Chicago (1685)

Sunday, 26 October 2008 20:00

Taking care of business

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When it comes time for Shelly Sun to hire a new employee at BrightStar Healthcare LLC, she’s done plenty of research to help her reach a decision with her team.

That’s because the founder and CEO spends months — sometimes even a year — networking to find the perfect match for her $12 million health care franchising company. And almost everyone she knows hears about her hunt for the smartest people in the field.

“It’s about talking to as many people as possible,” she says.

Smart Business spoke with Sun about hiring employees and creating a culture that keeps the business running smoothly, even when she’s on vacation.

Q. How do you create a culture that keeps the company running smoothly?

I wouldn’t have been ready to put this culture into my company three years ago. I’ve evolved there by putting together an advisory board of people that are smarter than me and having to listen to them to be the most successful.

Really look at the core functional areas of the company and who your department head is for that and have them put together their own strategic plans for their division and present it to all their fellow team members. And as hard as it is, don’t say anything. If I start interjecting my opinion, it’s going to be Shelly’s strategic plan for their department, not their strategic plan for their department.

I intentionally don’t attend some interim meetings because everybody’s looking to take a cue from the CEO. If I’m squashing it or asking questions as though I don’t support it, everybody else will follow suit.

I want to have my say at the ninth step of 10 in the process, but having my say in steps one through three means nothing happens in four through eight other than what I already came up with.

Q. How do you find those self-starters for your team?

The old saying, ‘Hire slow; fire fast,’ is probably one of the smartest sayings ever created. I don’t know who said it first, but it’s probably one of the best guiding principles in any organization at any level.

I think that when you rush it, you hire the wrong people. You hire out of desperation versus true fit.

Assess your own culture. For any CEO, depending on what their culture is — if it’s a more formal culture, then they want to look to network people that are more formal, and not everybody will be, so that’s why I start early. Any hiring manager should start early.

It’s always a stronger hire to network (with others) to a hire than find them cold because you can find out true information about them. Because I’ve gotten them as a reference from someone, and that someone knew them typically in some kind of work setting, I can find out what makes them tick.

That’s important information you can’t get by calling the human resources department.

Q. Once you have the right people, how do you turn them into a unified team?

Not only do we have the culture and have everybody know each other already in our organization, but everybody has buy-in to who we hire. I don’t want them just looking at only a 12-month horizon; they need to be thinking about the people they’re going to hire with the skill set that’s going to grow with them, as well.

I think peer interviewing is very overlooked in most organizations. It’s probably the most important. We’ll get [candidates] in for a full-day, in-person interview. All of those people that are presenting their strategic plans? They’re interviewing with all seven of those plus me.

What I typically see from my peers is that the person comes in and interviews with human resources and then they interview with the CEO or whoever is going to hire them, and they don’t hire with all the other departments. From our organizational standpoint, I think that would be a mistake in our organization to not have all the departments involved in those key hires.

Q. What are the key aspects to creating a sustainable business?

That is only accomplished by hiring the best and creating a culture where they feel comfortable being able to run a company as though they owned it. What I’ve tried to do is establish that kind of entrepreneurial culture. If they don’t all win together, nobody wins.

I don’t feel like I have to be the one to step in and make sure they’re staying on the right track. I would if I needed to, but I try to bite my tongue and not, because the group will self-correct without me having to.

For the first time, I feel like I [can] go away for 10 days’ vacation with my family, and I don’t have to check in with the office at all. That’s truly the benefit of being an entrepreneur. It’s taken me seven years to have the right culture and the right team to feel like I can do that.

Megan Tackett also contributed to this story.

HOW TO REACH: BrightStar Healthcare LLC, (866) 618-7827 or

Thursday, 25 September 2008 20:00

Diagnosing IT problems

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Almost every company has experience with IT projects that exceeded costs, were delivered late, didn’t align with the business’s objectives or failed to improve productivity. The question then becomes: Why are these problems so common?

“IT projects demand time-intensive investigation and planning to be properly implemented,” says CIMCO Communications’ Chief Information Officer Dave Braner. “Too often, the time needed to properly assess the project and its risks is unavailable and is therefore not built into the plan.”

Smart Business asked Braner about identifying and mitigating the risks associated with IT projects.

How do you begin in identifying risks?

Many times, people become so enamored with the technology and automating a process that other important aspects are not studied. Financial risk models are common, but they don’t address the other types of risks. Standard checklists are used, but IT projects are anything but standard. I recommend creating a SWOT (strengths, weaknesses, opportunities, threats) analysis as part of the risk identification process. It requires working cross-functionally and receiving input from disparate and impacted functions to clearly identify all possibilities.

As part of this process, it’s critical to ask if employees will really do their jobs using the new technology. If employees are averse to the technology change, they can sabotage the usefulness and productivity gains when a technology is deployed by creating their own work-arounds. These professionals can also help identify risks and opportunities that an IT person would not usually consider. Good change management and two-way communications throughout the project can bring employees along, get them engaged in the technology and use their feedback for early detection of potential hurdles. Plan and incorporate your change management and communications strategies from day one.

Where’s the greatest danger of risk?

First, it’s important to be forthcoming about the risks involved with a project. If you do not acknowledge the risks, you could find your project in serious trouble down the road. Be honest with your executive sponsor and leadership about the risks in the beginning.

Another key area involves the process used to develop your project plan. Always ask your team and impacted users, ‘What could go wrong with this project?’ Encourage people not to be afraid to bring up the wildest possibility. There is a lot of subjectivity and different perspectives in looking at risk. For example, perhaps a new technology captures more information or presents it differently than previous technology. Suddenly, the historical data used in making important decisions changes, which could impact business strategy, regulatory oversight, and employee roles and responsibilities.

Scope creep is the single biggest risk and requires discipline. A superb, detailed project charter is critical. It is your contract and your blueprint, and the project must be managed against the framework established in the charter. Too often, people forget to review the charter after the project is underway or only when the project is conflicted. If the scope goes beyond the project charter, you may need to make the difficult decision to close out the project and start over with a new, larger project.

How do you manage and monitor risks as your project progresses?

In my experience, it’s just as critical to understand how to mitigate each risk once it’s been identified. Then, qualitatively assess each risk and rank it by what is most probable. This places a value to each risk involved and helps you determine the point of diminishing returns.

A risk response plan should be developed for each risk. Since neither assessment nor mitigation is static, the risk response plan should be incorporated into the project management discipline for review and status as events change. Just as you keep a log of technical changes, you should keep a similar risk log and assign a person the responsibility of keeping an eye on it throughout the entire project. Risks are deleted from the log when they are no longer possible, and new ones added as events impact the project.

How can you anticipate all the possible risks that a project may encounter?

You can’t. It’s a best guess. There are both internal and external influences as well as technology and business process elements to consider. That’s why working cross-functionally and at all levels of the organization better helps in the guessing game. Will a major weather event impact deployment? Will a corporate reorganization derail progress? What if your executive sponsor suddenly is gone? Or, how many times do you think about the legal implications of an IT project?

The bottom line is to minimize surprises to keep the project on track and within budget. Managing risk is challenging, but doable with structure and discipline.

DAVID BRANER is Chief Information Officer of CIMCO Communications, based in the Chicago metropolitan area. Reach him at (630) 691-8080 or

Thursday, 25 September 2008 20:00

One eye on your portfolio

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If you invest in the stock market, you should pay close attention to Federal Reserve actions. “Investors need to consider Fed monetary policy to help guide investment decisions,” says Gerald Jensen, professor of finance at Northern Illinois University and an author of a number of studies that track security returns and Fed policy decisions.

In a recent CFA Institute study, Jensen and his co-authors showed substantial benefits associated with following a rotation strategy predicated on Fed policy.

According to the study, when Federal policy is expansive, i.e. when the Fed is decreasing rates, stock values generally increase, while stocks tend to perform poorly when the Fed is increasing rates (a restrictive Fed policy). These patterns are exaggerated for cyclical stocks, which creates the potential for investors to gain from a sector rotation strategy.

Smart Business spoke with Jensen about his research and its implications in the current market environment.

During the period of the study, how did stocks perform when Fed policy was expansive versus restrictive?

Between 1973 and 2005, during expansive policy periods — that is, when the Fed was lowering rates — the return averaged 17.4 percent. In contrast, during periods of restrictive policy — returns averaged 5.3 percent. So, when the Fed was lowering rates, stock returns were more than three times higher than the returns earned when the Fed was raising rates.

Has the relationship between Fed policy and returns held true during the recent turbulence in the financial markets?

The relationship has been surprisingly consistent throughout history but has broken down considerably in recent months. This can be attributed to several unforeseen developments. First, financial institutions greatly expanded the leverage of their operations through the use of financial instruments, such as collateralized debt obligations (CDOs). Over the last few years, these instruments experienced tremendous growth, which was then followed by a dramatic unwinding as credit concerns caused investors to lose confidence in the instruments. The Fed’s effectiveness in influencing the financial markets was diminished by the rapid development and ultimate collapse of this market. Second, after many years of increase, real estate prices dropped substantially over the last couple of years. Finally, commodity prices, and especially oil prices, experienced an unprecedented increase in the last two years. These three factors combined to create a ‘perfect storm’ situation, which has been devastating for the financial markets.

What future relationship do you project between Fed policy and security returns?

U.S. financial markets are extremely resilient, and I expect that markets will resolve the problems that currently exist. Some stabilization has already occurred. Yet, it will take at least six months before we completely recover from the extreme shock that the markets faced over the last several months. I believe we’ve hit bottom and are on our way to recovery. I expect that the effectiveness of Fed policy in impacting financial market activity will gradually return to normal.

What does research suggest about investing in precious metals and other commodities as a hedge against all this instability?

People have always viewed precious metals, such as gold, as a good safety net during periods of uncertainty. But precious metal prices, like stock prices, have traditionally exhibited a strong link with Fed policy.

Historically, the return on commodities, in general, and precious metals in particular, has been poor when the Fed has been decreasing interest rates. So despite the fact that many people are feeling jittery and want to put their money in a ‘safe’ investment, investors should be wary of increasing their allocation in commodities and precious metals during the current period. History suggests that the time to buy commodities, including precious metals is when Fed policy is restrictive, that is when the Fed is raising rates.

With the upcoming election, are there any political factors that investors should take into account?

People like to tie market performance and politics together, but my recent research reveals links that are surprising. A commonly held belief suggests that stocks do better in periods of political gridlock. But our research shows that the gridlock theory is a myth, and market performance doesn’t differ significantly whether the government is in gridlock or harmony (where all branches are controlled by the same party).

We’ve also found that the third and fourth year of a presidential cycle are traditionally good years for investors. Why? It turns out that Fed monetary policy provides a reasonable explanation. Specifically, Fed policy has historically been expansive in the last years of a president’s term and restrictive at the start of the term. This pattern prevailed during the most recent presidential cycle; however, the perfect storm scenario may have caused returns to deviate from the normal pattern.

GERALD JENSEN is professor of finance at Northern Illinois University. Reach him at (815) 753-6399 or

Thursday, 25 September 2008 20:00

The Graham file

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Born: Bronx, N.Y.

Education: St. John’s University in New York City

What was you very first job?

When I was very young I used to stuff inserts into newspapers at the local store, then I would work as a newspaper kid delivering newspapers.

What is the best business advice you’ve ever received?

Identify the best people, hire them, and do your best to keep them. It makes your life infinitely better when you have good people hired. That might sound very simplistic, but everybody comes up with these whiz-bang type [of] strategies to get ahead, but that’s it, you hire the right people and keep them because people want to be part of that winning team and will gravitate toward that.

If you could be one superhero, who would you be and why?

I would say probably the superhero that’s the epitome of truth, justice and the American way is Superman. Now, I’m not doing that as an ego thing, but when I take a look at this guy, what does he stand for? He’s a man of principle. I think I try to be consistent with principles; I don’t live in the gray area.

Thursday, 25 September 2008 20:00

Westfield Insurance on property coverage

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Many companies require the services

or goods of another company to

make their product or to run their business. As a business owner, your company may never experience a tragic loss or

damage, but what would happen to your

business if one of your suppliers experienced

such a loss? Do you have the proper insurance to cover your loss if your sole supplier

can no longer provide goods or service?

Business income provides for the business

what it cannot provide for itself. Dependent

property takes this coverage to the next level

to protect the business even if the loss happens to a third party on which it relies, says

William V. Reedy CIC, AU, The Learning

Group, Westfield Insurance. Business owners who understand the protection offered

with dependent property coverage and recognize their need are considered savvy insurance consumers and risk managers, he adds.

Smart Business spoke with Reedy about

the need for dependent property coverage,

how it can help protect your business and

how to evaluate your company’s risk to determine if such coverage is needed.

What is dependent property coverage?

Most businesses depend on other businesses to supply them with the raw materials or

finished products they will sell. Conversely,

supplier businesses rely on having other businesses that will buy their product. In both

cases, the business is dependent on another

entity to conduct its business. When a business cannot get the materials or product to

sell, it will experience indirect financial loss.

The fact that it is indirect does not lessen

the loss. Conventional business income

insurance reimburses a business for income

and expense after its own loss. Dependent

property coverage is used to protect a business when the loss takes place at a business

on which it relies.

Why is this type of coverage so important?

Dependent property coverage is extremely

important because the actual physical loss

(fire, wind, etc.) may happen to the business

you depend on and not your business. The

fact that this coverage responds on your

behalf relieves you of the financial loss you

would have had. These losses can be debilitating to a company.

Most business owners and insurance

agents readily identify buildings and business

personal property when they consider property exposures. Business income is sometimes overlooked in this process. Business

income coverage without the dependent

property endorsement will not respond to

the dependent property exposure. It requires

both business income along with the dependent property endorsement to make sure all

dependent exposures are addressed.

Who requires such coverage?

Any business that relies on another business is a candidate for dependent property

coverage. This coverage is especially important and most often provided when there is a

single or short list of key contributing or

recipient dependent property businesses.

For example, perhaps the insured business

makes wooden rocking chairs that are

known for their craftsmanship and quality. It

may only use one particular supplier of hickory that provides the best wood. Since the

chair company bases its reputation on quality, it is dependent on this particular wood

supplier. If the chair company added the

hickory supplier as a dependent property and

a fire occurs at the hickory supplier’s location

(rendering it unable to supply the insured

company with top-quality wood), it is considered a covered peril, since fire is a covered

peril under the policy.

The business income policy endorsed with

dependent property would pay the insured

company the amount it would have earned

until the wood supplier is back in business.

With dependent property coverage, the company is indemnified for the business it normally would have done, and it does not have

to resort to using inferior wood and potentially damaging its reputation for quality.

Are there different types of dependent properties?

There are four main categories of businesses that may require this coverage.

  • Recipients: businesses that rely on others

    for product 

  • Contributors: businesses that rely on others to whom they sell their product 
  • Manufacturing locations: businesses that

    sell a product on behalf of a manufacturer 

  • Leader locations: businesses that rely on

    other businesses to draw traffic to their location. An example would be a card shop located near a large retail chain store. The card

    store benefits from the traffic and would

    experience a downturn in revenue if the

    chain store were to close.


How can one determine risk of exposure?

If a business has a number of potential suppliers or available markets in which to sell its

product, then the need for dependent property coverage is not as great as if it depends

on a more limited and thus more important

few. The questions any business owner

should ask are: On what other businesses do

I depend? What would happen if they were

forced to shut down for a month, six months

or a year? Would I lose income as a result? If

the answer to these questions results in identifiable companies that would cause financial

loss if they were out of business, then one

may conclude that dependent property coverage is necessary.

WILLIAM V. REEDY, CIC, AU, is with The Learning Group, Westfield Insurance. Reach him at or (330) 887-0859.

Tuesday, 26 August 2008 20:00

The air is green

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Like many other industries in today’s global economy, environmental responsibility is an issue that the entire supply chain has both progressively and collectively embraced.

In light of the financial fuel crisis currently crippling the industry, airlines have desperately been searching for ways to reduce their fuel consumption, and it’s no surprise that their efforts have led them to a greener doorstep.

“Going green has resulted in a double win for the forwarding community,” says Joseph Hoban, director of international air services for AIT Worldwide Logistics. “The airlines have significantly reduced fuel consumption, thereby drastically lowering operating costs while simultaneously supporting the industry’s need to reduce harmful emissions and preserve the environment.”

It is this mutually beneficial duality that has prompted all modes of transport — trucking, rail, ocean and air — to take proactive measures in minimizing the global supply chain’s collective impact on the environment.

Smart Business asked Hoban to discuss how the air cargo industry is playing its role in the eco-friendly movement with great, “green” gusto.

What factors contribute to the success of the ‘going green’ movement?

While there’s no precise moment in time or defining incident when the so-called ‘green light’ went off and the industry scrambled to become environmentally conscious, I am confident that the groundswell stemming from individual involvement is the driving force behind the movement’s phenomenal success.

Al Gore’s highly publicized, award-winning efforts in the movement undoubtedly brought about an increased level of visibility and heightened awareness among the general public. Sparked by insatiable interest, individuals brought the hot-button issue to work with them, initiating watercooler conversations centered on the topic, thus driving the ‘greening’ of their behaviors into their own homes and organizations.

Quite simply, this isn’t a corporate initiative being imposed on employees — rather, it’s been fueled by individuals who are feeling compelled enough to ask, ‘What can I do?’

Discuss the industry’s current ‘going green’ efforts.

Like IT improvements, ISO and other standards that customers demand, going green has quickly become the cost of doing business in today’s world. Because it has transformed into one of the minimum expectations of the global consumer marketplace, customers are inquiring what our industry is doing to decrease our carbon footprint. In looking at the supply chain as one green line from door-to-door, they are opting to partner with and support the companies who align themselves with green initiatives.

Whether it involves powering aircraft with fuel derived from algae, coordinating test flights using biofuels or purchasing carbon offsets to mitigate greenhouse gas emissions, the airline industry is taking various measures, all in the name of ‘greening’ the operations of its business.

In addition to replacing planes with more fuel-efficient aircraft, the airlines have begun taking measures on a smaller scale, all contributing to the much larger picture: less fuel-burning holding patterns, using one engine to taxi the aircraft, towing from the gate and less idling, among a variety of other eco-friendly tactics.

Organizations have also implemented programs encouraging the industry’s ‘going green’ efforts. For example, the eFreight initiative introduced by IATA (International Air Transport Association) aims to free our industry processes of paper documents, while the SmartWay Transport Partnership led by the Environmental Protection Agency aims to reduce between 33 and 66 million metric tons of CO2 emissions and up to 200,000 tons of nitrogen dioxide emissions per year.

Are you encouraged or discouraged by the ‘going green’ trends you see in the industry today?

I am encouraged by the ‘going green’ trends I’ve closely examined and observed in this industry. These trends demonstrate that we are a vital component of the global village. Rather than standing on the sidelines and pointing fingers or playing the proverbial blame game, we are taking an active role in promoting the planet. Not only are we recognizing the fact that we’re depositing vapor trails and contributing to the harmful emissions lingering in the atmosphere, but we’re actually doing something about it.

I am, however, discouraged by the companies out there who are only greening their business for the sake of survival and profitability — their true heart is not vested in the cause. In a perfect world, these companies would be motivated by more altruistic intentions; however, the positive results and necessary progress remain consistent, regardless of their incentive to rally around the cause and receive the ‘green’ thumb of approval from their customers and counterparts.

JOSEPH HOBAN is director of international air services for AIT Worldwide Logistics, Inc., headquartered in Itasca, Illinois. 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 (4248).

Tuesday, 26 August 2008 20:00

Too much legal control?

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Research shows that 43 percent of employers use technology to block the popular social networking Web site called Facebook. Other organizations go further, limiting or banning additional sites, including the online career boards.

While removing these distractions may be a not-so-subtle strategy to increase productivity and retain key employees, it begs a serious question: If your employees were more engaged, passionate and proud of the work they did, would you need to enact such restrictions?

“An organization that controls too tightly the manner in which its professionals think will come up short on innovation and will stagnate,” says Michael Tuchman, partner, Levenfeld Pearlstein, LLC. “It’s the objective-driven employees who drive the highest value outcomes.”

Smart Business asked Tuchman how to read covert symptoms that indicate unfulfilled potential and how to create an environment where motivation is organic and filters are minimized.

How can companies create an environment to intensify employees?

The best management and professional employees operate within organizations that have an identifiable culture and embrace it. Culture is not how the organization projects itself externally. Culture is about how the organization views itself. Effort should be devoted to articulating your culture and promoting it within the company. Shared pride in company culture ties directly to motivation. A culture that embraces change and looks for ways to challenge and educate its people, without trying to measure only by the bottom line, will increase the bottom line. Think of continuing education not as a perk but as part of a culture of learning and betterment for staff. Think of challenges not in terms of higher objectives for an employee, but in terms of how much stronger that employee will be for having met the challenge. By connecting organizational objectives to culture, motivation will be organic rather than externally imposed, and your people will be stronger for it.

Should leaders place an emphasis on objectives or processes?

The emphasis should be around instructing employees on objectives, not processes. The organization will, of course, have its processes, but good employees know what those are. Respect for intellect and initiative is evident when you articulate the desired objective and let the employee think through the paths to getting it done. If you look at what creates value in professional organizations or what are the attributes of the best management, it is the ability to think creatively and adapt to changes. Processes are useful for refining efficiency and are a necessary part of an organization educating itself. But only objectives-driven employees will have the motivation to realize the highest value outcomes.

What is the most productive role for feedback?

Feedback — it can be constructive yet perfunctory and thus pointless. Or it can be part of a culture of teaching and learning.

Feedback is not so much about what someone did right or wrong on the last undertaking but about how to better tackle the next one. It is about making the employee a better professional, not merely about preventing mistakes. An employer who reminds himself of this before providing feedback will tone the message in a powerful way.

It is a common refrain that we too often forget to say, ‘Thank you; good work.’ But the frequency of positive feedback is not a substitute for meaningful substantive feedback. At an individual level, substantive feedback motivates because it evidences the organization’s commitment to and respect for the employee. Finally, at an organizational level, celebrate wins. This takes feedback to the next level and emphasizes the team and challenge aspects of company culture.

What are the benefits to minimizing filters?

Productivity is enhanced when employees interact with outsiders on behalf of the company or outside of their group and do not merely push things to someone else in the group. Here I can draw parallels to my own professional experience as a lawyer. In my early years of practice, I would research and write memos on points of law. The work was interesting and challenging, to be sure. I recall the first time I was told I would present my findings and recommendations directly to a client. My work, myself and my firm as a whole now were to be judged by this client. As a result, the way I saw my firm, myself and my motivation to perform changed markedly as my role was externalized. The best employees thrive when representing their company or group. The intensity of an employee’s commitment and the quality of his or her work is at its highest when the employee is exposed to the organization’s constituents and filters are minimized.

MICHAEL TUCHMAN is a partner in the Corporate Practice Group with Levenfeld Pearlstein, LLC in Chicago. Reach him at (312) 476-7550 or

Tuesday, 26 August 2008 20:00

Face time

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Despite what his business card says, Dale Moser views himself as just another customer service representative. That’s also how the president and chief operating officer of views each of the company’s 150 employees.

“We can build the field, but that doesn’t mean they’re going to come,” he says. “We need to make sure we’re meeting the needs of the customer.”

To fulfill that promise, Moser regularly visits departure sites to hear, face to face, the opinions and needs of his customers. The practice has helped push the 2006 start-up and subsidiary of Coach USA to 2007 revenue of approximately $15 million.

Smart Business spoke with Moser about how to stay in touch with your customers to help grow your business.

Q. How do you break into a new industry segment?

The key to that is making sure you know what your customers’ needs are. When you do that, you design it so that you’re no less than meeting those needs.

We’re out and about. We’re out in the field. We’re not just sitting in offices dreaming things up. We’re looking at what’s going on in the economy, what’s going on in our social cultures, in our environments, in our cities. You look at the potential to create a service that has the underlying plan to help with those issues.

I’d rather always under-commit and overdeliver. No one’s ever going to be upset with that. You commit to meet the expectations, and then you deliver where you think, in talking to customers, would make the difference and differentiate you from the other options they have.

There’s certain things that once they try it, those were the comfort zones that they say, ‘This is why I use you. I know once I buy a ticket, I’m guaranteed a seat. There’s no getting there, getting in line, finding out the bus is full, and I have to wait for the next bus, which could be three hours from now.’

Q. How do you stay in touch with customers?

I respond to a large majority of the e-mails that come in from customers: ideas, suggestions, recommendations. We do customer surveys on a quarterly basis by an independent firm. That information is used for us to reassess where we need to go.

The one I like the best is I like to get out. I like to go to see a departure in Chicago, in Milwaukee, in Columbia, Missouri, and talk to the customers before they’re getting on the bus, and just get a feel for why they’re traveling today, why they selected us, what were they looking for, what would they like to see.

Q. How do you sift through that feedback?

You’re going to always get somebody who will give you the sky-is-falling kind of input. Then you’ll have somebody on this other parameter that makes it sound as if this is the greatest thing since canned soup.

You have to read between the lines and really get at what is the burning issue or the item that customers are really pleased with. If you start here and see similar concerns with multiple customers, then that becomes obviously a much higher concern and issue for you that you need to address quicker than one where somebody’s complaining about not enough legroom on the bus, and the gentleman’s 6 feet 5 inches.

Q. What is the benefit of face-to-face interaction with your customer base?

You really get the opportunity to hear from the customers firsthand.

When the rest of my staff, everything from a driver to a dispatcher who’s out on the street to even the next level middle-management, when they see and know I’m out and about and I’m doing that, they look at it and step back and go, ‘It’s important enough for him to take his time to come out and visit with these customers personally, then it must be important enough for us to do it.’

Q. What should executives know before engaging their customer bases?

In my opinion, we’re all pretty much customer service representatives. Without the customer, we don’t have a job. I’ll just go to them, I’ll give them my name, and I’ll say who I’m with so they know I’m affiliated with the company, but I don’t really tell the customers who I am from a position standpoint.

I never have a problem if anybody ever says anything [about it.] I’ll hand them a business card just for the purpose of allowing them to either phone me or e-mail me direct. I don’t just go and hand out every card I have. I would-n’t recommend that.

The other thing I do to certain passengers, I will say, ‘Please e-mail me. I’d love to hear how your experience was.’

That’s the true key to making sure that you really know what you need to do. You hear it from your employees, and I take a lot of input from them on recommendations and suggestions, but you also need to make sure that you get a balance of what the customers think, too.

HOW TO REACH:, (877) 462-6342 or

Saturday, 26 July 2008 20:00

Managing in a downturn

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When economic times are slow, it’s hard not to focus strictly on your bottom line. Whether it’s buying product at a reduced price or taking advantage of a larger talent pool, there are a number of best practices that can help ensure that, once businesses do come out of the downturn, they are in a position to tackle the market head-on.

“Businesses must have a sober look at where they are now in the downturn, a realistic look at how long they think they can survive and, if they’re clear about what they think is going to happen, a coherent plan of action for when they come out of it,” says Mike Leach, senior vice president at Employco Group. “It’s those people who are prepared to hit the ground running in the inevitable upturn that capture more market share.”

Smart Business asked Leach about wise management moves to make in a lagging economy.

What are the mistakes that business owners make when the economy is slow?

The biggest mistake is not planning for the future. Companies have to forecast and think, ‘How can we get through this and better manage the process so when the upswing does come we’re five steps ahead of the competition?’ Focus on retaining your best talent. Take a look at what your benefits are, both hard and soft, and how you compare to the competition. Whether it’s a flexible work-place or health insurance, you need to look at what you offer and fine-tune those offerings so that your best talent doesn’t get recruited away.

Something that you should be doing if you’re not already is communicating with your employees — and not just with your upper management but on all levels — to share your vision of what’s happening now and in the future and try to paint the picture of how you’re going to survive the downturn. If you’re losing market share and struggling, people may be worrying.

How should the work force be managed differently?

Do a skills assessment of your staff to see what skill level they have and what skill level they would need to either help you during the downturn or be an even greater asset when the upturn comes. Here you have the opportunity for cross-training that lets employees gain expertise in other areas. You can figure out what you need in the future and whether your people have the skill level to make that happen and, if they don’t, what type of training can get them there.

For example, if someone has better knowledge of a certain product, take the opportunity to train that person in another product. Or take someone that’s in the client service area — it might be a good opportunity to work on some of his or her sales skills so that when the turn happens that person can actually help you out on sales. Or maybe service is very important to your organization and you don’t want to lose any clients. Some of those salespeople could help you on the service side.

What should companies keep in mind when hiring in a downturn?

The fact is that companies want to retain their best people. They’re hoping just to lose their least productive or least experienced. So there are highly skilled people available out there, but you have to be able to cut through the rest to find the ones that are right for you. You have to ascertain if candidates are unemployed because they got stuck in a down economy and their company went out of business or if they are unemployed because their company let the weakest go. You serve yourself well by doing strategic recruiting to make sure that you’re really targeting the skill sets that you need.

For example, in the banking and mortgage industry, there are a lot of good people out of work, and they may not necessarily have the product knowledge you’re looking for, but they do have the skill level you’re looking for. For example, they’re persuasive or have great presentation skills. A lot of those talents are transferable.

Is this a good time to outsource?

In a downturn, you may not have the people with the skill level you need, but you could go outside the company to others that are more specialized. Often you can get better services and pay less by outsourcing. You don’t have the cost of a full-time employee, you don’t have to pay for benefits, and you get better results. So companies can outsource wherever possible and use that savings to cover increased expenses or as they look to the future to potentially hire another salesperson or put the money in R&D or wherever it’s needed.

MIKE LEACH is senior vice president, Employco Group (, a division of The Wilson Companies. Employco handles human resource outsourcing for 400 small and medium-sized Midwest companies. Reach him at (630) 286-7357 or

Saturday, 26 July 2008 20:00

Set the tone at the top

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Board effectiveness is important to public, private and nonprofit companies. To be effective, a board, its committees and senior management must understand today’s requirements and expectations for increased oversight and governance. Board members must be able to evaluate the actions of management, the organization and its advisers to meet those requirements. Monitoring should take place to ensure all required actions are performed on an ongoing basis, and board members need a high level of assurance that the information they are given to make decisions is both accurate and comprehensive. This confidence is cultivated when strong internal controls are present and company management operates with integrity, from the top down.

Smart Business asked Harry Cendrowski, CPA/ABV, CFE, CVA, CFD, CFFA, managing member, Cendrowski Corporate Advisors LLC, about the ways that boards can increase their effectiveness.

What are some of the characteristics of an effective board?

A company’s board of directors and its senior managers set the tone for a company and its behavior. A highly effective board is one where the members communicate with management, independently evaluate the actions of the organization and devote sufficient time to its duties. Studies indicate that 50 percent or more of the value of an organization comes from qualitative factors, such as leadership, the ability to execute and the company’s overall strategy. As such, qualitative factors cannot be overlooked. The board needs to understand the attitudes and personality traits of members of the senior management team and understand how they approach situations.

What should a board look for in potential directors?

Key factors for members of the audit committee are financial literacy and independence — the member must be able to recognize issues with management’s financial reports and be independent to allow them to challenge management when necessary.

To ensure that members are meeting their obligations, there should be an evaluation of the directors and committees every 18 months or so. Board members should be able to work constructively with others and be willing to not only learn the industry, but the business as well. They should have strong communication skills, high ethical standards and the courage to raise issues, even if doing so might not be well-received.

To what extent should board members be trained about the company and its operations?

Members need orientation to understand the company and how it operates, as well as the strengths and weaknesses of the company and senior management. This will provide them information they can use when reviewing a particular area of the company, such as operations, financial or legal. Board members today will need some degree of financial literacy to recognize financial reporting obligations and expectations. That’s not to say that board members should become involved in the day-to-day operations of the company. There is a very delicate balance between the board and management, and a board member needs to know what that fine line is.

How can board members best assess risk?

Over the last few years, there has been an increased focus on enterprise risk management (ERM), a strategy for proactively identifying obstacles and improving the quality and relevance of information presented to the board. ERM helps companies anticipate risks earlier and determine possible impacts a risk occurrence might have, both internally and externally. Companies should keep in mind, however, that to be truly successful, ERM is a process that involves all levels of the organization and that no sophisticated ERM software is a replacement for human analysis. At the end of the day, board members and senior management are still accountable.

What can a board do to improve?

Organizations can seek outside counsel to identify best practices applicable to the company’s operations and the operation of the board itself. Boards can authorize an independent party to perform an operational review, which can identify strengths and weaknesses, as well as possible areas for improvement within the organization. Some operational reviews are merely tune-ups; others involve a complete overhaul of the internal control system. Generally, it should evaluate the culture of the organization to highlight issues that are people-related rather than process-related. In addition, companies that are reliant on one strong personality need to evaluate the risks involved with that person. Board members should interact with management on a regular basis, not only to solidify relationships, but also to stay apprised of how the company is running.

Perhaps most importantly, board members should maintain a sense of professional skepticism when presented with financial reports or plans. If something seems unusual, it should be pursued until it is entirely understood and evaluated.

HARRY CENDROWSKI, CPA/ABV, CFE, CVA, CFD, CFFA, is managing member of Cendrowski Corporate Advisors LLC. Reach him at (866) 717-1607 or or go to the company’s Web site at