Chicago (1685)

Monday, 26 October 2009 20:00

Gaining ground

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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

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.”

Monday, 26 October 2009 20:00

1. Foster creative thinking in the office

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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.

Friday, 25 September 2009 20:00

The final mile

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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 or (800) 669-4AIT.

Friday, 25 September 2009 20:00

Space exploration

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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.

Friday, 25 September 2009 20:00

Committed partners

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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

Friday, 25 September 2009 20:00

First things first

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Terry Jenkins is tired of hearing about the economy, too.

Maybe the worst is behind us, maybe it isn’t, but Jenkins is in the banking business, so you better believe it’s something he gets asked about regularly.

But the fact of the matter is, Jenkins, the president and CEO of Harris Private Bank, has more than survived the downturn now synonymous with his industry. In fact, things are pretty good at HPB, which is a member of BMO Financial Group, the behemoth diversified financial services provider with more than $348 billion in assets. As the unit that delivers wealth services to high-net-worth families, HPB has taken advantage through diverse business functions like Harris myCFO Inc., a one-stop resource for multiple financial needs. But keeping things up in a down market means keeping employees on task and away from the front page of the few newspapers left in Chicagoland.

“The challenge right now that is always there but far more prevalent today is managing competing priorities,” Jenkins says. “But managing fewer priorities falls back to keeping our people engaged and working with their clients on a day-to-day basis and just keeping them away from the short-term market noise.”

So Jenkins’ goal has been to keep his roughly 600 people on task so they don’t worry about the short-term bumps in a long-term plan.

“You have to try to get people to look above the dashboard and to the longer-term horizon, both with their clients and with themselves, so that they’re not wrapped up in the daily, hourly gyrations of the markets and the headlines,” he says.

At HPB, Jenkins has prioritized, and on the top of his list are aligning his people around stronger team-based planning, focusing on talent for the long term and celebrating wins that would go otherwise unnoticed in the onslaught of negative stories.

Align around a priority

To Jenkins, the top priority in rough seas is to get people aligned as a team with the direction you’re pursuing. At HPB, Jenkins and his senior leadership team wanted employees to better serve clients through a more full, team-based financial planning focus.

“From a leadership perspective, you need to do a couple of things — call it alignment,” he says. “It has to start from my chair and the message that we send out with the strategy of the business and our strategy is to serve our clients as a team and go to them with an integrated plan based on a team of professionals.”

In any economy, building alignment starts with you.

“It’s really interesting how your employees and your team will take the lead from how your management team works together,” Jenkins says. “If they see us working together … it starts with that senior team, and do the words and the music go together, do they see us doing what it is we say we should be doing as a business?”

To follow that up, you need to begin to put your money where you’re alignment is.

“It’s got to be part of their role mandate, what the organization asks them to do, it’s got to be part of their compensation plan,” Jenkins says. “If you pay people for things different than what you’re asking them to do in the strategy, guess what, it isn’t going to work. So you line up the strategy in the business, you line up the mandate that you ask of them, you line up how you pay them based on team-based compensation. If any one of those breaks down, you start to struggle.”

Doing that means putting in systems like merit raises on team performance. As you’re implementing, you need to make an effort to show people you’re attacking a down market.

“The way to keep your employees is they need to feel a part of something, they need to feel that they are with a firm or a wealth management business that is moving forward and going somewhere,” Jenkins says.

So as you go forward, bring in people who know what’s going on. Explain overarching team strategies with the why, as in, “Here is why we’re doing this right now.”

“If your professional teams and your employees don’t understand the why, then there’s the risk they may not understand what it is they’re attempting to do, whereas if they understand the why and the what’s in it for them or what’s in it for their clients, my view is you get significantly better engagement,” Jenkins says.

As you do that, work employees into the strategy. If you’re in a service business, have them get feedback on what’s keeping customers/clients up at night and get managers to report common themes. At HPB, for example, baby boomer clients were constantly expressing concern over being part of the Sandwich Generation — people taking care of both their children and their elderly parents. HPB came up with a program that used multiple professionals to coordinate the mature family member’s finances easily.

Keep track of top talent

Another priority you have to keep on the top of your watch list is talent.

It could be easy to worry about all the short-term things popping up, but at HPB, Jenkins gladly moves watching outside talent to the top of his priority list.

“We don’t just look for people when we need people, we are in the advisory business, so we’re always looking for top talent, good people,” he says. “When you have that in your DNA or your culture, we very often will interview or get to know people even if we don’t have a spot and, over time you build up a really strong network and you become what I’ll call an employer of choice.”

Whether or not you need someone right now, you will soon, so you’d better keep your senior leaders focused on people.

“As a senior leader, you have to walk the talk in terms of interviewing people and regularly meeting people,” he says. “We’ll have four, five, even six people on my senior team meet them. Even if we don’t have a spot, we will have them. It’s nothing for my head of investment to give me a call and say, ‘Hey, Terry, I just met this great lady; I want you to meet her’ and you know what, it goes to the top of my priority list and we’ll take 30 minutes or an hour to make sure we meet that person.”

Taking that time now is one of those long-term investments that can’t get lost in the short term.

“What a lot of people don’t realize is when you’re hiring really good people, there are two decisions that are made,” Jenkins says. “One is, are they right for us, which is why we have them meet a lot of people. But it’s also, are we right for them, and you need to get that connection done and you need to build those bridges long before they are on the job, otherwise you get three to six months on the job and they don’t stay.”

That means demanding that time of people upfront can prevent later problems.

“It’s an expectation of your managers and your leaders that they survey the best talent and when you have talent in the marketplace, you bring them in and you continually fill the bullpen. Our client retention is superb even through these difficult times because we’ve built our culture around that, and the best time to do that with new people is before they are on the job.”

Prioritizing talent is a two-pronged job: You also have to keep a strong eye on your current people.

“You need a robust talent management process, so you need to be very good at identifying talent within your organization a

nd developing them,” he says.

You may not have promotions available in tough times, but you can make notes for your next upswing.

“We identify what we would call top talent or those that we believe can go on to bigger and better things in the organization,” he says.

What’s important is to have leaders be talent scouts of the entire company. Have them work with other departments and share notes.

“We’ll make sure that my senior team members have the opportunity to meet other professionals in other parts of our business,” Jenkins says. “So, for example, if my head of trust is going into a marketplace, she’ll make a point of working with the investment people and the bankers and really understanding where the talent is across the business, and we identify those people for her, and it’s part of her job to get to know those people.”

Celebrate good times

Along the way, one priority that can’t get lost is honoring the good your people are doing.

“Don’t forget to celebrate success,” Jenkins says. “Our business has been having some great success on the sales and growth side, and it’s easy, with all the noise in the marketplace and people’s stress, to forget about that. We always make time to celebrate success wherever possible.”

Here’s a case in point from HPB: The company took advantage of some opportunities in the first quarter of this year and had some successes where business was up more than 25 percent. Jenkins used an already scheduled quarterly town-hall meeting for three primary agenda items.

“One is having one of our offices come up and talk about the success they had in the first quarter because they literally blew the doors off of their goals,” he says. “So the managing director is going to come up and talk about it, then one of their colleagues is going to come up and do some presentations for some exceptional achievement. Then, we have some tenure awards, some 10-year anniversaries for the group.”

First, traditional tenure things that are always done can’t be cut at the risk of hurting morale. Second, you have to take the opportunity to shine a spotlight on great behaviors — like if people are showing the alignment you want.

“So it’s just kind of sending the message subtly and not so subtly that we’re having some great success in this environment,” Jenkins says. “We’re doing some good things and I want to hear from the people who are doing it and what it is they are doing to be so successful.”

Even if you think temporarily suspending celebration awards can save you some money, Jenkins warns against it.

“Your professionals are in front of clients every day,” he says. “Think of the conversations they need to be having with clients now and the depth of the planning because of the marketplace. What you need to do as a leader is you need to remember your professionals, in many cases, are struggling with exactly the same things.”

If you can keep your company filled with top talent that is aligned to your plan and believes in the organization, downturns could very potentially become an opportune time.

“This is also a time to build a business and a time to be, I don’t know if assertive is the right word, but certainly not to be timid,” Jenkins says. “Good organizations with good leadership and good professionals can do some good things with clients now, and the clients are frustrated and worried, and an organization that focuses on the right things can make some gains — call it being opportunistic or however you look at it.”

How to reach: Harris Private Bank, (312) 461-7335 or

Wednesday, 26 August 2009 20:00

Deal or no deal

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Purchase and sale transactions may have slowed in the economic downturn, but opportunities are plentiful for those with realistic expectations.

“The bottom line is that deals are still getting done in this environment,” says Michael St. Peter, an attorney with Levenfeld Pearlstein, LLC. “There is a lot of cash on the sidelines that investors are looking to put to use in privately held businesses.”

Both buyers and sellers can still find the right deal, he says. They just have to work a little harder to do so.

Smart Business spoke with St. Peter about how to find good deals in difficult times and how to safeguard against bad deals.

How can a business owner find the funds now to get deals done?

Traditional bank lending is tight in the current environment, but it is still open to quality borrowers with strong cash flow and low leverage. Generally, traditional bank lending is more available now than it was six months ago at the height of the panic.

Also, private equity firms are more open to partnering with entrepreneurs and strategic investors now than they were a couple of years ago because there is less traditional financing available for those private equity firms to finance the entire transaction.

Finally, alternative funding sources are becoming more readily available: high-net-worth individuals, family offices or hedge funds that may be looking to make a minority investment in a private business; loans from accounts receivable factors or asset-based lenders; small business association loans; and seller notes, which is the seller of a business extending the financing necessary to purchase the business.

How can potential buyers access these funds?

Potential buyers need to be willing to shop their deal to different banks and financing sources, including alternative financing sources. Compared to a couple of years ago, financing sources are less likely to come knocking on the buyer’s door.

Traditional banks are hungry for deposits to increase their deposit base. If a potential buyer has cash, parking that cash at a potential lending bank creates an advantage in being approved for a loan.

Entrepreneurs can talk to their banker about obtaining a Small Business Administration loan for a potential acquisition but need to be prepared to provide personal assets as collateral.

Where can potential buyers find opportunities to purchase assets at attractive prices?

Valuations of many private companies are at historically low levels, just like publicly traded equities. Smaller competitors and larger businesses that may be looking to shed noncore assets or businesses are a good place for a potential buyer to start.

There are also distressed businesses that may not survive this downturn or that have already filed for bankruptcy protection. Several forums are available for a potential buyer looking to purchase distressed assets, including Section 363 sales, UCC sales, assignments for the benefit of creditors and state receivership auctions. The financial adviser, investment banker or lawyer of potential buyers may be able to introduce them to these types of opportunities.

What are some common pitfalls to avoid in purchase and sale transactions?

For buyers, the most common pitfall is taking shortcuts in the due diligence process. Also, buyers make the mistake of not closely analyzing the working capital needs of the target business. It could be a quality business with significant growth potential, but without enough working capital to fuel that growth, the business is likely to fail.

Another pitfall is the failure to protect the target company’s intellectual property and human capital — its employees — with appropriate noncompetition, employment and intellectual property agreements.

Finally, taking on too much leverage in an acquisition really hamstrings the business from day one.

For sellers, a common pitfall is not ensuring that the business is ready to be taken to market. The business needs to have its corporate and tax records, customer contracts and employee-restrictive covenants all in order.

Another common pitfall for sellers is not having realistic expectations about the valuation of their business. This can be a difficult thing for sellers because they spent a lifetime building a business, and by selling now, they are likely to get a lower price than they would have received for that business at the height of the last economic cycle.

How can buyers and sellers guard against these pitfalls?

For both sides, conducting candid negotiations on the purchase price and working capital requirements early in the process helps to avoid misunderstandings or surprises later.

For buyers, obtain monthly financial statements from the target through the closing of the transaction and watch for negative trends. Make sure that fulsome representations and warranties are made by the seller in the purchase and sale agreement, and pay attention to agreements with employees to ensure that those employees are properly incentivized after the closing.

For sellers, seek appropriate caps on the indemnification obligations to limit exposure after closing, and if declining sales trends or other surprises do occur during the negotiation process, examine the possibility of an earn-out or a hold-back of the purchase price rather than an outright reduction of the purchase price.

Michael St. Peter is an attorney with the Corporate Practice Group at Levenfeld Pearlstein, LLC. Reach him at (312) 476-7508 or

Wednesday, 26 August 2009 20:00

Head of the class

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Sharon K. Hahs doesn’t want to lose sight of the big picture at Northeastern Illinois University. To minimize distractions at the university, which has a budget of more than $127 million, Hahs places reminders in different places.

“Inside my little door that I open to get some of my materials in my office, I have pasted the university values,” the university president says. “They are also hung in beautiful banners on my wall. The strategic plan is on my table … and I actually do pause every now and then and read some of these pieces.”

Hahs has to keep focused on those goals if she wants to have integrity as a leader and communicate a consistent message.

Smart Business spoke with Hahs about how to lead with integrity and deal with failure.

Q. How do you lead with integrity?

You want to start with trying to figure out what the big long-term goals are for your particular assignment, your role, your company, whatever it is you’re leading. Then think about where the difficulties in the path are and, really, you work on communication skills. Because, sometimes there is a difficult issue and you’ve made your decision one way and everybody thinks it’s because you lied to them last week — how you communicate the need to have made the decision sort of as a surprise or differently or whatever, that’s where the integrity I think will come in.

Q. How can you improve communication skills?

You try to communicate in as many different ways as you can. We do town-hall meetings here. One per semester for faculty and staff, once per semester for students, once for our other campuses, and we combine faculty and students on our other campuses because they are smaller.

Town-hall meetings have two or three little things in it. They have, ‘Hello, I’m here. I’m glad to see you.’ Every question is welcomed. The second thing is, as long as it is done according to the university values, and I actually quote out about our communications and our values and our respect, and then, occasionally, there are two or three information items, and then it’s open.

I would say, of an hour of a town-hall meeting, more than 45 minutes is whatever people wish to ask. That’s a forum, and it’s a way to realize, ‘Wow, everybody else thinks I was thinking this way, but, in fact, I’m not.’

I eat almost every day in the cafeteria. Some days I have business lunches and other things. You tend to eat with people that you know are going to be in the cafeteria, but, in fact, I try to move around. Also, make it known, if you want to eat lunch with me in the cafeteria, just let me know and we’ll work out a day and a time.

So, you have the written word, several forums, you have oral, several forums, and you have walking around.

You spread it all out, and you always ask, ‘Is there any other way I could help with communication?’ Sometimes you get a new idea, and sometimes it’s one you’ve already done several times. I don’t think you can overcommunicate though.

Q. What advice would you have to communicate better?

Ask those around you how your communication might improve. See if you have a written style or an oral style that there is one element that drives people nuts, if somebody is willing to tell you that. You have to have a good climate. Ask others how they see the possibility of improving. If you don’t have good grammar and structure and all those things, then that is certainly something you want to work on.

Another piece is to read other folks’ communications and see what you like about it.

Q. How do you go through the feedback you get?

I seldom do anything by myself. I can. I’m very capable, I feel good about it — but (I bounce) it off of either one or two vice presidents because the topic might be appropriate. We have a group of 10 or 12 that we call the president’s council. So, those are where I bounce ideas most. Then I bounce ideas off folks at lunch, which could be just about anybody.

So, bouncing ideas off and then distilling to, ‘OK, this one makes a lot of sense. That one we’ve already tried. That one is not me.’ You have to be authentic in what you do. So, that’s where we kind of distill down to what we should try.

Q. What is a pitfall to avoid when being a good communicator?

You need to remember you never have all the answers. If you end up communicating that you think you know the answer before it’s had a wide audience that can get you in trouble.

Q. What advice do you have for dealing with failure?

If it’s really failure, and it isn’t actually always failure, but it’s an opportunity to learn and improve. Sometimes failure is like a dead end — it’s over, it’s done, it’s not happening.

But, most of what we do, if it hasn’t worked out well enough, we come at it differently or, in the end, we still work on whatever that was. It’s an opportunity to learn and improve.

One of my favorite people that I worked for years ago, he said, ‘Today’s news in the newspaper is lining the birdcage tomorrow.’ It’s that notion of, ‘The world didn’t end. We’re going to be fine.’ Yes, these things happened, but stay with the big picture and stay with the long horizon. Take your lumps, learn and move forward.

How to reach: Northeastern Illinois University, (773) 583-4050 or

Sunday, 26 July 2009 20:00

Protecting payroll

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No employer wants to suspect his or her employees of dishonesty. But the fact remains that payroll fraud could happen at any organization.

And without the proper controls in place to keep tabs on the payroll process, companies are leaving themselves vulnerable to everything from “ghost employees” to falsified hours and salary schemes.

“Aside from damage to a company’s reputation and the embarrassment, the main issue is the depleted assets, which could be quite substantial,” says Rob Wilson, president of Employco Group Inc., a division of The Wilson Companies. “In some cases, it could even cause bankruptcy.”

Smart Business spoke with Wilson about how to prevent payroll fraud from happening at your company.

How does payroll fraud happen?

It happens when unscrupulous individuals are allowed to have access to the company processes that generate payment transactions or company assets, and they’re able to do this without proper managerial oversight or controls in place to limit their access.

In many cases, it depends on the size of the company and whether it has the ability to hire people who are specialized in certain departments. In smaller companies, you may have one clerical person who is doing everything from answering the phones to doing payroll and accounting. Each company is unique in that respect.

When you downsize, it creates a situation where you might have had good controls in place, but because you’re eliminating people who had segregated duties, you now only have one person where you once had three. You can create a new exposure for yourself.

How can companies approach their payroll processes to prevent fraud?

One tactic is to establish segregation of duties, where the people preparing the payroll are independent of other payroll and personnel duties, such as the timekeeping, distribution of checks and hiring.

Also, you want to restrict access to other payroll data and actual cash. And the payroll accounting should be separated from the general ledger function.

One useful tool is Positive Pay. Basically, you send a file to your bank that lists out all the checks that you’re cutting that day, and when someone presents a check to your bank for payment, it compares that to the file that you sent to make sure that the dollar amount, the person’s name, the date, etc., are the same.

That eliminates the risk when someone takes a company’s payroll check, scans it into a computer and generates a whole set of checks with the owner’s signature on the bottom.

Companies should also restrict access to their blank payroll stock. And if you use a facsimile signature plate, you want to restrict the number of people who have access to that.

Also, require employees with payroll responsibilities to take vacations and have somebody else step in to do their job. That way, if there are any irregularities in the way that person does payroll, it comes to light at that point.

Other things you can do to prevent fraud:

  • Limit access to computerized payroll records.
  • Audit your pre-numbered checks to make sure all checks that haven’t been used are still accounted for and are in sequence.
  • Have complete documentation of procedures regarding changes in employment, including additions, terminations, salary and wage rates, payroll deductions, authorizations and approvals.
  • Make sure there are adequate authorization and approval procedures regarding vacations, holidays and sick leave.
  • Ensure prompt reporting of personnel data changes, adequate time-keeping and attendance records, and comparison of current records with prior history. Investigate any significant changes.
  • Before distributing checks, make sure that all transactions are authorized and match originating reports, that all pay and deduction rates have been authorized, and that paychecks agree with payroll records.
  • Especially in a larger company, when you pass out the checks, have employees sign that they received that check. You might even want to ask for the person’s I.D.
  • Be sure that your employee dishonesty insurance limits are adequate to cover any assets that may be embezzled by employees.

How can using a payroll service ensure stronger protections?

The payroll service becomes an extension of your payroll department. Especially if you’re winding down the number of employees that you have, it helps to create more of a segregation of duties. It can be used to complement the accounting function while also guaranteeing the independence of the payroll and personnel duties.

When the payroll checks are drawn by a payroll service, in many cases, that checking account is owned by the payroll service, so any fraudulent checks against the account would be a concern for the payroll service, not the client.

What you’re buying into is a system of controls and processes, which is especially useful for smaller companies that don’t have the wherewithal to get involved in all the new technology needed to safeguard their assets.

Also, with a payroll service, you’re paying probably a fraction of the cost that you would pay if you implemented all these systems and the necessary personnel on your own.

ROB WILSON is president of Employco Group Inc., a division of The Wilson Companies, which handles human resources outsourcing, staffing and insurance for 400 small and medium-sized Midwest companies. Reach him at (630) 286-7345 or