You are in a meeting and suddenly you get an e-mail on your BlackBerry. What should you do? a) Turn it off and answer it later; b) read it but don’t answer it; c) discreetly answer it during the meeting; d) excuse yourself and answer it outside in the hallway.
While cell phone etiquette during business meetings is well established, PDA technology is still relatively new and etiquette does not have hard and fast rules yet, says Terry Phillips, vice president of Robert Half Management Resources in Akron. Robert Half recently conducted a survey on the topic, which asked 150 senior executives across the country how common it is for professionals they work with to read and respond to e-mail messages on their mobile devices during business meetings.
Smart Business spoke with Phillips about survey results and some tips on PDA etiquette during business meetings.
What did executives in your survey have to say about PDA use during meetings?
According to the survey, 86 percent of senior executives polled said it is common for professionals they work with to read and respond to e-mail messages during meetings. However, ironically, close to one-third of this group (31 percent) disapprove of the practice. Thirty-seven percent of respondents feel it’s okay to respond to e-mail as long as the message is urgent; 23 percent of those polled said professionals should excuse themselves from the meeting before responding to e-mail.
What kind of signal does it send to meeting participants if someone checks e-mail during the meeting (and also responds to the e-mail)?
Well, it does gives the impression that you are not paying attention and it could, in fact, be a distraction. That said, it does depend on the type of meeting and the number of people in the meeting. In a smaller group let’s say a company board meeting where participants are engaged in an intense strategic planning session a participant who is constantly checking and answering e-mail can be considered just plain rude. However, in a large group, such as a lecture or a meeting with a couple hundred people, it may not be disruptive to check and answer e-mails.
On the other hand, what kind of message does it send to a client or a boss if you are in a meeting and don’t respond immediately to an e-mail, urgent or otherwise?
It is rare that an e-mail needs to be responded to immediately. Often a person can wait until after the meeting to respond. Of course, it depends on the circumstance and that ought to be agreed to ahead of time. For example, before the meeting you can announce that you are waiting for an urgent e-mail from a client and that you may need to step out and respond. You can also make sure that your client or boss who may potentially e-mail you knows that you will be in a meeting during a certain time and may not be able to respond immediately to a message. Doing some proactive work is often the answer to the e-mail dilemmas that arise during meetings.
Do you have some etiquette tips on using mobile devices during meetings?
- Be discreet. Set your device on ‘vibrate’ to avoid disturbing others during the meeting.
- Respond only if it is truly urgent. Remember, that there is no need to respond right away most issues can usually wait an hour or so for a response.
- If you are expecting an urgent e-mail, make sure that participants in the meeting know ahead of time that you may need to step out of the room to respond.
- Know when to let go. Spending a considerable amount of time checking e-mail will make those you are with feel unimportant. It’s better to bow out of a meeting altogether than be distracted during most of it.
What can meeting leaders do to set the etiquette tone about PDA devices?
Some of the better meetings I’ve seen have leaders who ask participants to disengage their PDA devices, much like asking people to turn off their cell phones. While the etiquette for cell phones is a good example for PDA devices, cell phone are, of course, more disruptive. However, it is easier to get caught up in an e-mail trail because it is less disruptive but it is still a distraction in a meeting. The verdict is still out how to appropriately use the PDA devices but, just like cell phones, the dos and don’ts will become clear as time goes on.
TERRY PHILLIPS is vice president of Robert Half Management Resources in Akron. Contact him at firstname.lastname@example.org or (330) 252-1820.
In the span of two years, corporate governance researchers, such as Dr. Suresh Radhakrishnan, of The University of Texas at Dallas School of Management, have been busy looking at the impact of the Sarbanes-Oxley Act on businesses.
“While things have settled down in the business world in respect to Sarbanes-Oxley compliance issues, there are many valuable trends that have emerged that businesses can learn from,” says Radhakrishnan, an accounting and information management professor and director of research for the Institute of Excellence in Corporate Government at the university.
Smart Business learned more from Radhakrishnan about the important developments that have emerged surrounding corporate governance.
What trends have surfaced as a direct result of the Sarbanes-Oxley Act?
Two major trends have emerged. One has to do with Section 302 of the Sarbanes-Oxley Act, which requires that public companies report, on a quarterly basis, any errors that have been found and corrected in accounting policy, etc. The second trend relates to Section 404, which requires disclosing any significant weaknesses in internal controls in the annual report.
Based on our analysis, we found that companies reporting significant or, in its legal term, material weakness in internal controls that are part of corporate governance have gone down by 40 percent. These are ‘weaknesses’ in control systems that are in place that could result in exposure to fraud and misstatements leading to potentially unreliable information. For example, having only one person sign off on a check can be a material weakness that can be remedied by having two people sign a check of, let’s say, over $500. Companies have done a very good job in zeroing in on material weaknesses and enhancing the internal control systems.
However, we also found that reporting of errors Section 302 has gone up by about 25 to 30 percent. While this may be counterintuitive, it actually makes sense because when a business has a good internal control system in place it is bound to red flag more errors.
Are there other corporate governance trends you have found in recent years that are not directly related to Sarbanes-Oxley?
Executive compensation at the moment is a hot trend. The Securities and Exchange Commission (SEC) now requires public companies to disclose executive compensation to investors and stockholders in a more transparent fashion in the Compensation Disclosure and Analysis. While there was initially a fear that this disclosure would lead to bad publicity about executives’ compensation, the fact is that the opposite has been true.
Yes, there have been articles in the Wall Street Journal and New York Times about companies with excessive CEO compensation, but overall, this SEC rule has actually led to fewer inquiries in the media because the disclosure is simple to understand and is transparent.
Another trend that is emerging on the executive compensation front is the ‘say on pay’ proposals. This gives shareholders and investors a say in what executives get paid. This has not been legislated, nor, in my opinion, should it be. But it is on the table for discussion in many companies.
What do all these trends mean for small and medium-sized businesses today?
When the Sarbanes-Oxley Act was passed, there was a legitimate concern that small- to medium-sized companies would be hesitant to go public to raise capital in order to avoid the expense of compliance.
This, in fact, has happened. However, an exit strategy is often desired for founders of these smaller companies. The preferred strategy at the moment is to be bought out by larger companies. The irony is that these small- to medium-sized companies can’t get away from the compliance issues because the larger companies buying them out require best practices and will pay a premium to companies that have good corporate governance practices already in place.
Other than preparedness for a buyout or going public, are there other benefits for small- to medium-sized companies to establish corporate governance policies?
Our research has shown that the link between governance and the establishment of long-term wealth [i.e., enhancing shareholder value] is nebulous at best. The Sarbanes-Oxley Act has improved the transparency, disclosure and reliability of information.
What we have found, however, is that more disclosure and reliable information is associated with a lower cost of capital in publicly traded companies. In other words, there is less risk involved when stockholders invest in a company with good corporate governance in terms of more reliable and transparent disclosure; however, a reduced risk does correlate with a lower return. <<
DR. SURESH RADHAKRISHNAN is a professor of accounting and information management at The University of Texas at Dallas and the director of research for the Institute of Excellence in Corporate Government. Reach Radhakrishnan at email@example.com or (972) 883-4438.
While it is sometimes more financially prudent to lease business equipment than buy it outright there are circumstances that make buying equipment more advantageous to a company.
“With any equipment that has a useful life longer than five years, it is generally better to purchase,” says Frank Briggs, senior vice president of business banking for Plano-based ViewPoint Bank.
Smart Business spoke with Briggs about the advantages of purchasing over leasing and tips on applying for business equipment loans.
What are some examples of equipment that would be more advantageous to buy?
Longevity of equipment is what makes its purchase advantageous, particularly if you are looking for a business loan to finance the purchase. Computers and telephone systems, in particular, are simply not good to purchase because chances are you will need to replace this kind of equipment within five years. The rule of thumb is that a business should borrow money for long-term capital items used in the operation of its business. A good example of this would be a printing press, machine tools or even shelving for inventory.
What other kinds of equipment can be purchased using a business equipment loan?
The purpose of a business equipment loan is to purchase a piece of equipment that will help the company do business and will have equity at the end of the loan’s term. There are many types of ‘equipment’ that fall under that category, including medical equipment and office fixtures, such as tables, chairs, bookcases, desks, computers and phone systems, mowers, trailers and hauling equipment. Many financial organizations allow for 100 percent financing of this type of equipment.
What are the qualifying criteria for a business equipment loan?
The equipment needs to be deemed a necessary asset that will benefit the business. The second criterion is the repayment history of the business principals and a good pay history of business credit. There also needs to be sufficient cash flow to service the term debt. The last criterion is that the equipment itself can be used as a secondary source of repayment to secure the loan.
Do certain types of equipment fall under 100 percent financing?
One hundred percent financing up to a $100,000 loan is generally available for capital equipment with a slow depreciation curve, such as machinery. The typical loan amounts range from $10,000 to $250,000 for a small business. The financial institution’s main concern is that a business will be able to comfortably afford the loan payments and that the depreciation of the equipment does not get ahead of the pay-down of the loan.
Is it easier or harder to get a business equipment loan than other types of business loans or lines of credit?
It’s easier because the collateral is hard collateral. The nature of these physical assets gives the financial institution a comfort level that is higher than, let’s say, a loan secured by accounts receivable. Many banks have an origination fee to protect early payoff. Equipment is financed on a fixed-rate basis; the greater the risk of the borrower, the greater the rate.
Are there circumstances when a financial institution will shy away from giving out a business equipment loan?
Most financial institutions are very cautious about equipment that will create an environmental hazard. There are also high-risk industries that banks are reluctant to lend money to. Not that money is never lent out to these industries; it is just that the bank will look very carefully at the guarantor strength, or proven track record in a particular industry.
What should business owners do if they are declined a business equipment loan by a financial institution?
They could try applying at another bank or financial institution. But many rejections from reputable institutions could mean that it is not advantageous either to the bank or the client to take out the loan. The guarantor strength may not be there, or the equipment could depreciate faster than the loan term. Whatever the case may be, you want to work with a bank that understands the clients’ needs and interest and is not just pushing a questionable loan through. This was the problem with all the subprime loans. Sometimes a ‘no’ is really doing a business a favor.
FRANK BRIGGS is the senior vice president of business banking for ViewPoint Bank (www.viewpointbank.com), which is headquartered in Plano, Texas. Reach Briggs at (972) 801-5729 or by e-mail at Frank.firstname.lastname@example.org.
Is your business efficient — or is it wasteful? One of the biggest problems in businesses today can be narrowed down to waste — of time, human capital and resources.
“Business waste is anything that does not add value to a product or service,” says Louie Hendon, program manager at Corporate College based in Cleveland. It can be obvious waste, such as unproductive meetings, excessive paperwork or wasteful use of energy consumption. Waste can also be hidden, such as poor design of business processes, excess overtime and labor.
Smart Business spoke with Hendon about the principles of waste in business, and what business owners can do to become more efficient.
Where do you see waste in businesses today?
There are seven types of waste that happen frequently in businesses — in both service and manufacturing industries. The waste centers around three areas: people, quantity and quality.
People. There are three types of waste that commonly occur with people in an organization. The first is processing waste, which is doing something that doesn’t add value to the customer. The second is motion waste, which is unnecessary activity that can cause a waste of time and the potential for injury. The third is waiting waste, any excess time it takes, for example, to process an order.
Quantity. There are three areas under this category. The first is making too much product — for example, a customer orders 500 pieces but your process only allows making 1,000. The second is inventory waste, such as product sitting idly on shelves. The third is moving waste, such as the number of times paper or items need to be moved from one area to another.
Quality. The last type of waste is fixing defects: taking the wrong order, fixing a damaged product, etc.
These types of waste are the basic principles of lean, which is a systematic approach to continually improving wasteful processes originally developed for the automobile manufacturing industry — companies such as Ford and Toyota. (You can learn more about these principles at the Lean Enterprise Institute’s Web site www.lean.org.)
Could you give an example of how lean would work in a service industry?
Let’s say a bank wants to reduce the amount of cash on hand at its branches to free up money to invest. If you take the principles of lean and closely examine the daily process of ordering money at the bank, you might find that every branch orders money differently. Some order it every day, some order it all at once. This is a wasteful process. By using the principles of lean, you can put some controls into place to deal with the waste — such as only allowing reorders of money when a branch reaches a minimum.
Another example in a service industry is the inefficient movement of paperwork. Is it really necessary to require employees to get five or six signatures on a contract before it is processed? Lean is a common-sense approach that helps companies take a hard look at what is efficient and what is wasteful.
Six Sigma is also an excellent system. (Readers can learn more about Six Sigma by visiting www.isixsigma.com). There are many consulting firms, national organizations and colleges that provide training in these techniques.
Who in an organization would best benefit from learning about these waste-reducing techniques?
Everyone can benefit: From top executives to shop floor workers to salespeople. That said, one of the key ideas regarding quality systems is that it has to come from the top down, and upper-level management needs to be spearheading the organization to adopt these methodologies and make them part of the overall business strategies.
How does an organization begin to identify waste in all these areas and become efficient?
It is difficult for an organization to go completely lean overnight. Usually going lean is done in stages, since you will need buy-in from other areas of the organization to make it successful. For example, one team or department can quickly go through the process of lean and identify the wasteful areas and brainstorm how to get rid of the waste. They can then go in and implement these ideas to see if they work. It could be as simple as moving raw materials closer — or moving all the printers to one location — or it could be more complex. The whole point of lean is to identify the waste, find a solution and then test that solution. Ultimately, this kind of process will affect the entire culture of the organization in a positive way.
LOUIE HENDON is the program manager for Lean Six Sigma at Corporate College, www.corporatecollege.com. Based in Cleveland, Corporate College offers employers affordable, cutting-edge and custom-designed training programs to enhance future work force development, job growth and job retention in Northeast Ohio. Reach Hendon at Louie.Hendon@tri-c.edu or (216) 987-2919.
Most businesses at one time or another need to manage cash flow issues, which may include finding ways to survive a shortfall in cash. Even something as simple as a late payment from a major customer could cause problems.
“Savvy business owners need to prepare today by arranging for a line of credit with their financial institution or bank,” says Yvonne Stewart, assistant vice president and senior business relationship manager with ViewPoint Bank in Plano. “Business owners need to assume that someday they will need to bridge the gap in their cash flow. If they wait until there are problems in the business because of cash flow, it may be too late to get a line of credit.”
Smart Business spoke with Stewart about the benefits of applying for a business line of credit early and the best way the business owner should use the funds.
Under what circumstances should a business owner apply for a line of credit?
It’s wise to get a line of credit even if a business is not currently having cash flow issues. Chances are excellent that a business will be able to get a line of credit if the company’s financial history is solid. Getting a line of credit in these circumstances is a little like an insurance policy in case a business owner does come up short during the month and needs to make payroll or pay bills.
The reason for asking for a line of credit ought to be because cash is not available due to accounts receivable, not because profits are down. The line of credit needs to be used because the business is not collecting as fast as it needs to pay out, not because something is fundamentally wrong with the financial picture of the business. So the line of credit should be thought of as a safety net to tide the business over until the accounts receivables come in.
What should a line of credit, ideally, be used for?
For a short-term loan used to make payroll and pay bills until the accounts receivable money starts rolling in. Lines of credit are meant to be used, paid off, then used again as necessary.
It’s also a good idea to get a line of credit if you are looking at growing your company in the near future. You may need the cash for a growth opportunity.
What kind of collateral is necessary to get a line of credit?
It depends on the financial institution, but typically, a line of credit under $125,000 does not require collateral to secure the loan. It will require a personal guarantee from the business owner, however. Larger lines of credit do require collateral usually accounts receivables.
Are there any rules or formulas to determine the right amount for a line of credit?
There are no math ratios for lines of credit. The business owner is the best person to determine how much they need to tide them over during a cash flow issue. One question that both banks and business owners need to ask is this: Can the business comfortably make monthly payments for one year on a line a credit if it is fully drawn?
What should a line of credit NOT be used for?
Some businesses ask for a line of credit to purchase equipment or make capital improvements, but this is not what it should be used for. The business owner needs to apply for a term loan for these types of purchases, where the debt can be spread over a longer period of time and rates are generally lower than a line of credit.
A line of credit also should not be used to bail a company out of financial trouble. If a business asks for a line of credit for this reason, they will be turned down by the financial institution. Businesses should be thinking about a line of credit long before they have run into cash flow issues. But if a business owner is using the line of credit to replace the absence of profitability instead of the absence of money coming in from outstanding accounts receivables this is a recipe for digging himself or herself into a financial hole that may be hard to get out of.
YVONNE STEWART is the assistant vice president and senior business relationship manager for ViewPoint Bank, which is headquartered in Plano. Reach her by e-mail at email@example.com. or at (972) 509-2020 ext. 7352. Reach the bank at www.viewpointbank.com.
A growth plan is hatched in a boardroom with the guidance of C-level executives and high-level managers. Too often, human resources staff is not invited during the early stages of the plan. But business growth is intrinsically linked to its human capital, says Michael Manser, Vice President of Human Capital Solutions for Talent Tree of Houston.
“Executives need to realize that a company’s strategic plan will always be linked to human capital resource planning ” he says. “You can’t just say, ‘We’re trying to grow X percent, and we’re hoping everyone will pull together and do more.’ That just doesn’t happen; hope is not a plan.”
Smart Business spoke with Manser about the importance of taking resource planning, hiring issues and organizational goals into consideration when putting forth growth plans for your company.
What are some of the obstacles businesses face when trying to align a growth plan with their human resource plans?
Your company’s organizational strategy will drive your business goals, which will, in turn, drive your work force planning. When there is a business goal to grow, say, 10 percent over the course of a year, do you know how many employees you need to hire? What type of employees you need to hire? What the timing of these additions needs to be to attain your goals?
Could you explain what you mean by ‘organizational strategy’?
An organization’s strategy captures its position in the marketplace as perceived by its customer base. In his book ‘The Workforce Scorecard,’ John Huselid gave a simple but powerful model of the three basic strategy groups most every company will fit in: operational efficiency, product expertise and customer intimacy. For example, companies like McDonald’s and Wal-Mart have an organizational goal of operational efficiency that is, their revenue comes from being efficient in delivering an inexpensive product to the most people. Companies with a product expertise strategy rely on product quality that is literally synonymous with their brand, such as Harley Davidson, Apple and Microsoft. The third type of company, customer intimacy relates to service or an experience that a customer gets for his or her money, such as the experience of shopping at Nordstrom, or how you visit Ace Hardware because ‘Ace is the place with the helpful hardware man.’ Depending on how a company’s organizational strategy works will drive how a business chooses, and compensates, its work force.
For example, a perfume company with a product expertise organizational strategy will approach how to achieve a 10 percent growth much differently than if it operated under one of the other two models because its revenue depends on creating unique fragrances for its competitive advantage and growth. So, it may opt to spend its growth budget on hiring the best qualified chemist to create new fragrances, rather than high-end sales-people, or procuring inexpensive ways to get raw ingredients.
Once you have revisited your business strategy and organizational goals, what’s next?
Do you anticipate that the performance results of your staff will achieve the new company’s objectives? Does your hiring plan take into account the learning curve? Should you hire sooner rather than later to get performance results up quicker? Do you have enough recruiters to accomplish your goals? Do you have enough money to hire these new employees? Where will you physically put these employees? Do you have enough offices, desks and computers?
What happens when businesses don’t go through this process of lining up growth plans with organizational goals and hiring needs?
Without connecting the strategy to the hiring plan, you won’t achieve the results. This failure will show up in a variety of ways; for example, while a business may know how many employees to hire, it may not know which ones are essential to its bottom line. Or, it may know the right employees to hire, but it may not have the resources to hire them or a place to put them once they are hired.
Where does this process need to start to avoid these mistakes?
HR and finance personnel need to be involved right at the beginning of a growth plan in order to avoid the disconnect between strategic goals and the hiring plan. Business executives, from the start of planning for growth, need to ask their team: How do these growth goals relate to hiring? And, how can HR and the work force help achieve those goals? Integrating HR executives into the strategic planning process will ensure a connection to the engine that drives your company the work force.
MICHAEL MANSER is the Vice President of Human Capital Solutions for Talent Tree, based in Houston. Reach him at (713) 361-7303 or by e-mail at firstname.lastname@example.org.
Do you know where your employees want to be five years from now? Understanding your employees’ career aspirations — and helping them to achieve these goals — is a little-utilized motivator in the corporate world.
“It’s not just compensation that motivates employees,” says Bob Holden, senior vice president of the Employco Group, a member of The Wilson Companies, which handles human resource operations for 400 small and medium-sized Midwest companies. “When executives in a company care about an employee’s career goals, it is incredibly motivating for the employee. Regardless of where a business is in its growth cycle, it is imperative that employees are encouraged to set personal career goals and expectations.”
Smart Business spoke with Holden about the importance of setting goals and how businesses can go about setting up a system for employees.
How can a business owner or manager go about finding out what employees’ career goals are?
The best thing to do is to simply ask the employee about his or her career aspirations during the annual or quarterly review. Then the conversation can begin on how to help achieve those goals and how those goals fit in with the company’s goals. Once the manager has that conversation with the employee, then goal-setting can begin.
How this process is done — formally or informally — depends on the corporate culture. It can be a simple conversation between an employee and the manager or part of a written plan with a regular feedback session. The point is that it needs to be on the agenda if it is going to happen.
Could you give an example of how goal-setting works?
During a performance review a manager discovers that the receptionist aspires to be an account manager, so the manager could sit down with the employee to go over his or her strengths. For example, the receptionist may be an excellent communicator, handles clients well, is an accomplished writer, etc.
Next, the manager would take a look at the employee’s ‘developmental needs’ — which are usually labeled as ‘weaknesses’ but really should be viewed as areas where the employee needs more education or training. In this case, the receptionist may need more job knowledge or may require more training about the company’s products.
The next step is to create ‘action goals’ for the upcoming year. Together, the manager and employee would decide how best to fill in the knowledge deficits that the employee may have so that he or she moves closer to the goal of becoming an account manager. The action goals could include signing up for product training, attending networking or client meetings, or attending development classes to strengthen customer service skills.
Once the career goals and action goals are set, what is the next step?
It is important to set goals on a yearly basis, then break it up into quarterly or monthly check-ins. The bottom line is that the employee understands the expectation of the action goals and that there is a monitoring process to see if the goals have been met.
Another important aspect is a reward after meeting a goal. It doesn’t have to be financial; it can be as simple as allowing the employee to attend a networking event he or she might not have had the chance to experience before. These simple rewards can be great motivators, and they create a sense of accomplishment for the employee.
What is the ROI for the company for this level of commitment?
Yes, we are all busy and doing this kind of goal-setting takes a commitment by the company and its managers. But in return, the company reduces recruiting costs and fosters a loyal work force. Employees are more satisfied when they feel they fit in to the company’s overall big picture.
It is hard to find talent today. Not only do the prospects have to sell themselves, but the organization also has to sell itself to the prospects. When you can say to a job candidate that you promote from within and help with employees’ career goals, it is a huge selling point.
Many companies are not using an employee’s career goals as a motivator. One main reason is that the employee may be doing such a good job at the current position that the manager doesn’t want to rock the boat or take the time to see if the employee has other aspirations But it is important to know what an employee wants from his or her job because the employer can bridge that gap and create a highly motivated work force.
BOB HOLDEN is the senior vice president of the Employco Group (www.employco.com), a division of The Wilson Companies (www.thewilsoncompanies.com). Employco handles human resource operations for 400 small and medium-sized Midwest companies. Reach him at (630) 286-7399 or by e-mail at email@example.com.