Despite repeated warnings, many small businesses continue to bet the farm on IT backup systems that don’t work. Their tape backups often fail due to malfunctioning drive systems, software issues, or human error. Their disaster recovery plans that rely on these backups are rarely tested if they exist at all. The problems are usually discovered when an actual disaster leads to loss of critical data and work products.
Smart Business spoke to Steven Vicinanza, CEO of BlueWave Computing LLC, about the new, highly cost-effective technologies that are easy to put in place to solve these problems once and for all.
What are the risks to companies’ data?
When people think of disaster planning they typically envision a fire or flood and perceive the risk as minimal. However, there are other risks that are much more common. No. 1 is equipment failure. Many believe that using mirrored or redundant drives (called RAID) eliminates the worry of a server failure. They rely on the fact that multiple drives must fail in order to lose data. Nothing could be further from the truth. For example, a very common failure point is a faulty server cooling fan, which will quickly cause overheating. Excess heat destroys disk drives resulting in catastrophic and total data loss.
Another all too common occurrence is equipment theft. With an active black market for personal identity information (which can be worth as much as $10 per person), many thieves are actually more interested in the data on the server than the hardware itself. Businesses like medical practices are especially attractive due to the large amount of social security and credit card information stored there. Obviously, if a server is stolen, the firm will find itself 100 percent reliant on the backup system to recover.
What’s wrong with current backup systems?
Most backups rely on removable media, such as tape, disk, or optical. Backup software running on the server copies its data files to the backup media. The media must be rotated daily and physically removed from the office to ensure recoverability in the event of theft or a facility disaster like a fire. This requires the constant diligence of office staffers, who must be trained in the backup procedures and troubleshooting.
In addition, the most economical and common media, magnetic tape, quickly wears out over time and is prone to failure. The result is that even if all procedures are correctly followed, there is no guarantee that the tape will function properly when called on. In addition, there is a huge security risk in having all the company’s data on a small, easy-to-remove tape backup.
The bottom line is that removable media backups are labor intensive, insecure and prone to human and mechanical failures.
What about disaster recovery and testing?
Current backup systems also lack an easy way to verify that the disaster plan works. To fully test a server backup one must either restore over the current server (which is usually not an option), or purchase a second, identical server to use as a backup test platform. As many organizations have multiple servers, this can become expensive in terms of both time and equipment costs. Needless to say, few companies go through the trouble to ever actually test a backup plan. Yet, without testing, one can never be sure that the plan actually works.
How can new backup technology help?
A new breed of backup technology has recently emerged. Made possible by the recent intersection of high-speed Internet service, server virtualization technology, advanced data encryption and specialized delta-based backup software, this new high-tech backup solution resolves the problems we’ve outlined here. It is completely hands-free, automated, secure, redundant, verifiable and, best yet, highly affordable.
How does it work?
Using special backup software, an initial snapshot is taken of the file system on the server. Then, each hour, any disk changes are snapped. These changes or ‘deltas’ are saved along with the master image on a local backup appliance. Because only changes are saved, the amount of the data stored each hour is relatively small and manageable.
From the appliance, it takes literally minutes go back to any point in the past and recover files that might have been accidentally deleted or changed. Should the server crash, the appliance can run the image it has stored and actually become a replacement server. For the first time, the organization has a testable and complete disaster recovery plan in a single box.
What if the office is robbed or burns to the ground?
If the server and the appliance are both lost and all the data is gone with it, this is where the Internet comes to the rescue. Every night, the appliance combines all the changes it has backed up over the day and compresses, encrypts and sends them over the Internet to a secure data center. When a disaster occurs, a disk is restored at the data center and delivered to load on a new server. Until a new server is obtained, the data center can load the image on its appliance and have the business up and running in hours instead of the days that might typically be required to procure a new server and recover a tape backup.
What will this cost?
An office with a single server can usually be protected for as little as a few hundred dollars per month. This would include the appliance and sufficient storage to keep a year of changes online. So now there’s no excuse not to have a bullet-proof backup and disaster recovery plan. And remember, failing to plan is planning to fail!
Steven Vicinanza is the CEO of BlueWave Computing LLC. For more information, visit BlueWave-Computing.com.
Stop for a minute or two and think back to what you learned about the banking industry during your childhood. Your parents probably introduced you to the concepts of deposits and checks and balances. You learned how to make the numbers work. Now think about what you learned about the industry during your years on campus and in the classroom. Some professor probably lectured to you about loans and liens and interest. You learned enough to earn a good grade and get out in the business world. And what did you learn about the industry after you established yourself in that world? You probably learned that a relationship with your banker is important, that surprises are bad and that communication is the key to just about everything.
Well, good. Keep all of that information in mind because so much of it remains relevant and important today. But so much more of the information that you learned during your childhood and your education and your years in business is now better left in the past, thanks to the lingering memories and results of the financial fiasco that rocked the economy for the better part of two years.
As we climb out of the fiscal wreckage of 2008 and 2009, the banking industry is in the middle of a new landscape. After what seemed like one bank sale, merger or closure after another, there are now fewer banks across the nation. And after thousands and thousands of businesses defaulted on their loans, banks of all sizes became more prudent in their lending practices.
The financial future continues to improve, but the present might be difficult for some business owners.
“In the last six months, banks were spending a lot of time reacting to the problems businesses were having as well as some of the problems in their own shops and in the financial markets,” says Kevin Hipskind, senior vice president, commercial lending, Fifth Third Bank. “So banks just didn’t have as much time to be out there working proactively with their clients on a lot of things. That left a lot of companies underserved.”Ask the right questions
Communication with your bank and your banker is as important today as it was 10, 20 or 50 years ago and, of course, with smart phones and the ability to talk almost immediately with just about anyone anywhere in the world at any time, communication has never been easier, either. But sitting down with your banker in person rather than over the phone remains the best and most effective means of communication, even if it might feel like some sort of lost art. That goes both ways, too; you should want to meet with your banker in person, but he or she should also want to meet with you.
“The first thing that companies can do is sit down with their relationship manager and discuss all the products and services that are currently being provided to them,” Hipskind says. “We try to do that every year because products and services tend to change as far as their relevance and their cost-benefit.
“The companies that have weathered the storm have significant upside opportunities, and the banks are having discussions on how to leverage this. Are there acquisitions that need to happen? Are there clients you can take on from your competitor who went out of business? What kind of working capital do you need to do that?”
It’s important for you to ask the right questions, too, especially if your bank merged with another bank during the recession or if it closed its doors and left you looking for a new bank.
For example, what will the bank offer you in terms of its resources? Will you work with one banker or with a team? As your business grows and changes, will the bank be able to help you meet your evolving needs? And how will the bank support you during your growth or expansion? Will the bank and your banker be proactive and visit your offices or locations in order to learn more about your company and provide trusted advice? Or will the bank offer nothing more than answers to your banking needs?
Think of that first conversation like a first date, of sorts. You want to learn as much as possible so you can determine whether to go out on a second date. If all goes well, maybe those dates will turn into a long-term relationship.
“We look for companies that recognize we’re in a difficult time and are looking for ways to cut costs, and we’re looking for ways to help them cut costs,” Hipskind says. “Those that have maintained really strong balance sheets and have cut costs to address some of the economic issues are seeing a lot of opportunities, and we’re looking for ways to help them grow. There are a lot of opportunities out there for growth. It really is a fun time to be out there talking to businesses. As much as there are challenges, there are great opportunities, too.”Prepare for economic change
On the surface, at least, the economy has started to turn. You need to look no further than the Bureau of Labor Statistics for proof of that. The unemployment rate either held or dropped each month from October 2009 through February, down to 9.7 percent from 10.1 percent. But talk with enough bankers and the picture comes into clearer focus.
Banks are still lending money. Banks want and need to lend money. It is, after all, one of their major sources of revenue. But according to a panel of experts, the number of loans and the amount of money requested during the last 12 months dropped significantly, and among the businesses that continued to request loans, more defaulted than normal. That led to banks examining financial statements and trends more closely. It also led to the perception that banks were holding onto their money.
“I believe many clients would say that credit underwriting is certainly more conservative. In reality, that has been the case for much longer than nine months,” says Gary Dowell, regional vice president, commercial markets, RBC Bank. “I hope that our clients would say we are willing to listen and help them through down cycles. Many banks, weakened by the economy, are simply unable to assist their clients with certain credit requests or other bank services. That has forced clients to look beyond their primary bank for financial assistance and banking services.
“The banker can help educate the client on specific credit criteria used by the bank. Those facts will help the client understand the reasons behind a particular credit decision.”
Now, with fewer banks in the marketplace, some banks can be more selective. But most are actually more open now to lending and are more forgiving. Ask around and you might find that many are breaking down the last year of financial statements for businesses seeking a loan, examining each month in search of positive trends, rather than just glazing over negative numbers from the last two or three years. Other banks are adding business bankers. Still more have recently committed billions to small and medium businesses.
The time is right to work with your bank. Just ask.
Wellness programs continue to receive the spotlight as a way to counteract the rising costs of health insurance. But do they? Many experts see wellness programs not as a cure-all but an integral part of a new beginning.
“Promoting healthy lifestyles and positive behavior choices is always a good thing,” says Mark Mixer, vice president for Alliant Health Plans. “It is difficult for employers to realistically gauge the impact it will have on health insurance premiums. The smaller the employer, the more difficult it becomes.”
Smart Business spoke with Mixer about how to tell if a ‘feel-good’ solution makes fiscal sense for your company.
Why are wellness programs becoming prevalent?
The unceasing trend of double-digit increases has employers frustrated, and solutions are elusive at best. Professional insurance advisers are compelled to provide solutions, and many have become advocates of wellness programs. Even the new government mandated benefits will require a wellness component. Employers logically want ROI calculations that show substantially lower costs.
Unfortunately, the excitement is short-lived once employers are told these programs come at an additional cost, above the insurance premium already being paid. Unless the end result of a wellness program will put an immediate and substantial dent in costs, it may be put off. The downside is unrealistic expectations on what wellness programs can truly provide and how they can benefit or enhance an employer’s benefit program.
Do wellness programs benefit employers?
To answer that question, we have to understand the core precept of insurance, which is ‘risk.’ Virtually all midsized to small employers are ‘fully insured,’ which means the premium payment they make effectively ‘transfers’ the risk of health care claims to the insurance company. Larger companies are typically ‘self-funded,’ with the employer paying the claims and assuming the risk (even though the employer may have an insurance company handling the transactions or taking the risk for the catastrophic claims on its behalf).
So here is the critical question: If a wellness program is beneficial, who benefits? In respect to premium costs the answer is the entity taking the risk. Why would an employer (fully insured) add additional costs of a wellness program when the risk — and thus the upside or benefit — is gained by the insurance company? Shouldn’t the company holding the risk pay for such programs, since they will reap much of the upside? Only the insurance company, or a large employer, has enough people to positively bend the cost-curve by employing wellness programs. It is virtually impossible to calculate the savings in a fully insured group (small to midsized company) with any accuracy.
Employers want the best for their employees, and for them to exercise, stop smoking and eat right. But there is a catch. Unless the insurance company is also invested in the results and can measure them, a realistic ROI is impossible to determine. If the carrier is not paying for these results, ask why. This is the logic we used to become the first health insurance company in Georgia to offer an incentive-based wellness program that is paid entirely by us — the insurance carrier — yet all parties have an opportunity to benefit.
What major mistakes do employers make when developing a benefits strategy?
Employers spend their time operating a business and minimal time on benefit planning. Not having a long-term, well-structured benefit strategy is the most common mistake. Another common mistake is not working with an experienced benefit adviser.
Failing to ask employees what they really want is a very common oversight. There is little to no collaboration with the very people employers are trying to retain. Unfortunately, this can’t be done one meeting 30 or even 60 days before the benefit plan’s renewal. For many employees, and employers for that matter, health insurance is perceived as a hassle. Oftentimes this is a result of not providing adequate choices based on employee needs and budgets. For instance, employers might be surprised to find that employees would be happier if they had a less rich, and less costly, medical plan if they gained access to a vision or a long-term disability benefit.
What can employers do to combat rising costs?
Gone forever are the quick fixes that instantly generate substantial savings. The fixes available today are incremental and must be thoughtfully combined. A professional agent or adviser can provide insight on various plan and contribution strategies that you may not have considered. These strategies can help to properly align your benefit goals.
There is much more to employee benefits than health insurance — and unless the company is promoting a wellness ‘culture,’ wellness programs probably won’t have much impact. Yes, we should all promote healthy behavior, but gaining measurable savings on health insurance premium costs needs to be more than negligible.
Our innovative wellness program is entirely incentive-based. This allows us to laser in on behaviors that drive costs down for our whole population and provide our employer clients with positive and rewarding messages for their employees. These incentives act as a motivational tool that keeps employees engaged, and it doesn’t add to costs.
Employee benefit programs are supposed to help employers recruit and retain quality employees. Every decision surrounding benefit planning should accomplish one or both of those objectives. For most employers, health insurance is one of their largest expenses, after payroll. If it doesn’t help you recruit or retain employees, then why spend the time and money? Think of health insurance as the final piece of a larger puzzle and wellness programs as the thread that weaves its way through all the pieces.
Mark Mixer is a vice president for Alliant Health Plans. Reach him at (800) 664-8480 x271 or firstname.lastname@example.org.
When Neil Gass and his team decided to set a new direction for Sunbrook Franchising Inc., they knew it wasn’t a quick process, so they spent nearly six months evaluating what they wanted to accomplish.
They decided they wanted to open or have in development 60 new centers over the next five years. Then he broke it down and decided that in order to achieve his goal that he would need to open 12 centers this year.
“You start with your longer-range objectives where do I want to be in five years?” says the CEO of the 160-person child care franchising company. “You hear this in the business publications from everybody, and it’s an often repeated story, but where do I want to be in five years, and then back it up in smaller increments. Now I have to look at what does it take to get these 12 months accomplished?”
But he also recognized that he couldn’t achieve this alone.
Smart Business spoke with Gass about how to bring in the right people to help achieve growth goals.
Recognize your weaknesses. We began as a family business. We know what we’re doing as far as building, developing and operating successful child care centers. We began to realize, as we geared up for this growth, that we did not have the expertise in the actual area of franchising. We’ve been doing it for a while and getting by and been moderately successful, but to move to the next level, you have to have someone on board who knows the industry and knows the business and knows the business of franchising.
It goes back to it’s time to re-evaluate the way you do business and what your goals and objectives are. The market has changed. It’s a new economy. There are different lending environments and some new buyer behaviors and patterns these days. The world has changed or is in the process of changing very rapidly and you go back and you look at what you want to be and how you want to get there.
Hire people who fit with you. It’s critical to have, when you’re gearing up for active growth, the right people in place. You want to know what experiences they’ve had some key decisions they’ve made that could have gone either way and why did they choose this way versus that way.
I’m happy to continue to grow at a slower pace as long as we’re bringing in the right people to enhance our organization and enhance our missions and philosophies, so one of the things we wanted to know is, ‘How committed are you to active growth, how many sales do you want to make, and what are your key decision factors in making sales?’ If they’re just looking for a warm body with a fat wallet, that may or may not fit with your organization’s goals. It certainly didn’t with us, so what are the key decisions for you in your process? What kind of experience do you have managing systems and developing and revamping?
It almost comes down to the more personal beliefs and philosophies than the hard experience. We can teach people how to operate child care, how to franchise, how to sell, build, develop and grow a child care system. What I can’t teach people is how to have good work ethics, good interpersonal skills, good communication skills and the right philosophy.
Those would be my two big points: Re-evaluate what you’re doing and how you’re doing it, and then find the right people to fill those gaps.
Get outside help. Bring in some business consultants. Any small business trying to grow, it’s nice to have an outside perspective on where you are and where you should be. In that, you can often identify gaps or holes that need to be filled, and some of those will be in terms of leadership and experience that the company would benefit from bringing in from the outside.
It depends on where you start from, of course. We started as a family-based business. One of the first things we did was bring in a family business consultant. For us, it was knowing that we had family business issues, and how can we identify and really address those correctly, and that was bringing in a family business expert.
Beyond the family business expert, there’s a multitude of experts. There’s a whole industry that’s grown up around providing advice and consulting now. Anyone can benefit from some form of a business coach to just provide a fresh perspective. You get stuck in your day-to-day routines of doing what you do, in the way that you do it, and that leads to stagnation and failure to recognize new opportunities, ... so anybody from a third-party perspective sheds a whole new light on where new opportunities exist.
Hire consultants like you would employees. Ideally you want someone who has worked in a similar or related business or industry. ... Then you want to look for some success how have the businesses that this consultant has coached fared after the work was done? Did they go on and were they able to implement the strategies and ideas given?
Oftentimes, we would work through referrals through networking contacts, both within and (outside of) the industry. We would look for folks, ‘Have you worked with this company or individual before?’
There’s no replacing good old face time interviewing. Sit down with this person prior to engaging them and find out what their philosophies are and what their experience is. Does that fit with your philosophies and objectives? You don’t want to bring in a yes-man to further the ways you’ve been working. But definitely somebody who has a similar philosophy of growth and they understand the growth cycle that your company is in and hopefully has been there before to help guide others through the same waters.
We’re more interested in quality over quantity. If I had brought in a franchise expert who was purely growth, purely show me the numbers, that would not be a good fit with our company. That’s part of the process of weeding through the available candidates to find the right match for us.
While certain sectors of our economy have shown signs of a gradual uptick, many, if not most, remain in a state of stagnation or recession.
Scott Rittenberg a partner with Habif, Arogeti & Wynne, LLP, points to three areas where owners can take control to better their chances for success in this, or any, environment: cash management, operational procedures and employment issues.
Many of these strategies are commonsense approaches to best practices, but they are often overlooked or put on a back burner as business owners and managers focus on day-to-day operations.
Smart Business spoke with Rittenberg about actions that family-owned and closely held businesses can take to improve their prospects during tough times.
If a business is currently experiencing a loss, what can the owners do to minimize that loss and have the cash necessary for continuing operations?
If a business had a down year, most likely it is sitting on a tax asset a net operating loss. Owners should file as early as possible to carry back losses and free up cash.
Owners should overcommunicate with their bank. Bankers do not like surprises. They expect revenue to be down in this environment. Set up a proactive meeting with the lender; do not wait for them to come to you. Now more than ever, businesses are partners as well as customers. Prepare forecasts using different realistic scenarios. Communicate early if there is danger of violating a covenant. Also, research how the bank is doing; their problems can become the business’s problems.
On the flip side, if the business is healthy, now is a good time to acquire a credit facility. While there may not have been a need for debt in the past, now is the time to view a line of credit as insurance.
Do whatever it takes to maximize cash flow. Stick to a strict payable schedule, no early payments. Work with vendors to try to negotiate more favorable terms with vendors. I’m sure they’d like to place more inventory. Offer to take more inventory with a guaranteed sale provision. Be prepared for vendors to require a personal guarantee on purchases. Negotiate vendor guarantees and consider doing the same with customers if the business is B2B.
Diligently manage receivables. Send out invoices as soon as possible, instead of waiting until the end of the month, and revise collection policy to become more proactive. Be sure that troubled customers keep current on payments. They can work on paying old invoices while not getting further behind. Consider converting old accounts receivable to a note receivable.
Where are the best areas to look for efficiencies in operational procedures?
Many of our clients have found significant savings by improving their procurement process. This usually involves using a consultant to evaluate and compare specific large expenditures to the market to determine if optimal pricing is being received. Oftentimes the savings are dramatic. Common areas to review are raw materials, freight and shipping, utilities and supplies. Usually, the fee for a study is a percentage of the savings.
Get rid of obsolete or bad inventory recognize the loss. Write off bad receivables.
Review job descriptions for duplications or inefficiencies. Be careful, though, there is still a need for segregation of certain duties and strong internal controls. Employees may be more tempted into inappropriate actions such as fraud during economic stress.
Depending on the industry, increase inquiries as to customers’ financial health and sustainability. Obviously, adjust credit terms accordingly. This is especially important for new customers, some of whom may have been cut off from their old suppliers for lack of payment or slow payment.
What would happen if a major customer were lost? Would the business have to cut back staff or reduce hours or production? Have a plan in place for the first 24 hours, 48 hours and the first week after the loss of a major customer.
How are vendors doing? Could their ability to supply inventory become an issue? Now may be the time to establish relationships with alternate vendors even at a less favorable price point.
Are there issues related to employment that business owners should be more aware of during this time?
If the business doesn’t have a relationship with an employment attorney, now would be the time to start one before executing any staffing decisions. A few hours of time evaluating procedures and policies on the front end may save a lot of heartache and expense on the back end.
If the business needs to reduce staff, owners should try to be creative with severance (assuming they’re in a financial position that allows). For example consider paying health insurance beyond the normal term. Little things may create good will. When times turn around, valuable former employees may be more willing to leave their next position and return. Be sure to check with an attorney before making any commitments.
Businesses can no longer tolerate ‘dead wood’ or underperforming family member employees. They may need to be removed from daily operations to save the business. Family members may still receive the benefits of ownership (when there are some) but not compensation for ‘services.’
Reduce overtime and benefits. Employees may be willing to do more in order to avoid reduction in base pay. Only cut pay as a last resort. Be cognizant of labor law issues, though, when employees are working more hours for the same pay.
This is probably the worst economic environment that most business owners have ever faced. However, like all other tough times, this recession will end. Those businesses that use this opportunity to improve their overall operations will be very well positioned for significant growth and profitability when better times return.
As the president and managing partner for Meeting Expectations, Brian Meyer is responsible for the overall strategic direction and financial performance of the company, executive development, and key customer contact. Meyer joined the company in 1997 and has also worked as the financial manager and vice president of finance and administration.
Q. Why should a business work with an event management firm?
The biggest thing a midsized business sometimes neglects is they just look at the dollars What is it going to cost? What are we going to take in? How much are the profit and the loss going to be? and they can neglect the overall event strategy. There are some important aspects of the event strategy that we can bring to the table to help you look at the ROI.
Q. Other than quality events and the ability to remain on budget, what important values does a firm provide?
The first thing, and this is the future of so many businesses, is to ask what the event management firms have in terms of technology. Technology is something you can really leverage to create a lot of efficiencies. What online registration systems do they use? Do they have their own in-house system? Can they help to deliver new solutions and reach out to your audience?
There are so many firms out there that plan the same events, and they do the same thing, and they charge the same price, but there are so many other opportunities out there for things to sponsor and revenues to generate. You can sell your Twitter feed for the event, you can sponsor e-mail functions, lunch functions, you can package things together. There are so many ideas out there to generate additional attendance and revenue for your events.
Q. What are some of the newer services a firm can provide for a small or medium business?
A virtual conference is big. You might have a great live event that you’ve relied on and that has been successful, and you don’t want to lose that, but maybe not everyone can travel to that event. Why not offer a complementary event on a more virtual platform?
Trade secrets are crucial information that helps one business distinguish its products or services from the competition. Even if not actively used by a company, the mere ownership of trade secrets can provide tremendous value to the owner.
For example, the formula for Coca-Cola is perhaps the classic trade secret. Less obvious examples, however, are formulas tested by the Coca-Cola Co. that are not used in marketed cola. Those formulas are likely trade secrets because the Coca-Cola Co. gains value by preventing its competition from reaping the benefits and know-how of its trial and error. Critically, information once considered trade secret may lose protective status if reasonable protective measures are not taken.
Smart Business spoke with Steven R. Press, shareholder with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, about information considered trade secret, how best to protect trade secrets and what to do if your secrets have been misappropriated.
What is considered a trade secret under Georgia law?
Georgia law defines a trade secret as information including, without limitation, formulas, programs, devices, methods, techniques, financial data, product plans, or a list of actual or potential customers or suppliers that is not commonly known by or available to the public and which (1) provides economic value from not being generally known by or readily available to others who could benefit from its disclosure and (2) is protected from disclosure by reasonable efforts.
Trade secrets are protected under Georgia law without a contract. Unlike trade secrets, confidential information in most circumstances may only be protected by an enforceable contract.
What are some procedures that should be in place to protect trade secrets?
- Require background checks on potential new hires to confirm reasons for termination and past adherence to nondisclosure obligations.
- Require nondisclosure agreements as a condition to employment.
- Circulate an employee handbook describing information claimed as trade secret and the duty to protect such information, with each employee acknowledging in writing that he or she has reviewed it.
- Frequently remind employees about what is considered trade secret and obligations to maintain secrecy.
- Restrict access to certain paper documents.
- Password protect computers and restrict access to certain parts of the server.
- Restrict physical access to certain offices and cabinets, and lock cabinets and offices containing trade secret information.
- Mark documents, either paper or electronic, as trade secrets.
- Restrict out-of-office access to trade secret information.
- Install standard office security, such as locks or alarms, and place protection devices on certain or all software.
- Only include employees with need-to-know information in meetings during which trade secrets will be discussed.
- Develop nondisclosure agreements with suppliers, vendors and customers.
- Remind terminated employees of their post-employment trade secret obligations and provide a copy of the nondisclosure agreement upon termination.
- Conduct forensic investigations on computers used by terminated employees.
- Hire outside firms to conduct a trade secret audit of your company’s trade secret policies and procedures.
While all of these alternatives have value and are achievable, at a minimum, there is no good excuse for failing to require every employee to sign a nondisclosure agreement.
How can you develop nondisclosure agreements, and what should be included?
You have to think about what gives your business a competitive advantage over others. In most circumstances, your agreement should cover a number of different areas, including:
- Information about customers or potential customers
- Corporate financial information
- Vendor and service provider information
- Information about current and future products including projected sales figures, project timelines, inventory reports and cost and expense reports
- Marketing strategies and long-term goals
- Technology used by your company
How will you find out a trade secret has been misappropriated?
The three most common ways are (1) a current employee shares a conversation had with the former employee regarding the former employee’s intentions; (2) a competitor that hired your former employee discloses that your former employee offered to share your trade secrets; or (3) a competitor employs your former employee and starts marketing products quicker than fair competition would allow.
What do you do if a trade secret has been misappropriated?
Trade secret status may be lost if you find out secrets have been misappropriated and you take no legal steps to prevent further misappropriation. The most common action is to sue your former employee and former employee’s new company seeking damages for past misappropriation and injunctive relief to prevent further misappropriation. Depending on the circumstances, criminal charges for theft of trade secrets may be warranted. The best approach is to take all steps possible to prevent the misappropriation from happening and, if necessary, aggressively litigate against all who participate in the misappropriation.
Steven R. Press is a shareholder with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC. Reach him at (404) 221-6534, (678) 662-7388 or email@example.com.
Born: Brooklyn, N.Y.
Education: Bachelor’s degree in cultural anthropology, The State University of New York at Buffalo
First job: I worked in catering halls for years. I was 16. I worked as a busboy, head busboy, waiter, bartender. I think everyone should be a waiter at least at some point in time. You learn so much about how to deal with crisis, how to deal with people, how to make them happy on a personal level. Before that, I worked in camps doing music I was the music instructor, but really that was my first real job.
As a child, what did you want to be when you grew up?
Probably a rock star. I’m not giving up on that. When I was 16, I was playing in a band, and we were playing at these clubs in Brooklyn and opening up for big names at the time. … It’s sad; when I was 16, I kind of peaked my rock stardom. I’ve been in a band almost ever since up until a couple years ago.
Whom do you admire most and why?
In life, and I know this is so cliché, but definitely my father just because he was also a musician and he was also extremely creative and passionate about life. The one thing that he instilled was he was always happy to go to work who the hell is always happy to go to work? Everyone has bad days. Everyone has problems, but he never showed that to the family.
What’s your favorite movie?
I’d say ‘Fight Club’ is probably my No. 1 favorite movie. ‘Fight Club’ is one of my favorite movies because it encapsulates a point in time when I first graduated college, it encapsulates where we were as a culture at that time, the challenges that we face, and there’s a lot of good lessons about materialism and counterculture.
Lunenfeld on establishing a vision and values: The vision needs to serve as a prediction, and it should be a work in progress slightly unattainable. For us, the vision is that Moxie is creating the agency of the future. We are creating it’s not to say that we are or we’ve achieved this. It’s creating that sense of a work in progress and something that we’re all striving for.
You can’t put [your core values] up on a wall and say, ‘This is what we are today.’ When we were crystallizing what our values were, it was really a reflection of who we are, not who we want to be. The difference between your values and your vision should be who you are. Your vision should be who you want to be.
Everyone really underestimates how important, what people consider, the soft stuff is in a company the touchy-feeling things. I was a cultural anthropology major in school, so for me, it’s all about what drives your culture, what are the things you stand for, what are the symbols that point those things out. When you think about it, a company really needs to be a drive, a culture, a vision, and everything you do has to ring true to that, otherwise everyone’s just going to call bullshit on you.
Week after uncomfortable week, Donald Trump leaned across the edge of his famous boardroom table, his hands locked together, his lips curled in a sneer, and stared some poor sucker right out the door. During eight seasons of his reality television show, “The Apprentice,” Trump has mastered the ability to pound out the two words that no employee, not even a contestant eager for fame and fortune, wants to hear.
As has been the case so many times during the last couple of decades, Trump proved to be far ahead of the curve. He mastered the fine art of the fire long prior to the start of our current recession, long prior to millions of workers hearing the same words, more or less, as that unfortunate contestant on the other side of the table. But perhaps Trump and you will not need to utter those words as often this year as you did last year.
The national unemployment rate dropped to 10 percent in November 2009 from 10.2 percent in October, according to the Bureau of Labor Statistics. That figure, however slight, represents enough of a drop to provide some glimmer of hope to human resources and human capital experts across the nation and some hope that the start of a long recovery will soon be under way.
“A sharp employer can use the current economic system to get their employees even more engaged in the business. The whole issue of human resources is really built on common sense and good human interaction,” says Gordon St. John, managing director, East Region, United States, Buck Consultants LLC. “Employers can be talking to their employees about what the challenges are and looking to their employees to help find more solutions.”
All of which means that, after a long and frustrating year filled with layoffs, wage freezes, the elimination of bonuses and perks, and the addition of more assignments for employees already under stress, the economy and the human resources industry might start to take a turn for the better at some point this year. Challenges do remain, of course, but there is hope.
Whenever the figures and charts tick upward, the time to move will be as soon as possible. Will you be prepared?Focus on your top employees
The challenges throughout the last year focused on how to maintain the revenue, trim the budget and retain as many employees as possible. Almost every business of every size lost something and, more important, somebody as evidenced by that aforementioned unemployment rate, which has increased during almost every month since April 2008.
You might still need to trim your budget, but you will also need to focus on identifying and retaining your high-performance and high-potential employees. So often, those employees might think the grass is greener on the other side of the proverbial fence. But what about when the grass is brown? What about when there is no grass? Heck, forget the grass, what about when there is no fence? They remain where they are for as long as necessary, as they are doing now because there are so few available positions in the marketplace.
Then they leave.
That is, at least, the consensus among dozens of human resources and human capital experts.
“Employers are doing whatever they need to do,” St. John says. “But they need to take care, because employees have long memories, and the manner in which employers get through these difficult times will not be lost on their employees. There’s not a lot of job-hopping going on these days, but when things get better, which they ultimately will, employers will have had to have done a good job of communicating openly and treating their employees as well as they could have.”
The process of retaining your employees has already started, with your top workers likely influenced by how you handled the fallout from the shock of the recession. If you handled layoffs with dignity, communicating why decisions were made and what they meant for the future, that helped. So did any revenue investment in those top workers, from compensation and bonuses to training programs and seminars. And if you talked with those top workers and relayed to them where they fit in the vision for your business, that would have been about the best thing you could have done.
“Employees talk, so when it gets around to human-resources-type programs, over coffee or at a holiday party or wherever, people talk about what their organizations are doing, whether or not health care is provided, how much you have to pay for health care,” St. John says. “If an employee has a negative perception of those things and becomes aware that there are those perceptions, they may not be able to act on it immediately, but they will keep that in mind and look for other opportunities.”Develop and share your plan
In addition to identifying and targeting your high-performance and high-potential employees to prepare for a future of healthy economics, you should develop a plan to address possible human resources challenges and plot the path you want your business to follow during the next couple of years.
Chief among your objectives for that plan should be the development of a balance between continued cost reduction and simultaneously positioning for growth. During the last year, many companies have aimed to manage and contain all costs related to human resources and human capital because they have been trying to do little more than survive. Survival is important, but it is also important to not damage the viability of your business in the big picture, well beyond these few years and even beyond this new decade.
Once you develop your plan, share it with your employees, especially your key employees. That advice might sound obvious, but experts say that too many business owners fail to relay information to their managers and their employees. And even in a good environment, employees who only hear about meetings behind closed doors and have no idea what is happening and what is about to happen will often speculate incorrectly, either causing additional stress or inadvertently spreading incorrect information. In short, you can still have those meetings behind closed doors, just be sure to share what is said on the other side of the oak.
“Communication is big, particularly from the senior executives,” says Josh Sorkin, senior vice president of enterprise services, Hudson. “It’s about what they’re doing to invest in not only the people but in the business overall, in making the employee base feel the company is investing in the longer term.”
Communication is a key to developing a successful human resources department, either internally or by bringing in an outside firm. You want your employees aware of what is happening in your business, and you want them to be engaged.
“With all of the changes going on in the economy and all of the uncertainty, it’s important to remain engaged with your employee base, to have them stay focused on the business at hand and not be distracted by news in the marketplace or internal chatter within their own companies,” Sorkin says. “It’s important for them to be focused on the tasks at hand and make sure you keep your business profitable and looking forward.”
Employment litigation is on the rise, with many cases dealing with workplace misconduct in the form of harassment or discrimination. The recession has incited our already litigious society to the point where employees will sue over misconduct instead of simply leaving the company.
Employers need to take action promptly once a complaint is received, conduct a thorough and fair investigation, and take action against the harasser to warn other employees that misconduct is not tolerated.
“If you don’t conduct an investigation, the behavior could become worse and involve other employees,” says Charles Huddleston, a shareholder with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC. “There can also be a lot of time and money involved in employment law cases, and it can generate a lot of ill will and bad publicity for your company.”
Smart Business spoke with Huddleston about developing policies concerning workplace misconduct and investigating incidents.
How are workplace misconduct complaints received?
Complaints can come directly from the victim or from someone who has seen or heard about the incident. Anybody in a management position should report an incident if they see it or hear about it. If it’s not passed on to the appropriate people and the harassing continues, the company will be held responsible.
Anywhere employees are undertaking activities for the employer can be considered the workplace, including a reception area, a business trip or client delivery. The mere fact that harassment or discrimination is occurring off the normal worksite does not immunize you from liability or relieve managers from taking steps to stop it if it’s seen or known.
What is involved in a misconduct investigation?
Investigations should be done promptly, thoroughly and fairly. The severity of the complaint will often determine how promptly the investigation should be handled. Investigations can be unpleasant and, many times, tend to drop to the bottom of people’s lists, particularly if the harasser is someone you know or like or it’s the boss. But every day you don’t take care of it could mean another day that the harassment or discrimination is continuing, and possibly getting worse, if the charge turns out to be true.
You also need to thoroughly investigate the complaint, and make sure all employees who may be involved are interviewed. If the complaint is accurate, odds are this wasn’t the first incident with the harasser, so you need to take time to seek out other potential victims to help build a clearer case.
You should have a trained investigator involved, mainly from the human resources department. Having more than one person involved allows for a fair investigation. If one investigator works closely with the harasser, he or she can step down from the investigation. If the harasser is someone with power and you want to make sure the investigation is handled fairly and the victim is able to tell his or her side of the story, then you may need to bring in an outside investigator; often the company brings in its outside legal counsel to handle the investigation in this situation. It’s also good to have at least one female involved, because female victims will be more comfortable talking to other females about an alleged incident.
Many times, victims will come forward to report an incident, but don’t want to do anything about it. You need to communicate that some sort of investigation needs to take place to stop the misconduct from happening. You should develop a strong anti-retaliation policy so that nothing can happen to the victim after reporting an incident.
How can you develop good policies and procedures to prevent workplace misconduct?
Policies should tell employees who to report incidents to and that all complaints will be investigated. Having policies in place and a good record of investigating, and taking actions to stop misconduct, gives employees no excuse to not report misconduct.
You need to make sure your policies are up to date and include employment law changes from the last several years. Supervisors and managers should be trained, as well as investigators, at least every other year so they’re up to date on the policies and any law changes. Investigators also need extra training on how to properly interview people to try and track down the facts to prove or disprove the allegation.
What action should you take following an investigation?
The severity of the conduct will determine how severe the punishment will be. You don’t always have to fire somebody, but you can take steps to try and change the person’s behavior before further actions are taken. The employee could receive counseling, have reprimand placed in his or her file, and have his or her behavior monitored by the victim and others working closely with him or her. The harasser can also receive extra training on appropriate workplace conduct and language. The employee should be terminated if the behavior continues or the initial incident was too severe.
What are the benefits of putting proper policies in place against workplace misconduct?
Having the proper policies in place and a good track record of investigations gives you a better defense if someone complains. If no report was made by the victim, it can actually give you a legal defense to certain claims. It can also send a message to your employees. The first time someone is reprimanded for harassment, even if it’s not made known publicly, people hear about it and know this is taken seriously.
The number of complaints can actually go down if you put the proper training and education in place, and if you create an environment where workplace misconduct is not tolerated.
Charles Huddleston is a shareholder with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC. Reach him at (404) 221-6536 or firstname.lastname@example.org.