By its very definition, a supply chain is a system of organizations, people, technology, activities, information and resources involved in the flow of global shipments from supplier to customer.
In many aspects, the supply chain is the engine that drives our economy it is a vital service, fundamental to nearly every sector of the marketplace.
Therefore, it isn’t difficult to comprehend why many corporations within the supply chain community have a growing interest in developing a social obligation to the local and national communities they serve.
“Logistics activities that demonstrate a deep-rooted commitment to the community are highly effective corporate initiatives that enhance relationships among employees, customers, vendors, partners and carriers,” says Vaughn Moore, vice president of sales and marketing for AIT Worldwide Logistics, Inc. “The practice of corporate philanthropy has become an important factor in sustaining a successful and responsible logistics business.”
Smart Business spoke with Moore about how the logistics industry has become guided by a collective social conscience.
How has community involvement been embraced by the supply chain community in recent years?
The logical and most obvious form for logistics providers to give back has involved providing the resources, warehouses, transportation solutions and other assets necessary to implement disaster relief operations that, at their core, are all about supply chains. The industry has been a leader at the forefront of using what it has and does every day in order to distribute goods and materials where they are needed most.
Two events in recent years have served as a wakeup call for the industry Hurricane Katrina and 9/11. In the wake of those dire circumstances and horrific tragedies, transportation providers were called on to coordinate relief operations to civil society.
In addition to providing aid, they were also challenged to move beyond the tangible business aspect of transporting goods. As you might imagine, these two historical events prompted the industry to rally together, recognize the power of humanity and embrace the altruistic side of the supply chain.
Logistics businesses were inspired to find additional ways to connect with local and global communities in order to contribute to the greater good.
What are the challenges and benefits presented to companies interested in implementing successful corporate commitments?
Financial and time aspects, allocation of key resources, engaging employee participation and development of clear long-term goals are potential challenges involved in selecting a corporate commitment.
Above all else, the success of a corporate social initiative is critically dependent on whether the community commitment is closely connected to and integrated with your company’s core competencies, business models and philosophies.
I’ve been using the term ‘emotional currency’ for years to describe the spirit of community involvement that’s adopted by employees who are properly vested in a cause. There’s a big difference between writing a check versus contributing year-round time, participation and front-line support.
When employees at all levels across the entire organization actually care not just about their job but about the company, its customers and the community your corporate commitment quickly becomes an employee-owned initiative rather than a company-owned initiative.
In addition to that, a successful program increases the exposure of your brand, creates a unique competitive advantage for your company, boosts employee morale and builds your reputation as a company committed to affecting change, both within the industry and outside of it.
Given the current state of the down economy, how are employees expected to participate and donate in corporate sponsorships or commitments?
Whether your company partners with the American Cancer Society to support the fight against breast cancer, sponsors an adopt-a-family program every holiday season or offers disaster relief efforts to Third World countries, employee-owned initiatives are relatively recession-proof.
After all, it is the employees who are driving continuous participation, creating internal and external fund-raising campaigns, making donations and sustaining involvement.
When the values of your company have been indoctrinated into every aspect of your community commitment and corporate culture, employees feel a certain sense of protection, pride and recognition.
These values not only bring out the best in a company’s employees, they ultimately shape and define your company and all of its global relationships among customers, partners, vendors and the communities where we live and work.
VAUGHN MOORE is the vice president of sales and marketing for AIT Worldwide Logistics, Inc., headquartered in Itasca, Ill. Spanning numerous nationwide locations and an ever-increasing network of international partnerships, the global transportation and logistics provider delivers tailored solutions for a wide variety of vertical markets and industries. Reach him at www.aitworldwide.com or (800) 669-4AIT (4248).
When a legal dispute arises, often a business owner’s first inclination is to declare war, i.e., file a lawsuit and engage in protracted litigation. However, that impulse should be resisted, says Adam Rome, attorney in the Litigation Practice Group and the Restructuring & Insolvency Services Group at Levenfeld Pearlstein, LLC.
“Litigation should always be a last resort,” Rome says. “Too many times a complaint is filed without determining a clear goal. A number of factors must be analyzed before making a decision about the proper course of action.”
Smart Business spoke with Rome about how to approach a dispute to achieve your desired outcome while keeping your expectations in check.
What are the first things to consider when a dispute arises?
Clearly, a major concern to a business in determining whether to engage in litigation is cost. However, cost cannot be the only factor analyzed. A business, with the help from its trusted business adviser or lawyer, must analyze the probability of its success. Success is defined by the client, which is why it is so vital to set a clear goal before filing a complaint.
After determining its goal, a company must consider all of its options. Not all options are based on the filing of a lawsuit. Savvy lawyers and businesspeople can, and should, get creative. Options are based on leverage. A business can use its leverage to obtain a successful result, without participating in an expensive lawsuit. If a company has little or no leverage, filing a complaint is a quick way to create it.
A business must also understand that a lawsuit is time-consuming. A company is going to have to use its resources responding to discovery requests, sitting for depositions and engaging in litigation strategy, which is time taken away from running the business.
A business should also weigh the impact of its lawsuit in the business community. Filing a suit will have a negative impact on the entity or individual being sued. Therefore, if this customer produces a large revenue stream for your business, it may not make economic sense to sue the customer over an issue that may have a less disruptive solution. A company should also determine whether a lawsuit could negatively impact its relationships with other clients or potential customers.
When is litigation inevitable?
If you are a defendant, litigation is usually inevitable. In contrast, filing a complaint is inevitable only after all other options have been exhausted, and it has been determined that the business cannot survive without achieving a successful result.
Furthermore, litigation makes sense when the amount of money in dispute justifies the cost of litigation. In contrast, there are situations when a business needs to make a public statement to deter future malfeasance from either within or outside the company. Sending a message can be a valid goal that has no direct monetary value. For example, a business may need to file suit against an employee who violated a noncompete agreement. This lets everyone at the company know that employment agreements will be enforced.
When should mediation come into play?
Mediation is a tool used within litigation. Mediation is a powerful device. It can be extremely beneficial when your opponent has deeper pockets. For the most part, mediation must be mutually agreed upon. Leverage is key when trying to convince your opponent that mediation is the best result. It is up to the lawyer to determine what leverage to apply, and how.
Mediation is not binding and should therefore not be treated like a mini-trial. The goal of mediation is not to convince the mediator that the business has a superior argument. It is important to persuade the mediator, but the goal is to convince the principal of the other company that it is in his or her company’s best interest to settle the case at the terms you suggest, rather than having to spend additional time and money.
Mediation is a skill. If one’s mediation style is too aggressive, there is a risk that your opponent may become defensive and/or angry, which could cause your opponent to litigate harder.
When is it best to walk away from a dispute?
Let me be clear, walking away does not mean forgetting about the dispute. It simply means that litigation may not be the best option. It means that sometimes you need to be creative.
If litigation is not economically feasible, business deals need to be, and should be, worked out. For example, depending on the circumstances, discounts can be provided on future deals, an exclusivity agreement can be worked out or payment schedules devised. Successful results can be achieved without involving the court system.
Some businesses file suit when there is no financial or noneconomic upside. For example, a former employee stole your customer list, but this list is not vital to your business. To file suit to enjoin your former employee from using this list may cost a significant amount of money. Again, if the lawsuit lacks financial and/or noneconomical impact for your respective company, a company should consider walking away.
Adam B. Rome is an attorney in the Litigation Practice Group and the Restructuring & Insolvency Services Group at Levenfeld Pearlstein, LLC. Reach him at (312) 476-7585 or email@example.com.
When John Rooney first got to United States Cellular Corp. in April 2000, there was nothing united about it.
“It was a company that was really sort of out of sync with modern business,” he says. “They had 26 different areas that they covered with their network, but they also had no uniform culture or uniform approach to business. They were basically, as one of my senior executives called it, 26 engines under the same hood. While they all had U.S. Cellular signs, they weren’t even uniform signs, so there was no real single character for the business.”
So when Rooney took over as the president and CEO, he saw a chance to immediately bring the company together under one culture — in this case, he put into place his dynamic organization, focusing on a culture of business ethics, employee training and focused customer service at the wireless carrier that did $4.2 billion in 2008 total operating revenue. It would be an understatement to say that it wasn’t an easy task when he first tried to bring everyone under one tent.
“We had a tough time getting it in because it was one of these things where there was no way to hide, so if you didn’t want to follow the principles and behaviors, then you were out,” he says.
But Rooney started off by making a clear declaration from the top, retraining his leadership team to get everyone on board, then, with a solid blueprint in place, he got his front-line people fully invested in pushing change.
Take the ball
Rooney didn’t expect the company to change immediately, but the role its top executive played did the second he came on board.
“There has to be a CEO who has got a feel for this type of leadership,” he says.
To do that, you have to clear your schedule of everything that doesn’t have to do with driving change.
“I have three jobs as the CEO,” Rooney explains. “I get to set the culture, which is the dynamic organization. I get to set the vision of the company, which is to be the best in customer service and satisfaction. And I also get to get rid of the ‘becauses’ — when someone comes to me and says, ‘I can’t do what you want because …’ then I get to go back in my old operating role and knock down the ‘becauses.’ I had a good COO here that could work on the other stuff. It’s a question of letting other people do the things that they’re good at and then making sure that I’m doing the things that I’m good at.”
So while Rooney let his chief operating officer handle the operations, he went out and made clear presentations to senior leaders.
“We really took the leadership at that time and told them what we expected of them. We had a fairly intensive effort for the first six to eight months that I was here to put the playbook out there and say, ‘Here’s what we’re going to do,’ and make it clear to them that they either subscribe to this or they were gone,” he says. “Many of them looked at that and said, ‘Well, this is the flavor of the month,’ and that they were going to outlast me. They didn’t do that.”
They certainly didn’t. Of the top 50 people Rooney originally introduced to the dynamic organization, he estimates fewer than five survived the transition.
“That’s the way things are; you have to just be intolerant of people that say, ‘I don’t want to live this way,’” he says. “They don’t want to live this way, fine, I don’t care. People have their choices, but that choice then says you don’t live here.”
As he explained these things to his senior leaders, he also went out to the front lines and shared the behaviors he was preaching.
“I went out to the front-line associates, who really are the most important people in this company, and I told them, ‘Here is what I want your leaders to be like,’” he says. “And then they were very intolerant of leaders that didn’t act that way.
“I didn’t want them tied up in a lot of bureaucracy, and we expected them to be proud of their company, and you can’t be proud of a company where there’s not a very strong sense of ethics. I promised them, ‘If you are being asked to do something by your leader that you think is a problem, you come right to me, and we’ll take care of it.’ In some cases, they did. And we also told the leaders, ‘Don’t try to interfere with the channels of communication. If you do, you’re going to get walked right out of here.’ And we had to do that, too, a couple times.”
After setting a sharp tone, Rooney backed it up by making leadership retraining a top priority. He began instructing the executive vice presidents on the expectations of the dynamic organization and then had them teach the vice presidents and so on down the line.
To ensure that the lesson was getting through, he set up the process so that it would rival a minor in leadership at most universities, bringing in Ph.D.s in business to help design a curriculum and make sure executives were clearly getting their point across. The idea was simple: No leader could stay with the organization if he or she didn’t thoroughly understand the new direction.
“I have a very firm belief that when businesses fail, it is not the associates that cause the failure, which, in many cases, it’s them that pay the price; it’s the leadership that screwed it up,” Rooney says. “And so often, the leaders get byes; well, they don’t get byes here.”
And while Rooney couldn’t personally teach every class, he did make a concerted effort to keep an eye on one group of leaders — those who handled front-line employees directly. When you’re focusing on company culture, it’s easy for a message to get lost down the line.
“That means that the most important coaches in the company are those people that we entrust our customer service people and our store personnel to,” he says.
So as U.S. Cellular went down that road, measuring leaders became important. It took more than five years, but Rooney put in place a measurement of how leaders were working that weighed as heavily as how they did on quotas and budgets. That meant a complaint about going against the dynamic organization held as much weight as a missed deadline.
“This is where we really started looking at the how with as much weight as we looked at the what and started taking people out that were doing the whats but were not doing it the way we wanted to do it,” he says.
That’s where the intolerance Rooney mentioned came into play. He didn’t expect changes overnight, but he did want them to be willing to try overnight.
“If it’s a will issue, just don’t let the door hit you on the butt on the way out,” he says. “If it’s a skill issue, I’m willing to show patience because, especially if you bring someone in from the outside, they have never been trained this way. I mean this is so different than most corporations and I can understand how someone can say, ‘That’s how I lead.’ We’re willing to coach them and put them through training and work with them, and as long as they’re making progress and they’re honest in their approach, we’re fine. We don’t expect them to automatically change overnight, but I expect those spots to fade pretty quickly.”
Get people f
As his leaders began to better understand the new direction, Rooney had to make sure the bulk of his employees — those without fancy titles — were fired up about the company’s new direction.
Rooney did a baseline culture survey in the summer of 2000 to get a feel for his employees and has done it yearly ever since, focusing on a few unusual elements. First, he was interested in how much pride they had in the company. Along with that, he gave employees an open forum to discuss any competitive advantage they saw.
He found that people had some pride in their job, but there was plenty of room for more. Looking to make a more personal touch, Rooney stopped hoteling call center employees, something competitors still do, and let everyone have their own desk where they could feel at home and put up personal items and pictures — which Rooney comments on during his visits.
“They just love it; they eat that stuff up,” he says. “Somebody’s paying attention to them and when you pay attention to them, they’re going to pay attention to the customer.”
The other thing that employees told Rooney about took some time. As the organization was changing, they began to wonder why U.S. Cellular didn’t flaunt its new focus on the customer. While it didn’t happen immediately, Rooney says you can’t ignore repeated outcries from employees, so the company came up with what it called human coverage, a way of presenting itself to the customer based upon the culture of the business. Rooney wanted his people fired up, so he told them they were now the face of the company, something he says pushed them to have a competitive edge.
“So I keep on telling them, ‘I want you to be cocky,’” he says. “‘I want you to get out there on that floor and feel sure of what you are and where you stand, and I want you to understand that you’re the best of the best.’”
And as more items employees mentioned on the survey became part of the culture, the more the pride element went up. Today, more than 90 percent of employees fill the survey out every year, answering questions and producing thousands of pages of extra ideas.
And that also gets other leaders more interested in seeing what people are thinking.
“Once I got this thing started, the leaders became more interested in hearing what their front-line people were going to say, too, because they wanted to know what they were going to say to me,” Rooney says.
While he doesn’t have an exact total for critical mass on a change like this, Rooney watched the pride element reach the point where more than 90 percent of employees felt positive about the company. And that’s a result of being unflinching along the way.
“It occurs when people figure out that you’re serious about being intolerant,” he says. “When they figure that out, then they become self-policing, because they then have to make the decision whether they want to stay with the business or not.”
Even with the success he’s had, Rooney doesn’t think he’ll ever be done pushing his organization forward — especially when inevitable bumps like the recent economic downturn can make people regress to old habits. Still, he says U.S. Cellular has watched turnover in its call centers fall to roughly 25 percent in an industry where the average is more than 60 percent. It’s getting those sorts of numbers that indicate forward movement. Any leader can get a group of direct reports in line, but it’s full buy-in that’s important.
“I can get the vice presidents singing together like the Mormon Tabernacle Choir, but that’s not what we want,” he says. “What we want is the whole organization singing together. The only way this company is competitive and successful is if I get 9,300 people to be creative and innovative and customer-focused, and if we’ve got people that really care, it’s sort of like a football team or a basketball team, right? People that are fired up about playing the game, they’re going to play a hell of a lot better.”
How to reach: United States Cellular Corp., (866) 872-4249 or www.uscc.com
The downturn in the housing market and the glut of condominiums in Chicago have combined to drive down prices and entice interest from potential buyers, as investors and disgruntled commuters alike are thinking about getting a place in the city.
“What we are seeing is a lot of people trying to take advantage of the slump in the condo market and purchase investment properties or weekend homes,” says Patricia A. O’Connor, a partner with Levenfeld Pearlstein, LLC. “If they have the cash or the ability to finance, there’s no doubt it’s a great opportunity to buy now. But you really have to think twice about the short-term benefit and the long-term commitment you’re making.”
Smart Business spoke with O’Connor about how to avoid common mistakes when purchasing a condo and how to make sound decisions.
What major issues should potential buyers be aware of when looking at condominiums?
If you are going from a single-family, freestanding home and moving into a condominium or town home, there are going to be issues, and the two biggest are economic commitment and lifestyle.
You have to understand that what you are buying into is membership in the organization. You are going to be bound by restrictive covenants, and if it’s a condo, you are also going to be bound by the terms of the Illinois Condominium Property Act.
Many purchasers want to buy a condo because they think they won’t have to take care of much, but that’s not the case. You’re not a renter. You are a joint owner of the common elements with every other owner in that association.
There are also rules of the association. People don’t necessarily realize that they can’t always do the construction they want to do. You have to go to the board for approval on anything that impacts the common elements.
Many issues can be avoided simply by doing due diligence. Take that extra step, because purchasing a condo is not like purchasing a single-family home, where you recognize that you are going to be able to make changes and will be responsible for the cost. People who buy condos don’t necessarily give a lot of thought to what they will and will not be responsible for cost-wise and what they can and cannot do.
What common mistakes do prospective buyers make?
You really need to think ahead. If you are looking at a foreclosure or short sale, it can be a great investment opportunity, but if there are a multitude of short sales and foreclosures in that building, that means there are a lot of condo units that aren’t paying their assessment. Who pays those assessments if they’re not paying? It falls on the other owners.
Also, if you have a personal economic crisis and you can’t pay your assessment, the association can evict you. You could end up out on the street.
What else should purchasers be aware of?
Someone who is looking into an older building where there hasn’t been a recent influx of purchasers is going to be dealing with owners who have been there for a long time.
Generally speaking, an older, more established condominium is a safer purchase, but you have to balance the risks and rewards of an older condo. The real deals are in the associations and condominium developments that came online in the last five or six years, in which the initial purchasers are ‘under water’ on their mortgages.
Find out what the level of assessment increases has been over the last few years, and compare the assessment amounts to similar buildings in the area with like amenities. Your broker can help you with that.
The comparison is important, because if there is one building that has similar amenities to every other building in the immediate neighborhood and the assessments on it are disproportionately lower, it should be a red flag to any potential buyer. That tells you that the association is not funding its reserves as much as it should. It also tells you that the association isn’t addressing any deferred maintenance.
Although the low assessment may look more attractive on a monthly basis, if a big project like a roof replacement comes up, you may be hit with a special assessment when the association doesn’t have the money to otherwise pay for it from its reserves.
What can prospective purchasers do to protect themselves?
The law requires that you be provided with certain information regarding the financial situation of the association and whether the association anticipates any special assessments in the next couple of years.
You are entitled to see the declaration, the bylaws, and all the rules and regulations. There may be something in there that may be a red flag and make you decide this condo would not be a good fit for you for one reason or another.
Take it a step further and ask for information that the condo board is not required to disclose. Ask for minutes from the board’s meetings from the last year so you are aware of what’s going on in the building and to see if there are any design defects or claims against the developer.
Prospective purchasers simply need to do their due diligence to ensure that the association they’re looking at buying into really meets their needs. Work with brokers and real estate agents, and use their knowledge of the industry and the area to make a sound decision, as those professionals have the ability to explain the complex details to prospective purchasers.
Patricia A. O’Connor is a partner with Levenfeld Pearlstein, LLC. Reach her at (312) 476-7523 or firstname.lastname@example.org.
When Sarah Eck-Thompson and her co-founder, Brook Jay, founded their company 11 years ago, they were doing it all. But, as All Terrain Inc. grew, they realized they had to start delegating more at the marketing company, which posted more than $5 million in 2008 revenue.
“It’s a balance on defining what you want the company to be and then allowing people to put their own spin on it in maybe a slightly different way than you would,” says the co-founder, president and chief operating officer of the company.
Smart Business spoke with Eck-Thompson about how to manage a growing company and create a casual culture.
Q. What advice would you have for another leader who is going through growth?
I am definitely an advocate of a leadership coach or just someone like an objective, third party that they can just sit down and talk to and talk through some problems or issues. Because it really helps give you some clarity on how you are communicating and how you are affecting other people in good and bad ways.
When we started our company, I didn’t ever really think of how we were communicating because we were still a really small group, so we were just going doing our work.
As we were growing and adding more people and different layers of management and stuff like that, it was really crucial for us to take a step back and look at that.
Q. How do you communicate feedback?
Our environment is pretty casual, so I would say it’s not a big issue.
(It’s) just calling (employees) into your office and saying, ‘Well, such and such didn’t go so well. Why don’t we take a look at what went wrong and how we would attack that differently in the future.’ …
The key to being a good leader is being accountable. It’s easy to jump out in front and claim the big wins and the big successes, but it’s also you need to acknowledge and appreciate people’s accomplishments and not jump in front of them and take credit for them.
At the same time, you need to, as a manager, take some ownership of the failures, too, and make sure that you use those as a way to learn from them. Look at them honestly and learn from them moving forward.
If someone has a failure of some kind or fails in their job before trying to say, ‘Oh, they screwed up,’ I like to look at it and say, ‘Well, did this person know what their job was? Did they have the skills and traits in order to fulfill that job and did we give them the resources to do it?’
Before saying, ‘This person isn’t right for this job,’ looking at the situation like, ‘Did we give them everything they needed to have to be successful and were they the right person to be successful?’
Q. How can a leader create a casual work environment?
It’s just the way the physical space is set up. We have workspaces where there are maybe four people working in a space together. We have dividers, but it’s not like a normal cube. It stimulates conversation between people.
So, just setting up the physical space. Our previous space had a pool table and Pop-A-Shot, which people didn’t actually play them very much, but it felt cool and more comfortable and casual.
We have, once a month, an innovation jam where we just invite the whole company to come and sit around on couches and just talk about cool stuff they’ve seen or they’ve done. It’s not totally free form. A lot of times, we will put forth a specific topic to have them thinking about.
It’s just time for everybody to step back from their work and sit around in a more social way and talk about cool stuff.
We will take ideas from the group if they want to establish something to do (that’s) extracurricular. Someone suggested having a yoga morning. So, we found a yoga instructor that would come in on Wednesday mornings and lead a yoga class. It’s cheaper than if they did it at a fitness studio or something like that, so we’re helping subsidize it a little bit. This is a way for people to get together. It’s been great because people from different teams from inside the office, different workgroups, are doing that together.
Q. What is the benefit to having a casual work environment?
It’s a difficult balance for sure. We like having a casual work environment because people are more social, there are definitely a lot of friendships that have emerged through it.
I think people feel like they can speak openly and there is a lot of trust. So, the balance is that, as we grow, we also need some more structure and systems in order to just manage the workflow and provide a feeling of stability inside the company, as well.
We employ a lot of younger people, so having a more social, casual work environment, I think stimulates a lot of creativity and camaraderie.
We really encourage our staff to be active and try to locate emerging trends. We encourage people to do extracurricular things and arts or culture because it really helps. Being out there and seeing what’s happening in some of these cultural and artistic communities really helps us build better programs for our clients and infusing new trends into our programs.
How to reach: All Terrain Inc., (312) 421-7672 or www.allterrain.net
Analyzing your budget for cuts is never easy, but it’s a little easier if you have identified what your company holds sacred.
“The thing for me is we just have to be sure that we’re giving good client service and we’re being loyal to true performers who have been good for Huron in the long run,” says Gary Holdren, chairman, president and CEO of Huron Consulting Group Inc., a $615 million management consulting firm. “There’s no secret sauce. What you’ve got to do is look at the line items, look at the details.”
That means an evaluation should reveal who your performers are and, more importantly, who they aren’t.
“The first starting point is (making) sure that if 5 percent of the work force is not performing, you do what’s best for the 95 percent,” Holdren says.
Holdren’s system is simple: Each of Huron’s nearly 3,000 employees has a goal-setting meeting with his or her manager at the beginning of the year where they set goals for the employee. If people have promised to improve on things and simply have not, you might have an easy answer to your hard decision especially if you mix that in with their overall productivity.
“The worst place you can be is to not do what you said you’re going to,” Holdren says. “So you’re the employee at the most risk if you’ve decided not to follow the conditions of employment. … If you have done everything Huron has asked of you and you’re making a good effort and just haven’t had as good a year, OK, you’re going to move up the pecking order. If you do everything Huron asks and had a good year, then you’re pretty bulletproof.”
At Edelman U.S., the nation’s largest public relations firm, President and COO Nancy Ruscheinski puts a premium on innovative thinking.
“The industry that we’re in, creativity is table stakes,” Ruscheinski says. “It’s not a luxury; it’s a necessity. So there’s real self-interest in creating an environment that spurs creative thinking.”
Edelman does this several ways.
The company closes down for creativity days a few times a year, taking employees on field trips to places such as The Art Institute of Chicago. Ruscheinski also relies on the old standby: a little competition and cash.
The company has given out small money grants to the person with the best idea for redesigning his or her cube. The firm also created a cash award for creative excellence for an employee’s most creative idea that’s used whether for a campaign or an internal idea.
“We put a big spotlight on them and celebrate those, so things like that help keep the concept of creative very fresh and dynamic here,” Ruscheinski says.
Edelman also held a contest where people could submit ideas for redesigning office space to become a creative space. The reward was based on the top design that mixed a sharp, relaxing setting and a meeting room where work could be done. And while those spaces are relaxing, they are also functional filled with whiteboards, markers and other tools to start a brainstorming session.
In 2008, an estimated 192 million U.S. Internet users visited an average of 11.3 retail sites per month to make their online purchases. As online retail revenue continues to increase, its impact on the ways in which individuals shop has undoubtedly transformed many of the ways in which logistics providers distribute their goods and services.
“Business-to-consumer needs have become a growth engine for the transportation and logistics industry in recent years,” says Ray Fennelly, director of business development for AIT Worldwide Logistics. “This shift in buying patterns and business activities has presented tremendous opportunities for logistics providers, who have been challenged to develop a more robust and highly sophisticated B2C residential delivery service for their customers.”
Smart Business sat down with Fennelly to discuss how logistics providers have adapted to the in-home delivery expectations of convenience, speed and choice among their customers.
Explain how and why logistics providers have been trending toward developing in-home delivery services for their customers.
The proliferation of online technology to facilitate e-commerce, online shopping and the B2C sector has put the spotlight on in-home delivery services for logistics providers, who are trusted by retailers, vendors and consumers to coordinate and handle the ‘final mile’ of purchases from brand owners to consumers.
With the continuing need to drive down costs and deliver directly and efficiently to the consumer’s residence, the logistics market has been increasingly shifting away from B2B business models and moving toward B2C. Today, online distributors and Main Street retailers share the same concern in finding the most prompt, reliable way to market and deliver goods such as TVs, fitness equipment and furniture direct to the consumer’s door.
Consumers’ spending behaviors and buying patterns have drastically changed as a result of their growing confidence in the Internet. Before the dot-com boom approximately 10 years ago, moving large consolidated shipments from manufacturer to distributor to retailer was the industry norm. Now, logistics providers are commonly delivering merchandise directly to consumers in the comfort and privacy of their own homes.
What are the risks or challenges presented with in-home delivery services?
Several indirect and direct complexities are involved with a home-delivery service solution. For starters, technology’s role in streamlining delivery details and enhancing every aspect of communication is crucial today’s Web-savvy customers expect to schedule online delivery appointments and receive automated e-mail responses and real-time status updates.
Delivering to private individuals instead of companies requires tremendous flexibility on the part of logistics providers. Getting access to delivery at a time that’s convenient for the homeowner often means you must be available to both coordinate and conduct their deliveries during weekday evenings or on weekends. It also means that you must be proactive in rescheduling appointments in the event that no one is home to accept the delivery or correcting a data entry error that has led you to the wrong address.
Regardless of consumers’ various service specifications, protecting both the home and the goods you are delivering is critical to ensuring customer satisfaction. Damage to walls, paint and carpeting are equally as detrimental as any potential damages done to the customer’s LCD television or treadmill while in transit. You also have to be mindful of regulatory concerns. For instance, individuals under the age of 18 cannot sign for the goods.
Essentially, the real challenge lies in ensuring that you provide the consumer a professional and quality experience from point of purchase to final delivery.
Describe specific service demands of in-home delivery customers.
The logistical requirements of supply chains extending to each customer’s address tend to be highly detailed and involved, as they include features and value-added benefits such as ‘white glove’ services, room-specific deliveries, professional installation, packing and unpacking, and debris removal.
While those services begin for logistics providers at the point of dispatch, the customer’s main concern is rarely about the lifecycle of his or her shipment. Instead, customers need to know whether or not you can be held accountable for meeting the delivery promise you’ve made to them. Empathize with the fact that their time is valuable they have likely rearranged their schedules in order to be home when their goods are scheduled to arrive.
Similarly, ensure that your work force is courteous, respectful, knowledgeable and polite upon entering each customer’s private home, and represents your company in a professional manner upon delivery. Remember that, in order to successfully develop a comprehensive expedited in-home delivery product, you must first acknowledge the fact that customer satisfaction goes far beyond the actual service and delivery requirements.
RAY FENNELLY is the director of corporate development for AIT Worldwide Logistics, Inc., headquartered in Itasca, Ill. Spanning numerous nationwide locations and an ever-increasing network of international partnerships, the global transportation and logistics provider delivers tailored solutions for a wide variety of vertical markets and industries. Reach him at email@example.com or (800) 669-4AIT.
Savvy CEOs are taking advantage of the slumping commercial real estate market by evaluating whether their space meets their needs while the cost to buy or lease is low.
Commercial real estate prices fell again in the second quarter, showing an 18 percent national decrease compared to the previous quarter, according to Massachusetts Institute of Technology Center for Real Estate’s index. The drop placed the price index 39.2 percent below its 2007 second-quarter peak.
Clearly, the market is experiencing volatility, but opportunities are present.
“There’s no question this is a great time to be a tenant and a buyer in this market,” says Dan Maslauski, managing director, Jones Lang LaSalle. “We expect that to continue probably through mid next year at the earliest if not through the end of 2010.”
Whether you’re searching for a new property or hoping to reconfigure space for efficiency’s sake, cost savings can be yours. The first course of action is to connect with an experienced commercial real estate broker to weigh your options because there are plenty of them.Debate to buy versus lease
The decision to buy or lease property has less to do with the current state of the market and more to do with each company’s individual circumstances.
Think about your industry, your strategic plan, your company culture and what those will look like five or 10 years from now; then add the amount of capital you have for discretionary spending. Most companies lease to stay adaptable.
“In general, I think it has been that it’s better for tenants to lease rather than own because it provides you flexibility and it also frees up capital for you to invest in your core business,” Maslauski says.
One of the bigger challenges facing the market today is that the capital markets are at a standstill, leaving few lending opportunities. The loan-to-value ratio has changed dramatically. Once, you were putting 10 percent to 30 percent down for a loan; today, it might be as much as 50 percent.
“For users, many of which are capital constrained, probably leasing looks pretty good right now,” says Shawn P. Mobley, executive vice president and managing director, Grubb & Ellis Co. “If you have adequate or excess capital, potentially it’s not a bad time to buy because there are some cheap opportunities out there.”
It’s important to work with your broker to analyze your options and ensure the best deal, especially because prices and volatility vary by market and even within markets. Renting sublease space may even be the way to go because it’s cheap, but be sure to investigate the leaser’s financial standing before signing anything.
No matter what your decision, you’ll more than likely see savings because sales prices have fallen and landlords are becoming more and more creative with incentives to retain and attract tenants.Renegotiate your lease
If your lease has been tucked away, dust it off and read the fine print. Renegotiating your lease can lead to immediate savings and even allow you to get better use out of your space. Again, the returns may vary based on your landlord’s willingness to bargain, but your market insight can be used as leverage.
Before you go to your landlord, there are a few questions to ask yourself. First, how much time do you have left on your lease?
“I’d say if you’re inside of five (years), you should think about it; if you’re inside of three, it’s absolutely worthy of investigation,” Mobley says about renegotiating.
Second, how much time do you commit? If you discuss the popular blend-and-extend deal, where you sign a lease extension in exchange for reduced rent, you have to think about whether the space will continue to meet your needs for that length of time.
Third, can you give back or add space? If you’re cash-strapped or your company has reconfigured its employee base, maybe you can work the renegotiation in a way that better uses your space, such as adding or subtracting square footage.
Fourth, use your broker to research your landlord’s financial position, such as insight on how large the mortgage is and whether your landlord has good credit.
“Understand your landlord; understand the debt structure of the property and what it can do, as it can really reveal some interesting negotiating opportunities for tenants out there,” Maslauski says. “Landlords are doing some things that we are shocked that we are seeing them do, because they don’t want to hand back the property to the lender.”
Some of those concessions are free rent, moving allowances and increased tenant improvement dollars.
Fifth, research your options in the marketplace. Even if staying makes the most sense, at least you can present your landlord with the possibilities that wait should you leave.
“Really it comes down to competition and opportunity,” Mobley says. “They have to believe you’re willing to move, and they have to believe there are options in the marketplace that will allow you to do basically a cost-free move.”Consider more than just costs
Before you sign next to the X, take into consideration more than just the monthly dollar amount you’ll be paying. The general checklist for picking property once emphasized location, employee driving time and amenities. Those concerns remain important, but the current state of the economy has also brought to light the need for efficiency, flexibility and sound deals.
Working with a broker will allow you to receive the best bang for your buck, meaning fair market value, tax breaks, relocation incentives, landlord concessions and operational costs, while making sure it’s a strong deal.
The real estate crisis has left landlords hurting. Work with your broker to determine whether your landlord is currently facing or could face financial distress and how that affects the tenant improvements or possible free rent he or she promised.
“Because of the distressed nature of many landlords these days, you really need to make sure that your tenant remedy clauses are ironclad,” Maslauski says.
Nonetheless, you should take the time to work agreements into your lease that protect your rights as a tenant if your landlord forecloses on the property and the lender takes over. Time and savings might also be found in the long run with contraction, addition and termination agreements for flexibility.
Flexibility is key for surviving this economy and that includes your real estate. Your broker will have a space planner who can help you efficiently design the space you’re in or determine which space best suits your company. Companies are saving money by going to open floor plans, narrowing cubical sizes and hoteling, which supports employees working outside the office and sharing desk space.
Whether you’re planning to buy, lease, move or stay, make sure you give yourself ample time at least a year but probably longer depending on size to ensure you’ve settled on the best choice for your company.
“If you’re doing it with a year left, you’re doing it too late,” Mobley says.
You use your bank for a variety of business services each day, such as payroll and accounts receivable and payable, but you may not realize what else it can do for you.
Banks can offer numerous services to you and your employees, including financial programs, new products or simple financial advice that cost you nothing to take advantage of. Developing a relationship with your bank and offering these benefits to your employees can help you save money and retain employees.
“The partnership is a personalized, hands-on service that allows employees to work closely with the bankers and develop a relationship similar to the one that you as a business leader have with a bank,” says Rose Kurhayez, vice president, retail business development at MB Financial Bank. “A partnership can be a value-added service and it can also save your company money.”
Smart Business spoke with Kurhayez about how to develop a relationship with a bank and how doing so can benefit a business’s employees.
What benefits can a bank offer to business leaders and their employees?
Many banks offer packaged programs that give employees special benefits, such as premium rates on savings products, discounts on loans, special checking programs, health savings accounts at special rates and 401(k) plans. The programs are designed to educate employees and assist them in achieving their financial goals. By participating, employees can get rates not offered to the general public.
Banks can also assist businesses with employee services such as payroll. Implementing direct deposit can help decrease a business’s rising payroll costs because it doesn’t have to cut checks to employees, put stop payments on checks, or worry about lost or stolen checks. A business can also tailor banking services to its individual needs and those of its employees.
And if a business has a large number of employees from a particular ethnic background, some banks can offer training and assistance to these employees in their native language.
What educational benefits can businesses receive through working closely with their bank?
A business may have employees who spend an inordinate amount of time and money on things such as cashing checks, paying currency exchange fees, money transfers or loan fees. These employees are in need of financial training, which can be offered by some banks through a variety of seminars.
Numerous topics can be covered during these sessions, including credit counseling, how to prepare a budget, how to save money, how to buy a home, etc. These seminars can also be done at no cost to employees or the company.
How can business leaders use these benefits within their companies?
Businesses can leverage the partnership and benefits package as a way to recruit new employees. And when these employees do join a company, the bank relationship should be discussed as any other benefit would be so they are fully aware of the products and services available to them.
Businesses also need to promote this package of services as a benefit to the company and the advantages that employees will see from using these bank benefits.
How can a business develop a relationship with its bank so that it remains strong and continues to grow?
The best way is to have regularly scheduled visits by the bank to the company, either monthly or quarterly. This allows employees to develop a relationship with the bankers, so they’re more willing to ask questions and bring up concerns. Having that expert available for guidance and support on the various benefits is important to help employees make the best financial decisions.
Having these meetings also allows the bank to keep up with the lives of a business’s employees. Things change so quickly today, with people and in the market, so it’s important for the banks to get that periodic update.
The bank can then help the employee accommodate any changes, if necessary, or take advantage of a new program or service. Having a banker there on a regular basis helps develop that comfort level among employees.
If an employee happens to leave that company, he or she can still maintain that relationship with the bank.
What value do business leaders and their employees get from partnering with a bank?
Business leaders demonstrate to their employees that they are caring, that they are looking out for their best interest and that they want them to succeed. Employee loyalty and retention are offshoots from it, allowing a company to develop a good, loyal staff.
In addition, employees will receive all the special rates and discounts that the average customer wouldn’t get, and they get hands-on training, expert services and personalized banking that others would not get. There is also a cost savings by taking advantage of these benefits. Companies may be dealing with the growing cost of benefits, but receiving these benefits through a bank will save them money.
Rose Kurhayez is vice president of retail business development at MB Financial Bank. Reach her at (847) 653-1137 or firstname.lastname@example.org.