaviors or skillsets in order to be successful. And when senior leaders model the behavior changes, transformations are five times more likely to be successful.

Leaders not only need to be equipped with information and resources, but they need to feel confident leading through change. This can be especially challenging, as leaders encounter more pressure to provide better answers and to support their teams. But how your leadership reacts to change will trickle down and impact your managers, who then impact your employees and their engagement.

To empower leaders and managers, executives and change leads should help them understand the fundamentals of change, including how to be an effective leader during times of change, how individuals react to and navigate change, and how to address roadblocks or areas of resistance.

Recently, I attended an offsite meeting for a client that was undergoing a major transformation of their shared services organization. While a vast majority of the offsite was focused on why the organization was changing and what would be happening, they carved out specific time to train and upskill leaders, the individuals who would ultimately be responsible for driving the change.

Leaders could select from trainings on a range of topics, including how automation and artificial intelligence are changing their business, how to apply Design Thinking to solve business problems, and fundamentals of change management. For example, during Design Thinking sessions, leaders were asked to problem solve and develop solutions around real-life challenges employees may face during the transformation. As a result, leaders walked away better equipped to support how they would drive the transformation forward.

Find creative ways to involve employees in the change. When planning for major change events, it is important to solicit feedback and engage people in the process. This helps build ownership in the change, and makes employees more likely to support the change and even champion it.

In preparation for FMC’s crop protection transaction with DuPont, more than 150 FMC employees were nominated by leaders to be part of the Change Champion Network. The group was established to engage their peers, answer questions, and excite employees about the future of the company. The group was an essential resource for fellow employees, and served as a channel for two-way feedback for leadership.

Another way to engage employees and drive commitment is to recognize those individuals who are embracing the change and demonstrating desired behaviors. For instance, a recent client wanted to drive a culture shift that was more open and transparent, and engage employees around recently launched corporate values. As part of the rollout, the company introduced a new award that recognized employees who were living their corporate values both inside and outside of work. Employees could nominate their peers, and winners were voted on by the entire organization and revealed at an all-employee town hall. Not only did this reward those who were role models for change, but it allowed the entire organization to become engaged in the process.

Being able to effectively lead change within your organization is crucial – and impacts more your culture and your bottom line. Companies who are highly effective at change management are three and a half times more likely to significantly outperform industry peers.

Assuming employees understand the changes your company is going through will jeopardize your change initiative. So the next time you’re approaching a change project, be sure to think about how you can inspire, inform, empower, and engage your most powerful ambassadors – and successfully lead your company into the future.


Published by Harvard Business Review, Written by Morgan Galbraith | October 2018

The Most Common Bookkeeping Mistakes That Can Spell Disaster For Your Business

Bookkeeping and Your Business

Running a business can be both fulfilling and stressful.

There is an undeniable satisfaction that comes from watching your idea become reality. However, there is more to running a successful business than product creation and marketing. While these are very important, keeping track of your expenses and making sure your finances are in order are just as essential.

This is why bookkeeping should be a top priority for every business owner. Although it seems mundane and can be tedious, it is a key factor in determining whether you make a profit or lose your investment.

Below we detail some of the most common bookkeeping mistakes that you should be aware of.

Not Having a Business Plan

Planning is an important part of starting a business. Having a solid business plan before you launch will help ensure that your company is prepared and ready to operate. This may seem obvious, but many small business owners are so eager to get started that they forget to lay down a thorough business plan as a foundation.

Your financial goals and bookkeeping processes should be part of your business plan. It should clearly outline the schedules and the people responsible for each task. This way, it is clear when certain financial deliverables are due, and who is responsible for creating them.

Even if it is just a one-person business, an organized bookkeeping schedule can help keep your business from going under.

Lack of Organization

Bookkeeping problems are common for small businesses. If you have limited team members, tracking all receipts and expenses will fall on the business owner. It is difficult for business owners to track finances, keep inventory stocked, and boost employee morale all at once.

Being organized will help you save a lot of time and reduce stress when it comes to bookkeeping. Before you launch, you should figure out where you will file receipts and when you will keep tabs on them. We highly recommend utilizing the advantages of technology when organizing your receipts. Lloyd & Hodge’s digital cloud bookkeeping services offer on-demand document storage and management, as well as vastly increased searchability for reporting and recall.

Not Having a Budget

It is common for small businesses to operate with limited cash flow. For businesses that have just started their operations, it can take a while to actually turn a profit. This is why it is essential to make sure that your business cash flow is transparent, organized, and within budget.

It is best to audit all your expenses before you start trimming the fat and create a defined budget. This will give you a clear picture of how money moves within your business.

Having a proper budget will help make keeping track of all transactions much less of a hassle.

Not Reconciling Bank Accounts

Some small business owners assume that operating your business with your personal bank account is sufficient. However, come audit time, not having separate bank accounts for your business and personal activities can lead to significant issues.

Should you be audited, you will have to provide complete records of your business activities that are separated from your personal expenses. To minimize errors and identify potential issues, make sure that your bank accounts are properly reconciled each month.

Not Classifying Employees

There is more to bookkeeping than just inventory and raw materials. Businesses must also consider the kind of employees they have on payroll. For most businesses, there are two types of employees, full-time workers, and independent contractors. Make sure to keep track of everybody’s employment status so that when it is time to file, there won’t be any concerns about misfiling.

Poor Petty Cash Management

Some business owners view petty cash as free money. They see it as funds that can be used for anything that can be attributed to the business. While that is true to some degree, petty cash should not be used as a business owner’s personal wallet. Any transaction made using petty cash still needs to be tracked.

Thankfully, keeping track of petty cash is pretty straightforward. It doesn’t require any confusing technology, just proper documentation and timely auditing.

Neglecting Sales Tax

A common error for many small businesses is not properly reporting and accounting for sales tax. This simple mistake could end up costing your business a considerable amount of money. Oversight in collecting and reporting sales tax can result in heavy fines and penalties that a business might not be able to handle.

Before launching your business, familiarize yourself with how sales tax and other state and federal taxes apply to your business and its operations. This will help ensure that you don’t neglect or forget to file the appropriate taxes.

Not Having Backups

Bookkeeping technology can be a challenge for many small business owners, even those who have been running their business for a few years. If you don’t completely understand a program, there is always a chance that you miss or delete essential data.

This is why you should always have a backup of your files. It helps to have a physical copy of your books. If something happens to your computer, you will be able to update your finances without any hassles.

Incorrectly Categorizing Expenses

Correctly tracking your income and expenses in the right categories provides a proper measurement of profitability. If you do not have knowledge of formal bookkeeping practices, then this can become a problem. Knowing the different tax treatments of each income and expense category can also yield significant tax savings.

Not Outsourcing Bookkeeping

Nothing is stopping you from keeping your own books, but there is a reason why bookkeeping is so sought after as a professional service. There are many aspects of the process that take years to master. Opting to outsource your bookkeeping will help you keep track of your business’ finances in an efficient and stress-free manner without having to make it your full-time job. Outsourcing your bookkeeping services can help you save time and allow you and your staff to focus on what you do best.

Leave the bookkeeping to the professionals.


Published by Lloyd & Hodge | Written by Whitney Hodge | October 2020

How a Business Credit Card Can Help You to Better Manage Cash Flow

As we edge ever closer towards a completely cashless society, credit cards are becoming more and more necessary. Business credit cards are also enormously helpful for bookkeeping, payment protection and emergency funds. So long as you manage your account well, a business credit card can really help you to manage your cash flow more effectively and smooth out any bumps along the way. Here are the top reasons to get a credit card for your small business.

Separate Business and Personal Transactions

It’s important to keep your personal and business transactions separate. When you use the same account for both types of expenses it becomes very difficult to understand how your business is actually faring financially. Furthermore, it can be tricky to remember which transactions were personal and which were business-related, leading to problems and headaches when it comes to filing your tax return – not to mention missed deductions. A business credit card keeps a simple log of all of your transactions, functioning as a basic bookkeeping system and giving you a clearer picture of your financial situation.

Most business credit cards provide summaries of your spending, simplifying your data for you. Better still, many providers allow you to export your transactions to your cloud accounting software program so that you don’t have to waste time on data entry. This is enormously useful for analysing your spending habits and creating cash flow projections to help you better manage your money.

Build a Better Credit Score

A business credit card is an excellent way to build a good credit history or improve a less-than-stellar reputation. Of course, in order to do this you must manage your card well, keeping your balance low and making fast repayments. Doing so will increase your score and mean that you will be a more appealing borrower and receive better interest rates.

Convenience and Protection

A business credit card gives you easy access to funds – no waiting for clearance or processing. You can make purchases quickly and easily, and you’ll benefit from free purchase protection, too. This provides your small business with a basic line of defence against theft and fraud.

A Cash Reserve

Every business needs a cash reserve for emergencies or difficult times. A business credit card provides a line of credit, allowing you to continue operations when funds are running low. This also gives you more freedom and flexibility when making purchases to grow your business. As a small business owner, you often have to spend money in order to make money and a credit card can really help with this.

Of course, a business credit card should only be used as a short-term solution to avoid mounting debts and interest. It’s very useful when a customer is late with payment or you’re waiting for funds to clear, but it can’t keep you afloat forever.

Discounts and Rewards

Some business credit cards offer lucrative bonuses and discounts which can be good news for your cash flow. You may also be able to earn cashback on certain purchases and earn rewards points, which you can later cash in for business expenses.

There are many great business credit cards out there with an array of lucrative rewards. It’s worth shopping around to ensure that you choose the card that’s most closely suited to your needs. For example, if you travel a lot for business purposes then a card which allows you to earn AirMiles would be a wise choice.


A business credit card offers flexibility, convenience and peace of mind for small business owners. Using a business credit card can simplify your financial records.


Published by Bookkeeping and Accountancy

All Management Is Change Management

Change management is having its moment. There’s no shortage of articles, books, and talks on the subject. But many of these indicate that change management is some occult subspecialty of management, something that’s distinct from “managing” itself. This is curious given that, when you think about it, all management is the management of change.

If sales need to be increased, that’s change management. If a merger needs to be implemented, that’s change management. If a new personnel policy needs to be carried out, that’s change management. If the erosion of a market requires a new business model, that’s change management. Costs reduced? Productivity improved? New products developed? Change management.

The job of management always involves defining what changes need to be made and seeing that those changes take place. Even when the overall aim is stability, often there are still change goals: to reduce variability, cut costs, reduce the time required, or reduce turnover, for example. Once every job in a company is defined in terms of the changes to be made (both large and small), constant improvement can become the routine. Each innovation brings lessons that inform ongoing operations. The organization becomes a perpetual motion machine. Change never occurs as some sort of happening; it is part of everyday life.

Today’s change management movement has arisen in response to the difficulty companies have had in making constant, rapid improvement a routine aspect of work. Efforts to overcome this have led to the bifurcation of organizational life into ordinary times and change management times. As an increasing number of people take on the role and mindset of the change management professional, instead of striving to make innovation and improvement routine, they naturally encourage the treatment of change as something special. Managers start to view change as an extraordinary event that must be dealt with using change management techniques and special skills. And then it’s easy for people to become resistant to change.

What needs to change is that thinking. Leaders should view change not as an occasional disruptor but as the very essence of the management job. Setting tough goals, establishing processes to reach them, carrying out those processes and carefully learning from them — these steps should characterize the unending daily life of the organization at every level. More companies need to describe their work in terms of where they are trying to go in the next month or next quarter or next year.

How do you transition into such a company? The simple answer is to skip the months spent creating a comprehensive plan to make the company more change-oriented. Instead, focus on some important goals that are not being accomplished. Have teams carve out some sub-goals they will aim to achieve in a few months. They should be asked to test innovative steps they think will make a difference and to learn from the process. Maintaining a short time frame for these experiments permits the rapid testing of many modest innovations. Of course, these are steps to advance major strategic goals, but the emphasis should be on executing specific changes — with each success followed by a new round of more-ambitious goals to tackle.

For example, Gary Kaplan, president of XL Catlin’s North American Construction insurance, got his division started by formulating some major strategic goals. Then he launched a series of short-term “results-seeking projects,” each focused on achieving some aspect of those strategic goals. The projects aimed to have people experiment with innovation. As they tested ideas and learned from them, they incorporated new ways of working into the fabric of the organization.

Each year they carry out about 50 such results-seeking projects. Of those recently completed, one won $8 million of new business in a particular region of the country and another focused on reducing costs by redesigning a process to shift major tasks to lower-level, less-costly staff. Kaplan’s project-centric strategy allowed the company to bring in $1 billion of premium revenue five years after the launch of the division, and then another billion dollars in the next 18 months.

A critical part of this evolution is holding managers accountable for continuing improvements. As Kaplan told me, by making the operating managers responsible, they develop their capacity to lead continual change while their people develop the capacity to implement it. Specialist experts can be used for support, but actual management of the changes must remain in the hands of the managers. Because, as Kaplan so neatly demonstrates, change management is management, and management is change management.


Published by Harvard Business Review, Written by Robert H. Schaffer | October 2017


A new global tax is in the pipeline – how it will impact South Africa

South Africa has joined 130 other countries in calls to introduce a global tax.

In talks held by the Organisation for Economic Cooperation and Development (OECD) at the end of June, the countries agreed to a plan to set a minimum corporate tax rate and establish a new regime for sharing the taxes imposed on the profits of multinational firms.

This will see the implementation of a two-pillar package that will result in a fundamental shift in the way international taxation has worked in the past, say tax experts at Webber Wentzel.

“The first pillar was designed to find a more equitable way of taxing multinational digital businesses (e.g. Google, Amazon, Netflix, Facebook), since they currently pay taxes in a different jurisdiction from those market jurisdictions where they earn significant revenue.

“However, this pillar will impact more than the traditional digital economy as it will affect any multinational business with similar consumer facing characteristics.”

The second pillar is aimed at a global levelling of tax rates by applying a top-up tax, using an effective tax rate test, to achieve a minimum effective direct tax rate across the globe of 15%.

This is the pillar that will likely have the most immediate impact on revenue collection by SARS, said Webber Wentzel.

“The changes brought about by the agreement on the framework will not be immediate or rapid as they will require each participating country to revise domestic tax laws and enter into revised bilateral treaties.

“Implementation will also likely require each country to sign an overarching multilateral instrument (MLI).

“In South Africa, the MLI will take effect once the agreement is approved by parliament and published in a government gazette.”

Pillar one – SARS will have its (VAT) cake and eat it too

Under pillar one, multinational companies with global turnover above €20 billion and a profit margin of over 10% will have to pay tax in jurisdictions where they earn at least €1 million (or €250,000 in smaller countries) in revenue from products used or consumed.

“To address revenue leakage, some countries have already introduced a digital services tax (DST) as a unilateral measure in advance of these proposals. South Africa has not yet introduced a DST but has begun work on it,” Webber Wentzel said.

“Countries that have implemented DST do so in various ways, such as through a withholding tax, income tax on the “digital marketplace” or tax on importation of digital services or products.

“These are unilateral measures which do not allow the company paying the tax to offset it in other jurisdictions. Pillar one requires removal of all DST and relevant similar measures on all companies.”

Pillar one relates only to direct taxes, not to VAT. Many countries, including South Africa, earn VAT from the sale of digital products and services which is paid by the end-consumer, not by the multinational business, said Webber Wentzel.

These countries will likely not need to restructure their VAT rules to implement this pillar as VAT is a consumption tax on the consumer or recipient and Pillar One affects income taxes levied on the supplier.

“In theory, pillar one would benefit South Africa and other markets for digital services and products in that the fiscus would be able to levy taxes on an area of economic activity that is not currently being taxed.

“Thus, if foreign multinationals generate income in South Africa in excess of €1 million, South Africa should be able to get a slice of the tax pie.

“Further, it is unlikely that South Africa’s largest multinationals will meet the Euros 20 billion in global turnover and 10% profit margin threshold requiring them to give up a slice of the pie to other jurisdictions.”

Pillar two – South Africa should reduce corporate tax rates further

A number of South African corporations, mainly those doing business in African countries where effective corporate tax rates are relatively high, have used low-tax jurisdictions such as Mauritius or the Seychelles to operate intermediary holding companies or centralised operations to manage their effective tax rates, using the low tax jurisdictions to balance the high tax rates in Africa.

These companies will likely be affected by pillar two of the framework, said Webber Wentzel.

“These companies will see their effective tax rates adjusted to a minimum of 15% once the MLI implementing this pillar is given effect.

“There will be no way to avoid the increase in their tax rate from almost zero to at least 15%, but it can be planned for.”

The unfortunate effect of pillar two may be that companies will be increasingly averse to doing business in higher tax jurisdictions, since they can no longer offset those rates, and may switch their focus to more developed countries where corporate tax rates are lower, the law firm said.

“Some large, fast-growing markets (such as Nigeria or Kenya) will remain appealing, but countries like South Africa, with negative GDP growth and higher corporate tax rates, are likely to be left behind.

“Some countries, like Mauritius, Singapore or Hong Kong, which have positioned themselves as lower-tax economic hubs, will lose some of their attractiveness. However, the extent of in-country infrastructure will also play a part in attracting multinational businesses.”

“More positively, in the long run, Pillar Two may encourage developing countries with high tax rates, including South Africa, to make downward adjustments to their corporate tax, or if this would result in a tax shortfall make greater efforts to incentivise foreign investment.”


Article published by BusinessTech | 31 July 2021
Commentary bt Karen Miller and Joon Chong of Webber Wentzel.