In its 2003 report, “Patient Safety: Achieving a New Standard for Care,” the Institute of Medicine’s Committee on
Quality of Health Care in America found that, every day, tens of thousands of errors occur in our nation’s health care system. Some can have devastating effects, while others — the “near misses” — slip by virtually unnoticed.
The report suggests that, in order to improve patient safety, we must build a health care delivery system that can prevent errors from happening in the first place. Additionally, we must establish a way for health care professionals to obtain and share information related to error prevention and quality improvement.
As medical care becomes more complex and patients are treated by an increasing number of highly specialized physicians, the use of computerized systems to identify opportunities to improve care and prevent error may be the answer.
“Data are most powerful when they are integrated and converted to comprehensive and useful information,” says Dr. Wendy A. Richards, national medical director for Aetna Small and Middle Market Business. “Today’s clinicians are faced with increasing amounts of data about their patients, and the dilemma is how to leverage that data to help their patients improve their health.”
Smart Business spoke with Dr. Richards to learn how computerized systems are helping to improve clinical quality and patient safety.
How do these computerized systems manage patient data?
Computerized systems, or data-analytic programs, convert member health data comprised of claims history, pharmacy, physician encounter reports, laboratory results and patient demographics into practical, usable information. Information that is self-reported by members through a health risk assessment tool or in a personal health record can also be important. For example, many people use over-the-counter medication or supplements, but some may not tell their physicians. Systems that have the capability to capture self-reported data provide additional opportunities to detect potential adverse events. This gives physicians access to a broader view of a patient’s clinical profile.
Behind the scenes, these programs are continuously scanning an individual’s health data against highly respected sources of medical literature and, when appropriate, alerting heath care professionals about possible urgent situations and opportunities to improve care and patient safety.
Is there a standard of care against which these data are compared?
With more sophisticated systems, patient data are regularly compared against thousands of evidence-based care guidelines that have been adopted within the medical community as the standard of care. The comparison attempts to identify gaps in care, medical errors and deviations from evidence-based clinical guidelines. It also can alert a physician when a necessary and prescribed medication has not been filled.
For example, claim data might show that a patient had a heart attack but has not filled a prescription for a beta-blocker medication, which is an accepted best practice to reduce the risk of a future heart attack. Or, one physician might have ordered lab work that shows a patient’s deteriorating kidney function, while a second physician treating the patient for a separate condition might have unknowingly prescribed a medication that could damage the kidneys further.
With this knowledge, the insurer’s medical staff can work with health care providers to ask the right questions, detect related exacerbating conditions and get patients more comprehensive treatment that can improve their health and help them stay at work or return to work more quickly.
Beyond seizing these opportunities, powerful data allow the insurer to gain insights into potential treatment conflicts that could escape the attention of the patient’s doctor. In fact, some insurers offer programs that proactively alert doctors to potential areas of concern.
How do these programs differ from pharmacy benefit managers?
While most employers have pharmacy benefit managers in place to monitor drug-to-drug-related clinical situations, data-analytic programs cover a much broader range of clinical issues and use more comprehensive data sources, including medical claims and lab results. Additionally, these programs deliver patient-specific, evidence-based treatment guidelines to physicians, who are better positioned than pharmacies to effect a change in treatment in a timely manner.
How do employers benefit from offering these data-enabled health plan approaches?
Computerized systems allow insurers to provide practical, timely, clinical decision support to physicians and patients, which can help to improve patient safety and medical quality, reduce medical costs and improve employees’ productivity.
If your existing health plan does not include a data-analytics program with health care provider notification, you may want to consider upgrading. The choice you make might take your plan to the next level of effectiveness and quality improvement, empowering your employees and their doctors with tools to improve wellness and potentially lowering your health plan costs in the process.
DR. WENDY A. RICHARDS is national medical director for Aetna Small and Middle Market Business. Reach her at (312) 928-3307 or Shanahan-RichardsW@aetna.com.
Welcome to the world of McDonald’s Corp.’s Ralph Alvarez.
So instead of spending all his time making out name tags or
constantly visiting the more than 100 countries that have a
McDonald’s, Alvarez, the quick-service restaurant’s president and
chief operating officer, and the executive team use another way to
unify the company: through its differences.
Building off the company’s diversity has become as closely tied
to McDonald’s growth as the Big Mac or Chicken McNuggets.
Want McProof? Since its inception in 1955, McDonald’s has had
only one slip in its growth, posting a loss for the first time ever for
its fourth quarter of 2002. Despite heading toward $16.2 billion in
revenue in 2003, the company was facing its worst margins and
things looked bleak.
“We took our eye off the ball some from the funding and the
focus around these long-term plans,” he says. “While we were still
very good, we could see how this is something that if you’re not
stirring every day, you can have a situation where you can lose
some of the progress.”
So McDonald’s refocused on creating opportunities for different
cultures to shine, adding to the foundation of recruiting minority
employee owners and franchisees.
“It’s easier to cater to the masses,” Alvarez says. “That’s the reality. But when we celebrate our differences, we’re better because
we’re different. That’s better than a leadership team that looks and
talks and thinks just like you.”
To keep benefiting from those differences, Alvarez has worked
to keep McDonald’s focused on growing opportunities given to
minority employees and franchisees, and then he makes sure that
the company isn’t just meeting quotas but giving the minority opinion a seat at the executive table. As a result, the company has
sharpened its focus on serving its diverse customer base, and
McDonald’s is setting growth records once again, posting just
under $22.8 billion in revenue and nearly $2.4 billion in net income
Grow your programs
Alvarez isn’t just a fan of McDonald’s diversity programs, he’s a
glowing example. He was born in Havana, Cuba, and came to the
U.S. at the age of 5. He joined McDonald’s in 1994 and realized that
there was more room at the company for his ascent than anywhere he’d been before.
Still, he cautions that there’s one very un-McDonald’s portion to
continuing to build diversity: There’s no drive-up window. You
have to be willing to lay a foundation through educational and
“The results are long term, you don’t see them overnight,” he
says. “It’s developing talent, recruiting outside talent, and bringing
them into an organization and helping them through the growth
curve. These are long-term commitments, you won’t see an impact
this quarter or next quarter, you’re going to see an impact three to
four years from now and being able to do that, that is always the
Thinking for the future, McDonald’s has put programs into place
that not only enhance the power of minorities already in the company but that will also entice others to join. Employee networks
were created for blacks, Hispanics, Asians, women, and gays and lesbians so that there is a comfort zone for development. There are
also educational seminars provided regularly for anyone on a number of minority career development topics. Other simple steps like
converting the course materials at the company’s famous training
program, Hamburger University, into 28 languages have also been
Coupled with other programs, these ideas help recruit diverse
employees and owners for McDonald’s — 41 percent of all its U.S.
owners/operators are women or minorities — and improve company culture. Each network is given its own voice within the company to celebrate its diversity and educate others. One example is
McDonald’s had a Martin Luther King Jr. celebration this year with
a presentation on the leader’s influence on the world as a whole,
which was then followed by a speech at McDonald’s headquarters
from a few executives on what King meant to them.
“I guarantee you that if you work here, you know a lot about
African-American history because of the programs we do,” Alvarez
says. “It’s about pieces that make you a much more well-rounded
person, and that reflects strongly in our culture.”
The programs McDonald’s uses may not be exactly right for
every company, but the point that Alvarez wants people to see is
that the effort is there. When a company creates outlets for minorities — ways they can network, talk, be educated and feel at home
in an organization — those employees gain a sense of empowerment and are more willing to add ideas and effort that contribute
to your bottom line.
“Gathering our black owner-operators organization, our Hispanic
owner-operators organization, our employee networks that we
have, people see we want that to happen; that makes us stronger,”
he says. “Maybe they come in with one voice that’s more powerful
than the individual voices to get a seat at the table.”
The results of those educational forums also help knock down
walls that often exist between one group and another.
“I’ve learned so much from my fellow workers about what they
may have gone through growing up or the challenges of being a
woman in a male-led organization,” Alvarez says. “We actually sit
down, and we talk about that in an open forum that’s much less
threatening than it would normally be.
“It’s very important because you are changing society. Part of
what we know we have in the U.S. is companies that have had success in doing this have actively gone after making a difference
through their training programs, through their recruiting efforts,
through the organizations that they support, through counseling
and through support organizations, so you’ve got to have it be part
of the business plans.”
Alvarez notes that if a company wants to truly expand beyond its
home markets — particularly into overseas markets — there has to
be a good sense of how important diversity is to helping figure out a
“It starts from the top,” he says. “You have to have the commitment from the leadership of the company that has to stress why
this is important to the organization and why it’s part of the company’s values — so it needs to be part of the company’s values —
and why it’s good for business or good for the organization. That’s
critical. This is a long-term mission, and it fits within how our
country has come to be. And if you are an international company,
it absolutely fits in with having success with different cultures
because first you have to be diverse yourself.”
Give diversity a seat at the table
Among the list of executives you’ll find at McDonald’s is Patricia
Harris, global chief diversity officer. It’s not a job description that
every company has room for, but it’s one way McDonald’s ensures
that diversity remains on top of the priority list. Alvarez loves to
point out something that Harris often says about how you have to
go from counting heads to making heads count.
“It sounds clichéish, but it really hits home that it isn’t about the
numbers you have; it’s about whether the numbers you have are
actually in leadership roles,” he says. “And leadership does not
necessarily have to be title, it has to be the ability to influence the
allocation of resources and the strategies that get placed for success for the brand.”
That means having constant conversations at the top level about
how diversity development is coming along. Alvarez and the rest
of the executive team have regular talks about each of the aforementioned education and succession programs and look for gaps
in the system where minorities aren’t being served.
“We’ll talk about gaps we might have in the farm team and in the
pipeline,” Alvarez says. “If we see a gap or we see someone that
can get extra development that’s where we can allocate extra
There has to be a focus on that in every area and the financial
support to grow it, Alvarez says. McDonald’s makes sure that there
is succession planning made both internally and on the franchisee
side where diverse candidates are being adequately groomed to
That means regular visits from each of the company’s diverse
groups with senior leaders to hear what issues they bring to the
table. By writing diversity into the plan as a strategic initiative,
Alvarez and the rest of the senior leadership team have committed
the regular time to study such issues. And when it’s time to promote someone, the first place they look is to see where their management doesn’t match their consumer. Those opportunities have
created results: The company has won awards for its diversity
inclusion and currently more than 24 percent of its officers are
Overall, Alvarez says the changing business world will demand
diversity from your company. Not only will customers expect it —
and the more markets you get in, the more you will run into diverse
customers with that expectation — but your ability to grow will be
fueled by it internally. A diverse company will not only attract
minority employees, but it will attract employees who are excited
about opportunities they haven’t seen in other places.
“It definitely had to do with two pieces: understanding our customers better and understanding our constituents better,” he says.
“Both from what motivates them, from the customer side for purchase, for their belief that we’re the best choice for them when
they are eating out and for our employees in a recruiting mode for
our franchisees in a commitment to grow mode.”
The results at McDonald’s have helped evolve the company from
a hamburger restaurant to a global empire that comfortably markets more exotic products like breakfast McSkillet Burritos or
Southwest Salads to customers all over the world. That regular
redirection is caused by those diverse opinions at the table,
according to Alvarez. With a constant push from different mind-sets on where the quick-service industry is headed, McDonald’s is
able to push marketing campaigns and customer service issues
that keep it on pace with the times.
“When we started having the right advertising, level of research,
product testing and seat at the table for executives that were
diverse, and when they were at the table when the strategies were
being developed or the products were being developed — versus
just making an adjustment at the end to try to fit it — there’s been
a huge difference,” Alvarez says.
“There’s a subtleness there, but it’s been a big part of our success. I also know it’s made us better as an American company that
operates over 50 percent of our restaurants outside the U.S. It’s
made us better in understanding and bringing our different leaders and different geographies to the table as we make the strategies that are global strategies.”
HOW TO REACH: McDonald’s Corp., (800) 244-6227 or www.mcdonalds.com
Michael B. Romano realizes it’s not enough to simply know where you’re heading in business.
As president and CEO of Associated Material Handling Industries Inc., he’s learned that everyone working under him also needs to know that direction because if everyone understands the ultimate goals, then they can work collectively to achieve them. He equates it to a basketball team where everyone plays a different position, but if everyone plays their position well, then the team wins.
To ensure equal playing time for his employees, he works with members of his management team to create a vision for the organization and then allows them to develop ways to achieve it. He says that if he mandated everything, nobody would care about those things. But by creating solutions themselves, employees are more inclined to get things done at the material handling storage company, which posted 2007 revenue of $117 million.
Smart Business spoke with Romano about how to effectively create a vision for your organization and get everyone playing on the same page.
Create a vision. You first have to look at what is the purpose of your organization. The vision should answer, ‘What is the need an organization is trying to address? How is your organization differentiated? What makes it unique?’ Then you should consider and address, ‘Who are the beneficiaries of what you do?’
There should be a purpose statement, which basically says what the organization seeks to accomplish, why does it exist, and then there should be an activity description — what exactly is the business? Many companies get sidetracked and get involved in unproductive activities because they’re working outside their core competencies because they haven’t truly defined what their business activity is.
Then, beyond that, the mission and vision should include and consider the cultural values that you find important and that you would like the organization to hold in common and endeavor to practice. That would begin to establish your culture.
The vision can be categorized in those three areas — the purpose, the business and the values. If someone thinks in terms of those three areas and answers some questions in those three areas, that’s when they start getting their hands around their future vision.
Revisit that vision. I and our organization must embrace our strategic planning process. It starts with setting a vision and mission for the organization. It then goes through evaluating the environment in which we operate, both internally and externally.
We do this every year, and then, based on opportunities that we feel we have in the marketplace or possible shortcomings, we develop initiatives that drive individual departments to develop their own goals and strategies to fulfill those.
Visit that every year and challenge it. We may tweak our mission statement based on things that we’re trying to stress. That’s actually done at the beginning of our planning process because we want to make sure that the plans we then develop the following year are allowing us to constantly work toward that vision that we’ve established.
Get buy-in. It’s not only my vision but the vision of executive management, and, if we’ve done it right, the vision shared by all employees.
The key is to make sure that everyone in the organization, from technician to general manager, are in the process, so they’re bought in to the process, they feel they have contributed to the development of the plan, and they fully understand their role in the execution and the success of the plan. That is fundamental to the whole empowerment.
We bring the planning process all the way down to the individual through the performance review process. The employee is reviewed every year on how they perform relative to their contribution to their department’s plan.
Every employee within a department knows not only the department plan but their role in it. At the end of the year, that’s ultimately how they’re judged.
It goes back to the buy-in. These are not top-driven. The vision is top-driven, but the rest of the plan, all the way down to the department level, is developed by those people, so that’s the key — their involvement.
Review employees. The employee performance review is simply an embodiment of that department’s goals and strategies, so when an employee looks at their review form, they see their department’s goals and strategies.
A manager is supposed to review all of those with them and agree as to what areas they’re going to be involved in. What is their role? Those areas are then marked as applicable, and that’s what the employee gets reviewed on the following year.
That employee review process is what creates the employee traction with the planning process because it forces the manager to review the goals and strategies for their department and to make sure the employee knows their role in the execution of the plan. You then let a good employee, who has the basic skills and capabilities, go out and do the job and make decisions and receive coaching and mentoring when they need it. ...
If they understand what they do [and] ... what their department contributes to the overall organization, all of a sudden, they feel a part of this. That’s what it’s all about — creating that inclusion-ary environment.HOW TO REACH: Associated Material Handling Industries Inc., www.associated-allied.net or (877) 628-9705.
The current outlook for the United States dollar is continued weakness, and United States exports are doubling the pace of import growth.
“The key is to work with a commercial banker who understands the client’s business, is knowledgeable about what financial programs exist and also works to keep the client’s best interests in mind,” says Ross Weigand, Commercial Group President of MB Financial Bank in Chicago.
Smart Business asked Weigand about the current economic climate and what specific international banking products are available.
Why is now a good time to take advantage of international banking services?
This may be an opportune time for companies to take advantage of the relatively weak dollar by finding business partners abroad interested in their products. The United States Department of Commerce recently released the 2007 International Trade In Goods & Services Report that showed that United States export activity increased by 12.2 percent to $1.6 billion in 2007 over 2006, while imports increased 5.9 percent to $2.3 billion. As a result, the trade deficit narrowed by 6.2 percent. This represents a decline in the annual trade deficit for the first time since 2001. United States exports continue to grow at a record pace, more than doubling the pace of import growth.
When the U.S. dollar regains strength should companies abandon international banking or keep at it?
The current outlook for the dollar is continued weakness due to falling interest rates, persistent liquidity concerns, a soft housing market and presidential election uncertainties. However, the dollar is bound to strengthen at some point and establishing foreign trade opportunities can lead to long-term relationships that can remain in place no matter the domestic economic cycle.
What are some typical international banking product offerings?
International banking products typically include Letters of Credit (LCs), Import and Export Collections, Export Financing Programs and Foreign Country Analysis.
International LCs streamline the fine points and reduce the uncertainties of international payments, and generally make it easier for your business to trade with new vendors and customers, protecting both parties. The bank that issues the LC guarantees payment on the buyer’s behalf. To receive payment, the seller must present documents as required by the terms of the LC. The use of LCs provides confidence in making and receiving payments from foreign companies. Domestic companies can make sure their suppliers receive timely payment, and they also minimize the risk of not being paid by overseas customers.
How are Commercial LCs used?
Commercial LCs for export secure payment from the company importing your goods, are issued by the importer’s local bank and can be authenticated by a U.S. bank. Commercial LCs for import are used as an instrument for paying overseas suppliers and are issued by your bank, thereby guaranteeing payment on your behalf; your supplier is required to present documents to receive payment. These LCs are different than traditional Stand-By LCs, which are commonly used in domestic sales transactions and for security deposits, insurance premium payments, in lieu of bonds, etc.
What’s the value of the other product offerings?
Import and Export Collections streamline international buying and selling when you’re dealing with trusted trading partners. This payment method is simpler and less expensive than letters of credit but still offers protection for the buyer and seller. Your commercial bankers can also help you assess risk even before you contact prospective vendors or customers through international credit investigations. Import and Export Collection arrangements offer bank-to-bank control to ensure importers receive their goods and exporters receive payment. Exporters typically initiate this process, which goes like this: exporters forward shipping documents to their local bank; the bank sends the documents to the importer’s bank for processing and payment; when the importer’s bank receives payment, that bank releases the shipping documents to the importer and the payment to the exporter’s bank; payments can be made as sight drafts, time drafts or clean drafts.
Export Financing Programs provide domestic United States exporters the ability to obtain financing that isn’t typically available. This includes using foreign accounts receivable as collateral and advancing against a larger percentage of inventories designated for export. Your experienced commercial banker can connect you to programs from the Export-Import Bank of the United States (Eximbank) and/or the SBA to take advantage of these affordable and accessible government programs. Foreign Country Analysis can help assess the stability and also the creditworthiness before contact is made or a relationship is developed with global business partners. Typical reports include a country-specific risk analysis, which will look at the political situation, regulatory environment and the size of financial institution, its ownership, return on assets and history.
ROSS WEIGAND is a Commercial Group President with MB Financial Bank in Chicago. Reach him at email@example.com.
Nearly every company, regardless of their size, faces the challenge of aligning IT objectives with business objectives. Though the task is difficult, aligning new technologies with business goals can lead to streamlined operations and improved efficiencies.
“Aligning your IT objectives appropriately can help you realize major business objectives that include service-level improvements, cost reduction, compliance, information protection, and business process support and automation,” says Dave Braner, CIO of CIMCO Communications.
Smart Business spoke with Braner about aligning IT objectives with business objectives, what the biggest challenges are and the importance of developing metrics.
Why is it crucial for IT management to align its objectives with the company’s business goals and objectives?
Businesses are changing structurally and operationally in response to new trends in technology and business practices. The role of technology is becoming more and more of a competitive advantage as organizational dependencies on information and data increase. How IT is integrated into the core of a business and the integral relationships required between the IT organization and senior leadership are crucial to the success of a growing organization
As companies become more transaction-based, the value in IT investments grows. IT is no longer a cost-center or stand-alone function. In order to grow a company, IT initiatives have to be tied tightly to key strategic business goals and objectives.
What specific benefits can be realized by alignment?
Successful, properly aligned IT projects create a chain reaction of benefits. Increases in performance can lead to improved customer satisfaction, which, in turn, leads to higher revenue and market share. By basing IT investments on their ability to drive the business forward, not only does the organization’s performance increase but so does the IT department’s overall success.
How should a company get started?
It is imperative that IT management be involved in strategic planning for the business. Once the business’s strategic goals are set, establish a plan in which you translate the overall business objectives into measurable IT services. This allows you to effectively allocate your IT resources and maximize business value with every project you implement. Next, create an infrastructure that allows you to accomplish your planned objectives. Identify key resources, both internal and external, and their alignment so your entire staff can function efficiently. Finally, determine the functionality of each project and measure how it improved operations across the organization. Make sure to take baseline measurements in order to appropriately report significant change.
What are the biggest challenges?
Every business has its own set of unique challenges. Here are some challenges that can touch any IT organization:
- Managing costs: This is always the No. 1
concern. To ensure that investments will
bring the best return, assess the current state
of your organization and its ability to deliver
- Changing metrics: All too often in IT, when
you finally find a pattern, there is a change
and your current metrics become obsolete.
Be prepared to adjust midcycle, as it is
- Understanding requirements: Ensure that
you fully understand internal customers’
needs and the requirements to ease their pain
as well as meet the business’s goals.
- Leadership support: Major infrastructure
changes and enhancements are significant
investments. Senior management may not
always see the big picture and often have
varying opinions about how to spend budget
dollars. Showing direct correlation between
IT initiatives and business goals can help
earn IT funds.
- Poor prioritization: IT project wish lists do
not get shorter. Poorly prioritized projects
can end up costing additional money and
time. Consider time, capital and outcomes
when prioritizing projects.
What metrics are typically used when aligning IT and business objectives?
One of the most important ways to monitor your success is to evaluate your work and show tangible results. Although it is recommended that you develop metrics significant to your organization’s success, there are some standard metrics that can work well for any organization.
- Percentage uptime: How long are your
applications staying up? Consider the times
when the applications are down and how
they affect the function of that application
and the cost per employee during downtime.
- Functionality: What purpose is the application serving, and what process is it improving? Determine whether the project is meeting a purpose for the business.
- Problem resolution: Are user issues being
addressed in an efficient way? Is there one
central location for users to go to for the
application? What is the time to repair for
Metrics should always be tailored to a company and its objectives. Determine what metrics capture the true results of your projects to calculate the return on investment for your organization.
DAVE BRANER is Chief Information Officer of CIMCO Communications. Reach him at (630) 691-8080 or firstname.lastname@example.org.
For a health care benefits company, customer service representatives serve as the important first line of contact for customers. These professionals work directly with members, employers and health care professionals to help them better understand the company’s products and services and to help with timely, accurate payment of their claims — while providing a human connection at those times when it is needed most.
Traditional customer service outlets continue to play an important role in managing customer and member satisfaction levels. However, the idea that individuals should have greater control over the decisions affecting their health care has prompted some insurers to take a closer look at what it means to provide good customer service.
“Consumerism is changing the way insurers view customer service,” says Bill Berenson, senior vice president of Aetna’s Small and Middle Market Business for the North Central Region. “Once considered to be a phone call to an insurer’s customer service call center, today ‘service’ can easily be applied to the information, tools and cost-savings solutions that insurers offer their members and customers.”
Smart Business spoke with Berenson to learn what insurers are doing to stimulate customer and member satisfaction levels.
What are insurers doing to better serve their members?
Many insurers now offer their members a self-service Web site where individuals can retrieve their personal health benefits information, such as the status of claims they have filed and their Health Savings Account or Flexible Spending Account balances. These sites can also include resources, such as physician directories, cost and quality comparison tools, and information on health and wellness programs.
What other offerings can be considered good customer service?
Surprisingly, much of what is considered customer service takes place behind the scenes. Most major insurers now offer personal health records — a powerful, interactive tool that provides members with secure online access to their personal health history, consisting of claims data and self-entered information. In some cases, these personal health records are powered by technologies that continuously scan an individual’s health and claims information against highly respected sources of medical literature and can alert members and doctors about possible urgent situations and opportunities to improve care.
This kind of data mining and integration is invaluable to members because it allows them to become more informed about their own health care and actively participate in the health care process, which often leads to better health outcomes.
Employers are customers, too. What are insurers doing to better serve this group?
A select number of insurers have developed self-service, Web-based tools to make it easier for employers to update and change member enrollment information. These tools provide online access to member eligibility information for medical, dental, pharmacy, and life and disability coverage. They give customers the ability to expedite online member additions, terminations, life event changes and selection of benefits.
In addition, these solutions improve the accuracy of benefits selection, increase the speed with which benefits changes are made, eliminate the number of pending member enrollments [because of incomplete information] and increase the delivery speed of member ID cards. All of this has a direct, positive impact on customer and member satisfaction levels.
BILL BERENSON is senior vice president of Aetna's Small and Middle Market Business for the North Central Region. Reach him at (312) 928-3323 or email@example.com.
Stephen W. Lilienthal grew up getting used to having the weight
of a company on his back.
Working in his father’s delicatessen in New York City, one of his
jobs was to take the recyclables — then mostly glass bottles —
up the stairs to the street. The bags often weighed nearly as
much as young Lilienthal did, but he realized that if he could just
get ahold of the bag and get some momentum going, he’d be fine.
When Lilienthal took over as chairman and CEO of CNA
Financial Corp. in 2002, another heavy load awaited him: The
business and personal insurance giant was losing ground fast. By
2003, the company had a net loss of $1.4 billion, and Lilienthal
knew that getting his arms around the problems was going to
take several years.
CNA, an umbrella organization for a wide range of insurance
providers, had $12.3 billion in revenue in ’02 but was segmented into
different organizations with different data. A truth that just hadn’t
been processed among the nearly 10,000 employees was that the
company was in a nosedive.
“The hardest thing was getting recognition of the issues at hand,”
Lilienthal says. “There was not a common acceptance that the place
was struggling and had confronted some very serious and life-threatening issues.”
So he began taking those first momentum-building steps. He headed up the project to collect all the data to see the company’s mis-steps, and he began promoting and hiring the smartest, most direct
people he could find. Meanwhile, he tied the data coming in to uni-lateral goals for the company by making CNA’s success equal
Gather and communicate the facts
To a fact-driven leader like Lilienthal, there are two simple steps
to starting a turnaround: You acquire data, and you clearly communicate the problems to employees.
“You have to say you’re struggling,” he says. “It’s that acceptance,
then it’s understanding what success is, what are the metrics that
we’ll be using, and what’s the data that we’re going to need?”
To say you’re collecting data is one thing, but Lilienthal says you
have to realize that it’s a big task, and you will need to put things
together incrementally and make changes regularly as you go forward.
“My project for the first two or three years was building a system
that would let me get at the data and refine it, and we planned it out
over a two- or three-year period so the refinements would come at an
incremental basis,” he says. “It’s not like we could shut down the
place for a couple of years while we rebuilt; we were operating a $12
billion company on the fly and trying to make sure we had something left after we did all of our re-engineering.”
Not only does getting data take time, but you have to realize that
some of the old data may point you in the wrong direction. At CNA,
the data from one portion of the business wasn’t always qualified the
same as another portion.
“Data quality was a huge issue because when you silo an organization to the extent that CNA had, it fractured the database and
made it difficult to get data in a consistent fashion and deliver it in a
way that I could really get my arms around,” he says.
By making redefining the data job No. 1, Lilienthal spent vast
amounts of time digging in and seeing some big problems at CNA.
Though the truths were often a bit scary, he says negative data can
be paramount during a turnaround.
“In terms of the ability to have a strategic vision and to develop a plan,
that will drive the organization to the desired outcome,” he says.
As data came in, Lilienthal and his senior leaders released it
through every communication process possible. It explained where
the company was off-balance and helped justify future moves while
giving employees a new standard for success.
“We release things and make people aware of any changes,” he
says. “The less surprises we have, the more stable, motivated and
focused the employees are in terms of the task at hand rather than
the noise that surrounds it.”
The more CNA could get the information out, the more it helped
employees get behind the turnaround. A new vision was created,
and employees got a better understanding of how what they were
doing would rebuild the company.
“The concept of leadership very much gets focused on one person
having a great idea and yelling, ‘Charge!’ and often not having anybody to go with them,” Lilienthal says. “We expect our leaders to
communicate on a regular basis whether people are meeting the
objectives, and that’s fact-based and quantitatively based.
“What differentiates an organization in terms of how it’s able to
motivate, attract and retain people is how you do it. You can have
hard challenges and act in a humane way and achieve more because
people are not afraid. They understand fact-based expectations and
the consequences, but they’re not living in fear.”
Let smart people do the work
As data was coming in, Lilienthal used another lesson he learned
at his dad’s deli.
“My dad’s message to me was, ‘You’re never as smart as you could
be, and you’re never going to be smart enough,’ so if you can recognize that, then you are unafraid to surround yourself with smart people who will help you get it done,” he says.
With data being released incrementally, Lilienthal began to apply
that to CNA. Whenever it became time to bring in or promote a new
leader, he looked for someone smart who could learn from data and
communicate it clearly.
“One of the reasons you absolutely have to have the smartest and
the best people is that smart people and experienced people can
operate with data that’s not perfect,” Lilienthal says. “You get people
who look at data and say, ‘I understand where this is leading and
what we need to do.’ That’s key because I couldn’t sit here and just
say I’m going to wave a wand over this technology and it’s all going
to be fixed in two weeks.”
To make sure he was getting smart people, Lilienthal and his senior team reworked the way they hired. First, CNA expanded interviews to feature several leaders — including those from other
departments — talking to candidates to see if the person displayed
the ability to work with other teams.
Beyond that, an emphasis was placed on patience. Lilienthal
worked his way up the insurance chain from one chair to the next,
and he knows the industry smarts that come with logical progression.
“To get to senior levels within any organization, you need to understand the fundamentals,” he says. “In this day and age, people are
impatient, and a lot of companies take chances on people that
skipped one or several levels of experience. So you wind up with
compensation levels being out of whack and with a lot of variability
in performance because people skipped the fundamentals.”
Lilienthal says the final litmus test is letting the interviewee show
his or her smarts by describing clearly and without prodding how he
or she would be successful.
“We don’t tell them the expectations of the job, we give a broad-based description and I ask, ‘If you had the job tomorrow, what
would you do, how would you do it, and how would you structure
the organization?’” he says. “And then I shut up. The measure is
their ability to communicate in a very crisp and concise way exactly what is in their head, how they would do it, the people they
would hire and what the core functions are.
“Sometimes what you get is an inundation-type answer, where if
they keep talking long enough and say enough things, somewhere in
there is an answer. The people I want are direct, very focused, they
have the facts and maybe they’ve done it before. They express themselves well because if they can’t communicate, they can’t develop
followership — and if they can’t develop followership, nothing gets
The test for an employee’s intelligence may seem basic, but
Lilienthal says it’s often overlooked.
“You have to have A players,” he says. “If you lose a year in today’s
business world, that’s a generation. You lose two, and you can say
it’s over. Smart people equal smart business, and if you give them
good data and good solutions, you have a shot at winning. If you do
not have smart people, it does not matter what your product portfolio or data quality looks like — marginal people equal marginal
Tie employee efforts to compensation
Besides reconfiguring how data was collected and utilized,
Lilienthal made another blanket move that helped CNA’s turnaround
gain traction: He tied senior employees to the success of the company with compensation. That doesn’t mean you tie people to the
success of their department, but you make sure everyone is looking
out for the company as a whole.
“They have vertical responsibility, but they also have horizontal
responsibility to help all the other areas get better,” Lilienthal says.
“That means the finance department would have primary responsibility for financial functions but also have an ancillary responsibility
to help other departments if they need support.”
In order to get everyone thinking in that horizontal fashion, the compensation plans at CNA didn’t let any one department earn extra compensation if the company was struggling.
“Our compensation plans are skewed toward the success of the
company, not toward the success of a department,” he says. “If CNA
does well, everybody shares in it.”
It sounds basic enough, but Lilienthal says some employees have
a hard time grasping that one’s personal success doesn’t always
equal big benefits.
“People ask me, ‘Does that mean that if my staff department hits
their target that we’re not going to get compensated over and
above?’” he says. “And I say, ‘You’re absolutely right because it wasn’t good enough. Whatever you did didn’t work because the results
weren’t there for CNA.’”
The idea isn’t to punish your employees when the company struggles, but you have to make them recognize that there is an overall
business objective, and you make them care enough to help in any
way they can.
“You have to care about a place if you’re going to be part of a winning team,” he says. “Otherwise you’re just a robot, and robotic
behaviors ultimately fail because you wind up gravitating to the middle. And if you are in the middle, you are just dead meat — sharks
hit when you stop swimming, so you have to keep moving.
“If you take one of the guideposts that you use, compensation has to
be there. It is probably the simplest and crudest way to keep people
focused on the results of the organization, but it’s recognition of success or failure.”
Compensation doesn’t fill in all the gaps, but motivated employees
will do that on their own. At CNA, the new direction created by tying
compensation to success bred an atmosphere where employees
wanted to do more. CNA had a record year in 2006, posting $1.1 billion in net income on revenue of $10.4 billion.
“It’s not just about compensation; the organization starts to
achieve traction, and people like to be part of a winning team,” he
says. “As the company does better, and our reputation and financial
results start to push forward, people feel good. They feel that it’s a
good place to work, and they stay here despite being potentially
HOW TO REACH: CNA Financial Corp., (312) 822-5000 or www.cna.com
When it comes to workers’ compensation costs, even the most comprehensive safety programs won’t completely eliminate workplace accidents.
“When an injury happens on the job, many employers feel like they lose control,” says Jim Bowers, claims workers’ compensation large loss team lead at Westfield Insurance. “Through a partnership with your insurance carrier, you can develop a return-to-work program that will keep you in control.”
Smart Business spoke with Bowers about the positive impact of return-to-work programs on employers and their employees.
Why should businesses have return-to-work programs?
The National Council on Compensation Insurance (NCCI) indicates that average indemnity costs rose 5.5 percent in 2006, which was the largest increase in five years. This trend is expected to persist. At the same time, NCCI reports medical costs continue to increase at near double-digit rates.
The best way to prevent these workers’ compensation increases in your business is through a return-to-work program. The goal of these programs is to have employees with on-the-job injuries or illnesses back doing meaningful, productive work as soon as is safely possible. This proactive strategy can lead to:
- Reduced indemnity benefit costs
- Decreased overall recovery period and
medical costs in the typical claim
- Contained workers’ compensation insurance premiums
- Good will through reinforcing employer
concern for employees
- Reduced or eliminated costs associated
with the recruitment and hiring process
- Increased retention of a trained, skilled
and knowledgeable work force
- Maximized operational productivity
- Boosted employee morale
- Decreased likelihood of malingering
- Less claim litigation
Study information published by Workers Compensation Research Institute (WCRI) showed a successful return-to-work program could improve the average return-to-work outcome by as much as 15 weeks. Although benefit levels vary by state, at a weekly benefit level of $700, this translates into direct savings of $10,500. WCRI data also show that workers returning to work within one month are more likely to remain employed, while those who remain off work for more than six months are far more likely to remain unemployed long term.
Finally, WCRI study information documents a significant opportunity for business owners to realize substantial financial impact by adopting these systems. The costs associated with a valued employee not returning to work can quickly affect customer relationships, productivity and operating results, as well as insurance premiums.
What’s the benefit for the injured employee?
For the hurt worker, the advantages of a return-to-work program are just as significant as they are for the employer. Returning to safe, productive work as soon as possible provides the injured employee with these favorable outcomes:
- Improved self-esteem
- Decreased financial hardship
- Reduced stress, boredom and depression
- Less physical and mental deconditioning
- Alleviated concern about continued employment and employment benefits
- Shortened overall recovery time
- Continued positive relationships with fellow employees
How should organizations develop them?
First, organizational support and commitment need to exist so the program can have the intended impact. Businesses should then look for an insurance carrier to partner with long term that has the experience and resources to help them develop, implement and maintain an effective program. A meaningful program includes a few key steps:
- Develop a formal return-to-work policy
and document it in writing.
- Consider all applicable local, state and
federal requirements, such as ADA and
FMLA, and consult with the appropriate legal
counsel to confirm complete compliance.
- Designate a coordinator to be responsible for ongoing program administration.
- Build procedures for reporting injuries,
referring for medical care and communication between the involved parties.
- Create forms and documents, such as a
Job Analysis Form, a Return-to-Work
Coordination Sheet, a Return-to-Work
Telephone Log, a Sample Transitional Duty
Physician Questionnaire and a Sample
Transitional Duty Job Offer Letter.
- Complete a job analysis or a job description for each position. Consider transitional
duty opportunities that may exist in addition
to current positions.
- In states in which the employer has medical control, meet with your designated medical provider to review your program.
- Communicate your return-to-work program with all employees during the initial rollout, as part of the new hire process and at regular intervals on an ongoing basis.
JIM BOWERS, CPCU, AIC, AIM, SCLA, AIS, is the claims workers’ compensation large loss team lead at Westfield Insurance. Reach him at firstname.lastname@example.org or (330) 887-6529. Westfield Insurance provides commercial and personal insurance services to customers in 17 states. Represented by leading independent insurance agencies, the product we offer is peace of mind and our promise of protection is supported by a commitment to service excellence. For more information, visit www.westfieldinsurance.com.
Small and medium-sized business owners know how difficult it is to compete for talent with the “big boys” in the arena of employee benefits. However, what most business owners do not know is that there is a way to level the playing field.
HROs, or Human Resource Organizations, are fast becoming the best way for small and medium-sized businesses to compete by pooling together benefit packages, human resource services, payroll and retirement plans.
“HROs level the playing field,” says Mike Leach, Senior Vice President of Employco Group, an HRO that handles human resource outsourcing for 400 small and medium-sized Midwest companies.
“A small company can become a member of an HRO and offer its employees the same benefits as a Fortune 500 company.”
Smart Business spoke with Leach on how Human Resource Organizations operate and the benefits to becoming a member.
How does an HRO work?
It is an outsourcing vehicle to help reduce and stabilize labor costs by using the power of a large group. You can outsource several areas of a business, but there are four main areas: human resources, employee benefits, payroll and workers’ compensation. The smaller company falls under the umbrella of the HRO and is therefore able to offer discounted health, dental, auto insurance and even pet insurance to its employees. This is a huge advantage for smaller companies that must compete for the same shrinking talent pool.
The HRO takes on what the business owner does not have time to deal with — including HR, providing decent health coverage, claims management, payroll taxes, direct deposits, etc. It is a way to simplify a small business owner’s life by taking away the administrative burdens.
Why don’t more companies in the Chicago area utilize this service?
HROs have been around for a long time in Florida, Texas and California. In other areas of the country, it has required a fair amount of education for business owners to understand how HROs work. But, as the economics of business are changing because of the exorbitant cost of health care for employees, business owners quickly understand the benefits of belonging to an HRO.
What type of company is best suited for HROs?
There are two types: small businesses that are finding it a challenge to get decent health care for employees; the other is a business with high workers’ compensation costs. Companies usually range from 10 employees up to 500. HROs are very advantageous to start-up companies and franchise businesses that cannot manage HR and employee benefits on their own.
Clients come from various industries; however, there are certain industries that will not be accepted by most HROs because of the high risks, such as roofing companies or ammunitions factories, to name a few. Companies must apply to the firm and, honestly, many are turned down. The business must be well managed to participate in an HRO and add to the stability of a group.
How much does it cost to participate in an HRO?
HROs charge a percentage of a business’s payroll. They often conduct an extensive analysis of a business’s needs in order for the costs to break even with the savings. Most firms have flexible programs — and employers can often pick and choose the programs to meet the ‘no cost’ goal.
What kind of company would not benefit from using an HRO?
Companies that are too large — over 500 employees — often can get good benefit deals on their own and don’t have a need to belong to an HRO. Very small companies — with less than 10 people — can most certainly use the service, but not all HROs will take on such small operations.
What are the steps to selecting a good HRO?1. Look for stability. Select a firm that has a good track record and has been in business at least 10 years.
2. Go local. An HRO that is in your city or region has its advantages since paychecks need to get to employees on time.
3. Ask for, and check, client references.
4.Get flexibility. If you are a small business owner, you need to be able to start small and have the HRO grow along with your needs.
MIKE LEACH is Senior Vice President, Employco Group (www.Employco.com), 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 mleach@Employco.com.
Remo Picchietti hates being kept in the dark. Take air travel, for instance: “There’s nothing more frustrating than sitting on the tarmac not moving and not knowing why,” says the CEO of World Commerce Services LLC. “All the pilot has to do is get on the PA system and tell us why we’re not moving.”
To avoid similar frustration at the 54-employee transportation management and consultation company, Picchietti is actively engaged in client transactions in order to disclose changes and anticipate specific needs.
“It’s all about sharing the information,” he says.
Those airlines should take note — from 2004 to 2006, Picchietti’s emphasis on open communication has helped the company post increasing revenue, from $55 million in 2004 to $65 million in 2005 and $80 million in 2006 before selling it to Wako Logistics Group Inc. in 2007.
Smart Business spoke with Picchietti about how to meet each customer’s unique needs.
Q. How can leaders anticipate their clients’ changing needs?
My advice is always to keep the customer completely up to date, good news or bad news, because then adjustments can be made accordingly, and then there are no surprises.
It’s all about listening, to begin with. One customer is going to certainly have a different need [from another]. Listen to that customer, and try to tailor to their needs.
The CEO really has to get his or her hands dirty. That’s the only way that I can properly lead this business is if I know what is happening within our industries and with our customers.
I am quite often on the road with salespeople, visiting existing or potential customers.
That is a competitive advantage against the big boys and girls of the industry.
If somebody is having a problem or a challenge, they have my direct-line number, they have my cell phone number, and, in some cases, they have my home number.
If they have a problem with one of the larger service providers, they have an 800 number, and they don’t know who they’re going to speak with.
Q. When tailoring services to a given customer’s needs, how do you avoid overpromising?
There are some companies in any industry that attempt to be everything to everyone. Quite often, that’s impossible.
It’s only going to lead to disappointing the customer and not winning that customer.
Our philosophy is consistent and constant sharing of what our abilities are. We don’t want to misguide or even misspeak on either side. We want them to know everything we can do, but in no way, shape or form can or should we make promises on what we might be able to do because that will only lead to disappointment on all sides.
Q. Have you ever turned down customers because they were asking for too much?
Absolutely. It’s so counterintuitive, and it’s probably one of the most difficult conversations I have with key staff, managers and salespeople — to actually make the decision to walk away from a customer.
That needs to be a key component of your strategy — the willingness and hopefully the capability of walking away from a customer if you can’t properly service that customer.
Q. What is the benefit of communicating that to your employees?
If they were attempting to take care of the needs of a customer for whom we can’t service properly, so much time and effort and energy is taken in trying to do something that we can’t do or something that they want us to do that we won’t do.
That’s time spent away from those customers that need our services elsewhere. With staff, they come to understand that, in the long run, (it’s better to) properly service the nine customers that we can versus serving just the one that has expectations beyond what we’re telling them we can do.
Q. How do you know when to expand offerings that consistently limit your ability to serve customers?
Counsel very closely with customers and attempt to anticipate what they are going to need.
In some cases, we are invited by the customer to be involved in their strategic planning.
These are wonderful customers that want their vendors to know well in advance of what their plans are so that everybody can make the proper adjustments.
If there’s expectation or anticipation that a vendor is not going to be able to keep up with us, then we have to make a different decision.
Therefore, when I’m on the other side and I’m promoting our services to our customers, I look at myself from their eyes. Only if I’m going to be able to be flexible and adjust are they going to stick with me.
HOW TO REACH: World Commerce Services LLC, (888) 873-9271 or www.shipwcs.com