Chicago (1685)

We spoke with EY’s Rick Fezell back in February about transitioning to his new leadership post in Chicago. Here’s a little more from that conversation as Rick talks about the value of asking for help – even when you’re the leader.


When Rick Fezell became the new managing partner of the Midwest Region for EY, he found himself in an unfamiliar setting. After spending most of his career on the West Coast, he was now in Chicago and had to get to know a bunch of new people.

“How I overcome that is I trust our other partners,” Fezell says. “If someone else has a better relationship and they’ve been there, it doesn’t need to be me and my title. It may be somebody else who has a relationship and can go and work through the issue. When you’re in a place for 10 or 15 years, typically you can just go out and handle those things. So I think it’s been a challenge to figure out where I should go and where we would be better off if I let someone else go who has a longer history with that client or person.”

It’s often not easy for a CEO to accept that there is someone in his or her company better equipped to deal with a problem. Those who aren’t able to accept it will find their opportunities for growth and expansion quickly become limited.


Setting ego aside

Fezell says stepping into a new situation is something most leaders will face at one point in their career.

“The biggest challenge for me has been not having a reservoir of goodwill to draw upon when you have to go into some challenging client situations,” Fezell says. “It’s particularly challenging when I haven’t been there before and my first meeting with someone is to work through a difficult issue. So they have no basis to trust me or know where I’m coming from.”

In those situations where you’re not the best answer, you just have to swallow your pride and trust your people.

“It’s difficult for me, not because of ego, but because I just want to fix it,” Fezell says. “We’re all fixers and with my title, it gives me the opportunity through influence and title to go out and fix something. But I also know that we have great partners and we’re all leaders in one way, shape or form. I just have a different leadership role.

“I think about what’s going to best help us get through the particular situation. In many cases, I’m not the answer. My team keeps me honest on that. They will say, ‘We don’t think you’re the right person to go do this and here’s why.’ So we find the person who is and move forward.”


How to reach: EY, (312) 879-2000 or


To stay in touch with the latest insight and advice from Chicago’s best leaders, please visit us @SmartBiz_CHI or check out our Facebook page.

The on-site clinic model — a quick care center that focuses on primary care, workplace wellness screenings, disease management and any acute colds, pains, etc. — is still somewhat of an unknown for small and midsize employers.

Typically, on-site clinics are utilized by large employers, so employers with less than 1,000 employees may think it is too expensive or too much of a startup expense. But that doesn’t have to be the case.

Dr. Ken Rybicki, an internal medicine specialist who runs several on-site clinics, says employers can put together an on-site clinic for less than they might think, while designing a plan that gets people to participate and become healthier. This in turn decreases claims and saves money.

“A business doesn’t need a full-time clinic. I have a company with about 30 employees that I go to once a month and one with 75 I go to twice a month,” Rybicki says. He also works with a company that has 600 employees and has a three-room medical center staffed 25 hours per week by himself or a medical assistant.

“It does not need to be a full clinic,” he says. “I transport the things I need, like my blood pressure cuff. Companies don’t need to spend a lot of money — as long as I have a room to use and computer access, I am good to go. You don’t need to have 5,000 employees and a full-time medical clinic. There are ways to do it on a smaller scale and still provide what employees need.”

Smart Business spoke with Rybicki about setting up on-site clinics and the advantages they can bring.

How do on-site clinics benefit both employers and employees?

The big advantage is the clinic is right there for people. Minor ailments can be cared for on-site, preventing employees from needing to leave work to go to the doctor. If someone needs a follow-up, he or she can come in on a break, and these visits are at no cost to the employee. On-site clinics also are able to take care of people quickly, which improves work performance and stops absenteeism and presenteeism — being present at work but not feeling well.

On-site clinics are convenient and keep people at work so they can continue to be productive. It also gives employees the sense that the management cares about them from a recruiting and retention perspective.

What are some specific ways on-site clinics help cut health care costs?

On-site clinics allow you to get very aggressive about identifying conditions like high blood pressure, asthma, heart disease or diabetes, for health plan members. You can then take an aggressive stand on treating these conditions on-site to keep them healthy and manage their cholesterol, blood sugar, blood pressure and overall health targets with testing and management.

On-site clinics can be highly successful in terms of employees and spouses reaching their desired health parameters. And in doing so, that saves employers funds because it reduces health care claims. There are not as many emergency room visits, heart attacks, etc.

Beyond checkups and treatment, how do you recommend business owners take the next step with wellness and prevention?

Employers should work with their insurance broker. If they have access to a particularly good broker, the representative will know about those resources and can help tailor their plan. You want a flexible plan that is made to work for any individual company.

What’s the best way to tie different health care management programs, like pharmacy, to an on-site clinic?

It can be done automatically. In my group, we have a pharmacist who looks at the pharmacy benefits and counsels us on everything from formulary to medication compliance reports. So, ideally, you want to choose a group that automatically does that as part of its on-site commitment. You can set it up so the clinic uses one pharmacist and medications are delivered on-site.

Do you have any other advice for employers?

You have to go a step beyond just doing a health fair and checking people’s blood pressure, blood sugar or cholesterol. You need to aggressively follow up and treat these conditions on-site. The only way to make a difference on cost and benefits is to get those under control, and you can’t do that unless you have somebody right there working with employees.

Dr. Ken Rybicki is on-site clinic manager, internal medicine specialist at HealthLink. Reach him at (314) 367-4800 or

Insights Health Care is brought to you by HealthLink

FOLLOW UP: For more information about on-site clinics and HealthLink’s health and wellness product offerings for employers, call (800) 235-0306.


Mark Silverman had a lot of voices in his ear in the early days of Big Ten Network.

The launch on Sept. 1, 2007, was a glorious day. But it was quickly followed by opinions from every direction as people with ties to the Big Ten Conference expressed their thoughts about what was and wasn’t working with BTN.

Patience wasn’t an option when it came to games not being broadcast or revenue being less than had been anticipated. Fans complained to their schools, the schools complained to the conference and the conference reached out to Silverman.

Fortunately, Silverman, who has been president from day one, was the cool head in the room. He did a masterful job of keeping his team on task, dealing with challenges as they came up and sticking to his vision of what he knew the network could be. The disciplined leadership has paid off with more than 300 affiliates and a presence in more than 52 million homes.

But Silverman did not just maintain an even keel in the face of criticism. He openly reached out to many of his critics and sought to gain additional feedback about the problems they saw at the network.

It’s a step many leaders are not willing to make.


Don’t be insecure

No one likes to be told that they are doing something wrong. Even those who say they embrace criticism or that they love it when mistakes are made must feel some sense of frustration when things don’t go right. It’s part of being human. So the ability to take criticism in stride and reach out to those who provide the negative feedback is a skill that many otherwise very successful people find hard to do.

In the case of Silverman, he saw it as an opportunity to make his organization stronger. So he contacted bloggers who wrote negative stories about BTN and set up meetings to discuss their concerns. He also went on talk shows and met with editorial boards and basically did whatever he could to gather feedback and use it to get better.

His approach going into these meetings was not to argue, nor was it to blindly accept every concern they had and always offer the perfect solution. It was to take what he believed would make BTN a great network, compare it to the opinions he was hearing and figure out the best response. If the critic was right, he was happy to make a change. If he didn’t agree with the opinion, he was comfortable not making a change.

Either way, he demonstrated a willingness to hear concerns and an approachability that would serve the network well.

When you have the confidence to hear criticism and even change course, you give your organization the chance to achieve great things.


Mark Scott is Senior Associate Editor for Smart Business Chicago. He is interested in the people and businesses making a difference in Chicago.

Reach him at (800) 988-4726 x216 or


It’s no secret that the success or failure of any modern company is driven by the quality of its people. This was the basis for the “War for Talent” concept developed by McKinsey and Co. in the 1990s. But the “war” has since evolved into a new endeavor, as a mission to not only obtain but also retain that coveted talent.

A stellar recruiting philosophy is no longer enough. To ensure success — especially in a highly competitive industry — a company must have measures in place to continually cultivate, challenge and satisfy its most promising talent.


Determine skills beyond paper qualifications

Education and experience are often viewed as key determinants of a candidate’s ability to perform a job. It is also imperative, however, to define personality traits and unique skill sets that will work well within an organization’s culture and business model, and that will allow the candidate to thrive once hired.

For example, creativity, adaptability and a passion for in-depth problem-solving are characteristics that, while not always immediately apparent on a resume, may be a key factor in the difference between a good candidate and a great one.

Defining these more abstract qualifications for your particular company and developing an interview technique to screen for them is no doubt a difficult endeavor. But it is also one that will pay off exponentially.


Customize each challenge

Often, high-potential employees are underutilized in roles that don’t best suit their particular strengths and/or personal motivations. This can lead to frustration for all parties involved.

Instead of collecting talent for talent’s sake, it is critical to analyze a star performer’s best fit within your organization.

In any industry, there are an infinite number of problems to be solved or processes to be improved upon. These can be customized to best suit each individual. The right breed of talent craves this kind of challenge, and will find tremendous satisfaction in the pursuit of a tailor-made goal.


Create opportunity ASAP

Newer talent is particularly sought after in highly competitive industries. It is extremely important to nurture these individuals, and to provide coaching and other educational opportunities. Team structure can play a pivotal role here.

Pairing new talent with more senior team members is a great way to further the new hire’s education while also exposing senior members to a different, fresher approach. Immediately providing this kind of guided opportunity for new talent helps them to develop relationships within the company, find mentors and ultimately become more engaged with and committed to the company for the long term.


Set the stage for greatness

Identifying and developing employees’ strengths and customizing challenges to capitalize on their unique skill sets creates the opportunity for greatness to be achieved. The desire for greatness and belief in its possibility will not only lead to professional fulfillment, but also to groundbreaking solutions that can transform a company. Productivity will abound, and satisfaction for both the individual and the organization will inevitably follow.


Name: Misha Malyshev

Title: CEO and founder

Company: Teza Technologies

Teza Technologies is a science- and technology-driven global quantitative trading business. The company is headquartered in Chicago with offices in New York and London. Misha earned his doctorate in astrophysics from Princeton University in 1998.


How to reach: Teza Technologies, (312) 768-1600 or


Twitter: @TezaTechCompany

Most people spend their working lives following orders, whether they’re from a boss or a customer. They may not be military commands — your customer may ask you in the nicest way possible to reduce delivery time — but they still must be obeyed. This is just the way things are, whether you’re a junior executive or higher-level manager.

So here’s the leap of faith: Consider the possibility that you can have an equal relationship with a “superior.” I don’t care if that superior is the CEO of a Fortune 50 company. You don’t have to be an inferior in that relationship.

But these partnership relationships don’t just happen. You’ve got to be courageous. A good first step is figuring out why you accept the role of order taker in the first place.

People define their roles based on how they are treated by their boss or customers.

This is a typical example for a newly hired lawyer. John begins his first day as a junior associate at a prestigious law firm, showing up at the appointed 7:30 a.m. time. Mark, his boss, doesn’t arrive until 8:30. Mark finally greets John, who had been sitting in the waiting area outside of Mark’s office.

“John,” Mark says, “I’ve got a lot of work to give you. Follow me.”

The interaction lasted only a few seconds, but the impact on the relationship was huge:


  • Tone and pace — Mark’s words and tone of voice said that he was “all business” and made John feel like a lackey about to receive his assignments. The cold, fast nature of the exchange said to John that his role was to obey without question.
  • Bad manners — Mark didn’t apologize for being late. Nor did he welcome John to the law firm. Being rude tells John that he is so far down on the totem pole that he doesn’t even merit bare-bones respect.
  • Commands — Mark asserted his dominance by his choice of words. He might as well have greeted John with, “Hi, you’re my inferior. Follow me to my office which is bigger than any office you’ll be in for a long time.”


Unequal relationships arise when one person does all the talking and the other does all the listening. Test this concept by thinking about your relationships. I’d bet in every relationship where you’re the primary listener, you’re also the primary order taker. Just as our best friends tend to be good listeners, our best work relationships are characterized by two-way listening.

To bolster peer partnerships you must bring the resistance out in the open. Maybe the other person doesn’t even realize they’re fighting against treating you as an equal. Another factor is that busy people often have good intentions but bad execution. They may agree with the points you raised in your partnership conversation, but then some crisis arises and those points aren’t acted upon.

If you want results from a partnership, you must talk about what that looks like because we can’t fix what we can’t see.


Name: Joe Takash

Title: President

Company: Victory Consulting

Victory Consulting is a Chicago-based sales and leadership development firm that helps people maximize their talent and performance. Joe is a keynote speaker for executive retreats, sales conferences and management meetings.

How to reach: Victory Consulting, (818) 918-3999 or


Twitter: @JoeTakash




As homeowners across the United States continue to struggle to stay in their homes, lenders and investors have taken different approaches in response to the crisis.

As of January 31, more than 1.3 million homeowners have received a permanent modification on their mortgage through the Home Affordable Modification Program (HAMP).

The U.S. Treasury Department reports these homeowners have saved an estimated $25.5 billion in their monthly mortgage payments since the program went into effect.

Jorge Newbery’s view of the program’s accomplishments isn’t as rosy.

“HAMP is (President) Obama’s plan to assist families,” says Newbery, founder and CEO of American Homeowner Preservation LLC. “When they designed it, they tried to ride a line between being perceived as enabling families who are doing strategic defaults and those families who really had medical emergencies, unemployment or reduced employment that made it difficult for them to continue to make their payments.

“The end result was a program that was not very effective.”

One tool that Newbery is using to reduce the number of foreclosures is crowdfunding. His company creates distressed mortgage investment opportunities and then reaches out to a larger pool of investors in search of a good match.

“Instead of using a handful of large investors, now we can make projects available to a more vast audience of investors by making the initial investments smaller,” Newbery says.

Instead of a minimum investment of $250,000, investors can get in the door at $10,000.


New opportunity

By transitioning to a crowdfunding model, the company has been able to lower the financial barrier of entry for investors and secure more funds. AHP has secured more than $4.5 million in crowdfunded investments. Newbery says the investments have a social impact and the ability to generate returns for individual investors exceeding 9 percent. 

More importantly, they have allowed families to stay in their homes.

“If they want to stay, we can typically drop payments dramatically,” Newbery says.

The program is possible thanks to a change in federal law that allows investment opportunities to be marketed to broad audiences, something that was made illegal following the Great Depression.

The change could open the door to more inappropriate lending practices, but Newbery says there is always a risk when money is involved. He says consumers should always be on the lookout for potential scams.

Newbery’s company has taken a number of steps to assure clients that their money is safe.

“Our loans are not held by our company,” he says. “They are held in a trust. The trustee is US Bank. If anything were to happen to us, the investors are the beneficial owners of that trust, so they would still have protection and own their loans.”

He says the business community has been supportive of crowdfunding.

“The returns we offer are higher than market, so that’s attractive,” Newbery says. “But we do have a number of investors who say the specific draw is that their dollars are having a specific impact on families that are in this crisis. It’s modern-day philanthropy. You’re getting a return, but you’re also achieving social good.” 


Learn more about American Homeowner Preservation LLC at:


Twitter: @AHPInvesting

How to reach: American Homeowner Preservation LLC, (800) 555-1055 or

Interviewed by Dustin S. Klein

If you take a tour of Life Fitness with Chris Clawson, you may find yourself answering questions that you wouldn’t expect to be asked on a tour of a company that makes exercise equipment.

For instance, he’ll probably want to know if you have a favorite wine or if you’ve ever visited a winery.

“I say, ‘How many of you think the wine tasted the same after you visited the winery?’” says Clawson, president at Life Fitness. “And they all shake their heads no because it tastes different. You get to meet the vintner, go out in the field, pull grapes off the vine and talk about the blend and all the things that go into making it. So you have this greater appreciation for what it is that was your favorite.”

So what does wine making have to do with a company that generated $693.5 million in net sales for 2013 making fitness products for commercial, professional and home users? Clawson sees it as a great analogy for the powerful relationship that can be formed between a business and its customers.

“You think you’re here to see product and you will see product,” Clawson says of people who take his company’s experience tours. “You think you’re here to have the story told about how we design products and what we do in manufacturing and that’s also true to an extent. But you’re really here to meet the people who make the wine.

“I say we have the greatest people in the world and if I’m overselling, you can tell me. I’ve yet to have someone tell me that I was overselling.”

Clawson loves the experience tour and conducted a lot of them during his first tour of duty at Life Fitness from 1994 to 2004. But now he’s president of the business, which is a division of Brunswick Corp., and he’s had to delegate most of that responsibility.

That hasn’t necessarily been a bad thing for the overall goal of building stronger bonds between his company and its customers.

“I will tell you I did a pretty good job, but the problem was I went to places where I wasn’t an expert,” Clawson says. “So when we recast this tour, the people you speak with now are experts. We spent $5 million building out our engineering lab space so that we had better places for our people to work. It also gave them a better opportunity to show people what it is that they do.”

Start conversations

Giving people a more active part in selling the overall brand and image of your business can take time. At Life Fitness, Clawson says it was a matter of convincing people to step outside of their comfort zones and see the bigger picture.

“At most companies, I believe people want to be part of a team,” Clawson says. “Where you start to see the breakdown is where one functional area is feeling neglected, feeling they are not being listened to or having their needs met. They start to retract that behavior they had put out there for fear that it’s going to create situations where they are going to be unsuccessful.

“When people recognize that everyone is pulling in the same direction and they want everyone to be successful and then you have those successes; that behavior changes pretty quickly.”

The tours provide a venue for people to feel closer to what is happening at Life Fitness. You need to find opportunities to engage employees in your business beyond the work that they do each day.

“I love product first and foremost,” Clawson says. “I love to talk about it and think about it and interact with customers. I encourage people who are involved in product development to do the same. If you stay inside our building and think all the ideas are going to magically come to you in the middle of the day, you’re mistaken.”

Dialogue with customers has to be about more than just projecting a friendly image for your business. It should be a tool you use to continuously improve performance.

“If you’re constantly thinking about them and talking with that customer group, you’d be amazed at how many ideas come out of a casual conversation or as you’re watching somebody as they use the product,” Clawson says.

“We recognize that if you ask somebody what they want, they can only tell you what they know. You can’t innovate giving somebody what they know. You have to innovate giving them things that they need and things that they don’t know that they need. That takes a lot of time and effort.”

Clawson encourages his employees to talk to customers about the products they buy from Life Fitness, as well as the products they wish they could buy. But he also wants them to ask questions.

“Talk to people about what they do and why they do it and how they do it and how they’d like to do it,” Clawson says. “They want to tell you and you get a chance to listen.”


Take a different view

Getting your employees more involved in customer interaction can be a big change and big changes can be stressful. One solution is to not present it as a big change.

“I just said, ‘Let’s look at it differently,’ as opposed to let’s change everything,” Clawson says of his approach to getting employees more engaged with customers at Life Fitness. “If you’re willing and able, you can do so many things. You fear the future less than you fear it if you’re not willing and able.”

That’s often easier said than done, of course. But Clawson firmly believes that many companies have a faulty view of taking risks.

“Whenever people talk about risk, they typically are talking about things they are going to do that they are not doing today,” Clawson says. “One of the things I like to talk about is there is just as much risk, and sometimes more risk, in continuing to do what you’ve been doing. One of the things you have to do is ask the people who are experts to identify the risks they have in their job.”

In other words, you can’t just think of risk in terms of the new plan or program you want to implement. You need to think about how what you’re doing now might be keeping you from maximizing your potential.

“One of the big moves we made in the last few years is we moved away from a Microsoft platform for developing our console technologies to a Google platform,” Clawson says. “We had no Google experience or Google hardware or software experts.

“All of that was new. But we knew if we stayed with the platform we were on, we were going to continue getting the same things we had been getting for two decades, and it was going to give us many challenges relative to flexibility and modularity.”

You can’t be an expert in everything, even if you’re talking about everything in your industry. Sometimes, you’ll need to reach out and get help. The leaders willing to do that are the ones who will keep moving forward.

“There are a lot of companies that are able and not willing or willing and not able,” Clawson says. “One of the things we’ve done a good job with is recognizing when we’re not able and finding people to help us become able. That doesn’t mean we go out and hire everybody. Sometimes it just means we have to partner with people.

“Some of the people, you just have to interview them almost as if you were interviewing them for a job. You have to get a feel for if they can handle it. You have to manage the process and if the process isn’t going where you want it to, you have to push the process where you want it. If it’s because they are not able, you have to go out and find somebody else.”


Be confident

Perhaps Clawson developed his affinity for meeting challenges and taking the path less traveled when he was a child and told whoever wanted to know that he wanted to be a baseball player when he grew up.

“People would say, ‘That’s fine, but what do you really want to be?’” Clawson says. “My parents always instilled in me that you can do whatever you want, so I had that latent confidence.”

Clawson proved the cynics wrong when he was drafted by the Atlanta Braves in 1984 and played three seasons in the minors before injuries forced him to choose a different career. The baseball career was over, but his passion for winning was stronger than ever.

“Winning begets an attitude and that attitude creates a culture and that culture creates a history and that history is what we have as a company in our industry, we are the most profitable and have been for the longest period of time,” Clawson says. “We create value for our customers and our customers recognize that.”



  • Share your love for the business.
  • Talk about how you can do it better.
  • Don’t be afraid of risk.


The Clawson File:

Name: Chris Clawson

Title: President

Company: Life Fitness

Education: Attended Newman University in Wichita, Kan., where he was an Academic All-American in baseball and is a member of its athletic Hall of Fame. Earned baccalaureate degree from San Diego State University and master’s of business administration from Kellogg School of Management at Northwestern University, Evanston, Ill.

Clawson on Life Fitness co-founder Augie Nieto: The guy whose spirit I carry forward. Augie was an EY Entrepreneur Of The Year™ and a spectacular human being. There is the Augie who was a great businessperson and there’s the guy who has amyotrophic lateral sclerosis who raised $39 million since he was diagnosed. That’s more spectacular. He’s an amazing person and an amazing story.

Clawson on dealing with life’s ups and downs: Things don’t happen exactly as planned and you have to be able to rebound and recover. You have to put it behind you and focus. You have to instill that you’re not going to be so upset because something didn’t go exactly as it was supposed to. If you do, people are going to be unwilling to take risks. You can’t get so high when something goes well because people lose focus, and there is still lots of work to do. When a product first comes out, there’s a lot to do to continue the momentum.


Learn more about Life Fitness at:

Twitter: @LifeFitness


How to reach: Life Fitness, (800) 351-3737 or

Companies that have health insurance plans with low deductibles can save money by increasing the deductible, and then use some of the savings to ensure employees aren’t harmed by the change.

“If you go from a fairly rich deductible of $250 to $2,500, the insurance carrier will provide you discounts of 25 to 35 percent in premium reductions,” says Dan Wilke, Vice President of Underwriting and Statistical Analysis at Benefitdecisions, Inc.

“But if you tell employees their plan changed from a $250 to a $2,500 deductible, that’s a PR nightmare. Instead, you can create a health reimbursement account (HRA) or health savings account (HSA) to reimburse them under that deductible,” he says.

Smart Business spoke with Wilke about the advantages and differences with HRA and HSA plans.

How does the reimbursement strategy work?

In essence, you make the employee whole all the way back to their original deductible liability. If their deductible was $250, then you’ll reimburse employees for any deductible incurred after the first $250. This works because in 90 percent of the cases we’ve done, the amount of premium savings — the 25 to 35 percent reduction the insurance carrier gives — is more than enough to cover the claims reimbursement the company has promised employees.

Doesn’t that involve some risk for the employer?

Yes, but our studies show that 53 percent of individuals incur $0 to $100 of claims on an annual basis. Even when you increase the amount to $250, it’s 63 percent of employees on the medical plan. So the company will have minimal reimbursement on 63 percent of employees. We haven’t had a situation where reimbursements have been more than the premium savings. It can happen; but our findings are that 10 to 20 percent of employees incur 80 percent of the claims.
The vast majority of employees don’t incur much in claim dollars. Employers should accrue an average of what they expect to reimburse, and that will add up to more than what is paid out. Over time, they’ll save money while giving employees the same coverage.

What are the differences between HRAs and HSAs? Which is better for employers? 

The HRA is a promise to pay. If an employee has claims, the company will give the employee money that has been set aside. Under an HSA, the company pays money into the account regardless of whether the employee ever goes to the doctor. If you raise the deductible to $2,500 and put $1,500 into an HSA, the company has incurred a fixed expense of $1,500. In essence, employees earn a $1,500 bonus that goes into a health retirement account they can take with them when they leave.

If you’re putting the premium 
savings into HSAs, you’re not really seeing any cost savings. You’re not pulling any costs out of the medical plan. Employees prefer HSAs because that’s money the employer is putting into a personal account. There also are tax advantages to the employee regarding any contributions made on an individual basis.

With an HRA, companies can cover the employee exposure from changing to a low-deductible to a high-deductible plan without giving up as much of the savings. Depending on your plan design, you can also issue debit cards to employees so that when they go to the pharmacy or doctor’s office they can have expenses paid upfront and they don’t have to pay up front out of pocket expenses.

Employees like that 
because the first thing they’re concerned about when switching to a higher deductible is having to pay a $2,500 bill and waiting to be reimbursed. This strategy is likely to continue to provide savings because you’re compounding premium increases on a lower amount. If rates go up 10 percent next year, a plan costing $500 with the $250 deductible would increase by $50, while the plan costing $375 with a $2,500 deductible costs $37.50 more. 
When employers see the compounding effect on three to five years of increases, they realize that it’s a way to curtail the trend seen over the last 10 years.
Dan Wilke is Vice President of Underwriting and Statistical Analysis at Benefitdecisions, Inc. Reach him at (312) 376-0437 or
Insights Employee Benefits is brought to you by Benefitdecisions, Inc.
Businesses are familiar with the notion that written employment contracts can be a source of rights and liabilities in the event of a split with an executive employee.

However, businesses 
are often not as familiar with other potential sources of employment liability in those situations, including the Wage Payment and Collections Act, sometimes called the Wage Payment Act.

Smart Business spoke with John Haarlow Jr., an attorney at Novack and Macey LLPto discuss the relationship between this statute and executive compensation.

What is the act and why is it important?

Generally speaking, the Wage Payment Act requires Illinois employers to pay the final compensation of separated employees. Employers need to be conscious of the act because it applies to all employees, from hourly wage earners to top executives. It also provides a range of powerful remedies for separated employees, including attorneys’ fees and potential personal liability. 

What are the elements of a claim?

To prevail on a Wage Payment Act claim, a separated employee must demonstrate that he or she has been denied final compensation in violation of an ‘agreement’ with an employer. Under the act, an agreement is broader and less formal than a traditional contract. For example, an agreement can arise from the pattern or practice between the employee and employer, such as payment of a fixed amount at regular intervals, or from a conversation between an employee and employer.

under the act are brought, and sometimes won, solely based on an executive employee’s testimony that the employer promised a payment it later refused to make.

What types of compensation may an employee seek under the act?

Final compensation is essentially any payment due and owing pursuant to an agreement between the employee and employer, including salary, wages, commissions, bonuses, vacation pay, stock options, severance pay and pension contributions. In the event of mid-year separation, some of these payments must be made pro rata.

Calculating these payments 
can be complicated and expensive when dealing with executive separations that include substantial commissions, bonuses or golden parachute packages that vest at various times.

When is an employee entitled to receive a bonus under the act?

Whether executive employees are entitled to a bonus upon separation under the act has been heavily litigated. Generally, if an executive can show that the employer made an unequivocal promise to pay a bonus and that the conditions for payment have been met, a bonus may be awarded under the act. Such an award is still possible even though a bonus is within the employer’s discretion and is typically awarded at year’s end.

When may a separated employee recover attorneys’ fees?

A recent amendment to the act provides that employers are liable for the attorneys’ fees of any employee that brings a successful claim under the act. The relatively easy access to attorneys’ fees provides departing executives a key bargaining chip in connection with their claims and makes claims for smaller amounts feasible to bring.

Under what conditions is personal liability possible?

One of the most striking features of the act is that an employer’s officer or agent can be held personally liable for the departing employee’s damages and attorneys’ fees. For personal liability to attach, an officer must have knowledge of the compensation arrangement between the departing executive and the employer and knowingly permit the employer to violate the act. This can provide executives tremendous leverage by putting individual officers at personal risk in connection with a Wage Payment Act claim.

How can a business protect itself?

Every business is different, so there is no silver bullet to protecting against Wage Payment Act liability. However, broadly speaking, businesses should make clear what comprises an executive’s compensation package and when and how it will be paid. That way, there are less likely to be disputes about payment upon separation.
John Haarlow Jr. is an attorney with Novack and Macey LLP. Reach him at (312) 419-6900 or
Insights Legal Affairs is brought to you by Novack and Macey LLP 
Business operations are subject to a number of internal and external risks, as are ownership interests in businesses. How organizations and their owners address these risks can have a significant impact on the value of businesses and interests therein. 

An enterprise risk management (ERM) process involves identifying risks relative to an organization’s objectives, assessing them for likelihood and impact, developing a response strategy and monitoring progress. A well-defined ERM process framework can protect and create value for organizations and their owners. 

Smart Business spoke with John T. Alfonsi, managing director at Cendrowski Corporate Advisors LLC, about how ERM precesses can mitigate risk and increase a company’s value.

Where is risk addressed in a business valuation?

The most common method of valuing a business is the ‘income approach.’ It requires a valuation analyst to project a business’s future cash flows, then calculate the present value of the sum of these cash flows by employing an appropriate discount rate. The valuation analyst must address risk in two primary areas: projected future cash flows and the discount rate. 

Effective ERM 
processes can help businesses increase value by affecting the estimates for these quantities.

How does risk impact projected cash flow?

There exists a risk that an organization will not achieve its projected figures. As such, the process by which management projects future cash flows can impact a valuation analyst’s assessment of the business. A key risk in the process is information integrity, the quality of information generated through monitoring and data assimilation. 

Information integrity allows management to make well-informed decisions and should provide a valuation analyst with greater confidence in a business’s projections. Valuation analysts can analyze information integrity by examining historical projections and assessing elements of the internal control environment.

A valuation analyst also should examine the variance between historical projections and a business’s actual performance. If a strong correlation exists, a valuation analyst can be highly confident in current projections, if the process employed by the organization remains constant. If not, the analyst must examine the variance between the past projections and actual performance to discern whether bias existed in past estimates and current projections.

What about risks in the discount rate? 

The discount rate is the yield necessary to attract capital to a particular investment, given the risks associated with that investment. A project with relatively high risk will require a relatively high yield to compensate an investor for bearing these risks.

In determining the discount rate, there are two sources of risk that need to be quantified: systematic and unsystematic. Systematic risk is the risk one must bear for taking on a risky investment in the market. However, systematic risk is estimated by calculating the return to public equities due to availability of data.

ERM process has little impact on systematic risks unless the business’s performance is heavily tied to market performance. Unsystematic risk is sometimes broken down into two components, industry risk and company-specific risk. Industry risk reflects the risks identified with the industry in which a business operates.

risks encompass all other risks, including size, depth of management, geography of operations, customer and/or vendor concentration, competition and financial health.

How can ERM processes mitigate company-specific risks and increase value?

An ERM process should quickly gather and assimilate high-quality information for use in an organization’s decision-making process, allowing the organization to rapidly assess the impact and likelihood of risks associated with changes in its internal and external environments. Early assessment and mitigation can help preserve value and capitalize on risky events when competitors do not react as swiftly to environmental changes.
John T. Alfonsi is the Managing Director for Cendrowski Corporate Advisors LLC. Reach him at (866) 717-1607 or
Insights Accounting is brought to you by Cendrowski Corporate Advisors LLC 
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