Often, business owners frame their own future in stark, binary terms — either I keep the business or I sell it. This binary thinking becomes most pronounced as business owners begin to contemplate retirement or an ownership transition. In reality, there are a variety of options that can span those two outcomes. For many business owners contemplating a retirement or transition event in the next five years, simply keeping or selling are suboptimal outcomes — either tying up critical value that could otherwise be used to diversify or foregoing the potential upside value in their business. In addition, these binary outcomes often overlook other important value drivers for business owners such as legacy, succession, well-being of current employees and the continuity of their current business. When evaluating which options to pursue, it is critical for business owners to first establish clear goals that define what they want to accomplish and when. This includes an honest assessment of their personal and professional desires and other value drivers (including those mentioned above). While these options each present unique opportunities and risks, they offer business owners a more tailored and optimized approach to achieving their future liquidity, retirement or transition objectives. Mezzanine debt recapitalization A mezzanine recapitalization will often allow business owners to seek partial liquidity or growth capital, without significantly diluting their ownership. Business owners can use the proceeds to diversify their holdings, while retaining equity control and the potential upside of the business. However, this option will add incremental, high coupon leverage to the business and could limit operational flexibility in periods of economic or business distress. ESOP — employee stock ownership plan ESOPs allow business owners a tax efficient roadmap toward partial or full liquidity while creating a mechanism for transferring ownership to employees. This allows business owners to maintain short-to-medium-term ownership and helps to preserve business consistency and legacy. It also rewards employees for their hard work and loyalty. However, once the ESOP has been established, it can significantly restrict ownership flexibility. MBO — management buyout MBOs allow business owners to achieve either partial or full liquidity while maintaining operational consistency throughout the organization. The MBO also rewards management’s loyalty and performance with the opportunity to acquire a significant stake in the business. However, MBOs often require management to partner with outside equity or debt providers — which can be time consuming and introduces new partners and influences on the business. Minority investment Minority investments from an outside investor (either institutional or individual) will allow business owners to seek partial liquidity, or growth capital, while maintaining a majority stake in the business going forward. The minority partner can bring valuable outside perspectives and skill sets to supplement your own. However, most minority investors tend to be only passively involved and often require onerous ratcheting provisions that could give them control if the business fails to meet operational objectives. Partnership transaction A partnership transaction will allow business owners to seek significant immediate liquidity while preserving some ownership and elements of control in the business going forward. Business owners can use the proceeds to diversify their assets, while maintaining potential upside in the business. The new partner can bring many valuable strategic and financial resources to bear to strengthen the business and pursue growth and value enhancement initiatives. However, new partners will seek elements of control and often utilize leverage to affect the partnership. Understanding the many options available to business owners will help lead to more tailored and optimal achievement of personal liquidity, retirement and transition objectives. Josh Harmsen is a principal at Solis Capital Partners (www.soliscapital.com), a private equity firm in Newport Beach, Calif. Solis focuses on disciplined investment in lower middle-market companies. Harmsen was previously with Morgan Stanley & Co. and holds an MBA from Harvard Business School.
Most successful businesspeople agree with Benjamin Franklin’s famous quote when it comes to strategic planning, “By failing to prepare, you are preparing to fail.” A leader’s approach to strategic planning can vary greatly in length of time, measurement of progress, commitment and ultimately in the results.
I would argue that a detailed, strategic plan spanning longer than three years is too long to be relevant. Tactics identified too far in advance cannot keep up with the fast pace of changing technology, new information and changes in the economy to make the plan meaningful.
Here are my three essential elements to the strategic planning process:
Range of specifics
Leading an organization with an established three-year plan creates an environment where your internal team understands where you are going and what you must do to get there. In a franchise organization, this level of planning helps the franchisor foster confidence in franchisees that your plan is to drive revenue and profit — theirs and yours.
All three years of the strategic plan are not created equal. Here’s how plans are structured in my organization:
- Current year: Have a one-year very detailed plan where everything is accounted for. Each objective must be specific and outline tactics, deadlines, human and financial resources involved and the method of measurement.
- Year two: This plan has objectives with projected tactics and resources. The specifics will be incorporated during the annual planning process, where previous performance can be factored and available resources are clear.
- Year three: Proposed objectives are the only details required for a three-year outlook. The annual objectives outlined help determine your course of action toward the previously stated five-year overall goal.
Second to the importance of planning is tracking progress toward what you set out to accomplish. Quarterly, the board of directors assembles to receive updates from the divisions responsible for driving the collective success. The company’s leadership team has bi-weekly updates and each month, the entire organization gathers to understand the current status and how they can make an impact.
By building in regularly scheduled reviews, you are building the ability to be flexible into your business.
I’ve written about serendipity before as it relates to purchasing Mr. Handyman and being approached by an owner of PuroClean to join forces. Had our set plans been too rigid, we may have steered clear of these acquisitions due to imperfect timing and missed out on the chance to build our company’s holdings of in-demand professional home service franchises. There are times when it makes sense to adjust.
Teams must be completely committed to the annual strategic plan. It is the easy way out to simply change the plan when you don’t think you will make it. Finalize the plan, hold your people accountable to it and find ways to achieve what you set out to do.
Create incentives for your team to benefit when the shared goals are achieved. Years ago, we established a quarterly bonus program which has unified my team to work toward our revenue and store-count goals. Team members know what the company is trying to achieve, and they can also earn additional rewards for setting and meeting personal objectives in their area of influence.
As the assembly line inventor Henry Ford said, “If you think you can do a thing or think you can’t do a thing, you’re right.” Commit to your strategic plans and celebrate the successes of achieving them.
David McKinnon is the co-founder and chairman of Ann Arbor, Mich.-based Service Brands International, an umbrella organization that oversees home services brands, including Molly Maid, Mr. Handyman and ProTect Painters. To contact McKinnon, send him an email at [email protected]
SS&G recently announced the promotion of Jim Dannemiller, CPA, to managing director of its Akron office.
Dannemiller will focus on growing the Akron office, mentoring new staff, building the firm’s presence in the community and will continue to serve clients. He will be co-managing the office with Mark Goldfarb, CPA. Dannemiller joined SS&G in 1993.
SS&G’s Akron office also welcomes Ilona Aronov as a senior associate in the tax department. Prior to SS&G, Aronov worked as a tax associate at PricewaterhouseCoopers LLP.
SS&G has also announced three new employees to its Cleveland office.
Courtney Ockenden joins as a senior associate in the entrepreneurial services group. Ockenden worked as a senior accountant at Zinner & Co. LLP before joining SS&G.
Mario Ciclone joins as an associate in the tax department. Prior to SS&G, he worked as a staff accountant at Hobe & Lucas CPA Inc.
Steve Newton joins as an associate in the IT department. Newton worked as an IT service specialist at Progressive Insurance before joining SS&G.
First Federal of Lakewood recently announced that Rebecca Ruppert McMahon has been appointed to the board of directors, and Jeffrey Bechtel has been named senior vice president and commercial banking senior lender.
McMahon has devoted nearly 20 years to building a successful legal career in both the public and private sectors. Most recently, from 2009 to 2012, she served as general counsel for Cuyahoga Community College.
Bechtel, a 25-year industry veteran, will lead First Federal’s efforts to establish a broader commercial banking presence in Northeast Ohio, with a focus on traditional commercial and industrial banking opportunities.
C.C. Hodgson Architectural Group continues to expand with the announcement of the addition of architects Bob Seaman and J. Ryan McNutt.
Bob Seaman brings more than 25 years of experience as a project manager for a variety of building types, with a specialized focus on the design and management of large health care projects. Most recently, Seaman served as director of health care architecture for the Cleveland office of URS Corp.
J. Ryan McNutt has 13 years in the business, most recently serving as Project Manager for Ewing Cole/Belson Design in Cleveland.
EYE Lighting International, a leading manufacturer of lamps, luminaires, controls, and related lighting products, is pleased to announce the addition of Suzanne Beatrice as the director of HR.
In her new role, Beatrice will be responsible for expanding organizational development goals for all employees as well as leading recruitment, hiring and on-boarding activities for new employees and managing personnel transitions.
Beatrice has worked for more than 20 years in the HR field, most recently with Airgas USA LLC.
Janney Montgomery Scott has announced the hiring of Michael Guyre as director and senior analyst, forensic accounting at the firm’s Cleveland branch office. Guyre, CPA, joins the firm with more than a decade of experience on the sell side as a forensic accounting analyst. He began his career at Arthur Andersen.
John Dewine looks out his window on the ninth floor of the Standard Building in downtown Cleveland at the construction project he has been leading — The Global Center for Health Innovation (GCHI) and Cleveland Convention Center (CCC). Dewine, a Turner Construction Co. vice president and construction project executive, is no stranger to construction as a 37-year Turner veteran, and no stranger to Cleveland either, as he worked on both the Key Tower and Quicken Loans Arena projects.
Turner Construction, a design/build contractor, brought Dewine to Cleveland to head the project, which the firm completed three months ahead of schedule and on budget in June this year with the help of URS and LMN Architects.
“We got hired in early May 2010,” Dewine says. “From May through the end of 2010 we worked with the designers, engineers, Merchandise Mart Properties Inc. (MMPI) and the county to conduct a series of budgetary estimates and checks to make sure that the project design was staying on budget, providing the programming needs and scope that the county wanted.”
The GCHI (formerly known as the medical mart) and CCC are a $465 million Cuyahoga County project being developed, managed and marketed by MMPI. GCHI brings buyers and sellers together at the world’s first market facility designed specifically for the health care industry.
The state-of-the-art facility integrates permanent showrooms with convention and conference facilities to uniquely meet the innovation, education and commerce needs of the medical marketplace. GCHI showrooms will feature the latest technology from the world’s premier health care and medical manufacturers while the convention center is designed to host health care industry trade shows and conventions.
“The GCHI will be occupied by companies such as GE Healthcare, Cleveland Clinic and Invacare,” Dewine says. “There will be areas for collaboration, which Cleveland Clinic CEO Delos ‘Toby’ Cosgrove hopes will help yield next generation innovations for the medical field.”
The GCHI and CCC project had numerous engineering feats and challenges that Dewine and his team, along with the help of 168 small business enterprise contractors had to overcome.
“On Jan. 3, 2011, at midnight, Armageddon took downtown Cleveland when we started to put in barriers and fencing to corner off three city blocks,” Dewine says.
The GCHI and CCC is located at the corner of St. Clair Avenue and Ontario Street. Before any structure was put in place, a lot of prep work was done to prepare the area for the new buildings.
“In downtown Cleveland the geology is such that the bedrock is almost 200 feet down,” he says. “For heavily loaded buildings, caissons or drilled shafts are imbedded into the rock, and it’s a very unknown-type process. We have an idea of what we’re going to encounter, but you don’t know until you’re drilling the hole.”
Dewine and his team encountered a lot of methane gas, so much that they installed a permanent methane venting system in the facility. But that wasn’t the only issue the Earth’s crust offered.
“The structure and strength of the clays that you drill through are such that if you drilled a hole and left it overnight it would squeeze shut,” he says. “That’s not a good thing, because if it squeezes shut it creates a void somewhere else, maybe under another building. So we had to put steel casings down as we went to prevent the walls from caving in. Getting through that caisson process was huge.”
Besides the groundwork, Public Auditorium and the old convention center provided several challenges for Dewine and his team.
“In the 1960s when they built the old convention center, they successfully incorporated a lot of mechanical and electrical equipment from the convention center to help service and feed Public Auditorium,” Dewine says. “We had to unhook and separate Public Auditorium from the convention center so we could tear the convention center down. Public Auditorium stayed in service, so it was very specific as to what we could and couldn’t do until we had enough of it isolated.”
The other thing that was a real challenge during the build was that the old convention center’s loading dock was at the same elevation as the floor. To create a true loading dock where the trucks are lower for ease of loading in and loading out, Turner had to lower the existing floor by 8 feet.
“As the loading dock goes underneath Lakeside Avenue, we had to lower the subgrade within 2 feet of a 99-inch brick sewer that was installed in the 1880s,” he says. “That took some extra precautions and measures to ensure something catastrophic didn’t happen.
“We had to make sure we didn’t collapse Lakeside Avenue in the process. We had to shore up Lakeside Avenue, remove the columns that supported it with temporary means, dig it out and lower it, put new foundations in and new columns back in, and then release the loads.”
Dewine says the real success of the project and the reason it was completed ahead of schedule was due to a very positive preconstruction period. Turner and its partners were able to sequence the 17-acre site and attack it from a number of locations at the same time.
“I believe the project got completed early because of how successful we were in sequencing the work,” he says. “When we put our guaranteed maximum price schedule together we had about 350 items in the schedule. At the end, we we’re well over 4,000.
“As items became identified and determined in the schedule, we could micromanage it so that you measure and know what you have to accomplish each week. What you don’t accomplish you have to have a recovery plan for how you get it done the next week. It takes a tremendous amount of communication.”
Turner had a general project manager/superintendent meeting every Thursday morning. In addition, the different areas — north of Lakeside Avenue, south of Lakeside Avenue, the GCHI and Public Auditorium — each had their own separate meetings as well.
The result of all those meetings and the hard work done by thousands of people is a finished project ahead of schedule, on budget and without any major accidents. Dewine is happy to now look out his window across the street at a completed GCHI and CCC.
“It’s a real good feeling,” he says. “It’s the successful result of a lot of efforts from a lot of good people. We were blessed with the contractors that ended up being successful in bidding and being awarded the project. We’ve had well over 6,000 employees take home paychecks as a part of this project. The level of cooperation has been unsurpassed.”
By the numbers
The GCHI and CCC is located in the nation’s medical capital, home to the largest concentration of medical leadership in the U.S. More than 230,000 health care professionals, including 43,000 at Cleveland Clinic and 25,000 at University Hospitals, along with more than 600 biomedical companies are located within the region.
Building Size — 1,003,000 million square feet
- Site Area — 14.6 Acres
- LEED Certified Silver
Global Center for Health Innovation
- 235,000 square feet
- 100,000 square feet of permanent show room space
- 11,000 square foot junior ballroom
- 2,000 square feet of retail space
- Outside windows pattern evokes strips of DNA
Cleveland Convention Center
- 767,000 square feet under Malls B and C
- 230,000 square feet of high-quality exhibit hall space
- 60,000 square feet of high-tech, flexible meeting room space
- 32,000 square foot column-free ballroom
- 17-truck capacity loading dock
- 90-foot interval columns to carry a load equivalent to a 65-story building
When Timothy Yager started at Revol Wireless in the fall of 2011, the company had been losing customers every month for an extended period of time. Late 2009 through the first half of 2011 were tough years for the organization — rumors of bankruptcy and new ownership were being floated around and the wireless communications provider was in desperate need of change.
“The company was having some financial issues,” says Yager, president and CEO. “So my arrival was a chance to hit the reset button for Revol, not only for our customers, but for our employees and say, ‘It’s a new day. The ownership change has happened and they’ve brought in new management and we’re going to focus the company on winning.’”
When Revol was first launched, it was a more than 300-employee, $100 million company. It had a reputation as being on the cutting edge of the prepaid wireless industry.
“Revol had a lot of success early on because it offered unlimited voice and those kinds of things on a prepaid platform,” Yager says. “They were the only provider in the footprint offering that type of service.”
In 2008 and 2009, other prepaid providers started moving in and the competitive forces grew. In a hypercompetitive industry such as wireless, Revol wasn’t as competitive as it should have been and it quickly began to fall behind.
“They needed some help getting the business turned around,” Yager says.
Here’s how Yager reinvigorated Revol Wireless with a strategy to get the prepaid provider winning again.
Evaluate the business
Prior to Yager’s arrival, Revol’s strategy and day-to-day operations were hindered by its capital structure, which brought about a slow-to-react atmosphere. Once the company was free from that structure, there were a lot of people who were looking for strong guidance, enthusiastic leadership and setting of general objectives to get the company back on track.
When Yager was first introduced to the team, it was a transformation in enthusiasm, direction and general motivation. Everybody suddenly had a place to go and a job to do. Yager brought a lot of that enthusiasm and direction to the table, and that’s exactly what people needed.
“Those first few days and weeks were really about analyzing the team that was here and where the strengths and weaknesses were,” Yager says. “The other thing was trying to change the focus and mindset of the company.”
Yager wanted to instill a strategy that said the company was in it to win it. It didn’t happen overnight, but employees started to recognize that there was a new philosophy.
“Revol had gotten mired in the minutia and a lot of times in companies that are struggling, people retreat from making decisions,” he says. “One of the biggest things I did was come in and start making decisions.”
Simple things like “yes and no” decisions went a long way toward starting to improve morale and helped employees realize there was a new sheriff in town. Yager represented new ownership, new direction and new thought.
“I think people started to feel empowered to be successful,” he says. “In a turnaround situation, one of the biggest things you’ve got to do is make decisions. So often companies get polarized with the fear of making the wrong decision that they make no decision, and I firmly believe that sometimes a wrong decision is better than no decision.
“If people are just constantly treading water and they don’t know whether they’re going up, down, right or left, it zaps the life out of a company.”
People respect leaders who come into a company and lay out a plan of attack, are upfront about the plan and who are forceful.
“I can remember that first meeting and saying, ‘I’m not going to do everything right and I’m not going to pretend to do everything right, but we’re going to make decisions, have short meetings, focus on what needs to get done and we’re going to get it done,’” Yager says. “In our wireless industry, where it is so competitive, we don’t have the luxury of taking six months to analyze everything.
“Sometimes you’ve got to look at the facts, make a decision and move on.”
Revol started 2012 losing customers every month, just as it had been the year prior, but with Yager on board the wheels were in motion for the company to move forward.
“When I came in, one of the first things I did was put some extra incentives out there to our dealers to sell some phones,” Yager says. “I was trying to buy some enthusiasm from our partners to get reinvigorated about selling the Revol brand.”
Another key decision Yager made was to get out in the field and visit a lot of the company’s owned doors and indirect doors to help get the message across that it’s a new Revol and a new day.
“Those were things that didn’t cost a lot of money, but helped move the business forward because it put a face with a name they were starting to see on emails,” he says. “It also gave them a chance to meet me and realize that I’m a relatively aggressive guy.
“When you’ve got five to eight competitors in a marketplace, you’ve got to be aggressive, and by people meeting me and realizing that I wasn’t just saying we were playing to win, they could tell by meeting with me that we want to win the game.”
One of the most crucial issues that Revol and Yager identified that needed to be changed was their network.
“Revol was still operating on an older technology called 1X and had slower data speeds,” he says. “In today’s world of smartphones, Androids and everything else, data is key.”
Shortly after Yager joined the company, the board approved a plan to upgrade the network to a 3G network.
“Our key initiative in 2012 was the company deploying 3G,” he says. “We launched that service in September last year and noticed an immediate uptick in our sales to customers as well as a stickiness of our existing customers.”
Yager’s key to helping Revol right the ship was his ability to deliver on his decisions. He was careful not to promise too much.
“I came in and made a few simple promises — two or three key things and then I spent a year beating the drum on those things to do it,” Yager says. “Too often people come in and make a laundry list of 26 items they’re going to promise. No one can get that done in a reasonable timeframe and you lose credibility. Pick and choose what needs to get done and then deliver on it.”
In 2012 Revol was all about getting 3G launched. In 2013 the company is all about selling phones and keeping customers happy.
“When we launched our 3G network we saw an immediate turnaround to our gross sales and our net sales,” he says. “We have more than doubled our sales in January 2013 from January 2012. We’ve really seen that the successes are bearing out.”
Everyone at Revol had to put in the hard work to get the pieces in place, but now that that’s done, the company has seen noticeable improvement. To continue to see those sales and revenue numbers increase, the company has to keep a focus on growing its customers.
“I’m happy to report they are growing,” Yager says. “I’m excited about what we can achieve this year. Last year we had a hard time competing from a sales perspective because we hadn’t upgraded the network. This year we’ve got those key ground-level type things in place, so I’m looking forward to being able to execute and win.
“We have almost a singular focus in 2013, which is to grow the business. There’s really only one way to grow the business, and that’s to be successful in adding new subscribers and keeping existing subscribers.”
How to reach: Revol Wireless, (800) 738-6547 or www.revol.com
If you had any doubt about the recession being in the rearview mirror, consider this tidbit from the ERC/Smart Business Workplace Practices Survey. In the last 14 years, only two years — 2009 and 2010 — have returned results with Northeast Ohio companies reporting the poor economy as their toughest challenge. For the 11th year, companies in 2013 are reporting that their biggest challenge has been hiring and retaining talent.
The survey, which has been a collaborative effort between ERC and Smart Business since 2001, is aimed to let you know what companies in Northeast Ohio are doing to drive their businesses forward.
This year in particular showed an overwhelming amount of companies, 49.5 percent, listing hiring and retaining talent as their No. 1 challenge.
The other concern many Northeast Ohio workplaces have includes health care costs and the uncertainty of the Affordable Care Act (ACA). The good news is that a mere 5 percent of companies named economic conditions as the toughest challenge.
“Hiring continues to be strong,” says SueAnn Naso, president of Staffing Solutions Enterprises. “We see more and more companies adding recruiting talent, and it’s getting much more competitive to find those people, which is a good sign.”
Companies in Northeast Ohio are ramping up their recruiting efforts with 84.2 percent utilizing Internet job boards, and 50 percent utilizing social media to recruit talent.
“On the hiring side, you see a lot more LinkedIn activity,” says Lauren Rudman, president of the Cleveland Society for Human Resource Management (SHRM). “LinkedIn is still the No. 1 way to go, but I’ve also seen job opportunities pop up on Twitter and Facebook.
“Word of mouth is still a great way to go if your company has a referral program. Between social media, specifically LinkedIn, and word of mouth, those are still the No. 1 and No. 2 ways that work for recruiters and talent acquisition teams.”
While companies are finding ways to recruit more talent, they are also very focused on retaining that top talent once they have it.
“We’ve seen a continued emphasis on things like workplace flexibility and investing in training and development as ways to retain employees,” Naso says. “They’re focusing on keeping their turnover numbers as low as possible.”
According to the survey, 77.7 percent of companies provide financial assistance to employees to upgrade their skills through advanced education or job-related training. In addition, 28.6 percent offer a mentoring program.
“Training and development is a big one, especially for some of the millennials (Generation Y),” Naso says. “They really are focused on learning and growing, so I’ve seen a lot more hiring of people that do training and development, creating leadership training programs and having a leadership track so these young professionals see a career path and aren’t looking outside the company for growth.”
Today, there are more training and development programs than there were in the recent past and there are a couple of things that factor into that.
“One is the economy,” Rudman says. “Unfortunately, when things go bad, training and development is the first thing to get cut. As the economy continues to get better, those will either come back into play or grow.
“Another big part of it, too, is Generation Y in the workplace. Generation Y wants development, training and to know how they’re doing. Companies need to recognize that in order to retain top talent they have to provide these resources like mentoring, coaching and development opportunities because they want it more than some of the generations in the past.”
According to the companies that responded to the survey, roughly 75 hours of training are provided to new-hires in their first 90 days. Another way more companies are incentivizing employees to stay at their current company is through workplace flexibility.
“That has been a huge trend,” Naso says. “There has been a study that mentioned that about 78 percent of U.S. workers are looking at workplace flexibility as a primary reason why they’re either staying where they’re at or making a move. That is as important to them as compensation.”
According to the 2013 survey, 44.3 percent of companies in Northeast Ohio are offering flextime, 14.8 percent are offering compressed workweeks, 17.2 percent offer telecommuting and 32 percent offer a work-from-home option.
“It’s interesting because workplace flexibility tends to be something a little different to each person,” Naso says. “We’re seeing companies trying to put things in place that provide a variety of options for employees. It depends on the type of job or their focus and how they can create that flexibility.”
While hiring and retaining employees remains the top challenge, the upcoming ACA and its pending changes to health care costs have companies anxious about what the result will be.
“One trend we are seeing that was published recently in one of the staffing industry magazines is that temporary staffing jobs hit a record high in May as companies are trying to lighten the burden of the whole Obamacare regulation,” Naso says. “Instead of adding staff, they are using contingent labor to manage some of that.”
In fact, according to the survey, the average percentage of the workforce that was temporary of the companies polled was 3.6 percent, the highest since 2006. The percentage of contingent workers in 2013 was 8.6 percent.
“In preparation (for the ACA), a lot of companies are attending conferences and meetings,” Naso says. “However, I haven’t seen any hard and fast actions yet. I haven’t seen companies that have actually reduced their part-time staff from 35 hours to 28 hours or anything like that. They’re all in that wait and see mode.”
Due to the uncertainty of the ACA, a lot of employers and companies are being proactive.
“We’re seeing companies bringing in wellness coaches, reimbursing employees for gym memberships and bringing healthy food into their organizations via vending machines or fresh produce stands,” Rudman says.
“Biometric screening is another big one. You see a lot of those efforts happening, which down the road can hopefully impact and decline health care costs for those companies, as well as employee’s out-of-pocket costs.”
The biggest decision looming for companies is whether they will “play” or “pay” with the ACA.
“Pay means that the company is not going to offer health care and they will pay the penalty, which is $2,000 per employee, and then those employees will be a part of the health care exchange that the government is offering,” Naso says.
“Play means a company will provide a health insurance plan that meets all the new government standards. Even companies that currently offer insurance could be affected because their current plan may not meet those requirements anymore.”
One of the requirements is that health care doesn’t cost an employee more than 9.5 percent of their salary. There is also a minimum coverage.
“Companies that currently have a plan could have increased expense because they may have to pay more of the premium or increase the amount of coverage, which increases the cost of the premium,” she says. “At the moment I have heard that more companies are going to play than pay. But it’s still a huge unknown.”
Despite what may result from the ACA, there is no doubt that companies in Northeast Ohio are once again flourishing and waving goodbye to the recession. Smart Business thanks ERC and those companies that participated in this year’s Workplace Practices Survey.
Workplace practices and policies ranging from innovative flexible work arrangements to the debate over the Affordable Care Act (ACA) were topics of this year’s ERC/Smart Business Workplace Practices Survey. Watching the discussions around these events unfold serves to reinforce the fact that the decisions we make as employers have the ability to significantly impact the well-being of both our individual employees and our organizations.
Now in its 14th year, the 2013 survey collaboration between ERC and Smart Business aims to shed light onto how employers in the region are effectively applying these practices, enhancing their workplaces and ensuring that they retain their top performers and attract new talent in the region.
So, whether you are pursuing the latest innovative trend or simply looking to meet the basic needs of your workforce, you are likely doing so for largely the same reason as the vast majority of other organizations in the area — to overcome the challenge of attracting and retaining the best and brightest employees here in Northeast Ohio.
Below are a few hot topics from this year’s survey. Also included are a few suggestions about how each can be used to help attract and retain top talent at your organization.
Organizations are increasingly expressing concerns about health care costs with 42.6 percent of manufacturers and 28 percent of non-manufacturers reporting that they are “unsure” whether they will “‘pay” or “play” when the new ACA regulations take effect.
Two-thirds of organizations are choosing to “play” and will continue to offer health insurance to their employees. With many unknowns still on the horizon, try to understand the drivers of these costs for your business and explore new ways to manage them in the long-term. Investing in wellness initiatives helps manage costs and still allows you to provide the benefits that are most important to your workforce.
Creating a physically safe work environment starts with putting specific policies on the books that will keep employees safe on a day-to-day basis. We’ve been fortunate to see very low rates of violence in the workplace in recent years among participating organizations, 77.5 percent of which prohibit firearms and other weapons. But safety isn’t always as cut-and-dry as having a policy in your handbook.
While violence has declined, incidents of bullying have actually risen to a high point of 19 percent in 2013. Creating an environment that encourages employees to speak out if they experience or see inappropriate behaviors can be challenging, but results in a healthier, safer workplace.
Respondents are making this popular concept into more than just a catchphrase. This year, flexible work arrangements rose to 68.9 percent — the highest level seen in the past 13 years. While we understand not every job is conducive to off-site work arrangements like telecommuting or work-from-home, even manufacturing organizations have some options. In fact, manufacturers in this year’s survey allow their employees some degree of flexibility with 34 percent allowing part-time schedules and 36.2 percent granting flextime.
While social media use is seeing growth on the whole, the most prominent role it plays in organizations is in recruitment strategies. Half of respondents report using some type of social media tool for recruiting. But this year organizations made it abundantly clear that not all social media tools are created equally.
When it comes to finding the right employees, organizations appear to be taking their recruiting responsibilities more seriously, with 90.9 percent sticking to professional networking sites like LinkedIn. Facebook ranked second with only half that number of users at 45.5 percent.
Sincerest thanks to this year’s survey participants and to Smart Business magazine for 14 years of survey collaboration. In addition, we would like to acknowledge the NorthCoast 99 winners over the past 15 years (www.northcoast99.org) who also demonstrate excellence in the attraction and retention of top talent.
Pat Perry is president of ERC, Northeast Ohio’s largest organization dedicated to human resources and workplace programs, practices, training and consulting. Reach him at (440) 684-9700 or [email protected] For more information, visit www.ercnet.org.
“The greatest weapon against stress is our ability to choose one thought over another.” — William James, American philosopher and psychologist.
In an increasingly stressful world, William James’ remarks are just as accurate and relevant today as they were when he said them more than a century ago. We face countless stressful forces, most of them beyond our control: changing market conditions, economic uncertainty, new laws and regulations, and competition, to name just a few.
Confronted with circumstances and situations that we can’t change, our only hope is to affect what we can: our own thoughts and actions. Only by managing ourselves can we exert some control over our physical and mental health.
The first step is to change the way we think about stress. Rather than trying to take control by accomplishing more, we need a different tack: getting back to basics, with time-proven strategies like slowing down, truly connecting and living in the moment.
Why do these work? Because they tap into our fundamental need for purpose and meaning and help us remember what really matters. They allow us to put stress into perspective and truly gain control — not of what’s happening around us, but of ourselves.
For most of us, staying connected means having round-the-clock access to our phones and email. However, nothing replaces face-to-face conversation, where you’re intently focusing on the person next to you and they’re doing the same. That kind of connectedness is a need we all share and it can’t be replaced by a screen or monitor.
Rather than constantly email the colleague next door, think about having more in-person, direct communication. Likewise, make a personal commitment to carve out meaningful time for the important people in your life.
The last thing you want to do when you’re stressed out is slow down. But the reality is that even a short break for quiet and relaxation will reap you benefits tenfold.
Even 20 minutes to go for a walk on a tree-lined street or to sit on a park bench makes a difference.
Whatever you choose, making time to slow down won’t set you back — it will actually refresh you and give you more energy for what lies ahead.
Having faith means different things for different people. If you have faith in a higher being, then you know it’s a source of strength.
Making time to read short meditations or prayers can center and rejuvenate you. Others find faith in themselves or in modern philosophers.
In either case, it’s important to find a source that fuels you when the going gets tough.
Find your fire.
A sure-fire way to relieve stress is to focus on something you truly love and feel passionate about. When you’re engaged in an activity you deeply enjoy, everything else recedes into the background.
Make time for activities you love and recapture that childhood enthusiasm.
Laugh it off.
Research suggests that laughing has healthful effects. But we don’t need scientists to verify that laughing feels good. Let your guard down and laugh when the situation calls for it.
If you can’t laugh at your natural surroundings, then create a laugh break by watching or reading something you find funny. Or do an activity that’s sure to make you laugh — like miniature golf, bowling, an amusement park or karaoke. However you do it, make laughter and humor a routine part of your life, not a special occasion.
Donna Rae Smith is a guest blogger and columnist for Smart Business. She is the founder and CEO of Bright Side Inc.®, a transformational change catalyst company that has partnered with more than 250 of the world’s most influential companies. For more information, visit www.bright-side.com or contact Donna Rae Smith at [email protected]
This month I decided to remove my marketing hat and put on my CEO hat. In numerous peer-to-peer driven groups over the years, I have heard the resounding message more times than I care to admit: to be the best CEO, we need find time to work on the business and not in the business, we need to make time for our family because we cannot get that time back and we need to take care of ourselves so that we will still be here to enjoy the fruits of our labor.
Yet, as a CEO who has friends and clients who are CEOs, living this is much more easily said than done.
With 2014 in the headlights, I thought that now was a good time to emphasize that even CEOs need a timeout. As CEOs,we need to stay focused, be happy and in good health mentally and physically. Living this will improve our performance. The recession was a tough couple of years for many of us, but it does look like things are getting better. It is a great time to take a timeout and make sure our game is spot-on.
The business timeout
To keep a sharp focus, CEOs need to get out of the day-to-day minutia to analyze past performance and plan for what changes need to take place to strategically grow the company.
I am not talking about scheduling a planning retreat with your leadership team, although that is important, too. I am talking about time for you, the CEO, to get away and get focused on the next big challenges that lay ahead.
Since founding Greencrest in 1990, I have religiously scheduled time away from the office for annual business planning, and I have credited that planning for the company’s success. Last February, after three years of being consumed by the business, I got back to scheduling time away for business planning. This sacred ritual makes me a better CEO. When I do this planning, I emerge with what I need to lead my company into its next phase of growth.
The family timeout
At times, family demands can be as grueling as business demands. And sometimes we just can’t find enough of ourselves to share with all those who need our time and attention.
Yet, if we don’t find a livable balance, we will miss out on important moments in our life that cannot be bought or replaced. Time with our family is when we can relax, be ourselves, be with those we chose to have as a part of our lives, share our dreams, embrace our spirituality, raise our offspring and plant the seeds that will long outlive our own mortality.
How many times do you hear people talk about the parent, grandparent, sister or brother who inspired them? Taking a timeout for family is essential to our happiness as CEOs. Business is a moment in time; family is a lifetime.
The personal timeout
Sometimes between meeting the demands of both our business and family, there is just nothing left at the end of the day or week for ourselves. Sound familiar?
Nonetheless, a CEO needs to take a timeout for mental and physical health… working out, reading a good book or watching a movie, getting a massage, meditating, pursuing a hobby, socializing with friends, eating right, getting regular check-ups, oh and adequate sleep — whatever is needed to maintain good health and invigorate your inner spirit.
A CEO needs to be able to maneuver in the fast lane at all times, and that is just not possible unless all cylinders in our life are operating at peak performance. Taking a timeout is an essential ingredient. It is the fuel CEOs need to forge ahead at full speed.
Kelly Borth is CEO and chief strategy officer for GREENCREST, a 22-year-old brand development, strategic and interactive marketing and public relations firm that turns market players into market leaders. She has received numerous honors for her business and community leadership. She serves on several local advisory boards and is one of 30 certified brand strategists in the U.S. Reach her at 614-885-7921, [email protected], @brandpro or for more information www.greencrest.com.
Marcia Taylor isn’t your run-of-the-mill CEO. She’s a soft-spoken matriarch, who transformed Bennett International Group LLC from a small, five-truck contract carrier into a $266 million logistics and freight services powerhouse.
The key to her accomplishment? She attributes her early success to fostering a family-oriented culture and deliberately sidestepping head-to-head battles with conventional competitors.
“We grew organically by adding services to meet the unique needs of our customers,” Taylor says. “We were positioned outside the mainstream, so we were used to competing against just four to five firms.”
Riding the coattails of customers helped the company expand beyond long-haul trucking into lucrative new segments like warehousing, logistics and vehicle transport.
Over time, Bennett International built a stable of disparate companies and service lines with random reporting lines while earning a reputation for being one of Atlanta’s best employers. In fact, the company has been recognized as one of the top workplaces in the area by The Atlanta Journal-Constitution.
But the recent recession illuminated the shortcomings of the company’s unorthodox structure as domestic revenues sagged and the management team struggled to win new contracts, especially in burgeoning international and government segments.
“I think we became a bit complacent before the recession because things were going well, and we were making money,” Taylor says. “In hindsight, I can see that we weren’t as efficient as we needed to be and our management structure prevented us from offering clients bundled services or a single point of contact, which were essential to winning bids and new contracts.”
Realigning a family-owned company is never easy. Here’s how Taylor got Bennett International back on track without sacrificing key staff or its family-oriented culture.
Prioritize people over profits
Taylor wanted to avoid draconian staff cuts and the potential loss of institutional knowledge that could impede Bennett International’s ability to rebound when the economy improved. In addition, she didn’t want to violate the trust of long-term employees or tarnish the firm’s vaunted employment brand, so she reduced ancillary expenses, watched cash flow like a hawk, and asked everyone to make small sacrifices.
“I’ve always believed that if you treat people right and give customers great service, the profits will come,” Taylor says. “Our goal was to come out of the recession in a better place and we achieved our mission because our employees were willing to pitch in which helped us avoid massive layoffs.”
Taylor asked employees to take off one day per month without pay, while the management team worked on reorganization and hunted for new sources of revenue. The camaraderie was so strong, that financially secure employees helped their cash-strapped co-workers by volunteering to take off additional days without pay.
“Our employees supported our long-term strategy because we didn’t make hasty decisions and kept them in the loop throughout the realignment process,” Taylor says. “CEOs can reduce fear during times of crisis by being candid about their motives, prioritizing the needs of their customers and employees, and avoiding cuts that might hinder growth and profits down the road.”
So far, it seems that Taylor’s penchant for delayed profit gratification is paying off. Bennett International is projecting revenues of $275 million in 2013 and Taylor says the organization can sustain 20 percent annual growth for the foreseeable future without increasing overhead, thanks to its increased efficiencies.
Exploit synergistic opportunities
Given her intimate knowledge of logistics, it’s not surprising that Taylor took a methodical approach to Bennett International’s realignment initiative. Her management team pinpointed the needs of current and prospective clients and redefined the firm’s core services, while looking for ways to streamline and consolidate its vast slate of offerings.
They also looked for ways to extend their capabilities by leveraging the firm’s prized fleet of owner-operator truckers, who have primary relationships with Bennett International and a vested interest in the company’s success.
In turn, Taylor earns the loyalty of owner-operators by treating them like family, which is smart, given the current and projected shortage of transportation professionals.
“We looked for synergistic opportunities to combine several services under a single umbrella and leverage our existing assets and owner-operators so we could up-sell current customers and attract new clients by offering them a package of services,” Taylor says. “Second, we wanted to be more efficient by leveraging our existing technology and consolidating back office tasks without inconveniencing our existing clients.”
The goals served as the linchpin for the reorganization initiative and a rallying point when the team disagreed or veered off course. In the end, they were able to segue from a company with a host of competing fiefdoms into an integrated firm with several divisions. Plus, realignment created opportunities to consolidate billing and accounting systems and eliminate redundant processes that increased overhead while adding little value.
For example, the team created an international logistics division by bundling project cargo, cold chain and other services that had been housed under different entities giving the firm expanded capabilities in full spectrum logistics planning and support. They also created Bennett International Transport and Bennett Distribution Services to enable rapid expansion into key segments of the international marketplace.
Early realignment efforts spawned new contracts from clients with international needs and the U.S. General Services Administration, and validated the efficacy of the team’s strategy.
While some CEOs might hammer out a major reorganization plan in a few hours or days, Taylor’s team worked on the initial blueprint for nearly six months.
They often argued behind closed doors but eventually reached consensus by listening to each other and staying true to their goals and the company’s values.
“I think it’s healthy to disagree but you need ground rules so the discussion is respectful and fruitful,” Taylor says. “We’d take a break when we reached an impasse. I’ve always thought that sleeping on a problem is a great way to break a stalemate.”
Match the right people to the right jobs
Once the new divisions were created, Taylor faced the difficult task of realigning the company’s senior management team with its new structure. She took stock of each person’s strengths and performance before asking them to take on new roles. The fact that the senior management team includes outsiders and her two sons added to the complexity of her mission.
“I believe in putting people into roles that give them an opportunity to grow and maximize their strengths and talents,” Taylor says. “The decision to realign employees is difficult, but it gets easier if you put them into positions where they have the best chance to succeed.”
Taylor referenced the needs of clients and the company’s history of exceptional customer service to bolster support for her management realignment strategy. She’s an advocate of values-based decision making. Her business decisions support the company’s mission and core values. She also uses data to make tough calls but says executives make the best decisions by balancing data with intangible factors and thinking about what’s fair.
“I think if you have a lot of passion for your ideas and convey a clear vision, people will accept change,” Taylor says. “It may take time, but if the logic is there and your decisions don’t conflict with your values, people will eventually come around to your way of thinking.”
Taylor takes her time when making difficult decisions but defends her sluggishness by saying that she’d rather be slow and accurate than have regrets, especially when her decisions directly impact the financial health of the company and its nationwide team of more than 3,000 contractors, agents and employees.
While Taylor acknowledges that she and her children don’t always see eye to eye, she says they’ve found success as a family-operated company by fostering open communications and supporting each other through thick and thin.
“We’ve learned some valuable lessons from this experience, and we don’t plan to repeat our mistakes,” Taylor says. “By leveraging our excellent reputation, repositioning for growth, and remaining true to our customers and what we do best, I believe our company and our extended family will continue to do well for the foreseeable future.”
How to reach: Bennett International Group LLC, (800) 866-5500 or www.bennettig.com
Garner support for your plan by prioritizing people over profits.
Create operating efficiencies by exploiting synergistic opportunities.
Match the right people to the right jobs.
The Taylor File
Name: Marcia G. Taylor
Company: Bennett International Group LLC
Education: High school graduate
What was your very first job?
I was an apprentice pharmacist in a small, solely-owned compounding pharmacy in Mt. Vernon, Ill. There were only four of us on the staff so I learned the benefits of a family-oriented culture at an early age. The pharmacist would extend credit to customers who couldn’t afford their medications so I also learned the importance of ethics and the value of prioritizing people over profits. Profit is important but it’s not the primary goal. If you treat people right and give them great service, you’ll have loyal customers, plenty of referrals and profits will follow.
Who do you admire most and why?
I admire Margaret Thatcher for sticking to her guns when she felt something was right. Although our styles differ, I appreciate the way she went about things. She was a tough lady who accomplished a great deal because she wasn’t afraid to take a stand and voice her opinion on difficult issues.
What is your definition of business success?
When your employees and customers are happy, you greatly increase your chances of success. Set high standards, focus on being the best instead of the biggest, and success will follow.
What was the best business advice you ever received?
Don’t rush to judgment or make rash decisions. Step back and think things through. And when you’re facing a tough decision, rely on integrity as well as facts and think about what’s fair. I’ve found that by practicing values-based decision-making, I make the right call most of the time. Plus, it’s hard to undo the damage when a leader makes unethical choices.
What’s the secret to working with family?
Set ground rules and then hash things out behind closed doors. Always speak with a unified voice when addressing the staff and don’t take things personally. Businesses come and go but you can’t replace family.