Monday, 22 July 2002 09:52

Perspective

Since we’re going to hear and read this fall lots of propaganda about the pluses and minuses of federal tax cuts, we should remain mindful of several important facts.

First, Congress has already locked up $2 trillion of the next decade’s projected $2.9 trillion federal budget surplus to assure long-range financial stability for Social Security and Medicare. The tax cut debate is not about protecting Social Security or Medicare. The needed funds are set aside in a statutory “lock-box” that ensures it will not be spent on other programs or used for tax reductions.

Second, $2 trillion for Social Security and Medicare will allow the U.S. Treasury to reduce federal debt and restructuring of remaining borrowing at more advantageous terms. This is happening already.

Third, if Social Security and Medicare are assured, one of three things will happen to the predicted $900 billion additional federal surplus: (1) It will be spent by the federal government; (2) It will be returned to taxpayers; or (c) It will disappear because the economy slows.

About (1), note that the current fiscal year’s actual surplus — about $87 billion — has already been soaked up by additional federal spending. This is to be expected. Congress and the White House will find ways to spend every available nickel of any surplus.

About (2), several years of strong economic growth and the federal budget surplus itself owe themselves to American workers’ and businesses’ steadily increasing productivity. Is a reward for this hard work appropriate? Wouldn’t the right reward be one that would also bolster growth and productivity gains?

Finally, if the last scenario kicks in, the disappearance of projected surpluses would affect the $2 trillion set aside for Social Security and Medicare.

This brings us to the fundamental question: Do we think the economy will be more likely to thrive because the federal government spends $900 billion more over the next decade, or because Americans get a large tax refund?

Federal Reserve Chairman Alan Greenspan says the worst economic option is for Congress and the White House to spend federal budget surpluses. Unless there is a tax cut this year, you can bet the ranch and the dog that every single penny of the next decade’s predicted surpluses (and probably more) will be “disappeared” by this time next year.

Cliff Shannon is president of SMC Business Councils. Reach him at (412) 371-1500.

Published in Pittsburgh
Monday, 22 July 2002 09:52

Getting you globally

A profusion of often conflicting state and federal court rulings leaves a company with a Web site vulnerable to having to defend itself in court anywhere, even in a place it may have done little or no business — and even if no evidence exists that anyone there saw the Web site.

For now, the way a business uses the Internet affects how likely it is to be sued. Consider the following:

Companies that use Web sites primarily for advertising won’t likely be sued in a given location unless that advertising is coupled with more traditional contacts in that location.

For companies that use the Internet to facilitate sales, the chances of lawsuits in distant places will increase in proportion to their customer base.

Those operating largely on the Internet, providing essentially electronic products or services online, should expect to be subject to jurisdiction anywhere on the globe unless they specifically restrict access from places where they want to avoid being sued.

A business thinking about venturing into e-commerce can minimize the risk of exposure to litigation far from its home base by consulting its attorney.

Mark A. Willard

No benefits for unmarried heterosexual live-ins

According to a recent ruling by a federal court in New York, a company offering benefits to unmarried same-sex domestic partners but denying them to unmarried heterosexuals does not violate civil rights law.

In Foray v. Bell Atlantic, a male employee sued the telephone company for sex discrimination when it denied benefits to his live-in girlfriend. He argued that, if he were female, his female live-in partner would be entitled to benefits. Thus, he was a victim of gender discrimination.

The court ruled that his claim under Title VII of the Civil Rights Act of 1964 was invalid because the company did not treat him differently from a “similarly situated” person of the opposite sex, i.e., a woman with a live-in boyfriend. A woman with a female domestic partner, the court reasoned, is differently situated from the male employee because, unlike the male employee, she cannot legally marry her partner.

Foray v. Bell Atlantic provides further support for employers who wish to extend to employees with same-sex domestic partners those benefits which traditionally have been offered only to married employees.

William E. Adams

Good intentions count in discrimination cases

The U.S. Supreme Court has ruled that employers cannot be forced to pay punitive damages in discrimination suits if a manager’s discriminatory behavior runs counter to the employer’s good-faith efforts to comply with the law and run a bias-free workplace.

In Kolstad v. American Dental Association, a female employee sued her employer for sex discrimination after being denied a promotion. Although the trial court ruled that she was the victim of discrimination and awarded her back salary, the trial judge refused to consider punitive damages because she had not shown that her employer’s conduct was “egregious,” as required by the Civil Rights Act of 1964.

The court of appeals affirmed the trial court’s decision, holding that Title VII of the Civil Rights Act of 1964 requires a showing of egregious conduct. The Supreme Court rejected the appeals court’s ruling, holding instead that the employee must prove only that the employer acted with “malice or reckless indifference to the employee’s federally protected rights.”

However, it also gave well-intentioned employers a break, stating that an employer will not have to pay punitive damages for a manager’s discriminatory conduct when such conduct is “contrary to the employer’s good-faith efforts” to comply with Title VII. An employer’s “good-faith efforts” may be demonstrated, for example, by an employer’s implementation and enforcement of anti-discrimination policies, including education of all personnel on Title VII’s prohibitions.

All employers, therefore, should, at a minimum, adopt and distribute to all employees a clear policy against discrimination which includes a procedure for complaining about discrimination.

William E. Adams

Harassment liability guidelines

In June 1998, the U.S. Supreme Court issued two important decisions which held that employers will be liable for sexual harassment by supervisors resulting in a “tangible employment action” (e.g., termination, failure to promote, undesirable reassignment) unless they can prove that 1) they exercised reasonable care to prevent and promptly correct any harassing behavior; and 2) the employees unreasonably failed to take advantage of preventive or corrective opportunities provided by the employers or failed to otherwise avoid harm.

In the wake of these landmark decisions, the Equal Employment Opportunity Commission has issued guidance that provides its interpretation of the Supreme Court’s decisions and how it will apply those decisions to its investigations of harassment charges. The EEOC clarified that the rule regarding employer liability for a supervisor’s harassment applies not only to sexual harassment, but also to harassment based on race, religion, national origin, age or disability.

The EEOC suggests the following measures as reasonable action to prevent and correct harassment:

  • Have a written policy prohibiting harassment of any kind and disseminate it to all employees.

  • Have an effective complaint procedure that provides more than one person with whom to lodge complaints and assures employees that no adverse action will be taken against an employee for making a good-faith complaint.

  • Conduct harassment training for all employees once a year.

  • Investigate complaints or other evidence of harassment promptly and thoroughly and document the investigation.

  • Take immediate and effective corrective action when a complaint is substantiated and follow up with the victim to establish that the problem has been remedied.

Businesses might not have to implement a formal complaint procedure as long as they have effective informal mechanisms to prevent and correct harassment. Regular staff meetings where anti-harassment policies and procedures are discussed might qualify as such a mechanism. Employers should nevertheless be sure they document such meetings, including the date, attendees and subjects discussed.

William E. Adams

Cash options and overtime pay rates

A recent decision by the Federal District Court in the Eastern District of Pennsylvania has raised significant concerns regarding the calculation of overtime pay for those employers who maintain a cafeteria benefit plan under which employees can elect to receive cash.

In Madison v. Resources for Human Development, Inc., the court held that, because of the cash option, the company’s cafeteria plan was not a “bona fide” plan, and therefore, an employee’s regular rate of pay must include contributions made by the employer to the cafeteria plan, regardless of whether the employee selects the cash option.

For such a plan to be bona fide, the cash option must be:

  • An incidental part of the plan;

  • Available under circumstances specified in the plan;

  • Consistent with the purpose of the plan in providing benefits;

    If your cafeteria plan contains an option to receive cash in lieu of benefits, discuss the implications of the Madison case with your attorney.

Paul M. Yenerall

Look, regulators, no paper...

The U.S. Internal Revenue Service and Department of Labor have issued proposed regulations on the use of electronic media in administering employee benefit plans. The regulations permit electronic delivery of certain notices and distributions to employees and set minimum standards for benefit records maintenan ce and retention.

The regulations require that the electronic media:

  • Be reasonably accessible;

  • Be no less understandable than the paper documents they replace;

  • State that a paper version of the document is available on request.

    The proposed regulations are effective the first day of the first plan year beginning on or after June 18, 1999. Plan sponsors and administrators may rely on the proposed regulations until the final ones are issued.

Paperless administration promises considerable cost savings for businesses; it will speed completion of transactions and make record keeping easier and more efficient. Business owners should keep in mind that both federal agencies continue to require that certain documents be distributed and maintained in paper form.

Paul M. Yenerall

You can suspend workers’ comp. payments

The US Supreme Court has affirmed the constitutionality of the 1993 amendment to Pennsylvania’s Workers’ Compensation Act, which allows insurers to suspend payments for medical treatment during an independent “utilization review” to determine if the treatment provided to an employee is reasonable and necessary.

In American Manufacturers Mutual Insurance Company v. Sullivan, employees of a school district sued state officials, the school district, and private workers’ compensation insurers. The employees’ claim, brought under 42 USC 1983 alleged that the Act’s “utilization review” procedure guaranteed by the law deprived them of property (i.e., medical treatment) without due process under the Constitution because they did not receive notice, nor were they given an opportunity to present their side, before payment was suspended.

The court disagreed, holding that employees are entitled not to all medical treatment once the employer’s initial liability is established, but only to reasonable and necessary treatment. The court held that an employer is not obligated to pay for employees’ medical treatment until the reasonableness and necessity of the treatment have been established.

The Supreme Court, consequently, has left in place a mechanism intended to help Pennsylvania employers control burgeoning insurance costs.

James G. Seaman

Law Briefs is written by attorneys from Eckert, Seamans, Cherin and Mellott, LLC, a national law firm based in Pittsburgh.

Published in Pittsburgh
Monday, 22 July 2002 09:52

No excuses

Karl Insani distinctly remembers Ross Products’ 1993 sales awards ceremony.

The then-vice president of sales for the Columbus-based company was master of ceremonies at the San Diego event. Insani wasn’t feeling well that day, so he took a breather after rehearsals while his crew set things up.

He skipped dinner, then returned in his tuxedo ready to make the presentations.

“I went to the preparation area to go on stage, and I was just in a corner of the room by myself and slithered down to the ground,” Insani says. “That was it; and the next thing I knew there were people trying to carry me.”

Insani had suffered a heart attack and was taken to a nearby heart hospital before he was transferred home to Grant Medical Center to continue his recovery.

Insani had never had heart trouble before.

He’d also never had an exercise regimen.

It was no surprise, then, that less than a month into his rehabilitation program at Grant, he wasn’t making much progress.

“Of course I felt like I was the world’s biggest wimp and had not given any thought at all to going into a physical exercise program,” he says. But when a nurse recommended intensive one-on-one training, he agreed and began working with Mark Mayes, president of Fitness Resources Inc. of Columbus.

I didn’t know what was motivating me except I didn’t want to die,” Insani says.

Six weeks into the exercise program, he started to see definite improvement, he says.

“I started having more energy and saw that my appetite picked up, but I didn’t worry about it because I knew I was exercising,” he says.

A few short months later, he’d face another problem. He returned to his regular work routine, which included lots of travel — 60 percent of his time, in fact.

How would he keep up the three-times-per-week exercise training program that was bringing back his health?

“First of all, you make the commitment that you want to be able to live your life to the fullest,” says Insani, 52, who recently retired and does consulting work, “and if you want to do that, you’ve got to make exercise part of that. Doing it when you travel is just proving to yourself that you’re serious about this.”

Step by step

Insani, who admits he could not have been as successful at exercising if he did not have a personal trainer, says his travel would have been a definite obstacle had he not found ways to continue exercising on the road.

“I flew everywhere — all areas of the country, coast to coast,” he says.

Preparing a client to exercise while traveling is key to Mayes’ work.

“We’re basically trying to teach people how to exercise properly,” Mayes says. “Our whole goal is to educate the person so they can go off individually.”

Mayes and Insani offer the following advice to business executives who want to keep up an exercise program while traveling:

n “There are things you can take with you in the suitcase and you can work out in the room,” Mayes says.

One of Mayes’ clients, who often travels to Hong Kong, takes running shoes and exercises by doing laps up and down the stairs at his hotel. Dynabands, rubber tubing that allows the individual to work the upper body, are another possibility. There also are inflatable weights that can be packed and filled with water before use, Mayes says.

“You can do things in your room like using chairs and doing dips between the chairs to work the triceps or like doing types of pushups or types of squats,” he says.

  • Make arrangements to stay at hotels that have fitness rooms or that have agreements with local fitness centers for day rates.

    “I never found a hotel that wasn’t willing to drive me there in their van,” Insani says.

  • Schedule exercise into your daily travel routine.

    “Once you make the commitment you’re going to do it, it’s no more than saying, ‘I’ve got a 3 o’clock meeting,’” Insani says. “I’d say be flexible in your schedule; don’t say, ‘I have to work out at 6 in the morning.’”

    Insani was motivated knowing he’d return from trips to his regular training with Mayes.

    “He didn’t expect me to lose ground because I was out of town for 10 days,” Insani says. “He knew I was very goal-oriented, so he used that to help me.”

    Insani says he’d often exercise in the afternoon, and when he’d arrive to a dinner banquet where he’d have to make a speech, he’d hear people regretting they had spent the previous two hours in the bar or munching.

    “Quickly you see, by observing people you are with, you are feeling a lot better about yourself and what you’ve got to do, and it’s because you allowed your body to exercise rather than sitting there like mashed potatoes,” Insani says. “That would be one of the bigger motivators to do it while you’re on the road.”

  • Watch your eating, which is 50 percent of the fitness equation, Mayes says.

    This tip is one of the hardest for executives who travel, Mayes admits.

    “A lot of times they’re in a meeting and they’re served [a meal]. They don’t pick out what they want,” he says. “If you’re in a situation where you can’t pick stuff, I would say use moderation. You have to eat something. Try to pick whatever’s best. Then when you’re away from the meeting, try to get something healthier.”

  • Drink plenty of water.

    “Flying can dehydrate you anyway. That’s one of the reasons you have jet lag,” he says.

    The old adage of drinking eight, 8-ounce glasses of water is especially hard to fill while traveling, he says.

    “I tell clients to get a liter bottle and carry it with them,” he says, adding that executives could keep it in their hotel room. “At least that way you can physically see what you’re drinking. If you rely on drinking fountains or just drinking from glasses, you’ll typically not get enough.”

  • Find a fitness professional in the area where you are traveling. One place to do this is through the American Council on Exercise, Mayes says. Search geographically by state at the council’s Web site, www.acefitness.org/profreg, or call (800) 825-3636.

In the end, Insani says, the ability to exercise while traveling helped him continue his exercise regimen — and improve his health.

His doctor has stopped prescribing heart medications for him, and his annual stress tests are a breeze. He’s progressed from a limit of three minutes on an exercise bike or treadmill to an hour. He can do 200 sit-ups nonstop, where previously he was proud if he could muster five. Mayes says Insani can lift weights that would be difficult for men 20 to 30 years his junior.

“I try to dwell on the fact that the energy has picked up greatly,” Insani says. “I’m pleased with my body image. I’m toned. I don’t feel like a weakling. I don’t get colds and flus like I used to. Your self-confidence builds up when you have a good image of yourself.”

Mayes credits Insani’s success to his gung-ho attitude, but he says any exercise program, especially for an executive who travels often, can be successful with a bit of dedication.

“Nothing’s easy,” he says. “They’re going to have to take some time to plan this out. I don’t think it takes a lot of planning, but it does take some.”

Joan Slattery Wall (jwall@sbnnet.com) is a reporter for SBN.

Published in Columbus

The papers have been signed. Money has changed hands. The deal is done. But once you sell your business, the work of getting on with your life has just begun.

After years of building and running a successful business, many business owners seem lost when it comes to continuing on with their lives. They may understand the financial issues they face after the sale of their businesses, but many aren’t prepared for the psychological and emotional traumas they may experience. Many experts equate the sale of a business with putting one’s child up for adoption.

This is how many former business owners feel; therefore, it’s not surprising that, when it’s your turn to sell your business, you may have difficulty with some or all of the following:

1) An identity crisis — For many years you were the business and vice versa. Once that business is gone, you may not know how to introduce yourself. The question is, what do you call yourself when you are not the president of XYZ Co.?

2) Loss of control — For years, you have managed employees. Who will you manage once the deal is done?

3) Transition issues — Will you be able to step aside and let others run the company while you gradually ease out of the business?

4) Social adjustments — When the business is sold and there’s a large influx of money, you may find yourself immensely popular with charities and people selling investments. At the same time, you may start to lose your former industry friends. These are the same people who were a big part of your life when you were at the helm of your business.

5) New social circles — With newfound wealth, many will upgrade to a more affluent neighborhood and try to develop friendships with people who may not share the same values. This can be disappointing to someone who is starting a new life.

6) Unrealistic expectations — Many former owners fail to calculate taxes on after-sale proceeds and are shocked when they don’t receive what they thought they would from the sale of their business.

7) No more expense accounts — Once the business is sold, the things that used to be paid through the business, such as health and disability insurance, club memberships, meals, business trips, vacations, etc., must now come from your own pocket.

8) Lack of investment knowledge — Many former owners probably reinvested their money into their own businesses. Now they have to invest in the financial markets, which they frequently don’t understand, to keep their money growing.

Despite such changes, the situation is not as grim as it might seem — and can be viewed as a new opportunity. The following can help former business owners transcend their old lives for something much more exciting:

Rent an outside office and spend time there at least a few days a week. This will give you a chance to tie up loose ends while preserving your family’s sanity.

Postpone any major decisions regarding investing in the securities markets or purchasing another business for the first year after the sale. Sometimes, it is better to research options thoroughly than to rush into something without a great deal of thought behind it.

Take a family vacation. Taking time to play is a reward for many years of hard work.

Consider volunteering in local business organizations that help small businesses or in the businesses themselves. Part-time and full-time opportunities for pay sometimes are available for consultants, boards of directors and advisory boards.

Louis P. Stanasolovich, CFP, is founder and president of Legend Financial Advisors, Inc., a fee-only Securities and Exchange Commission registered investment advisory firm located in the North Hills. Reach him at (412) 635-9210. The firm’s Web site is www.legend-financial.com.

Published in Pittsburgh
Monday, 22 July 2002 09:50

Cutting through the red tape

When Steve Higley finalized the business and financial plans for American Bright Bar, an innovative steel processing business he’s launching in January 2000, he intended to target big banks such as Citicorp and Bank Boston — financial institutions he’d done business with during his years as an officer for LTV Steel and, later, Republic Engineered Steels.

But first, he agreed to meet with the Orville branch of The Savings Bank and Trust Company, which had learned of his interest in doing business in Wayne County.

It was during that meeting (which Higley confides he considered a dry run before talking to the large financial institutions) that Higley’s plans for financing — and his preconceived ideas about small banks and government agencies — began to change.

“I thought regional banks might be the most interested. But The Savings Bank put some ideas on the table that fit where we wanted to go with this business,” Higley says, referring to the business and financial plans he co-authored with John Sears, who will serve as American Bright Bar’s vice president of finance.

Higley says that Jim Kleinfelter, senior vice president at The Savings Bank, pointed out that the scope of his business, located in Wayne County between Massillon and Wooster, would appeal to the U.S. Department of Agriculture’s Business and Industry Development division.

“The USDA’s rural development area is kind of a country cousin of HUD, to assist economic development in rural areas where the population is less than 25,000,” Kleinfelter says, noting that the USDA program is not available in most of Summit and Stark counties. “They’re particularly interested in manufacturing since that tends to create the best-paying jobs and the best tax base.”

Kleinfelter asked Higley if he could arrange another meeting, this time with Orville’s key business leaders, representatives from the USDA, the Small Business Administration, the Ohio Department of Development and the owner of the property Higley was considering for purchase.

“I was surprised and intrigued, because the bank treated us as if we were General Motors,” Higley says. “They assembled this team of people and said, ‘We think you have a great business plan, we think your start-up can be done on a very large scale and we want to make that happen.’”

Higley says the city expressed the position that its future is in strong, diversified businesses, and the USDA articulated its intent to promote entrepreneurial efforts for rural growth.

Kleinfelter says he was particularly impressed with Higley and Sears.

“They put together the most thorough and professional business plan I’ve ever seen, and based on their knowledge of the industry, and the talent and capital Steve put together, I knew they were an excellent candidate.”

Higley was able to acquire a Business and Industry Development Guarantee, in which the USDA provided a substantial guarantee for The Savings Bank, and The Small Business Administration provided a portion of a revolving line of credit. As for encumbrances tied into the transaction, Higley says they are no greater than those involved in a conventional loan.

“The USDA tried to structure an approach that fits with conventional banking. For example, my business plan had to hold up to critical analysis of both the USDA and The Savings Bank. I had letters of support from four key customers and two major suppliers I’ve worked with over the years,” Higley says. “In terms of debt to equity ratios and financial parameters, other financial benchmarks were really no different than conventional loans.”

It did take some time to work with all the agencies, Higley admits. Still, the process came together in about six months, in part because of his propensity to meet deadlines and exceed expectations.

“He and John Sears did an excellent job in working their way through the maze of red tape,” says John Finnucan, a managing partner at the Akron/Canton accounting firm of Bruner Cox LLP, to which Higley turned for financial expertise.

Part of the transaction’s success was in the fact that finding investors was no problem, Higley says, revealing that he was able to raise “a substantial amount of money.”

“When I made it public that I was starting this business, several people called and wanted to invest. We offered a fair return on their investment and we did it without involving an investment banker, which is always an expensive proposition,” he says. “We did a private placement, which leads to a fine capital structure and puts us in a position to compete.”

Finnucan says Bruner Cox helped structure a strategy to acquire the interest of investors, afford a greater return to compensate investors for the transaction’s intrinsic risks, and protect the company so that, when stock is redeemed, all the equity is not stripped out.

“We made an S Corp. selection so the redemption price would be less than the accumulated retained earnings. That has some disadvantages to the investors, but the cash payout should be so substantial that it compensates them for that,” Finnucan says.

The Ohio Department of Development counseled Higley in job creation, tax credits and training. Higley says American Bright Bar will provide jobs for 35 people and its specialty will be cold finished bars (steel bars), a product that will be enhanced because of Higley’s chosen production process.

“We first take the raw material and mechanically clean, or shot-blast, it. The bar is conveyed, lubricated and drawn through carbide dyes. It’s a big operation with a 300-horsepower motor and imparts value added characteristics for close tolerance, machining, cutting and drilling,” he explains.

The bar is then sheared to length, restraightened, packaged and shipped.

Most comparable steel-processing facilities produce the product on a batch basis, but American Bright Bar’s continuous process production line will do in a half-hour what it takes days for other companies to accomplish, Higley explains.

The company’s 45,000-square-foot building is currently under construction and production is set to begin in January. Joining Higley and Sears in the venture will be Gary Lenhart as vice president of operations. Among the three of them, they share about a century of experience in the steel industry — another element that appealed to the agencies backing them.

“This is a bold move, because at this point we have no revenue stream and we’re off and running. But we’ve had tremendous support from all directions and we’re confident we’re going to have a solid business,” Higley assures.

“I know the market, the industry and manufacturing trends and I didn’t take this step without talking to potential customers, making sure we’ll have a strong niche in the market place.”

How to reach: The Savings Bank and Trust Company in Orville, (800) 475-8961; Bruner Cox LLP, (330) 497-2000

Published in Akron/Canton
Monday, 22 July 2002 09:50

Sprint to the finish line

Ken Thompson says he’s at a low level in his life. The consummate entrepreneur, who has owned up to 18 businesses at one time, only owns four right now.

For a man who, at age 62, runs marathons and long-distance races for fun— including one he just finished from Florence to Faenza, Italy, (“most of the other runners had dropped out through the night,” he says) — it’s hard to believe there could be a low level.

Thompson spends most of his time these days running PlastiCards Inc., the corporate name for his three printing companies: Rainbow Printing in Green, Ultra Plastic Printing in North Royalton, and Daylux, a division of a N.J.-based company he just purchased. At work by 5:30 most mornings, Thompson starts his day with a copy of the Los Angeles Times. Not that his local Akron Beacon Journal doesn’t provide enough news. It’s not news Thompson is looking for. It’s trends. Trends that fuel ideas.

“I don’t know why it emanates from the West Coast,” he says. “I’ve often used things I’ve seen there as a leading indicator. It’s the first place you saw white hose. It’s the first place you saw black nail polish. It’s the first time you saw environmental law on emissions on companies like ours.”

Some of the trends Thompson has jumped on lately include highly resilient photo ID cards and weather-resistant cable markers. The idea for the photo ID cards came after the tragedy in Littleton, Colo. Suddenly, there was a surge in the demand for ID cards with magnetic strips. Most of the cards on the market could take about 2,000 to 3,000 bends before they cracked. Thompson developed one that could withstand 20 times as many bends, at a lower cost.

“We’re just starting to get a tidal wave now,” he says of the product line’s sales.

The idea for weather-resistant cable markers? While most people are just realizing that they are being offered cable service by two, three or even four different companies, Thompson saw this coming. He also foresaw a potential problem when the cable repair workers climb a pole to find several indistinguishable cables.

The solution? Weather-resistant markers. That idea was confirmed recently when the largest cable company in the U.S. placed an 80,000-piece order.

Thompson describes his business philosophy with one word: Opportunist. But not in the negative sense, he assures. He just jumps on every opportunity that presents itself.

“You hear the adage all the time, ‘When opportunity knocks, you’ve got to get up and answer the door,’” he says. “I contend that you better stay in the starting blocks, coiled tight, ready to spring forward to answer the door first. It’s not just enough to have an opportunity and walk to the door. You’ve got to be there first.”

The next opportunity Thompson is planning to take advantage of is a climb to the top of Mt. Everest. Like everything else, he must jump on this opportunity fast, because it’s illegal to climb the mountain past age 65.

But even as he nears that cut-off age, in true Thompson fashion, he is planning a 100-mile run to the base of the mountain first.

How to reach: PlastiCards, (330) 896-5555

Published in Cleveland
Monday, 22 July 2002 09:50

Banking on innovation

David Daberko is one of only a handful of people in the business world who truly make billion-dollar decisions. From his 35th floor office overlooking Lake Erie, he has steered National City Corp. to the top of the banking industry, all the while leading the company with a steady hand and cautious eye.

It was Daberko who 14 years ago oversaw the integration of the former Banc Ohio chain into National City, doubling the size of the company and setting it on track to become the $85 billion banking empire it is today.

Four years ago, he stepped into the role of CEO, making the decisions that further solidified National City as an industry leader.

“I think one of the things that has particularly happened since I’ve been CEO is we’ve made some major changes, major acquisitions, some major bets, if you will,” he says. “I don’t like the term ‘bets’ when it comes to banking and shareholders, but that’s what they are.”

He quickly recalls the acquisition of First of America, a Michigan-based chain of banks. It was a deal set to cost National City $7.2 billion, and it was Daberko’s signature that had to go on the dotted line. The secret to making monumental business decisions, he explains, is to know the company’s strengths and weaknesses.

“I’ve always been comfortable making big decisions when I felt the odds were strongly in our favor,” he says. “I have a good crew around me and I do a pretty good job of getting things down to, ‘The odds are 80 percent this is going to work for us.’ Those are the ones that we do.

“The ones that are 50 or 40 percent we tend not to do. It’s a very intellectually questioning kind of environment. We really analyze things thoroughly before we make our bets.”

But how does one turn a good idea into reality with 38,000 employees spanning seven states? Daberko readily admits it is no simple task.

“Because the companies are so large, just by definition it’s hard to change them,” he says. “These are battleships. I think one of the most useful exercises we do is every year, the top management — the top 14 of us — sit down and say, ‘What are our strengths? What are our core competencies? What do we really do well?’”

It was during that annual meeting two years ago that the bank’s senior managers decided to modify National City’s geographic management structure. The change was needed because some National City banks outside of Ohio were not fully capitalizing on product lines proven successful in other markets.

Although customer service and lending decisions would remain local, bank executives decided to juggle the organizational structure of the company so they could ensure new products were being introduced consistently in each market, a move Daberko believes set the stage for National City’s growth.

“We’ve made an organization that promotes decision making and execution of plans a lot better we used to have,” he says. “If we had stayed geographically oriented, we would be way behind where we are today.”

William McDonald, president of National City Corp’s Cleveland division, believes one of Daberko’s main strengths is his ability to bring new ideas to fruition.

“He understands the importance of identifying what will be the drivers of performance in the company and then assigning responsibility or accountability for dealing with those,” says McDonald. “He’s a very good delegator amongst his senior people, but constantly following up. He asks, ‘What are we doing about this? Have we got an answer to that yet?’”

In 1995, Daberko proved himself a true innovator when National City became the first bank to buy a full-service investment banking company and brokerage. The idea occurred to him when he worked on the investment side of National City, long before becoming the bank’s CEO. It was a self-described “pet project” that he was finally able to implement.

“I just felt that brokerage investment banking really had a place in the banking business,” says Daberko. “So we did innovate, went out and bought one of the first ones and then took the brokerage company and merged personal trust and financial planning and all of the businesses that touch wealthy people into one unit. Almost every other bank in the country has now done the same thing.”

Bringing change to National City and living with it afterward — especially the kind of change that involves spending billions of dollars — is something Daberko does quite well. Once a decision is made, he says he never doubts whether it was the correct one.

“I really study the facts, make a decision and then we go with it,” he explains. “And, if somebody three months later asks ‘Why did you do that?’ I say, ‘I don’t really remember.’

“You make a decision based on the best information you have and you go with it. I don’t look back much.”

How to reach: National City Corp., (216) 535-2000

Jim Vickers (jvickers@sbnnet.com) is associate editor at SBN.

Published in Cleveland
Monday, 22 July 2002 09:49

The extraterrestrial highway

When SBC Advertising wants to communicate with its clients, it sends them to Area 51. Granted, the North Columbus firm’s clients aren’t actually visiting the Nevada military base of extraterrestrial notoriety.

Instead, SBC’s Area 51 is a special section of its Web site created so clients can periodically check on the status of their projects — and offer feedback in a more efficient manner.

For example, on a recent project in which SBC launched a new bank card for The Kroger Co., the firm needed input from the Minneapolis bank issuing the card and from Kroger officials in Columbus and Cleveland.

“We were able to put that creative [project] up on Area 51 and did a live conference call. Everyone was able to look at and comment on the work simultaneously, and when changes needed to be made, everyone was able to view it again in the afternoon,” says Jeff Tritt, SBC’s senior vice president.

The Area 51 process not only saves on travel, SBC and its clients avoid the costs and time involved in producing color copies and sending them via courier or mail. In addition, using Area 51 gives the firm the opportunity to get a product to market sooner because it isn’t waiting so long for feedback.

“We have found it to be just as beneficial to clients in town as clients in Cleveland,” Tritt says. “Our time and their time still is valuable.”

Not top secret

Tritt says the idea for Area 51 was born when SBC noticed clients, in a business world of downsizing, were having to do more things with fewer people.

“Time is a premium item for them,” Tritt says. “They don’t have time to have lethargic meetings talking about minutiae.”

Now, that “minutiae” is handled over the Internet by more than half of SBC’s clients, who visit SBC’s Web site — www.sbc-adv.com — click on Area 51, enter their password and choose the project they wish to view. They can print out a copy, make note of desired changes and call, fax or e-mail the information back to SBC.

“We get quicker feedback and more time to work on something without affecting the timeline,” Tritt says.

Clients also gain more flexibility in working with SBC.

“It’s convenient,” says Lisa Dulay, advertising manager at Express-Med, one of SBC’s clients. Express-Med uses SBC to produce direct mail pieces, and each month she visits Area 51 to view new creative work from the advertising firm.

“If we were out of town on a trade show, we could look them up and print them out and take them with us instead of not getting back with them in a timely fashion,” she says.

Area 51 also helps the flow of communication at Express-Med, she says.

“Anyone can go on and look at it at their convenience and not have to wait for somebody else to look at it and pass it on,” she says.

Authorized entry granted

In order to ensure its clients would approve of Area 51, SBC had to design it so it would be easy to use and secure — and fun.

Because SBC already had its own Web site, an in-house programmer simply had to create the Area 51 section. Security parameters, such as code names for client companies and passwords for each employee, alleviate confidentiality concerns for clients.

Here are some steps the firm took to simplify the process for its own staff and its clients:

  • SBC provides clients with written instructions and consults with them one-on-one by phone to make sure they’re comfortable using the site. “Our clients vary in technological aptitude,” Tritt says. “We try to make it very simple for someone who is not far down the line on computer competence.”

  • The firm decided to use a PDF, or portable document format, to transmit the creative pieces, because those files are smaller and easier to download. That format holds the quality and color well so the client gets an accurate portrayal of the firm’s work. The client can zoom in and out of the document on the computer screen to get a better view.

  • SBC account representatives notify clients by phone or e-mail when a new creative piece is posted on the Area 51 site or when revisions are ready. So SBC can keep control of the product quality, clients cannot make changes directly to the creative pieces posted on the site. Instead, they can look at the piece, which appears in color, and either telephone, e-mail or fax comments to SBC.

  • The firm also automated the process internally. Rather than having just one computer expert who can load information onto the site, all creative staff employees can do it for their own clients. “So it’s not like we’re waiting on one person to get it up on this complicated Web site,” Tritt says. “It’s very simple.” So simple, in fact, that it only takes 10 to 15 seconds for someone to post a project to the Area 51 site.

  • To notify clients of the general availability of Area 51 to review project work, SBC sent out press releases. The firm also provided clients using the site with a laminated identification card, complete with password, that resembles a real security badge. “We tried to make it fun for clients who might be intimidated by it,” Tritt says. The badge, in fact, has been the only out-of-pocket cost for the firm.

    “Really, it’s intellectual property. We already had the Web site; we have the server. It’s just increased the functionality,” Tritt says.

    Tritt expects the increased efficiency from Area 51 to both free up time for SBC to work on more client projects and be an attraction for clients to choose the firm in the first place.

    “When it’s easy to get things done through us,” Tritt says, “it’s easier for them to give us more projects.”

    Joan Slattery Wall (jwall@sbnnet.com) is associate editor of SBN Columbus.

Published in Columbus
Monday, 22 July 2002 09:48

The science of sitting

Where do executives stand on the issue of desk chairs? They don’t stand; they sit.

In fact, a new poll shows that execs spend most of their time in their chairs — a full seven-and-a-half hours a day. That’s an increase of more than an hour-and-a-half a day from a similar survey in 1990.

The poll, conducted by American Furniture Rentals, headquartered in Bensalem, Pa., shows a 67 percent increase in rentals or sales of ergonomic desk chairs with lumbar support systems.

Why? Write it off to a combination of longer hours and more computer time, says AFR CEO Neil Scholnick.

“Chairs with lumbar supports are booming, because back pain has become the ulcer of the ’90s,” Scholnick says. “When most executives feel tension, their backs ache. When their backs ache, they look for a chair that will ease the pain.”

What are the most asked-for features in ergonomic chairs? The survey says:

  • Pneumatic seat adjustment, 84 percent;

  • Lumbar support, 56 percent;

  • Adjustable seat and back angle, 42 percent;

  • A tilt forward feature, 28 percent;

The days of the big leather desk chair are over.

“The ‘status’ chair is all but gone in our orders,” Scholnick says. “The boss is looking more to form and function. Those chairs that you could sink into never really gave the proper support. Now, people want features like lumbar support, knee tilt, pneumatic seat height and adjustable seat and back angle. Many new chairs offer a tilt forward feature, which helps ease the strain of computer work.”

The poll sampled rental and buying habits of 400 executives.

Scholnick is a 1999 Ernst & Young “Entrepreneur Of The Year” finalist. American Furniture Rentals has showrooms and outlet centers in Pennsylvania, New Jersey, Delaware and Maryland.

Published in Cleveland
Monday, 22 July 2002 09:47

Making the jump

Twinsburg-based Forest Corp. snared $20 million in revenue in 1998 from the likes of Budweiser, General Motors and Coca-Cola. It was that high-profile client list that led the company’s executives to the realization that they would have to update their computer network.

Some of the heavy-hitting firms the point-of-purchase communications supplier did business with were rapidly merging new technology into their everyday business. Many of its customers were building extranets and wanted Forest to do the same. They also wanted it to develop e-commerce and order tracking applications.

The company tabbed the Anderson Group of Akron to build a new system that would meet its clients’ needs. When the systems integration firm stepped in to evaluate the situation, it discovered the company had a very simple network infrastructure.

“When Forest Corp. first engaged the Anderson Group as their systems integrator, their technology infrastructure was minimal,” explains A.J. Vasaris, Anderson’s president.

At that time, the company’s internal operations consisted of a lone IBM RS/6000 linked to standalone PCs for the sharing of basic accounting and manufacturing information. Communication with outside departments didn’t exist, and internal departments with different operating systems could not communicate with each other. In addition, there was no company e-mail system with which employees could react to customer comments or transmit information to co-workers.

The Anderson Group’s first step was the development of an effective way for employees to communicate with each other. Vasaris’ company installed a Windows NT file and print server in conjunction with Microsoft’s e-mail and groupware product. Next, the company’s network infrastructure of thin net coaxial cable was replaced with new cables that allowed for quicker communication.

Anderson connected workers at Forest’s main plant into the network. Plant data collection terminals were installed in key areas to allow better tracking and product scheduling. As facilities were added, high-speed links were integrated into the network to allow an extension of plant data collection and digital communication.

Finally, an e-commerce application was installed on Forest’s corporate extranet, where clients could easily order product. That work is ongoing, but the end result will be better communication between Forest and its national clients.

The payoffs are obvious. The company has better internal communications that ensures clients are taken care of and jobs are turned around faster. The system integration also provides a way to strengthen customer relationships by having a quick way to share information.

Another important benefit, Vasaris points out, is the company’s ability to gather information, impossible to collect and catalog without a computer network, from the plant to improve efficiency.

“Having a network infrastructure,” he says, “allowed Forest to improve plant efficiencies and scheduling through the collection and analysis of information previously lost.”

How to reach: The Anderson Group, (330) 945-6408

Jim Vickers (jvickers@sbnnet.com) is an associate editor at SBN.

Published in Cleveland