Linda A. Klein is the managing shareholder of Baker, Donelson, Bearman, Caldwell & Berkowitz’s Georgia offices and is a member of the firm’s board of directors. Klein’s practice includes most types of business dispute resolution, including contract law, professional liability and employment law.
Q. How can following legal advice save money for a company?
We all have our own jobs that we do, and the owner of a business is very good at running his or her business, but they may not be lawyers. Just as you would go to a doctor for a checkup, legal advice is much the same way. By going to a lawyer who understands the legal implications of what your business does, you’ll be able to get a legal checkup. Sometimes the lawyer can point out something you could do better, and if you do that, you could avoid a lawsuit or a government investigation.
Q. When should a business seek legal counsel?
When you are going to begin a business is an excellent time. If two people have an idea and decide to start a business together, there needs to be a plan for when they are not happy and are not working well together. Because when things are going well, you don’t see what the potential problems are. When you plan for the worst, you have a map for resolution of a possible dispute that was set way in advance, and perhaps, there will be no litigation or a very low-cost resolution.
Q. Can a company negotiate a flat fee for some services?
Law firms are always open to working with clients to find the best method of paying for their services that works for both the client and the law firm. It was large businesses that got law firms more used to doing billable hours, because there was a perception that clients would get a better value from hourly billing. As business has changed, business owners want to know what something is going to cost.
Many companies are outsourcing their IT functions as a way to cut costs, improve service and turn their attention to their core competencies. Before you make the decision to follow suit, you need to look at several key factors to make sure you’re doing it at the right time and for the right reasons, says Courtney Stoll, director of operations and administration at Arke Systems LLC.
Smart Business spoke with Stoll about how to decide whether outsourcing is right for your company and how making the move can help you focus on what really matters for your business.
What factors should business leaders look at when deciding whether outsourcing is right for their company?
There are three key factors that come into play when determining whether your company should outsource. First, you have to analyze whether you have the right team in place to quickly execute the IT project you’re considering. Do you have the staff available, or would placing them on this project jeopardize other responsibilities they are tasked with? You need to look at experience: Do you have experts on staff who are familiar with executing similar projects, or are you missing a critical piece of the puzzle to achieving success?
Second, you also need to consider the strategic value of the project. Is the effective execution of the project critical to your business? If you run into problems with the project, is there room for delay or potential failure or is it critical that it succeed the first time?
And finally, how do the resources required for the project align with your company’s core business competencies? If the project is outside the scope of your core competencies, you may want to consider outsourcing. In addition, outsourcing can provide you with an outside opinion on a problem that you may be struggling to solve internally on your own.
When is the right time to begin outsourcing?
Before you begin a new project, you should consider whether you would be better served by outsourcing it. It’s difficult to make that transition in the middle of a project if you discover that you don’t have the capabilities to do it in-house, so it’s critical to make that determination before you begin.
Another good time to begin outsourcing is if you are making step improvements in your processes and not just targeting incremental improvements. By outsourcing, you can make transformational change in your organization instead of simply taking small steps to improve what you’re already doing.
How can outsourcing help you focus on your company’s core competencies?
Outsourcing allows you to place responsibility for the less critical areas of your company on someone else, enabling your company and your people to focus on your key processes and initiatives that are revenue generators to your business.
Outsourcing also creates a single point of accountability and allows you to better define and regulate that process. Doing so creates a win-win partnership, establishing goals and rewards on both sides of the relationship for hitting requirements, with shared benefits and results for both parties.
How can outsourcing benefit a company in a down economy?
Outsourcing your IT functions can not only help you reduce costs, which is critical in today’s economy, it can also increase innovation by your employees and help make substantial improvements in processes at your company.
Companies have long outsourced functions outside of their core competencies, such as accounting, human resources, staffing and collections. Outsourcing IT functions to the right partner is no different. In a down economy, it’s common for businesses to reduce their staff, and by using an outsourcing partner, you can keep your company running smoothly with fewer employees and relieve the burden on your existing staff members.
Plus, outsourcing can help improve your company’s cash flow by reducing your payroll costs and by allowing you to work out financing and payment schedules with your outsourcing partner. Paying just for the work done by the partner also relieves you of absorbing the overhead of benefits, such as health insurance and 401(k) matches.
And finally, by outsourcing you are freeing your managers to focus their attention on more strategic, bigger-picture activities that have a higher value to your company.
How can outsourcing better position your company to grow as the economy improves?
Outsourcing allows you to achieve a high level of performance in mission-critical areas, enabling your company to quickly build scale and establish best-in-class processes. No business can maintain experts in every area that it needs to run smoothly, and having partnerships with experts that will grow with you and help you maintain your competitive edge is critical.
How do you find the right outsourcing partner?
In the past, functions such as debt collecting were outsourced to the lowest bidder. But as the functions that are outsourced have become more complex, you need to identify the company that offers you the best value for your money, not just the company with the lowest price.
Look for a company that has experience in your industry, that can work closely with your company and that has an experienced operations team.
Courtney Stoll is director of operations and administration at Arke Systems LLC. Reach her at firstname.lastname@example.org or (404) 812-3123.
Born: Livingston, N.J.
Education: Bachelor of science degree in finance, Lehigh University
What has been the best advice you have ever received?
Do the right thing. Always do the right thing.
What has been the biggest challenge you’ve faced in your career?
I think having the courage to follow a dream. I went off and started my own business, and that took a lot of courage and guts and sanity. But I think I’m glad I did it.
As a kid, what was your first job?
My first job was paving driveways for money in the summer in high school. Very glamorous, right?
What did you learn from that job that still applies today?
If you work hard and harder than anybody else, you can be successful.
As a child, what did you want to be when you grew up?
I wanted to play basketball for the New York Knicks. I wasn’t even close. But if they ever call me, I’m going.
What is your favorite board game and why?
Monopoly. It’s just an interesting combination of strategy, and I just like the strategy of it.
With more than 2,000 franchisees, the Roark Capital Group portfolio includes such brands as Cinnabon, Moe’s Southwest Grill, Schlotzsky’s Deli, Seattle’s Best Coffee, McAlister’s Deli, Carvel, Primrose Schools, PSC Info Group, Money Mailer, BatteriesPlus, DX Marketing and FASTSIGNS, among others.
Jim Doorn is the regional vice president of operations for Regus, a real estate company that offers clients workplace products, including fully furnished office and virtual meeting rooms. Doorn is responsible for providing leadership and strategy for more than 150 business centers throughout the eastern United States.
Q. How can a company determine how much space it needs?
The first thing, they’ve got to look at the total cost. If you look around your office space, how many of those areas are really used on a daily basis? How well is your business prepared for an economic downturn or normal economic cycle? Those types of questions are key to determine what percentage of space you need in a conventional lease and what percent of your real estate needs to be flexible where you can ramp up and scale down and limit the capital expenditures that you have in the real estate portion of your business.
Q. How can companies best weather the economic crisis when it comes to their real estate?
We’re seeing a mixture of things. A lot of companies are looking to just hold firm and ride it out or they’re looking to cut costs and maximize flexibility. We’re seeing a lot of companies forego renewing their current lease and downsizing to something that’s flexible. Companies are looking to leverage opportunity in the market and manage their costs.
Q. How can a company save money on real estate?
In the current economic environment, we’re finding that a lot of companies, large and small, are looking to move a percentage of their portfolio to a more flexible location. A business could save over half if they took office space for 30 percent of their real estate needs, a flexible solution for 30 percent and then a very limited use for the final percentage. The type of model where employees are not in the office as much is providing companies with options they’ve never had before. It all goes back to flexibility and managing cost.
If you don’t have a way of measuring your return on investment, you’re not in control of your business.
With a customer relationship management (CRM) system, you can measure your results on everything from marketing campaigns, sales activities and new products to logistics performance and productivity, says Courtney Stoll, director, operations and administration at Arke Systems.
“Business owners are already managing their business in a way that lets them track this information,” she explains. “The problem they’re facing is that the information isn’t consistent, it’s disconnected and it’s time-consuming to perform the analysis needed to make important decisions.”
According to Stoll, you can ease into a CRM technology solution at your own pace so it doesn’t disrupt your business. And once you get key data points into the system, you’ll wonder why you didn’t invest in it sooner.
Smart Business spoke with Stoll about how basic investments in technology can help you to better track your return on investments.
How do you determine what within the company requires ROI tracking?
Return on investment is traditionally determined by how much time it takes to recover that investment. Generally, you should look to measure ROI on large purchases or investments that affect your key performance indicators.
Business leaders contemplate investment decisions every day. There are upfront decisions about making an investment, and there are also ongoing decisions concerning the performance of those investments. Using ROI as a basis for making an investment decision helps frame your expectations about the value you’ll receive from the investment. Then, after making the investment, continuing to measure ROI helps give you perspective on how it is affecting the business.
Determining what to measure also depends on your business. Based on the business or the type of investment, the factors used to measure ROI differ. What’s important is making sure that your ROI comparisons are apples to apples. If you’re measuring ROI on several items in your business, the measures and factors going into those calculations need to be consistent.
Most likely, the assumptions used to develop the initial ROI model will continue to evolve, so it’s important to interpret the results in that context.
How can basic investments in IT help you track ROI on your marketing campaigns?
That’s one of the main benefits of a customer relationship management system. With this technology, you get a 360-degree view of your business. Out of the box, that includes your sales, marketing and customer service. And you can use information from different aspects of your business to gain deeper insight into your customers.
Without a CRM system, you might send a postcard special offer to all of your customers, and you could potentially see an uptick in overall sales. But with a CRM system, you can relate that postcard to increased Web traffic, an increased number of phone calls, an increased number of e-mails, fewer customer service issues, new sales, a shift from legacy products to new products, etc. With this kind of holistic approach, you’re able to maximize every customer relationship based on ROI measurements.
How can you better track your sales activities with a basic investment in IT?
Just as a CRM system gives you the overall view for measuring marketing ROI, you can also dive into the details of each area of your business, such as sales. Once you use CRM to manage each stage of your sales process, your sales performance improves because the system keeps you tuned into the specific sales practices.
CRM keeps you focused on your business because it gives you the ability to actually see what’s happening. And once you’re using the system, you begin receiving ancillary value, such as the ability to measure the cost of sales or comparing customer satisfaction to customer personas. Whether that’s used to focus in on a niche market or improve customer service for particular products, having this information gives you the data you need to tweak and improve your overall business offerings.
How can IT help you track the ROI of new products, logistics performance and employee productivity?
The next generation of CRM is xRM, where x means anything. You can easily configure Microsoft CRM to manage anything within your business, such as projects, timesheets and customer satisfaction survey results.
It also integrates with your Web site and with Twitter, allowing you to measure marketing efforts, all the way through to sales and implementation and back to customer service. By closing the entire business cycle loop, CRM equips employees with the information they need to make the best decisions.
What are the costs to establish a system to track ROI?
Take CRM one bite at a time. Most of our clients see an ROI on CRM within 90 days. But in order to realize real value within that time, you need to start with the basics. From there, CRM evolves, just as your business evolves. You tackle one new aspect at a time, and it changes with you. It’s an ongoing effort designed to show incremental value with each iteration. For example, Dynamics CRM allows you to buy a hosted solution for as little as $44 per user per month, and it scales up to an on-premise solution as your needs grow.
Courtney Stoll is director, operations and administration at Arke Systems. Reach her at email@example.com or (404) 812-3123 x106.
In these difficult economic times, businesses are streamlining their employee base and, at the same time, could be shrinking safeguards, as well. By eliminating or trimming certain key staff, companies could be putting themselves at risk from reduced management controls.
Employees may be facing severe pressure in their personal or professional lives through foreclosures, bankruptcy, layoffs and failing businesses. Your employees are impacted and that puts your business at risk.
Smart Business learned more from Angela Dotson, CPA, senior tax manager at Habif, Arogeti & Wynne, LLP, about overcoming recessionary risks to protect your business from fraud.
What businesses have the highest risk of fraud?
According to the Association of Certified Fraud Examiners, small businesses are the most vulnerable to occupational fraud because financial responsibilities in smaller companies are typically only handled by a few people, or even one person. Smaller companies tend to have ‘trusted’ longtime employees that have access to assets and information that provides an opportunity to both commit and conceal the fraud, whereas larger businesses with an internal audit department have a lower risk of becoming victims.
What causes an employee to commit fraud?
The three key elements in what is known as the fraud triangle are opportunity, pressure and rationalization.
Opportunity is the person’s ability to commit fraud based on his or her level of access to company information. Pressure can be brought about by medical bills, expensive tastes, addiction problems and any other significant financial need. Rationalization is when the individual justifies stealing from the company, since oftentimes the employee intends to replace the funds in the future. The typical fraud is committed by a first-time offender under extreme pressure and is usually uncovered via tips or accidental discovery. As a precautionary measure, business owners should be proactive and develop a climate that is hostile to fraud.
What can companies do to reduce the risk of fraud?
Business owners should implement strong internal controls to minimize opportunities to commit occupational fraud, but first, they need to identify areas where abuse is likely to occur. One of the most common types of abuse is asset misappropriation through disbursements and skimming.
The following questions and suggestions should be used by business owners in reviewing their internal controls and determining which areas require further action:
- Who is responsible for receiving cash, disbursing cash, writing checks, signing checks and reconciling bank accounts? To reduce the risk of fraud, the duties should be separated.
- Do you require two signatures for checks over a certain dollar amount?
- What controls do you have in place over noncheck disbursements such as wire transfers and debit memos?
- Make sure that employees with cash disbursement and bank reconciliation duties are required to take vacation, and have other employees trained to perform their functions when they are absent.
- Blank checks should be kept in a secure location. All voided checks should be canceled and retained.
- The person performing the bank reconciliation should not receive the bank statements directly.
- The statements, along with enclosures, should be viewed by another appropriate person on a monthly basis.
- Disbursement checks should be prepared after they are matched to proper supporting documentation and have been formally approved.
- Pay close attention to the vendor account numbers as you and your employee could have outstanding invoices with the same company (i.e. credit card or cell phones).
- The person(s) responsible for preparing payroll should be independent of other personnel duties such as timekeeping, distribution of checks and hiring employees.
- There should be restricted access to blank payroll checks.
- Are pre-numbered payroll checks used, the sequence accounted for and unissued checks controlled?
- Do you reconcile the payroll register and the general ledger to gross and net pay amounts per the payroll tax returns? There should be a periodic review of the payroll register compared to the budget for the year and any variance explained.
- Do you have adequate timekeeping and attendance records to prevent abuse by employees?
- Have you verified that your payroll taxes are actually being remitted on a timely basis?
What if your company does not have enough staff to separate all the functions?
Discuss your concerns with your CPA. Consider having him or her review your financial statements and various components on a regular basis. Work with your CPA to determine what functions would be appropriate to outsource to his or her firm. Your CPA can help you identify and assess your internal controls and help develop solutions that will work for your business.
Insights Accounting & Consulting is brought to you by Habif, Arogeti & Wynne, LLP
Angela Dotson, CPA, is a senior tax manager at Habif, Arogeti & Wynne, LLP. Reach her at firstname.lastname@example.org or (404) 814-4981.
Early in his career, Brad Eller was promoted to a position that, by title and job description, he didn’t have enough experience to have, and the new role opened his eyes.
“When that happened, what I realized very quickly is people do not think the same way that I think,” Eller says. “People do not do the same things that I do. People don’t approach problems or issues or conflict the way that I approach those things.”
At the time, he didn’t have the resources to hire a coach to help him, so he immersed himself into reading a variety of professional books to help him learn how to understand different personality types. What he learned still helps him today as president and CEO of LEVEL5 LLC, a construction management services company that has climbed the Inc. 500 list as a result of its growth from $1.5 million in revenue in 2004 to $47.5 million in 2007.
Smart Business spoke with Eller about how to understand personalities and build a strong senior management team.
Develop a strong senior management team. Everyone has to understand the need of a senior management team. One person cannot drive a business. It takes a group of people, and it takes a group of people that have alternative thoughts or different perspectives for a president or CEO to really get a read on any situation or issue or problem or actually to create a vision.
How I developed that is twofold. One, there’s going to be people in the business that you didn’t select — they’re in the business, so you have to understand those people and you have to understand what perspectives they bring to the table and what their talents are. I don’t want to go too far into psychology but kind of what is their personality profile? Where do they stand? How do they view life? You have to understand the perspective of who that person is and what they represent.
You have some of those people and then you have the ability or occasion to bring in other people. You have to bring people into your organization in areas where you’re lacking. Sometimes managers surround themselves with people who think like they do, and that’s a mistake. You have to look at the uniqueness.
Senior leadership, it’s like a stew; my job is to put the right ingredients in the stew — make sure that those ingredients complement one another. I can’t put the same ingredients in, otherwise it wouldn’t be a stew, and I have to make sure the ingredients bring out the flavor of the other ingredients and that it blends. Then I have to occasionally taste it and add ingredients. Sometimes my job is to stir it up a little bit. Then my job is to sometimes put the heat on and sometimes to turn the heat down.
Take time when hiring. From my perspective, I’m committing to someone for their livelihood. One of those fundamental leadership things that I have is I need to make it work. It needs to be successful, so I need to make the right decision.
I begin with a phone interview. Certainly we talk about experiences, previous work history, but we also talk about what do you want to accomplish in your career, what is the perfect job, how do you see yourself progressing, where would you like to be in 10 years, how much money do you like to make?
Then I like to bring the person into the organization, and I like to conduct an interview and meet the person. Depending on the strength of the phone interview and the personal interview, I’ll invite them back the second time. That second time, that’s the most rigorous of all because I try to have all of the other senior managers spend an hour with them — it can be a long, tiring day for the right candidate.
Then we meet and everyone provides feedback. Then, based on that feedback, I call the person in again. If you find a talented person, they may have other offers, and they’ve got decisions to make, and sometimes I have to accelerate through that, but I make it clear that we don’t want to rush through the process. It’s got to fit.
It’s like buying a pair of shoes. I go to the store, and I see a great pair of shoes, and I put them on and they don’t really feel right, but I buy them anyway and take them home and wear them into work, and my feet hurt and have a blister, and the shoes didn’t work. You don’t want to do that with people. You want to make sure that it works and make sure that it fits.
Mix everyone together. You have to make sure that your team understands that everybody is there to provide different alternatives and perspectives. So when we have a meeting, we want to have rules because I want power dialogue in the room. The main rule is you attack an idea not an individual. Other rules are there’s no rank in the room, and you have to be present, you have to be engaged.
Then what you have to do is you really have to teach your senior management team how to engage in conflict so that people can disagree and it doesn’t ignite emotional fire. It’s an education on how to engage in conflict. Organizations grow through conflict. If a conflict is resolved, they can stay on that growth curve, but if the conflict’s not resolved, you decline.
What you want to do is by heating up the fire or stirring the pot, when it makes strategic sense, have some conflict. You’ve got to check the temperature of your organization. If people are complacent and everybody just seems to be complacent, then obviously that’s when you need to insert a little bit of heat and conflict. If everybody is out there firing on all cylinders, and they’re working hard toward a common goal, then that’s when you need to turn the heat off, and you don’t need to stir the pot. Let it simmer. It’s a good tasting stew. It doesn’t need me doing anything to it.
How to reach: LEVEL5 LLC, (404) 761-0008 or www.level5.com
Numerous pieces of federal legislation have been proposed to control the high compensation costs for executives at public companies. While decisions on the legislation are not expected until later this year, approval would impact disclosures, reporting and corporate governance for public companies.
“Any company registered with the SEC will be affected by these new rules if they are finalized,” says Kevin A. McGill, an attorney with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC.
Smart Business spoke with McGill about the different pieces of legislation, new rules developed by the SEC and how to prepare for possible approval of the legislation.
What are the proposed pieces of legislation?
Sen. Charles Schumer recently introduced legislation to overhaul a number of governance areas. Sen. Schumer’s legislation includes significant provisions, such as:
- ‘Say-on-pay,’ which gives shareholders an annual, nonbinding vote on executive pay practices
- ‘Say-on-severance,’ which gives shareholders a nonbinding vote on severance packages for executives following M&A transactions
- Enhanced proxy access, which makes it easier and cheaper for investors to nominate their own directors
- Elimination of classified boards, which requires companies to hold annual director elections rather than voting on a portion of the board each year
- Majority vote standard for director elections, which requires directors to resign if they do not win a majority of votes
- Independent board chairs
- Risk management board committees appointed by boards
The Shareholder Empowerment Act was recently introduced by Rep. Gary Peters and goes a bit further than the Schumer legislation. This legislation would implement eight governance reforms highlighted in a Council of Institutional Investors letter to Congress late last year. These include:
- Majority voting for directors
- Enhanced proxy access for long-term investors in nominating their own director candidates
- Elimination of uninstructed broker votes in uncontested director elections
- Separation of board chair and CEO positions
- Nonbinding annual shareholder approval of executive compensation
- Independent compensation consultants
- Clawbacks of unearned incentive compensation
- Bar on severance for executives terminated for poor performance
Finally, Sen. Richard Durbin introduced the Excessive Pay Shareholder Approval Act and Excessive Pay Capped Deduction Act of 2009 in May. The first act would require a supermajority shareholder vote — 60 percent — to approve a compensation structure in which any employee is paid 100 times the average employee salary at that company. A company’s proxy statement would also need to include disclosures related to the compensation of the lowest and highest paid employees, average compensation paid to all employees, and total compensation and number of employees paid 100 times the average compensation.
The second act would limit a company’s federal income tax deduction for compensation paid to executives receiving 100 times the average employee compensation. Any amounts paid in excess of this cap would be considered excessive and would not be deductible. Any company paying excessive compensation would be required to file a report with the U.S. Department of Treasury.
What rules does the SEC have in place?
The SEC put fairly extensive proxy statement disclosure rules into place in 2006, but there have been complaints that there was not enough emphasis on compensation policy analysis. The SEC has recently proposed rules that would require a more enhanced discussion about how compensation policies impact a company’s ongoing business. Many companies, primarily in the financial services sector, compensate employees heavily based upon business success and performance. The SEC is looking for a better analysis of how this method of compensating employees may impact business risk, i.e. whether employees of a company or particular business unit are encouraged to take on too much risk in an effort to increase individual compensation. The aim of these new rules would be to allow investors to assess whether a company’s compensation policies are properly aligned with the long-term success of the company.
Currently, the SEC requires a company to include a number of compensation charts in its proxy statement, including disclosures related to option and stock-based compensation. The proposed SEC rules would change the manner in which such compensation is reported in a company’s proxy statement by requiring that option and stock awards be presented in the tables at their aggregate grant date fair value rather than the dollar amount recognized for financial statement presentation.
How can you become educated on the legislation and prepare for possible approval?
Public companies need to be working closely with outside counsel and accountants. Some of these proposed items would require pretty extensive disclosures and could have some serious business impacts, especially if your company’s compensation policies emphasize success-based pay. If you have a good year and certain employees are rewarded for that success, you may not be able to deduct the excess compensation if the 100 times ‘excess compensation’ cap is implemented. You need to be proactive and understand how the legislation and rules might impact your business. Stay tuned, as it will likely be later this year before any new rules are finalized, and we see how many of these areas are impacted.
Kevin A. McGill is an attorney with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC. Reach him at email@example.com or (404) 443-6704.
Tim Bentsen has been working at KPMG LLP longer than many of his employees have been alive.
After 34 years with the audit, tax and advisory service firm, one thing he recognizes is that he has a large group of generationally diverse people, which makes it a challenge to get everyone to understand him and the vision he’s communicating — and to buy in to it.
“We have so many smart, bright people that are out there trying to serve clients in a variety of ways — how do you keep them all aligned under the firm guidelines, processes, goals and objectives?” says Bentsen, the firm’s managing partner for the Southeast area and the Atlanta office.
He starts by setting goals for the 2,000 people in his region, following up to make sure they understood and then stepping back and letting them execute.
“That links into how do you get buy-in around things,” he says. “You can’t just tell someone, ‘This is our vision, and by golly, you just have to buy it, and it’s our way or the highway.’ You have to let them take some ownership of it. Say, ‘OK, this is the firm’s vision. What’s my piece of it? How can I influence it at my level? And how, at my level — even me as a partner — can I really influence what’s happening?’
“If you start to understand that piece and see how if I push in that direction or contribute in this particular area, it helps move the firm forward overall.”
You’ll never be able to get a group of people going in the same direction if you don’t set the direction for them, so the first thing that is crucial to keeping people aligned is to set goals.
“The key is just set a real clear set of goals and objectives and keep them focused on that, and you continue to say, ‘This is what we do, and this is what we will not do, and this is how we’ll engage with our people, and this is how we’re going to engage with the marketplace,’” Bentsen says.
When it comes to setting clear goals and objectives, it’s often more difficult than we’d like to think.
“We’ve all heard it for years — keep it simple,” Bentsen says. “That’s what we have to do because professional services, we can make it sound awfully complex, but it’s really fairly simple. If we understand our clients’ business issues and help them solve those, it’s not a whole lot more complicated than that. … We just have to keep in front of us a clear understanding of who we are and what we’re not, what we’ll do and what we won’t and how to engage with our clients in accomplishing that.”
Bentsen has to take a look at KPMG as a whole and then break it down from there. For example, as an international organization, the company has goals and objectives it wants to accomplish. From there, the U.S. entity also has goals that it’s looking to achieve. From those goals, Bentsen needs to look at how his regional area can fit into that puzzle of achievement. He then uses those tasks to create goals for his people.
“It starts at the very top with the firm’s priorities and strategies, and it transcends down into the businesses, be it geographic or functional, which then goes down to specific teams and individuals — what is my role, what are the things that I’m expected to do to help the firm accomplish its overall goals?” he says.
A lot of times it may seem overwhelming when you’re determining what goals to set for yourself or your people, but Bentsen says you have to choose the most important tasks to focus on.
“Don’t overdo it,” he says. “One of the real challenges is to keep it fairly clear. … Our leadership team might say, ‘Tim, here’s 47 things we need you to do.’ I cannot focus on 47 things, so it really needs to break down to, ‘Tim or Sue or George, what are the three to five things that you do that will move the business forward?’
“So I would say to keep it really clear, keep it somewhat of an ability to focus on priorities. What are the three to four things that will really make a difference?”
He says there are some ways to know how to choose top priorities.
“One, you have to use your own knowledge and intuition about what’s really important, but I’ll also play that back to my boss, and I would encourage people to play that back to their leaders,” he says.
For example, when you or your people are part of multiple projects, everyone thinks that the project he or she heads is most important, so how do you prioritize when different people think different things are most important? He says that’s when you have to go through those 47 — or whatever your number is — things and look at which items will most affect the business. Then communicate to everyone involved that these are your 47 things, but these are the four that are most important to focus on.
“I’m going to get to the other 47, but I’m going to address these four things first or keep them sort of the No. 1 priority as I work through the overall list,” he says. “Play it back to the people that you work with to get them to agree and understand what some of those competing priorities are.”
It’s all well and good to set goals for your company and employees, but they still won’t get aligned if those goals aren’t clear and understood by everyone, so you have to check back with them.
“When you’re communicating with someone, setting expectations, you do some follow-up with different groups and levels and say, ‘Did the message get through?’” Bentsen says.
He does this by having people summarize to him what they heard when he’s conducting formal reviews.
“You’re working with me, and I’ll say, ‘Here are your performance goals for this year, and I want you to summarize those and put them back in the formal performance discussion process that we have,’” he says. “So one, it’s your ability to turn around and articulate those in a formal and structured manner and then through ongoing and frequent communication and interaction.”
Bentsen also likes to sit in with his managers when they do this with their team members so he can see that they are doing the same thing and that their people are seeing how they need to contribute.
He also follows up with people after large group meetings.
“One of the things that I’ve learned — you kind of know it, but you learn it the hard way sometimes — is what you believe you say is not always what people hear,” Bentsen says.
For example, when he had a practicewide conference call for his region, where there were hundreds and hundreds of people on the call, he knew there could be misunderstandings. So the next day, he had a call with 15 of his senior associates and asked them what they heard on the call the previous day.
“I went through four or five specific areas that I had addressed,” Bentsen says. “‘OK, this is a topic we covered. Somebody tell me what I said.’ I think just to have that follow-up — and that’s the goal of having this sort of feedback process is to say, ‘Did my message get through, was it understood, how could it have been interpreted by others?’ If everybody is sitting in different contexts and experiences and different things, what they hear is going through all those different filters.”
Get out of the way
After setting goals and following up, for everything to work well, the next thing you have to do is back off.
“My role is to get out of the way,” he says. “We have some outstanding people, and if you set the goals and set the expectations, you want to empower them by having that clarity of expectations and then getting out of the way and then saying, ‘OK, you go do it, and what can I do to support you?’”
Bentsen knows how important it is to get out of the way because he’s seen his own frustrations through his own experiences with micromanagers and, on the other hand, his experiences with those who empowered him.
“Do unto others as you would have them do unto you,” he says. “I look at who have been great leaders for me over the years and know that they were there but they had given and they had instilled in me a tremendous amount of confidence — ‘Tim, I know you can do this. I’ve seen you do this before. We’re in agreement this is where you’re going; go do it and check back with me in two weeks,’ or whatever. But you learn from the people that you work with.”
While you may learn how to better let go by watching those who have led you, you’ll also learn how much to let go as you watch those you currently lead.
“As I’ve had the opportunity to work with others, you give more rope to different people,” Bentsen says. “That’s why you get to know people and you understand Samantha here can do some incredible things so I’m going to let her have almost as much rope as she needs, where Steve over here is maybe a little less experienced so we’re going to have a little more frequent touch points.”
Those touch points come in the form of evaluations and metrics. You have to have that follow through and look at how they are performing against those goals and objectives. One of the expectations he has of his people is to provide constructive feedback on someone’s performance in order to help them grow and understand the opportunities they have in the firm. He expects performance reviews of new associates after every project of more than 80 hours. For more experienced people, reviews are expected semiannually. He’s also quick to note that sometimes the best performance “review” is often the immediate and specific feedback that someone provides to a colleague.
“For a huge percentage of the population, they’re just going to do that anyway, but for everyone else, there is an expectation that what gets measured gets done,” Bentsen says.
Once you do all of this, you’ll have good systems in place to move the business forward.
He says, “You set all these expectations, and then you get out of the way and let them go do it and don’t micromanage and have your points of accountability and know that you’re there to support and encourage and help the teams going forward.”
How to reach: KPMG LLP, (404) 222-3000 or www.us.kpmg.com
Chances are you’re feeling the pinch of today’s economy in ways you never expected. With the recent banking crisis, you may be hesitant to share your worries with your bank for fear that it may see you as a risk. And your concern may be well-founded, as more than 40 percent of banks reported a reduction in credit lines to small businesses, according to a survey by the Federal Reserve.
But now, more than ever, is the best time to buddy up with your banker to develop a strong relationship that can help pull you through hard times and can ultimately save you money.
Forming a partnership with your banker makes sense, as you both share a common goal: the financial strength of your business. By talking candidly with your banker about all aspects of your business, you bring a financial expert to your inner circle of decision-making. Along with your accountant and attorney, your banker can help you streamline efficiency and keep you on the track to financial soundness.
“The bank is truly a key adviser to clients, and building a strong relationship between the customer and the bank is essential,” says Gary Dowell, market executive for Georgia, RBC Bank.
When you make time to talk with your banker regularly, you ensure that you receive the best services possible as well as the advice you need to keep your company running smoothly even when the economy is bumpy.Keep communicating
Communication is key during any climate, but keeping the lines of communication open becomes of utmost importance during downtimes. Frequent communication ensures that your banker understands your business and can best assess your needs.
“It boils down to a strong relationship and ensuring they have a meaningful meeting when they get together,” says Bill Peele, executive vice president, commercial banking line of business manager, Atlanta region, SunTrust Bank.
Like in any new relationship, those first discussions can feel a bit awkward. But each time you sit down with your banker whether during a quarterly meeting or through a monthly phone call it becomes more of a friendship. The most basic way to begin building the relationship is by inviting your banker to visit your business, so that he or she can visualize your passion.
“A banker today takes comfort in knowing all aspects of the business and the company,” Dowell says.
From the onset, you must convey to your banker a sense of openness and eagerness to discuss the various aspects of your company. Additionally, there should be an understanding that both sides are in it for the long haul.
“A long-term relationship creates trust, and that’s what clients are looking for,” Peele says. “When they chose to go with the cheapest rate, they don’t get that high level of service that they expect. Business owners don’t want to have to tell their story over and over again; they want to have the same banker and the same bank.”
Discussing a vast amount of information will help your banker understand that you respect the partnership and are looking to the future.
“A business should be very forthcoming with financials and information, good or bad,” Dowell says.
While it’s easy to share positive news, such as unexpected revenue, some executives may find their heart racing when they think about telling their banker that a major account is hovering near bankruptcy. However, discussing matters quickly and honestly can pave the road to an amicable solution. Bankers detest surprises, so ensuring that you are their first line of communication is paramount. If you choose to ride out a negative situation in silence, you run the risk of your banker hearing of your troubles in the newspaper or from a mutual friend.
“A banker would much rather learn about bad news from the client than learning about it in another way,” Dowell says.
While a banker may not be thrilled to hear of financial shortcomings, he or she will ultimately respect a client who does not hesitate to share important information.Maximize the relationship
With a trusted adviser on your side, you can work together to develop a plan to prosper. To make the most of the partnership, go over your business plan together and discuss how to improve efficiency. Even if your company is thriving, you can always benefit from the sound advice of a financial professional who can help you look to tomorrow.
“Just asking the bank to evaluate the business plan is the best first step,” Dowell says.
From there, you can analyze the effectiveness of your current plan and figure out what changes you could make to improve your overall success.
As a CEO, it’s your job to update the bank on any changes in your industry. Your banker can then help you plan your next best step, whether it be trimming costs or planning an expansion. It’s also a good idea to ask for your banker’s opinion on how you can take advantage of the low interest rates offered today. Refinancing may lessen your payments and free up cash for other investments.
Once you have a relationship with a bank, it may be tempting to shop around for additional services. However, remaining loyal to one bank for a variety of products even when you could get a slightly cheaper price elsewhere may actually save money in the long run. When a company has a variety of services throughout different departments of the bank, that company becomes a household name inside the bank and may be considered for special offers.Find the right products
Banks today offer more services than ever before, and tackling the list on your own can be overwhelming. Once your banker understands your company, he or she can assist you in selecting products and services that can streamline your workday and improve your bottom line.
“Any good bank is only going to want to place a client with products and services that make sense to that client,” Dowell says.
Though some services have a fee, the benefits can outweigh the costs. For example, compared to traditional check depositing, remote deposits can save time and money by eliminating the need for an employee to drive to the bank.
In today’s market, cash is king. Products are available that can maximize your cash flow. Your banker can also provide advice on the best use for additional money such as investments or paying down loans.
With the nature of banking constantly evolving, a business must trust its banker to match the business with appropriate products. A company should review its banking products annually to stay fresh on the offerings.