Implications of the "Incoterms" in international import & export

Communication is crucial in international import & export, where both buyers and sellers are located a long way away, there’s every chance of misunderstanding in the interpretation of various terms used in contracts and agreements. These confusions and misapprehensions can cost one or both parties, dearly. What sounds pretty simple and straight-forward to a buyer sitting in United States, could turn out to be a perplexing one for the seller in China.

This problem continued to exist and resulted in many mix-ups and losses until the International Chamber of Commerce set down “Incoterms”, which is a set of 13 terms, referred as

1. EX-Works
2. FOB (Free On Board)
3. FCA (Free Carrier)
4. FAS (Free Alongside Ship)
5. CFR (Cost and Freight)
6. CIF (Cost, Insurance & Freight)
7. CPT (Carriage Paid to)
8. CIP (Carriage and Insurance Paid to)
9. DAF (Delivered at Frontier)
10. DES (Delivered Ex Ship)
11. DEQ (Delivered Ex Quay)
12. DDU (Delivered Duty Unpaid)
13. DDP (Delivered Duty Paid)

Businesses can choose any of these 13 terms according to their own needs and requirements. For example, "Ex-works" inflict the minimum liability for seller; on the other hand "Delivered Duty Paid" makes it obligatory for the seller to arrange for almost everything including export duty expenses, loading and unloading expenses, landing charges, transportation, insurance and custom clearance. Incoterms are not applicable to all aspects of trade, however they do standardize most of the terms used in international trade. For example, they spell out the terms of delivery in detail, and establish the responsibilities for buyers and sellers as to who will bear the expenses of insurance, clearance or various other taxes. Another important implication of "Incoterms" is the reduction (or removal) of uncertainty about the transfer of risk.

As an exporter or importer, you need to spend some time on understanding each of these 13 "Incoterms" and their explanations given on the official website of "International Chamber of Commerce". Each of them is an agreement in essence, with predetermined terms and condition, for that reason each of them has got different advantages and disadvantages. After a careful study, maybe you can underline the best ones and then stress on using that particular Incoterms when getting into an agreement with some buyer or seller. Incoterms are acknowledged all over the world (by courts, governments, etc); therefore a good comprehension of all of these terms is a must for all international exporters. Remember, ICC keep making minor changes (not very often though), it's important to keep a track of these modifications.

How to deal with employee's high turnover rate

Turnover rate is the ratio of employees leaving the company (or some specific industry) in a given period. A company or industry has high turnover rate when the workers of that company tend to ditch their jobs more often than the employees of other companies (in the same industry). Some industries and jobs have high turnover rates because of the nature of work, however if your company has a high turnover rate than your competitor and you are not able to sustain your employees with you, there maybe something wrong with your policies. In case you don’t pay attention, not only you will be loosing your good employees to your competitors, your business will also suffer from high costs of attracting, recruiting and training the new staff.

Atmosphere and working conditions:
At certain workplaces, you will feel the tense atmosphere as soon as you put your feet in, reason can be strict management or unrealistic targets. Being a manager, it is necessary to maintain some discipline but some managers overdo it by importing rules straight from the books of military. For many individuals (especially fresh graduates) it becomes really hard to adjust in this kind of atmosphere.

Working conditions are linked with health related issues. Light, ventilation, air conditioning, heating systems and safety measures are some of the basic requisites. Sometimes, improving your high turnover can be as simple as loosening up some rules or dealing with some unhealthy environment issues.

Salary & Growth Opportunities:
Excessive work, no incentives and low salaries, these are all grounds for a high turnover rate. Employees are here to earn, and their morale is directly related to their income. If you are expecting them to give their 100 %, you should be giving back in form of good enough salaries. Your salary packages should be competitive if not the best in market. A good salary package will make up for many other factors, but if the salaries are low from the market standards, nothing can hold the employees for long. Similarly, motivating employees by providing growth opportunities is also necessary.

Choosing the right candidate and the nature of the work:
If your recruitment and hiring process is flawed, you are destined to have a high turnover. Many small businesses, in a hurry to fill out vacant positions, hire some unskilled individuals, thinking that he/she will learn the traits with the passage of time. Such hiring is nothing but wastage of time, both for employee and employer. The interviewee should have complete knowledge of the skills required for some particular job, and the successful candidate must be having most of them, if not all.

Sometimes the reason for high turnover is the nature of work, for example the jobs that require night shifts or excessive late sittings. These types of jobs are not suitable for everyone; hence turnover rates are often high in such jobs. These are just some of reasons, apart from looking into these areas; you can communicate with your employees to get the idea if they are having any reservations.

How important are Performance Appraisals

There may be a huge difference between the performances of two employees, even when their qualifications or all other variables are same. Reason can be the difference in their dedication, commitment or personal traits. Quite obviously, the one who put more effort, more time or more commitment, for the growth of business than his/her counterparts, should be getting some extra reward for that. A timely salary increment or promotion for the best employee is not only an encouragement for the frontrunner; it also motivates others to work harder. If you don't come up with any kind of bonuses or rewards, it won't take long before you see a drop in that employee's performance graph too. Also, performance appraisals are essentials to keep a track of your overall business performance and figure out the deficiencies.

It may sound quite simple to choose the best contributing worker and hand him the reward. In reality, performance appraisals are something that needs lots of planning and careful thinking. Sure, it brings the sense of competition in your workforce, but the evaluations will also attract lots of puckered brows and objections. A flawed performance appraisal will go as far as completely shattering employee's confidence or loyalty towards your company. Bottom-line … don't take it lightly; you need to be extra cautious and fair when planning and implementing some performance appraisal program.

Guidelines for performance appraisal system:
Performance appraisal systems are based on some ranking or scaling criteria. Ideally, the judgment should be made with the help of statistics, along with the feedback coming from managers, coordinates and peers. Assessment criteria must be uncomplicated and easily available to everybody. Give them a transparent review system, where employees can judge themselves against their fellow workers, at any given time. Monitor the performance on regular basis instead of waiting for the month end before you go through the evaluation process. Don't try to stuff your performance appraisal plan with too many attributes and benchmarks, keep the requirements simple and easy to comprehend.

Performance appraisal Meetings:
The most important part of performance appraisal is to communicate with employees and discuss their overall performance. Don't discuss anybody's problem or dismal performance in front of his/her colleagues. Also, don't ignore past performances when judging an employee, if the worker has constantly been performing well except the present month, ask for the reason, especially if something is bothering him/her at workplace. Keep in mind the main objective of performance appraisal i.e. to encourage and motivate your employees, not to mark their short comings or hurt somebody's feelings.

Decorating your office - the right way

Office design and decoration plays an important role in the overall environment of the office, by the same token the overall environment plays an imperative role in the productivity of the company. Hence, a professional and pleasant looking office is as important as anything in your business success. Remember, you need to maintain a balance in all aspects when trying to decorate your office. For example, employer's comfort is vital but not to an extent that they start getting drowsy or lethargic in the working space. Similarly, it's good to try and make your office a fun place to be but it should not be giving an impression of some discothèque. Here are some important considerations for workplace setting and decoration.

'Light' Delights:
Surprisingly, light has been treated as an addendum when planning for your workplace. Whereas proper lighting at workplace is supposed to be your first priority, because that is where you spend most of your time. Bad lighting will harm your mental and physical health; in addition to this it may have a negative impact on your productivity. Excessive use of computers has made it so important that hiring some lighting expert is not a bad idea if you are not good with lighting standards or requirements. Ideal lighting arrangement should give your working space a feel of comfort and openness.

Comfortable Furniture:
Do some planning before going out to purchase your office furniture, so that you have a clear picture of the furniture that is fitting for your office space, this will save you from buying some needless fixtures. A chair or table that looks classy at furniture shop can turn out to be extremely inappropriate when placed in your office settings. Don't go for the looks, price or designs, comfort should be the main concern. You can go and talk to some sales person at furniture store, tell them your requirements and they'd show you the right piece of furniture.

Right colors for the Right mood:
Even before we had these research works, we knew that some colors have kind of soothing effect on our nerves; on the contrary some colors are quite stimulating. It means that using the right blend of colors, when painting your office walls can bring forth the right set of feelings in you and your staff. It's better to use different colors in different sections, like using neutral colors at workplace and cool colors at recreation room.

Coping with the workforce diversity for manager

Workforce diversity is often considered a characteristic of large corporations, with considerably large pool of employees; however workforce diversity is not limited to just large companies. If we go by the definition, any business having two or more than two employees coming from different age groups, ethnic backgrounds, religious sectors, race or gender, etc is basically having a diverse workforce. Sometimes the differences are trivial and hard to notice, sometimes quite flagrant.

Workforce diversity is not something to be wary of, even if it requires a little bit more planning and thinking at manager's end, because it brings so many different perspectives and thought patterns to the organization, hence a diverse workforce is more of a plus than minus for businesses. A diverse workforce results in a more flexible and innovative business. That is why, there's no need to panic, if you find yourself managing a multitalented workforce. Wasting your time in planning to avoid people coming from difference age groups, gender or religious backgrounds is not only a discriminatory practice, but also a bad management decision. By doing this, you are closing your doors to a more versatile workforce, which is more capable of dealing with challenges.

Do's:
First of all, you need to accept diversity and allow your employees to carry and develop their own unique personalities (as long as it doesn't clash with office discipline and business objectives). It comes handy during the process of decision making and business meetings, where some sort of brain storming is needed. A group that consists of managers or attendees with similar ages, genders or experiences is more likely to miss out some noteworthy aspects, which a more diverse group can easily point out. As a manager, you must make use of the diversity when making some important decisions like finalizing a project, making appraisal plans or launching a new business.

Dont's:
Never go over the top with your efforts to eradicate individuality from the work place, with the intention of developing a more standardized workforce. By doing this, you may end up killing the creativity of your staff, a business having no originality or inventiveness can never reach its true potential. Take the example of this world, despite of so many disasters and challenges; this world continues to exist so far because of its diversity. To manage a diverse workforce efficiently, a manager should be having excellent communication skills and an understanding of human behaviors.