Education: Bachelor’s degree, economics, Wake Forest University
First job: When I was growing up in my family’s real estate business, I worked the front desk at one of my parents’ hotels.
What was your biggest business challenge, and how did you overcome it?
It was really waking up on Sept. 12, 2001, and having the reality of the unknown that was there. It was the first time that I really didn’t have a full grasp on what it was that we were going to have to do.
That was one of my most difficult times. It was also one of the greatest times when I look back on it, because that’s when I come back to my team of executives. I had a group of executives that all showed up in my office Sept. 12, all carrying the dashboard ... and all of us sitting by and saying, ‘We don’t know what’s next, but let’s talk about what we have to go do and accomplish.’
My executives treat our business like partners. When times are great, we all are the beneficiaries, and when times are tough, everybody digs in and gets it done.
The reason that we’ve been so successful over the history of our organization, and we’ve had a lot of success recently, is because our team knows how to survive. They know what they’re doing. They’re talented professionals and they’re committed to the success of our organization.
What has been the greatest business lesson you have learned?
Maintaining the commitment to your company’s ideals will allow you to achieve whatever it is you want to achieve. When you start wavering from those company ideals is when you start getting in trouble. Maintaining those has been the greatest lesson because we’ve really achieved and learned from that, and it’s made us the company that we are.
Whom do you admire most in business and why?
My dad gave me an opportunity in the early ‘90s to a kid who hadn’t accomplished nearly as much to be afforded that opportunity, which was to invest the family’s entire savings and earnings. People may say I’m still a kid now at my age, but I really was a kid then.
My dad taught me the value of quality and metrics before there was a balance scorecard. He ran quality control for RJ Reynolds, and he taught me the value of measuring and quality. He also taught me the value of surrounding yourself with great people and giving them the keys to be your partners and treating them like partners.
I’ve made him chairman emeritus of our company because people love him so much. The business things he has taught me and what he gave me at such an early age to start this business, I doubt I could search and find anybody else who would do that given the circumstances.
We didn’t know we were coming out of a major recession. This was the recession of ’91, ’92. These were very difficult times in our business.
“Darren’s success is a result of his multifaceted pharmaceutical experience, high energy, high intensity and creative ability to find solutions,” says Jeff Thompson, chief operating officer of Stiefel Laboratories, a strategic partner of Glades. “These are excellent skill-sets and qualities that make Darren a spectacular choice for his new role.”
Alkins has a strong background in the pharmaceutical industry. He started his career as an intern at Bristol-Myers Squibb and spent the next 15 years with the company gaining expertise in both brand and generic sales, marketing, operations and business development. He then joined Glades Pharmaceuticals in 2004 as vice president, business development.
“Glades is built around a philosophy of maximizing the life cycle potential for pharmaceutical brands,” Alkins says. “We are always looking for new partners who have a shared goal of improving the lives of patients and optimizing product value. We believe in equitable, balanced relationships. Glades will continue to invest long term in both its business and its partners.”
Mitel appointed Ray Jimenez regional director of the company’s new Southeast region headquarters.
He brings experience in sales and marketing in the IT/Telecom market, primarily with AT&T, Nortel Networks and Symbol Technologies, where he succeeded at both the field and executive levels. His experience in selling through channel partners plays a critical role in the company’s expansion.
ALVAREZ & MARSAL
Alvarez & Marsal appointed James D. Decker managing director to help build the firm’s footprint and capabilities in mergers and acquisitions, financings and corporate restructurings.
He previously worked as managing director at Houlihan Lokey Howard & Zukin.
WILLIAM MILLS AGENCY
William Mills Agency promoted Kevin Denver Banks to account supervisor.
He has been with the company since 2000 and has managed media relations programs for dozens of clients in the banking, credit union and mortgage industries.
He earned a bachelor of arts degree in English literature from the University of Georgia. He has also studied at Keble College, Oxford University in England and is a member of the Business Marketing Association.
MedAssets made several promotions within its executive team.
Rand Ballard was promoted to chief operating officer of the company and president of North American sales.
Nicholas Sears of Aspen Healthcare Metrics was promoted to chief medical officer of MedAssets Inc.
In another move, the company promoted Dan James to president of MedAssets supply chain systems.
Also within supply chain systems, Maureen Gender moved up to senior vice president of implementation and Gary Green took over as senior vice president of sales for supply chain systems’ alternate care market.
In addition to these changes, Sandra Green became president of MedAssets supply chain systems’ Southeast region after working as president of shared services health care.
Rounding out the company’s promotions, Bob Fink moved from shared services health care to senior vice president of sales for MedAssets supply chain systems’ Southeast region.
KITCHENS NEW LLC
Kitchens New LLC named Jeffery M. Cleghorn a partner in the firm.
He previously worked in the U.S. Army’s military intelligence corps and on the joint staff for the Defense Intelligence Agency at the Pentagon. After leaving the military, he earned a law degree from The George Washington University and began his practice in Washington, D.C. He returned to his native Georgia in 2003 to enter private practice.
Witness Systems appointed Greg Higham vice president, information systems and technology.
Before joining Witness, he worked as vice president of worldwide customer services for Epiphany (now SSA Global). He has also held leadership positions with Inovis, Peregrine Systems, Harbinger, Premenos and Tandem Computers. He brings more than 25 years of leadership experience in fast growing global organizations to the company.
NEWELL RUBBERMAID INC.
Newell Rubbermaid Inc. appointed Steven J. Strobel to its board of directors. He also serves on the audit committee.
He works as senior vice president and corporate controller of Motorola. Prior to joining Motorola, he worked for Owens Corning for seven years. Before that he worked for Kraft Foods for 10 years.
He began his career as a CPA after earning his bachelor’s degree from the University of Illinois and an MBA from the University of Chicago.
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As in the movie “Kelly’s Heroes,” once you know you are in the mine field, you can work your way out. Don’t wait until you hear the click of the land mine to start taking these seriously. Remember, even seasoned veterans sometimes miss land mines until they explode.
- Informing an employee a benefit will or will not be paid. It’s common to find an employee asking a human resource manager whether a benefit is covered or not. The H.R. manager, in good faith, looks at the benefit summary or even the certificate booklet and, in good faith, tells the employee that the benefit will be paid. The employee takes action ... and the claim is denied.
Although a certificate booklet is the contract that determines if a benefit will be paid, you may misinterpret that language. Certificate booklets or SPDs are often 50 to 100 pages of disclaimers, definitions, restrictions and requirements. The best answer an H.R. manager can give is an opinion on whether the benefit will be paid and to instruct the employee to contact the carrier or plan administrator before services are rendered.
In addition to contract language interpretations, there are always exceptions to the contract. We have seen time and time again where a carrier will pay outside of the contract based on circumstances surrounding a claim. Many appeals that are filed with the insurance carrier after claims are denied are paid based on these circumstances.
- Failing to distribute certificate booklets. This task can become a monster project, because most insurance carriers do not send the certificates to employees’ homes. Most employers have benefits administered by multiple carriers. When your supply of booklets comes in at different times and in the event that booklets are delayed 60 to 90 days or longer after open enrollment, a host of serious problems can occur.
The law is very clear on the necessity to distribute certificate booklets to all enrolled parties in a timely manner. Although employers are encouraged to post the certificates on their company Web page, that may not satisfy compliance requirements unless 100 percent of your employees have access to the Internet. It is important to have proof that you have distributed certificates. Getting employees to acknowledge receipt of their certificates is ideal. Too many times we find employers with unopened boxes of certificates in a closet. An employee can have a valid claim against an employer for a denial of a claim if a certificate booklet was not distributed.
- Failure to audit payroll records against health care benefit invoices. Although the best time to audit payroll and carrier invoices is immediately following open enrollment, it is also important to audit these throughout the year. Changes occur throughout the year: new hires, terminations and qualifying events.
Auditing is a time-consuming project, but you will find that most audits will reveal mistakes. Carriers will typically allow only 60 to 90 days for retroactive credits. In addition, employees typically will not volunteer that they are being under charged through payroll deductions.
Auditing will save you headaches and company money.
- Not collecting enrollment forms from new hires and all employees during open enrollment. We all know how painful openeEnrollment can be in collecting enrollment forms from every employee. Some employers have taken the stand that if the employee fails to return a form they will not be enrolled in a benefit. This approach is acceptable only if your employee communications clearly indicate the consequence of failing to return forms. Even this approach is dangerous, because an employee can claim that he or she did return the forms.
The best solution to nonreturned forms is a letter back to the employee indicating his or her form was not received and the consequences of this lack of action. Keep this letter in the employee’s file. An even better solution is a post-enrollment confirmation letter of all benefit elections. These letters can resolve other issues, including confirmation of correct enrollment elections and payroll deductions.
The landscape of employees can be filled with land mines. Make sure you get your benefits agent to help you identify all of them before you enter the field of employee benefits.
BRUCE BISHOP (firstname.lastname@example.org) is director of marketing and managing partner of KYBA Benefits. The company provides consulting and administrative services to more than 400 corporate accounts, ranging in size from 20 to more than 7,000 employees. Reach Bishop at (770) 425-6700 or (800) 874-2244 x205.
Smith, who founded mortgage company SouthStar Funding with Brian Smith, Mike Fierman and Tyler Wood, did so with the idea that if you form close personal relationships with your employees and clients, you will keep turnover low and encourage repeat business.
“We’ve always believed that you have to differentiate yourself with the service that you provide,” says Smith, president of SouthStar. “That is the one thing that we feel like we can do consistently, day in and day out.”
The company’s motto, “It’s always personal,” has been SouthStar’s backbone and propelled the company to rapid growth. Its revenue has increased from $60 million in 2002 to $144 million in 2005, and the number of employees has grown from 270 to 828 during that time. It has also been named one of the best companies to work for three years in a row by a local publication.
Smart Business spoke with Smith about his unique hiring procedures and how he creates a positive corporate culture.
How has hiring people from outside the mortgage industry helped you grow?
We say we want to be different than everybody else. If we hire everybody else’s employees, it’s pretty hard to maintain that differentiation.
When you bring people in from competitors, they typically have a preconceived idea on how they are supposed to do their job and how the industry works. Sometimes people struggle when they come here from other companies because they are not used to they way we do business because it is a little unique.
Underwriters, for example, are the decision-makers (and they) talk directly to the customers. Most other mortgage companies don’t allow that.
We’ve also found that both salespeople and administrative employees who come to us from other mortgage companies are 2.5 times more likely to leave than people who come to us with no mortgage background. Our goal as a company is to experience less than 10 percent turnover in any one year. The industry standard is somewhere between 25 and 30 percent.
If we continue to want to get our turnover down, we’ve found that most times, we’re better suited to hire people without experience and then train them on the way we do things.
How do you find employees?
We have a very active program for employees to refer friends and family. We like to hire people who our employees are recommending to us. They must be pretty good, or people wouldn’t be referring them to us because that would be a negative reflection on them if they didn’t perform.
It also works vice versa. The person coming in obviously wants to do well because someone has stood up and vouched for them. In addition to that, we do a lot of college recruiting.
How do you create a good work environment?
About half of our marketing budget is spent on marketing to our existing employees, as opposed to external customers. We spend as much money on making our employees happy as we do on making our customers happy.
We take a customer trip. Everyone in the company is invited. We go to a beach location. We have done this six years running. The company pays for the airfare, the hotel, typically they are all-inclusive. We take it on a holiday weekend and then close the office one additional day, so it’s typically a four-day event.
We do quarterly socials where people get out of the work environment, and we’ll go to ball games, bowling, trivia contests you name it, we’ve done it. The idea is to try to get people to know each other in a social setting.
We have a profit-sharing plan where we take 5 percent of the company’s profits, and that goes directly into everyone’s 401(k) a couple months after the end of fiscal year. People get birthday cards, birthday gifts, anniversary gifts. We’re constantly focusing on ways to make the environment for our employees a fun one. The idea is if they like working here, they won’t want to leave.
As you continue to add employees, how do you incorporate them into SouthStar’s corporate culture?
Any new employee who starts with us, their first day is in Atlanta at a two-day orientation. They hear from the managers on what our values are, what’s important to us as a company.
Hopefully, we make them more comfortable with who to go to if they have issues and problems. Many of our employees start off immediately after the orientation in a training program.
When anyone comes into our company, they are assigned a mentor. The mentor spends a lot of time with the individual, making sure they understand how we operate as a company. They’re there to answer any questions, they’re there to go to lunch with them and kind of be their pal for awhile until they’re incorporated into the culture.
HOW TO REACH: SouthStar Funding, (866) 350-2302 or www.southstar.com
Education: Bachelor of arts degree, accounting and finance, University of Utah; and post graduate work at Northwestern University and completed an executive program at Northwestern University.
What is the greatest business lesson you’ve learned?
To be an outstanding leader, you need three elements. People want to know where they’re going. The first element is, you’ve got to have a strategy. You’ve got to have a mission. You’ve got to have a vision. You’ve got to excite your work force about where they’re going.
The second element is, you’ve got to have a bias for action. You’ve got to do something. One of my favorite quotes is from Teddy Roosevelt. He said (that) in any given situation, the best thing to do is the right thing, the second best thing to do is the wrong thing and the worst thing to do is nothing.
I think companies are not willing to learn enough from their mistakes, and they’re not willing to takes some risks and step out. I have a strong bias for action. That’s the way you learn.
The third element is to say thank you. If employees perform, you’ve got to reward them. You’ve got to uplift them. You’ve got to motivate them.
My three steps, are tell them where you’re going, lead them via a bias for action and tell them thank you.
What is the greatest business challenge you’ve ever faced, and how did you overcome it?
The most stress I’ve ever been under is when the telecommunications business turned south and I’d just invested $68 million in a company called Pathnet.
It was a telecommunications company out of Washington, D.C. It’s purpose was to build a broadband Internet loop around the United States. I donated my rightaway and I contributed financially to that. In about 1999, it was part of our diversification growth strategy.
You know what happened to the dot-coms. We were not built out and we didn’t have enough cash. We went into Chapter 11 and we went into Chapter 7. I ended up getting the rights to my right away back so there was no loss there, but it was an expensive lesson.
I went in with some trepidation, not knowing the business. I did all the research I could. If I’d done it five years earlier, it would have paid off very well. Timing was a disadvantage to me.
That was a lesson in investing in an industry that I didn’t know a lot about. It was hard to take, but I was committed to overcoming it and growing the company to earn that $68 million back to my company. I think we’ve increased shareholder value here by several hundred million dollars. I think I’ve made that back.
“We realized there was a problem in the market regarding the ability to easily buy low-volume prototype parts,” says Hollis. “We wanted to create a business that would address that need in the market.”
In late 1999, the three founded Quickparts.com, an Internet-based company that provides custom manufacturing services. Engineers can log on to Quickparts.com, upload their design data, receive a quote in seconds, order the custom parts and receive them in as little as two days.
The concept was a hit, and Quickparts’ revenue has grown to $14 million in just six years.
Smart Business talked with Ron Hollis, president and CEO of Quickparts.com, about the pros and cons of being an Internet-based business and how he is managing the company’s growth.
What challenges have you faced as head of an Internet-based company?
When we first started, we had to prove that this was a real company. The way we did that was we got people involved very quickly. If you were online, got a quote and placed an order for parts, almost immediately you would get a call from someone at Quickparts thanking you for your order and letting you know when your parts were going to ship.
That connected the technology to the human element of the business. That was a very important struggle that we had to overcome.
How has being an Internet-based business helped Quickparts grow?
One of the great things about leading an Internet-based company is a lot of things are measurable. In traditional business, it is very difficult to measure key business metrics - the number of contacts, the number of quotes, the number of customer visits, etc.
In an Internet business, where everything is data-driven, it is very easy to measure. If you can measure, then you can evaluate, analyze and improve the efficiency of different areas of your business.
Another huge benefit of an Internet business is that you are open 24 hours a day, seven days a week, 365 days a year, so you never actually have to close your operations. Even though we might not have human resources in the office, a customer can still go online, get a quote and buy his parts.
How have you managed Quickparts’ rapid growth?
The key aspect of managing growth is discipline. You and everyone in the organization have to have the discipline to do the right thing, in the right way, at the right time. It really just becomes fundamentals of execution.
If everyone is executing, then growth is irrelevant. You will always adapt to the growth. If you don’t have the discipline to do those things, then growth will kill a company.
Our culture is very conducive to having such discipline in it, and it has allowed us to continue to grow. To us, rapid growth is normal growth.
The other thing is we are very focused about what we do. We know what we are good at and what we aren’t good at. We try to stay focused on doing what we are good at.
It’s all about people. Business is nothing more than the sum of the actions of the individuals in the company. You have to have great people in the company doing these things.
We spend a lot of energy developing our team members so that they are ready to absorb the challenges that come with growth.
How do you create a culture that takes a disciplined approach to growth?
You set forth what the expectations are. We have a set of values and beliefs that are fundamental to what the company is about. When we hire, we have a very extensive top grading system, which is about making sure that the interviewee understands our values and beliefs and that they are aligned with them.
We preach these values and beliefs over and over and live them every day so that the team members know what the right actions are and how to treat the customer. No matter what we do, we are always here to service the customer.
How will you preserve quality customer service as you grow?
A lot of it is to continue to train our team members so that they understand what is expected of them. We do a lot of training. We have a couple of books that when you become a team member of Quickparts are required reading.
One of them is about customer loyalty. The element of it is you have to go above and beyond serving your customers in order to create a loyalty to the company. Everyone at Quickparts has read that book and has to pass a test on that book as part of their employment.
These are just the fundamental principles and values that we have that you have to understand who and what the customer is in order to serve them appropriately.
HOW TO REACH: Quickparts, www.quickparts.com
As it stood then, its policies were counterproductive, making Simmons an unattractive place to work.
“Simmons was a very autocratic, formal, stiff, bureaucratic company,” Eitel says. “Corporate thought the people at the plants were there to serve them. They had it completely backwards. The only communication was from corporate to say, ‘This is what you will do.’
“Our plants all had very different cultures. They had very little communication; they competed with each other. We had awards we would give out. If it meant hurting another plant to win an award, they would actually do it. It was a very fouled-up culture. And it started right at the top.”
Eitel knew the entire corporate culture of the bedding manufacturer needed an overhaul, so he set out to change the way people throughout the entire organization thought about the $870 million company. To do that, he spent $10 million on a new philosophy, dubbed the “Great Game of Life.”
“The key here is to create an environment where people feel like they’re making a difference, where they can have fun, where they are free to make decision beyond the boundaries of a typical company,” Eitel says. “A lot of this comes from the culture that we’ve created.”
Eitel’s investment in the Great Game of Life was used for training and development and for experiential activities to regularly push associates outside their comfort zone into their learning zone.
“For example, almost every employee of this company has been through a two- or three-day outdoor experience, including a ropes course, classroom training, experiential learning exercises, all geared toward continually helping us to reinvent our company, helping us build a better company,” Eitel says. “There’s a lot of power in people coming together and sharing their truths and their beliefs about what’s what. That’s what the Great Game of Life is about.”
Employees learned how to think in new ways, take charge and have fun along the way. By focusing on changing the attitudes of employees by showing a commitment to caring about them, Eitel more than doubled his company’s earnings in five years.
The Great Game of Life represents the core culture at Simmons, and the values of that culture have to be communicated constantly and consistently to get results.
“One of my jobs is to make sure that I have a senior leadership team that’s connected,” Eitel says. “The most important area of connectivity is on the subject of the culture and how we behave. I’ve got five people that report to me, and all five of them believe as I believe on this subject. We’re all different. We all have different perceptions and behaviors, but when it comes to how we treat our people or how we walk our talk, it’s not open for discussion. We have to have this consistency.
“When you have that consistency of behavior and demeanor, it flows through the organization. It takes years to get this message through. Occasionally, somebody messes up at a senior level and goes astray from that behavior. Then you have to back up, regroup and go forward. That’s just part of the process that you’re going through to communicate to people, ‘I care about you.’”
To communicate in simple terms what the company is about, Eitel developed the acronym C.H.O.I.C.E.S. Each letter represents a company value caring, history, opportunity, innovation, customers, empowerment and support. It is a simple, straightforward way for the Simmons’ management team to communicate the company philosophy to thousands of employees.
“People have trouble, particularly as you work your way down the ranks of an organization, bringing clarity to what a company stands for and what a company is trying to become,” Eitel says. “That word clarifies who we’ve been becoming and also puts emphasis on what we think is the most important going forward.”
And while each letter in C.H.O.I.C.E.S gives represents one of the company’s values, Eitel considers one of them caring the most important.
“For us, caring is a very specific core value,” Eitel says. “We care about each other, we care about our customers, we care about our suppliers, we care about our health and our mental health.”
The value of caring is demonstrated both externally and internally. For example, following Hurricane Katrina, Simmons worked with the Red Cross to offer mattresses at significantly discounted prices and encouraged employees to give blood and make donations. Simmons sent more than 6,500 mattress sets at a rate of six trailers per day to dealers near the devastated areas, making it possible for individuals to purchase mattresses at or below wholesale cost.
Caring plays out inside the company, as well.
Eitel says that employees in the plants did their jobs but had difficulty understanding the corporate culture. At the Charlotte, N.C., plant, for example, communication was difficult because 17 languages were spoken there.
“The Great Game is about hooking people up across cultures and across belief systems to come to a common understanding of what is important,” Eitel says.
Now communciations are translated into the languages spoken by employees, making it easier for them to understand the company’s goals and values. It also makes it a better place for people to work because language barriers no longer isolate them from what the company is all about.
Eitel’s cultural shift isn’t just about making everybody feel good about work; metrics measure just how much the culture is affecting key performance measures in the areas of safety, quality, service and cost.
“We rank them in that order,” Eitel says. “We have monthly business reviews and we examine those four categories in considerable detail. If we focus on safety, quality, service and cost, we believe that everything else will take care of itself.
“Treating safety as an unquestioned initiative and behavior says a lot to our people about how we feel about them, about how we care about them,” Eitel says. “As the CEO or the head of manufacturing, I can’t allow anything to go on in this company that is unsafe. There is nothing else more important than safety.”
Employees take the caring message seriously. Three years ago, the company’s annual workers’ compensation costs were $3.3 million; today, they are about $600,000.
“This has been traditionally an unsafe industry, and Simmons wasn’t really running safe plants,” says Eitel. “Today, our safety performance is exceptionally good. A lot of that is just by focusing on it and connecting the Great Game of Life to safety. We’ve driven our OSHA recordables [work injuries that require reporting to OSHA] from a number that I’d be too embarrassed to talk about to below four.”
The Great Game of Life also led to morning meetings at which plant workers discuss the day’s activities. Anyone with a safety concern of any sort immediately reports it to a safety committee.
“The biggest problems you have in bedding plants are back strains,” Eitel says. “That has resulted in moving more toward automated handling of product.”
The second most important metric is quality, and that focus has led to an improvement in how products are shipped. Simmons had problems with returns because the plastic that protected mattresses during transport often tore. That allowed mattresses to drag on the ground, leading to returned products.
One plant’s team solved the problem by putting an extra guard on the bottom of the bed so if it dragged, the guard would protect it. The company also returned to a thicker plastic wrapping.
“We thought we were being conservative and correct for using a thinner material for our bagging,” Eitel says. “The cost of quality from tears was greater than the cost of going to a thicker material.”
The third most important metric is service.
“We’re a make-to-order company,” Eitel says. “When we get an order, there’s always been a belief that you have to make it immediately. We learned that not all of our customers wanted everything immediately.
“We had a flawed belief system if we didn’t deliver everything in three days, then we were going to disappoint them. Through better communication, we found that a week is fine, even 10 days is fine. Instead of automatically making product and immediately shipping it to them, we’re more likely to ask, ‘When do you need this?’ And then we would provide it when they need it.”
And when customers are served more efficiently, there is more time to plan production, which ties directly to the fourth metric cost.
“If we have more time in production to plan and still meet service needs, then that reduces our costs,” Eitel says. “Service is measured daily and tracked. Most of those ideas come from product planning and the way product is scheduled. So that comes more from the office side. They’ve been through Great Game as well. They have their own meetings to decide what went right, what went wrong.”
When all four initiatives are done correctly by the employees who have been trained in the Great Game of Life, financial success follows.
“The final performance would be the bottom line,” Eitel says. “If you were to look at the company the year before I came here our (earnings before interest, taxes, depreciation and amortization) were approximately $50 million. Last year, it was $130 million. We went from $50 (million) to $130 (million) in five years [on revenue of about $870 million], and in the middle of all that, sold the company for over 100 percent improvement in value.”
Eitel’s Great Game of Life has changed the attitudes of employees, and the company has joined Fortune magazine’s list of the top 100 companies to work for. Simmons debuted on the list at No. 100 in 2004 and last year moved up to No. 93.
“Being selected as a Fortune 100 company, for me, is the most important report card that I could get, because my No. 1 job is to create an environment where people can grow and develop,” Eitel says. “What I’m trying to do at Simmons is leave a legacy that goes way beyond me, way beyond my successor and way beyond my successor’s successor to say that we have created a culture here built on a great legacy that, at the end of the day, is about caring for each other, caring for our customers and caring for the environment.” HOW TO REACH: Simmons, http://www.simmons.com or (770) 512-7700
During the month of January, industry experts put their own spin on the possibility of benefits increases in 2006. Headlines predicted increases in cost from as low as 5 percent to a miserable 19 percent. Only by reading the entire article carefully did you find that each article was correct based on what costs were being reported.
When you read that costs are increasing only mid-single digits, you eventually found in the article that the cost being referenced was the employer’s cost. Employers are keeping their increases low, based in part on changes in plan design and increases in employee costs.
Trends for medical and prescriptions combined are still higher than general inflation and range between 8 percent and 17 percent, based on the medical carrier and their delivery system.
Most employers are choosing plan designs that limit increases in their employees’ payroll deductions. Employee surveys consistently indicate that employees are more concerned about their payroll deductions than their copays and out-of-pocket expenses.
With 80 percent of the general population incurring less than $2,000 in medical claims a year, most people realize that what they really need is affordable major medical insurance.
The transition to high deductible plans and, eventually, health savings account plans will be predicated by the renewal increase.
Let’s examine the question, “How much are my medical rates going up in 2006 from my current carrier?”
Assuming your incurred loss ratio (claims / premium) is 80 percent (the target loss ratio) and there are no changes in your demographics (age and gender), your increase would be whatever trend is for the insurance carrier you are with at the time of your renewal. This is one of the reasons why you want to review trends of the health insurance carriers during your annual review.
The other 20 percent (100 percent to 80 percent target loss ratio) is used for the carrier overhead and profit. If your loss ratio is lower than 80 percent, you should receive a reduction in the trend increase from claims.
In other words, if your incurred loss ratio was 75 percent and the medical trend from the carrier 15 percent, then the increase from claims would be 10 percent (5 percent less than trend of 15 percent). If your loss ratio was 85 percent, your increase from trend would be 20 percent (5 percent more than trend of 15 percent).
Depending on the size of your group, underwriters will blend the claims experience increase and the manual rates to yield your actuarial increase. This is called credibility.
The answer to the primary question of predicting a group’s increase is answered with the following four questions.
- What is your current carrier’s health care trend?
- What is your group’s claims experience?
- What changes will you make in your plan design?
- What changes will you make in employee contributions?
The primary culprit is still the inflationary factor of providing medical benefits. This factor referred to as trend is more than double general inflation in the best-managed plan and triple that for most health care plans.
Is there any relief in sight? Fortunately, the answer is yes. When most of the insured population of Americans return to major medical plans, you should see trends actually reverse.
When Americans have $2,000 deductibles with no copays, except for preventive health services, simple economics will step in. If Americans stop buying certain services because they feel they can’t afford it, the cost will have to come down. That’s a simple economic fact.
Also, more than 60 percent of Americans are overweight and a shocking 30 percent are obese, and most experts agree that more than 50 percent of health care expenses can be attributed to lifestyle choices. So the other trend reversal is that people will realize that the best way to avoid health care expenses is to stay healthy.
Bruce Bishop (email@example.com) is director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to moe than 400 corporate accounts, ranging in size from 20 employees to more than 7,000. Reach Bishop at (770) 425-6700 or (800) 874-2244, ext. 205.
Dancu is a seasoned technology executive with expertise in managing rapidly growing companies.
“John is a successful serial entrepreneur with a proven track record of driving rapid growth and building shareholder value,” says Raye Croghan, IDology spokesperson. “He has the experience, talent and vision to continue to build IDology’s market success and leading technology. On behalf of all of us here at IDology, I want to express how excited we are with John’s desire to join our team and move the company into its next phase of growth.”
Dancu worked as president and chief operating officer of Synchrologic Inc. and guided it in its rapid growth and its sale to Intellisync Inc. He also worked as president and COO of Netzip Inc.
Prior to Netzip, Dancu worked as COO and chief financial officer of K&G Men’s Center Inc. During his five years there, he led the company through growth, overseeing its initial public offering and helping to complete K&G’s merger with the Men’s Warehouse in 1999. From 1985 to 1995, he was an investment banker at the Robinson-Humphrey Co.
“I am excited about the opportunity to lead IDology,” says Dancu. “IDology has a talented and dedicated team, excellent customers, technology leadership, financial strength and a leading market position from which to continue its ongoing, rapid expansion in the age and identity verification market.”
NAVIGANT CONSULTING INC.
Bill Jennings joined Navigant Consulting Inc.’s Atlanta office as managing director.
Jennings brings 20 years of experience in fraud and forensic accounting investigations to the company. He is a CPA and a certified fraud examiner.
KING & SPALDING LLP
Robert D. Hays Jr. was elected chairman of King & Spalding LLP and succeeds Walter W. Driver Jr.
Hays joined King & Spalding in 1983 and has served two terms as a member of its management committee since 1999. He has also worked as leader of the firm’s 150-lawyer Tort and environmental Litigation Group since 1995. He has won several key cases, including a jury verdict in 2003 that was elected one of the Top 10 Defense Verdicts of the Year by the National Law Journal.
Hays graduated from the University of North Carolina at Chapel Hill and earned his law degree from Vanderbilt University Law School.
Mirant hired William P. von Blasingame as senior vice president and general manager, Caribbean. He is responsible for all Mirant assets and businesses in the region.
He brings nearly 20 years of experience to the company. He spent most of his career with Edison Mission Energy, where he has been vice president for the past nine years while living in Singapore. He also worked as vice president, project finance, of Edison Mission’s Asia region, and for the last five years as vice president and chief financial officer of the region.
Von Blasingame earned a bachelor of science degree in business administration from Clark-Atlanta University and an MBA from the University of California at Berkeley.
TECHNOLOGY ASSOCIATION OF GEORGIA
Don Addington was appointed to the board of directors of Technology Association of Georgia.
Addington is president and CEO of Seagull Software. As a board member, he participates in strategy development, gaining access to industry resources, promoting growth and governance of the association.
Gary M. Austin joined eLifeCare Solutions as director and senior vice president, business development. He is responsible for building and maintaining strategic vendor relationships, generating new business opportunities and securing funding to pilot expansion and product development.
Austin has more than 20 years of C level corporate experience in business and capital development.
Prior to joining eLifeCare, he co-founded Clearwave Corp., a health care solutions provider of radio frequency technology and Web-based kiosks. Before that, he founded HERO Inc., a holding company managing intellectual property in the payment card-based cash rewards business.
SCHWEITZER-MAUDUIT INTERNATIONAL INC.
Frederic Villoutreix was hired as chief operating officer of Schweitzer-Mauduit International Inc. following the retirement of Jean-Pierre Le Hetet.
Villoutreix joins the company from Compagnie de Saint-Gobain, a French multinational manufacturer of numerous industrial products, where he had worked since 1990. He held key manufacturing positions in Europe and the in United States, including general manager, world construction products and stone, Luxemburg; and vice president, abrasives Europe and coasted abrasives world.
He earned a master’s degree in science and engineering from Ecole Polytechnique in Palaiseau, France, and a Ph.D. in engineering and management from Ecole des Mines in Paris.
NATIONAL CHAMBER LITIGATION CENTER
The National Chamber Litigation Center named Joaquin Carbonell chairman of its board.
Carbonell is general counsel for Cingular Wireless and has worked in that capacity since its formation in 2000. He also led the regulatory and legal teams that completed the merger of Cingular Wireless with AT&T Wireless in 2004.
He graduated from Boston College and earned his law degree from Duke University’s School of Law. He also earned a master’s degree in management from Stanford University.
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There’s the high-end concept, the one with the strange name and the one named after a funny looking species of cattle.
The three chains The Capital Grille, Bugaboo Creek Steak House and LongHorn Steakhouse comprise RARE Hospitality International Inc., which owns and franchises the restaurants. And it is Hickey’s job to find a way to move those three restaurant chains forward, keeping the concepts relevant, the staff trained and intact, and the growth manageable.
“The ultimate goal is to build a company that stands the test of time,” says Hickey, chairman and CEO of the company that posted more than $812 million in revenue in 2004. “Restaurant companies often struggle to stay alive for a long period of time. In our company, we are very fortunate to have been in business for 24 years.”
The first step to growth is making sure the company stays relevant to customers.
“A healthy fear that gets me out of bed every morning is how do we stay current,” Hickey says. “I use the term concept relevance that is, what we serve, the price we charge for it and the manner in which our people serve it does that continue to answer the guests’ needs? For example, in the early days of LongHorn, there were nine entrees, one salad, one dessert a very limited menu. Today, we’ve expanded broadly; we’ve added a number of taste profiles. We’ve modified the box, the restaurant, the interior and exterior seven times. Staying relevant and staying current are very critical to staying alive.”
Hickey knows a little something about what happens when a restaurant concept loses its focus. Although he left the chain more than 15 years ago, as co-founder and former executive of Cooker Bar & Grille, he felt more than a small pang when that restaurant padlocked its final locations in 2004.
But it also served as a cautionary tale.
“They did grow too fast, but also they lost track of the core values upon which the company was founded,” Hickey says. “That may sound like founder’s sour grapes, but I don’t think so. I left in 1989; the company survived for 15 more years after that. But when I left, we had established the foundation and core principles of the company, and a big feature of the foundation was how we treat guests and how we treat our people.
“The guests have to be nurtured and catered to. If, over time, that focus veers away from the guest and more toward financial performance, the guests will abandon the concept.”
To make sure that doesn’t happen at any of RARE’s restaurants, Hickey surveys guests in a number of ways.
“We’re pretty relentless on tracking guest satisfaction from shopper scores,” Hickey says. “We also use what we call top box or intent-to-return scores. We use Internet market research, phone market research, and we also have the verbatim and subjective comments from the managers, the staff and guests sent upstream as well. Again, this is all in the effort to stay relevant to our guests.”
Another way to keep guests happy and ensure the chain’s success is to make sure they see the same smiling faces every time they visit the restaurant. That’s not an easy thing to do in a trade in which the tenure of the average waitperson is notoriously short.
“It’s the bane of our business,” Hickey says. “It is transient by nature. What we strive to do is to build loyalty and to have that person who will stay loyal and stay with our company for a long period of time. We have a large number of long-term employees who are very devoted to their guests and have promoted a family-like feel in many of our restaurants.”
Hickey says it all starts with the restaurant management.
“Most of our restaurants have a managing partner,” he says. “That is a person who buys into the restaurant and has a very focused need to grow the business. Correspondingly, that managing partner has the understanding that the pathway to building loyalty with guests is by having loyalty of the staff members.
“Imagine going into a restaurant and seeing the same friendly faces that you’ve always seen, and they know your name. That’s a very magnetic quality for a restaurant to possess. We try to drive that. Also, the consistency that comes through loyalty the consistency of food quality and presentation is something that we continue to strive for.”
The way to do that is by making the restaurants a place that people want to come to work at every day.
“We’ve been able to sustain that in a lot of our restaurants by creating a great culture individually in each restaurant, and trying to have the underlying culture of RARE support those same values,” Hickey says.
And there is a practical side to loyalty.
“Our managers are very well paid,” Hickey says. “We have very competitive benefits. When we benchmark our satisfaction levels against other companies, our managers are very happy. There’s the expectation that our managers have to provide for our crew, our team members. They have to make them happy and drive their loyalty, and they have to get results. If they don’t, then we have to have a dialogue with them and try to modify that behavior.
“We do employee-level satisfaction surveys and we do management level surveys at least annually, and if there are any clouds on the horizon, we do them more often. We do a support center survey of all our support center staff. In addition to that, we go out on the road and we conduct what we call day camps. We bring in every manager in the company once a year, in small groups, to hear the current goals of the company and the future goals of the company and (provide) a reinforcement of some of our cultural benchmarks.”
Management also does small focus groups of six to eight managers at a time.
“We drill down and track all that information,” Hickey says. “We have a lot of different data points for management and crew satisfaction.”
Communication and training are keys to developing top-notch employees.
“Talent acquisition and talent development are the two linchpins to success,” Hickey says. “Most of our leaders are promoted from within. Because of our culture and our track record, we continue to attract people from outside the company, as well. We like that blend of talent.
“The culture that we have is one of training and development. If we can get people on board who have a lot of those skills, we can certainly enhance what skills they have and enable them to grow. We have enormous opportunities, and we love to see someone come on board, take the bull by the horns and grow as fast as they will allow themselves to grow.”
Once those people are on board, RARE takes steps to make sure that their skills do not erode. Each restaurant chain has its own training program, but Hickey also employs a corporate university to make sure that it’s not just those at the restaurant level who keep their skills honed.
“Those are programs that are driven toward driving guest loyalty and creating and sustaining the culture of high food quality consciousness and high guest satisfaction consciousness,” Hickey says. “RARE University is separate from all those, and that is where we train all our managers for all our concepts.
“Management training is two to three months, and then a week at our headquarters and support center. I speak to every class. It takes a lot of time, but we think it’s essential to preserving the culture. We believe that training and development are so key for our continued success. We continue to pour a lot of resources both people and money into perpetuating it, trying to perfect that.”
Hickey’s ultimate task, of course, is to increase value for shareholders, and the primary engine that drives that value is growth. But growth cannot come at the expense of destroying the concept relevance lest the company suffer the same fate as Cooker nor at the risk of being unable to find the right talent to oversee operations.
Hickey set a goal of 20 percent earnings per share annual growth. To do that he developed a three-part plan that includes growth through new restaurants, margin improvement and same store sales growth at the almost 300 total restaurants under the RARE brand.
Of that 20 percent earnings per share (EPS) growth, as much as 15 percent will come from new restaurants, with 70 percent of them opening in existing markets and 30 percent in new areas.
“Backfilling allows us to take advantage of marketing leadership, economies of scale and, of course, you continue to target new markets to expand and grow your brand,” Hickey says.
Over time, RARE management has learned how many restaurants can succeed in a market.
“We do a number of surveys that cut by population and income and growth,” Hickey says. “We have a large number of factors that we load into our models. Once we begin opening those restaurants in the cities, we see how they respond. We have over 30 restaurants in Metro Atlanta and over 40 in Georgia.
‘Ten years ago, I don’t think we had any idea that we could grow that many. It’s a matter of learning the market and making sure the customer base is willing to embrace more growth.”
That’s still a learning process. The company expected to post a loss in same-store sales for the Bugaboo concept in 2005. It posted a 6.6 percent decrease in the fiscal third quarter of 2005 compared to the same period in 2004, and Hickey brought in a new president to refocus the concept.
RARE’s ESP growth will also come from improving the margin by growing same-store sales. The more sales the restaurants post, the more purchasing power they generate, reducing the costs the chain pays for supplies while still charging the same prices to consumers.
The final piece of EPS growth is from same-store sales growth, of which there are two components:0 guest counts and increasing the average check price.
“We expect to grow our guest counts by 1 [percent] to 2 percent,” Hickey says. “We hope to grow guest counts by first of all delivering exceptional dining experiences, which will, in turn, generate loyalty among those happy guests. In addition, we count on word-of-mouth advertising, as well as our own advertising, to attract a continually growing stream of new guests. While the restaurant business is extremely competitive these days, restaurants can still grow guest counts and sales by exceeding expectations, meal-by-meal, day-by-day.”
The remaining EPS same-store sales growth comes from increasing the amount of the average check through either menu price increases or from quarterly menu promotions that are heavily emphasized to encourage people to choose additional items over what they would normally order.
So far, the plan is working. In the third quarter of fiscal 2005, LongHorn posted its 15th consecutive quarter of same-store sales growth, while The Capital Grille posted same-store sales growth of 4.4 percent compared to the third quarter of 2004. The organization overall posted 14.8 percent net income growth for the same period.
Under Hickey’s leadership, RARE Hospitality is ready to move forward, confident that management will keep the concepts relevant, the staff intact and the growth manageable.
“We like the balance of three growth concepts,” Hickey says. “Obviously, LongHorn is the most stable and established brand of the three, growing 27 [stores in 2005] and 29 to 30 (this) year. We’re very confident in sustained high growth. Bugaboo and Capital Grille, we’re not as aggressive in growing those, but we think that both those can grow more units per year in 2007 and beyond.”
HOW TO REACH: RARE Hospitality International Inc., (770) 399-9595 or www.rarehospitality.com