What Are the Best Businesses to Start in 2012?

As the new year begins, many are asking, "what are the best businesses to start in 2012?" As we roll along through this second month of the year, with the unemployment figures still quite grim, even more people are asking this question. Not only are both men and women looking for a "Plan B" in case their job comes to an end, but many are wanting to venture into a new business as a diversion from the day to day routine in which they may find themselves mired.

If you are one of those who are seeking a new business at the onset of this year, perhaps it would be prudent to conduct some simple research. If you are one of those starting from scratch, the best indicator for a business which would be your best choice could be something that you and also your family members are already interested in. Perhaps it is a current hobby, or perhaps it was something which you had done in years past and want to re-visit as a possible business venture. However, like all businesses, the major consideration in the beginning is the capital needed to have a strong launch. Thankfully, with the Internet at the fingertips of nearly everyone today, finding the choices for the best businesses, and at the lowest cost, can be found in hours or days, rather than weeks or months.

As the recession spreads across the globe, businesses of all kinds are being affected. We are truly a Global Economy in the year 2012, and as time goes by, this web will become increasingly strong. Keep in mind that starting a new business, especially one which is conducted primarily online, does not necessarily require a large amount of money. Conversely, finding a business which DOES cost a lot to either purchase or start, for instance a franchise like Wendy's or McDonald's, is not inevitably an indicator of greater success.

Among the best businesses which can be started in 2012 are related to Information and Communications Technology, or ICT. These could include online tutorials for students from kindergarten through college levels. Transcription services, particularly for the medical field, are increasing in demand. Web hosting and maintenance is crucial in today's economy, and many businesses and individuals have websites, but no time to manage them. Freelance graphic designing services for various companies can give you flexibility in terms of scheduling your own activities. One of the newest businesses is a social media consultant; now that almost every person and business is involved in various social media, there is increasing demand for expertise in handling marketing campaigns on popular sites such as Facebook, Twitter, and YouTube.

It's clear that there are many excellent choices when deciding which are the best businesses to start in 2012. One of the most important things is to just do it! Many people hem and haw for weeks, months, or even years before deciding to make some significant changes in their lives, changes in their career choices. It may feel as if you are taking some big risks to seek out those new businesses and careers, but as long as the risks don't include losing your home, your family, or your health, it might be wise to follow a dream to a new business in a new year.

Four Ways HRO Firms Can Help Boost Employee Morale and Improve Productivity

Your employees are smart - they sense the vibe of your workplace, whether you have an open door policy with full disclosure, or not. When the economy is down and sales are flat, it is important to maintain a positive and upbeat work environment, regardless of your financial statement. In recent years, thousands of employers have begun turning to Human Resources Outsourcing firms for support. An HRO firm provides many services that help improve employee morale and productivity.

Motivated Employees

Despite the common perception, increases in salaries or financial bonuses are NOT the number one motivational factor for employees. Study after study proves that employee development, training and recognition programs are the primary motivators in the workforce. Most employees recognize the difficult financial times and will allow their employers a "pass" if they skip this year's bonus, but not if they feel under-appreciated. Recognize and appreciate your staff, and they will continue to give you their all, despite the tough economic times.

Employment Challenges and the HRO Solution

Yet, despite the noblest intentions, most small employers find their time and resources too limited to research, create, and implement effective programs. Their management team is already tasked to just "get the job done" and motivational programs are often viewed as extraneous or expendable. This is where an HRO firm can help! Human Resources Outsourcing firms employ a team of HR experts in a wide range of disciplines, from employment compliance and HR policies, to employee benefits administration and safety consulting. Most importantly, HRO firms work with a wide range of businesses and are able to collect, review and implement the most effective motivational programs that have been proven to work. More importantly, these programs can be implemented quickly and at a substantially lower cost than if they employer attempted to manage it themselves.

Below are four fundamental elements of an employee recognition and motivational program with which an HRO can assist:

1. Management Training - Some trainings are required by law, such as Unlawful Harassment Training. However, many courses empower supervisors to reach higher levels of confidence and commitment to their employer. With advanced management courses in their pocket, they can more readily motivate, train, and lead their staff.

2. Employee Development - An educated employee is a dedicated employee. Numerous trainings motivate and empower staff to reach their full potential. Time management, Positive Motivation, and Managing through Difficult Times are just a few examples of training that motivate employees to excel.

3. Incentive Programs - In a tight economy, most employers don't have the financial resources to provide large bonuses or cash incentives. However, with a little creativity, employers can find alternatives to incentivize and motivate their staff. Birthday parties, small gestures of appreciation, public recognition, and minor gifts go a long way in keeping your staff supportive of your efforts in tough economic times.

4. Employee Benefit Packages - A key motivator for employees to work hard and remain dedicated are good benefit programs. While insurance can be costly, many low-cost alternatives exist, including voluntary benefit and retirement plans.

Two Small Business Essentials - Accounting and Bookkeeping

Information is an important resource for businesses of all sizes and the people that are employed within. Businesses need to collect data and information pertaining to the financial performance of the business, to process this data and make it into a format that is easy to access to base informed business decisions. As a result of the need to have timely and accurate accounting and bookkeeping information, the development of management information systems has become predominant in all industries and expertise. This system is designed to collect, process, record, report and convert the data collected into a usable format for management and other decision makers within the business to make accurate decisions. As with any decision, the quality of the decision is only as good as the data that it is based upon. With the business implementing an accounting and bookkeeping system that accurately records and reports on a timely basis is the key to making better business decisions.

With the advent of computer technologies, businesses of all sizes now have access to hardware and software that can process data quickly, efficiently and cost effectively. The popularity of the computer has made it feasible for small businesses and industries that traditionally have not been able to afford such investments in technology, to use such hardware for storing, processing and presenting large quantities of information pertaining to the businesses operations, finances, productivity and employees.

Accounting and bookkeeping are a central component of all businesses management information systems. The sale of goods or services starts a series of accounting entries using sales and ledgers to record changes in sales and accounts receivable. Accounting and bookkeeping software greatly enhance and facilitate this process by reducing the effort needed to manage detailed financial reporting and systemising the entry of data.

Farming is one of the leading industries worldwide. The professionalism of the industry is paramount to its success and the adoption of computers and internet based software by farmers and agricultural operations around the world has been a leading trend associated with the increase in productivity and professionalism. Specialist and affordable farming industry software has been designed and tested not only to provide a complete accounting and bookkeeping solution for farming operations, but also incorporates the nuances of the industry, including stock control, fertiliser and other inputs with measures as to their effect on the farms productivity.

Is the future of digital journalism an outside job?

Making small digital news providers sustainable has become the holy grail of journalists and the search continues for workable business models and revenue streams.

Advertising may produce some revenue, but it will never generate sufficient resources to support digital journalism because so little advertising money is available for sites with small audiences. About three-quarters of all online advertising goes to the top 10 sites and Google, Facebook, Microsoft, and Yahoo account for about 60 percent of all online revenue. This leaves very little advertising expenditures to be contested among all other players--of which news providers are only a small fraction. At the same time, the prices paid for online advertising are falling because there are so many sites offering advertising, the advertising inventory is nearly infinite, and audiences continue fragmenting.

This means the majority of funding for start-up digital journalism must come from elsewhere and online news sites—especially start-ups—are having mixed success trying to construct multiple revenue streams from philanthropy, memberships, events, consulting services, and payment systems. Both large legacy news organizations that dominate provision of news in the digital space and free automated aggregators are hampering efforts of small sites to develop audiences. The primary successes that can be observed have been for start-ups carrying out special forms of journalism or concentrating on highly specific topics.

The answer to sustainability may not lie in the business creation and business operational approach. The key to making emergent digital news providers sustainable may lie in the 18th and 19th century approaches to journalism, in which journalism was an avocation and not a profession (or at least only a part-time profession).

If one reviews the history of newspaper start-ups around the world, one finds that the bases of journalistic compensation were not journalism itself. It many cases it was funded by public employment—serving as postmasters, teachers, or other civil servants—or by operating commercial endeavours—such as printing firms, taverns, and retail shops (Even brothels funded the costs of newspapers in some towns in the Western U.S. during the nineteenth century).

The current inability to effectively fund small-scale digital journalism means that we all need to be thinking more broadly about how we can support the functions and people involved in them. If the past is a guide, we may need to return to provision of local journalism as community activism, political activity, or business support service—all of which played significant roles in establishment of news provision in years past.

Beyond the Human Resource Function: What Lies Ahead?

An increasingly common theme in Human Resource (HR) literature in the 1990's concerns how the HR Department can make a greater contribution to the success of the business it serves. To do so, we must first change our view of the Human Resource role as being only executable within a traditional "Department." We must view HR more as a "function," or "a set of activities," than as a department. While HR services may not be delivered in the future via what we know as a Department, they must be delivered in some way. This article is about the realm of possibilities.

The HR Function Today

Today the HR Department is in a transitional phase. Some organizations have long ago realized that the HR Department can make a greater difference. Others need convincing. A positive trend seems to be developing, as evidenced in publications of the Human Resource professional's accrediting organization, the Society for Human Resource Management, (e.g. see HR Magazine, 11/98). Chief Executive Officers are increasingly viewing the HR function as an actual or potential "strategic business partner." This is encouraging, for as recently as the early 1990's the notion of the HR function as a strategic partner would have been quite novel.

To understand where the HR function is going, it is helpful to briefly review its past.

WHERE HR CAME FROM

In the first half of the 20th century, the Human Resource function grew out of the Payroll function. The remnants of this can be seen in companies that retain the responsibility for payroll processing within the HR Department. Today, the payroll function can often be found in the Controller's functional area.

This new entity then became known as the "Personnel Department." It was responsible for those duties that, quite frankly, didn't seem to fit anywhere else, such as overseeing the employment process. Unlike later iterations, the Personnel Department was not concerned with strategic recruiting and selection. Its goal was simply to hire people to fill "jobs," a 20th century creation. This emphasis explains how, even today, many people think of the Personnel Department as simply "the Department that hires people." So engrained is this idea that, even in surveys of HR practitioners that we conduct today, many of them still define the main purpose of the HR Department as being "the employment of people." Of course, it is true that in many of their companies, hiring people still is their main focus and purpose.

Since its inception, the HR Department has gone through a number of transformations, as depicted in Figure 1. During the 1970's and 1980's as it sought a new identity. These changes attempted to reposition the function as the guardian of employee relations and a provider of services.

The Evolution of the Human Resource Department:

- Payroll
- Payroll/Personnel Department
- Personnel Department
- Employee Services Department
- Human Relations Department
- Employee and/or Labor Relations Department
- Personnel Relations Department
- Human Resource Department
- Human Assets Department
- Human Capital Department
- Human Systems Department

In terms of the evolution of Management, this change had its origins in the "Human Relations" and "Human Resource" Movements of prior decades. The core notion of these movements was that organizations should proactively establish closer links with its employees to create the perception of, if not an actual concern for, employees, because of the employees' potential to disrupt organizations when "relations" became unstable.

This era was also the beginning of the "employee involvement" movement and strategy. Employees became more increasingly engaged in decisionmaking that affected them. Progressive companies increasingly realized that employees who did the work, knew the work best. To gain greater acceptance of change, it was best to involve employees whose lives would be affected by the change. Human Resource professionals became "Employee Relations Counselors" and had the responsibility of bridging, establishing and maintaining a stable relationship between the employer and its employees.

Eventually, the notions of the HR function as the Personnel Department and the Employee Relations Department gave way to a new notion: the idea of employees as organizational "resources" to be valued. Thus was born the "Human Resource Department."

Structurally, the Department did not change very much. The various sub-functions of Employment, Compensation, Training, and others remained. But the connotation of employees as "resources" permitted the HR Department to be viewed as something more than just a hiring function or as a mere provider of counseling and other services to employees. It suggested that the HR function recognized that humans as resources could be valued, served, recognized and "invested in," in ways which could increase their value to the company.

It was the start of what would later emerge as "Human Capital" theory. This theory holds that, through training and education, an investment in people will provide a "return" to the company in the form of greater innovation and/or productivity. We see this final transition represented in Figure 1 by several newly conceptualized titles, including "Human Systems" and "Human Assets" Departments. Human Systems, for example, refers to the potential involvement of the HR practitioner in any human system within the company, be it a pay system, a sociotechnical system, a team-based systems or others requiring the internal consultation of the HR professional. Their contribution is tied more closely to the strategic nature of the business and the impact can therefore be even greater than that which was possible within the traditional HR Department.

WHERE IS HR TODAY?

Where is the HR function today? In an increasing number of companies, HR services are being delivered in new ways. In others, the HR Department resembles the same function and structure used in the 1960's.

Fortunately, we are seeing long overdue change. The change is prompted by how organizations of the 1990's need to be or demand to be serviced. For some, this means being a full-fledged strategic partner in the business. For others, it simply means being utilized as something more than a mere hiring or administrative function.

Change is also affecting the name of the emerging HR function. As depicted in Figure 1, the HR function in some companies is becoming the "Human Capital," "Human Systems" or "Human Asset" Department. These names suggest the need to invest in human capital or human assets, as well as to evaluate how people are integrated in various organizational systems. Being new, these names may be better thought of as part of HR's future.

The Effect of Cross-Functionalization

Specifically, how are HR services being delivered today? Certainly, functional structures are still in use, with their traditionally separate specialty areas such as Employment, Compensation, Training, and others. However, as "team-based," "lateral," "cross-functional," or "matrix" organizations (choose a name) proliferate, the HR function has adapted. It is increasingly common to see a cross-functional HR representative assigned to other functional areas to provide general, ongoing HR services to that area, team, or group.

A more radical approach for the delivery of HR services is one in which it is understood that the HR representative is more strongly aligned with the assigned functional area than to the traditional HR Department. The difference is one of emphasis. While this is happening now, this structure could be considered more of a model for the future.

Unfortunately, this structure sometimes creates a split allegiance for the HR professional. Internal conflict increases under this model both within and across the HR functional representatives because the HR representative can become more emotionally tied to the assigned function than to the central HR function.

The Trend Toward Generalists

The trend toward the use of more HR generalists and fewer specialists also continues. This is an outgrowth of downsized organizations and the "do more with less" philosophy of the 1990's. Thus, the makeup of HR Departments reflects this demand, increasing the use of generalists who can "do it all." Some companies complement this approach with specialists, such as Compensation Specialists, for example, who are called upon as needed to serve the entire company in an internal consulting capacity. Company size also impacts the ratio of generalists to specialists. The larger the company, the more likely it is that it will create specialist positions.

Shared Services Model

Another current model gaining increased attention is the delivery of HR services via a "shared services" model. This is a centralized model in which HR specialists and generalists deliver services to the entire company on an as-needed basis, charged to the functional area served.

The central HR function also can perform normal or expected services such as administrative services (somebody has to do it!) on behalf of the company. These may be free to specific functions or the costs may be distributed over all functions.

The shared services model creates a more positive image for the HR Department as an internal consulting function rather than an administrative function, or in the other, less attractive ways the function has been traditionally viewed. A disadvantage of this approach can be the reluctance of other functions to utilize services for which they will be charged. An HR function operating in this environment would be wise to internally market its services to, or "partner" with, other functions.

WHERE IS HR GOING?

The future will be an interesting time for the Human Resource function. As one HR consultant observed (ACA Journal, Spring 1997), a review of the debates in the national business media might lead one to conclude that the future HR Department will be "a fraction of its size, with the remaining activities pushed up (to the CEO), down (to line management), out (to vendors and consultants) and in (to technology)."

Will it continue to exist, but as a smaller entity? Will it become functionally stronger, gaining greater acceptance, meaning and value in organizations where it serves? Or will its duties remain but be delivered in other forms?

Here are some of the more radical possibilities.

The Devolution of the HR Department

One scenario has the HR function being "devoluted" (i.e. de-evolved), with its tasks being redistributed or incorporated into other functional areas. Thus, managers in what once were the "customer" areas served by HR take on HR functions such as employment, compensation, counseling, and many more.

This envisioned future is disconcerting to HR professionals. A common reaction is that the supervisors and managers of other functional areas do not possess the HR professional's knowledge, gained over a long period of time about matters such as discrimination law, dispute resolution, pay strategy, administrative requirements, designing and presenting training programs, and many other responsibilities resident within HR Departments. A major concern is that this lack of knowledge on the part of the receiving function about compliance law will result in financial damage to the company, in the form of fines and penalties.

In fact, the belief that the HR function can be devoluted can be a serious misconception. From the general HR literature, it appears that non-HR professionals, including Executives, sometimes minimize the value of the HR function. Consequently, they conclude that absorbing its responsibilities will be relatively easy. This is a very dangerous assumption. One reason why an absorption of duties does not work is the time demands placed upon the absorbing functions and individuals. Whether the HR role is one capable of absorption or not, time constraints prohibit its successful and timely execution.

Thus, the thinking about the HR function's role and importance comes full circle. It is a unique function with unique preparatory requirements. In another irony of perspective concerning the absorption of the HR function, it is interesting to observe how commonly companies assign the HR function to the Financial function, but never the converse! In fact, both functions should be viewed as different, unique and, above all, separate.

Human Systems Management

Another scenario for the HR function's future is a movement toward "Human Systems Management." As briefly defined earlier, this is the management of human systems, or any organizational system in which the role, impact and reaction of the human element is of primary importance.

Human Systems Management encompasses much of what Human Resource Management has become, and more. In it, the HR function is re-creating, redefining, and essentially retuning for the Post-Modern and Information Ages. The system may be exclusively human (e.g. the process of team building) or sociotechnical (i.e. the interaction of people and technology). It may involve the redesign of work or the design of new pay systems to improve employee satisfaction and organizational performance. The key element is the human element. The desired outcome is twofold: improved individual and organizational performance.

In this HR future, we move away from the view of HR as a functional area and redefine it in terms of its internal consulting capabilities. Yet it still permits the HR function to fulfill a role we have come to expect, namely, to provide services which do not fit neatly into the roles of other functions. It is that "crossover" activity, in which the business' operations must be understood and combined with the special expertise that HR professionals possess, including knowledge of organizational behavior, organizational theory, organizational development, and human resource management. Human Systems Management thinking recognizes that the HR professional has a unique view of the organization, and serves to capitalize upon it.

Shared Services Model

The Shared Services Model has become an increasingly popular model of HR Department design, and, as previously described, could be considered as a current design. What makes it more of a future model at this time, however, is its relative lack of implementation. Practitioners are still working out the organizational issues it creates, and discovering its usefulness.

In this model the HR Department acts as a kind of "central consulting organization" and, sometimes, even becomes a "profit center,."" charging its services to other departments as its services are retained by them. While the traditional HR Department can provide consulting services out of its historically common structure, the consulting relationship is more formal in the shared services model. It is not the "old" HR Department redefining itself as internal consultants. Rather, it is a formal re-introduction of HR into the company as a functional area with a newly defined mission. This mission is to provide HR consulting services as requested for a fee.

While it may not actually be profitable as a profit center, it is an intriguing way to assess the organization's need for HR services. If one believes that the HR function can act like a strategic partner, how often are we afforded the opportunity to prove it? Do others see HR as being a mutually useful and beneficial partner in order to achieve their business objectives? Being organized in a Shared Services Model will give you the answer quickly.

Outsourcing

An increasingly popular model today is outsourcing, which permits the HR function to rid itself of activities that can often be performed by others more effectively or economically. In other cases, outsourcing simply permits the HR function to turn its attention to other, more important matters.

It would be easy to view the use of outsourcing as a current phenomenon, not as something that will occur in the future. However, a growing change in the outsourcing strategies of companies is to move beyond the simple outsourcing of administrative tasks and into the realm of professional services like compensation program management and maintenance activities. For example, third parties may be used to maintain a company's job descriptions. This is important and useful because this activity is normally a time-consuming responsibility that is often avoided internally. Third parties/consultants also can design and implement training and development programs, as well as conduct audits (e.g. pay program audits, retention audits, skill audits, etc.).

We have always outsourced a number of HR activities. These include contingent/retained recruiters, benefits administration, and training and development programs to some extent. What has changed? Specifically, it is the expansion of the activities that we are willing to outsource, spurred by the new rationale for outsourcing more HR activities: namely, that we are recognizing that the HR role can be performed much more effectively in other ways. We are moving away from the "administrative, service and control" HR model and toward the "strategic partner" HR model, and extensions of it. When we can lighten the load of HR functions in order to address more meaningful challenges, we are increasing our worth and value to our organizations. Outsourcing helps us to achieve this.

Environmental Scanning

This is, perhaps, the most unusual possible course of action for HR Department design in the future. Scanning refers to the monitoring of activities in the company's external environment. Scanning activities have been part of the HR Department's role for quite some time. For example, Compensation Departments are responsible for conducting pay surveys to gather external marketplace data. The HR Department also scans governmental activity to monitor changes in laws which affect the management of people. Employment Managers monitor demographic changes in the workforce to establish recruitment strategies.

The suggestion, therefore, is that the HR Department become the entity which is responsible for those and other scanning activities, some of which may now be performed by other functional areas, such as Marketing which is responsible for market research, or for outsourcing tasks (once again, to the "outside" of the company).

The possibilities are endless but require very different thinking about the tasks of different departments and a willingness to centralize them under the new entity. Like any other cross-functional redesign effort, a "natural work group" of tasks (i.e. a combined task group that makes sense) would need to be assembled to make this vision a reality. Not all external scanning possibilities would make sense for grouping in a department that, in the end, may have a name other than the Human Resource Department. It could be called the "Environmental Monitoring" Department, as one of many possibilities. Whatever its name, the core concept is that what happens on the outside of our companies is important and worth researching, or simply, good "strategic management."

CONCLUSION

Ask someone to quickly define the purpose of an HR Department and you'll receive some interesting answers, from both practitioners and non-practitioners alike. The diversity of their answers reflects the uniqueness of the HR function.

We seemingly can't live with the HR function, nor without it. It is becoming something more than it has been historically, and yet it faces the prospect of further evolutionary change. Different methods of service delivery will be seen in different companies. The demand for services will differ depending upon the company and its view of the role and purpose of the HR function.

I believe it is safe to say that the HR function can be "something more" than it has been in many companies. In some, HR has already demonstrated how valuable its contribution can be. In others, it continues to provide only administrative support. Perhaps the solution rests in what the contract will be between the HR function and the organization it serves. What does the organization want HR to be?

We see the potential emergence of the HR function as a "hybrid" structure, consisting of the valuable parts of its past, but combined with new services and approaches aimed at supporting the new business entities and thinking that have emerged in the last fifteen years. For example, the training and development of human assets has now become just as important to the managers of Manufacturing, Engineering, and other functional areas, as it has always been to the HR professional. This convergence of thought provides new opportunities to the HR professional to serve in ways which are increasingly valuable and meaningful to supported functions.

How to Boost Employee Morale

he new year is a time for personal resolutions and goals, but it does not have to be all about the personal aspect. It is also a great idea to make resolutions and goals for your business and professional pursuits. As you know, your employees are essential to the everyday livelihood of your business. That's why one of your goals should be to show your appreciation to all of those that make your professional and business goals a reality. Here are three simple ways to show your employees that you appreciate all their hard work, dedication, and loyalty:

New Year Bonuses or Raises - Starting out the New Year with a bonus or a small raise can really boost employee morale. It shows that you appreciate the work they do and that they're a vital part of your ever-growing company. The bonuses or raises don't have to be a substantial amount that will stress your company's finances, but it should be enough to show your appreciation. If you don't have the money to give bonuses or raises, there are other ways to give your employees a little something extra. You could opt for paid time off, switch to a better dental plan, or begin casual Fridays at the office.

Team-Building Exercises - This may seem corny and lame, but team-building exercises really can work, if executed properly. Which team-building exercises you choose should be dependent on your exact situation, the nature of your company, and your end goals and expectations. You could do anything from trust exercises to a company day at the bowling alley or movie theater. It could even be a lunch hour spent playing guitar hero or some other interactive activity.

Catered Event - An easy and convenient way to showcase your appreciation is to cater a company event or get-together. Everyone loves free food, especially when the food is delicious! Search online for a local catering company. Finding the right catering company, for instance, will be quite simple. Now, this catered event doesn't have to be expansive. It can be a catered lunch for employees or a dinner for employees and guests.

Showing your appreciation and building employee morale are two essential parts to a successful business. Not to mention, it's crucial to develop healthy, honest, and appreciative relationships with employees. This can encourage your employees to stay with your company and choose it as their careers. And that benefits all involved parties.

How Pay Raises Lower Employee Morale

As the economy looks like it might be improving, more employers are thinking about giving raises to their employees. While employers say that telling an employee he's getting a raise is one of the most satisfying parts of being in charge, this act could actually result in an employee uprising if not done properly.

How? Let's say that you have not given any raises over the past year and now you choose to give raises.

There are two basic ways to give raises: (1) You give them to a few of your most important employees; or (2) You give them to all your employees.

1. Raises for a select few:

When you sit down with your most important employees to tell them they are getting a raise, you may be surprised when the employees are not as excited as you thought they would be.

Employees may think that any raises will be a catch-up for not receiving a raise the previous year. The way in which you bring up the subject of raises and how you let your employees know of their importance to your business is vital. It is also critical to give them the biggest raise possible.

Even if you manage to handle the conversation correctly and the employee leaves the discussion happy, you are still not out of the woods.

Though you probably told the employee to keep their raise a secret, the information will still get out. Count on it. This is where most managers get blindsided. They are not prepared for the backlash.

Be ready to sit down with any employee who brings up the subject. Focus only on the employee to whom you are speaking and on how he can improve his performance to get a raise in the future.

Never let an employee compare himself to another employee, which is the biggest trap ever.

Depending on your company culture, it may even be a better strategy to address your entire team prior to giving select raises and acknowledge the entire situation. While the employees who are not getting raises won't be happier, it will take the pressure off of your best employees and reduce the gossip around the subject.

2. Raises for all your employees:

The second way is to give raises to everyone. While this way appears to be easiest, it sometimes causes the biggest damage to employee morale.

Businesses often use the "peanut butter spread" method where everyone gets the same raise regardless of his performance or importance to the business. Your best performers absolutely hate this technique. They don't want to see their hard work ignored while their lazy coworkers get the same reward as them.

Again, managers should assume that regardless of any policies or warnings they give, everyone will know everyone else's raise amount.

In this economy, how you handle your raises can drastically affect employee morale and performance but more importantly, it could cause you to lose your best employees. Make sure to make your decisions consistent with your company culture.