Parties often have lengthy negotiations before they enter into a final written contract. Various promises and representations are made and relied on during those negotiations.
“Be sure to incorporate all important terms and promises into the final written contract,” says Shelby Drury, of counsel with Novack and Macey LLP. “Later, if there is a dispute that results in litigation about the contract, the court is unlikely to allow either party to introduce evidence of promises or representations that are not stated in the written contract.”
Smart Business spoke with Drury about the admissibility of promises or agreements that are not stated in the final, written contract, and how to draft a contract in a way that makes it clear whether or not the parties intend to incorporate prior or contemporaneous agreements.
How do courts determine the contracting parties’ intent?
Illinois courts generally follow the ‘four corners rule,’ which provides that a written contract speaks for itself and the intent of the parties is to be determined from the language used in the contract without looking at outside evidence.
What if a party relied on earlier promises or agreements that are not expressly stated in the final, written contract?
Generally, parties are bound by the contract as written and may not bring in evidence of additional promises or agreements. The ‘parol evidence rule’ bars evidence of prior or contemporaneous oral or written agreements and discussions or promises offered to explain or contradict the plain, unambiguous terms of a written contract. Significantly, the rule bars evidence of promises or agreements that contradict a written contract as well as evidence of additional consistent terms. The reason for this was explained by the Illinois Supreme Court, which stated, ‘when parties sign a memorandum expressing all the terms essential to a complete agreement, they are to be protected against the doubtful veracity of the interested witnesses and the uncertain memory of disinterested witnesses’ concerning its terms.
Are there exceptions to the parol evidence rule?
Yes. If the court finds that the contract is unclear or ambiguous because its language is susceptible to more than one meaning, then the court may allow parol evidence to help resolve the ambiguity. Also, if the contract is incomplete, the court may allow evidence of additional consistent terms to supplement or explain it. Additional exceptions apply to contracts that are covered by the Uniform Commercial Code.
Is there anything that contracting parties can do for extra assurance that prior agreements or promises will not be admissible in a lawsuit concerning the contract?
It is wise to include an ‘integration clause’ in the final contract to make clear that the parties agree that:
1) The contract is complete.
2) Negotiations and representations made prior to the written contract are not part of the agreement.
3) The parties intend that the contract be interpreted solely based on its plain language.
A typical integration clause provides: ‘This agreement constitutes the entire understanding between the parties hereto and supersedes and cancels all prior written and oral negotiations, understandings, representations or agreements with respect to the subject matter of this agreement.’
What if the parties want to include terms not included in the contract?
In that case, the parties should expressly incorporate such other agreements by reference in the final, written contract. They should do this by identifying the title and date of such agreements and expressly stating in the final, written contract that such agreements are incorporated by reference.
Shelby Drury is of counsel at Novack and Macey LLP. Reach her at (312) 419-6900 or firstname.lastname@example.org.
Social media: Follow us on Twitter @Novack_Macey.
Insights Legal Affairs is brought to you by Novack and Macey LLP
A company’s mission can be a very powerful tool for building employee engagement and fostering a winning culture. But that can’t be accomplished simply with a mission statement posted on a wall.
“It’s not so much about creating a statement. A company mission lives and breathes, whether it’s documented or not,” says Greg Stobbe, SPHR, J.D., Chief HR Officer at Benefitdecisions, Inc. “The mission is what drives the culture, which is what drives the organization.”
Smart Business spoke with Stobbe about the importance of having a mission and the impact it can have throughout your organization.
What is a company mission?
There’s a unique answer for every organization, but the mission is the what, why, who and how of the company; it’s the reason it exists. The mission isn’t developed — it’s already there, you just need to uncover it.
The mission is the organization’s ultimate goal, if you don’t have one you can’t truly define success or failure. It’s like a ship without a navigational system, you’re not going to know your course or if you’ve reached your destination because you don’t have one.
What are the benefits of having a mission?
The benefits are directly proportionate to the effort and thought that went into designing, implementing and maintaining focus on tracking the mission. There will not be any benefits if it’s just a statement, whether oral or written, and nobody pays attention to it.
Time spent on devising, developing and articulating a mission is a savvy investment in human capital that will pay dividends in the financial success of the organization. Employees who feel invested, who understand their roles, become engaged and emotionally attached. It would be very difficult for someone to be emotionally attached to an organization unless the person knew the mission and it resonated with him or her.
With the economy improving, employees might be apt to look at a position elsewhere for more pay. But when you have employees who are emotionally invested, their first motivation is not compensation. You can do more with a smaller group of employees who are passionate about the cause than with a larger group who show up for the paycheck. A passionate, engaged workforce can accomplish great things and that all goes back to the power of a company mission and how that affects employee engagement.
How is the mission articulated?
You need to work with employees on establishing the mission. It’s not like the secret recipe of Coca-Cola that’s kept in a vault in Atlanta and only three people know it. The mission drives the culture, and you should know what it is when you walk into a company’s headquarters. Once you know the company mission, everyone should know it and live it. If you approach any employee, he or she should be able to articulate what the organization's overall mission is and how his or her contributions are aligned with it.
What are the challenges faced in the process of developing the mission?
First and foremost, the mission has to come from the top — the CEO and/or the board of directors. They need to be stewards of the process. Companies can hire a consultant to put together a mission statement, but if that’s just because the CEO wants to check a box, it’s not going to produce any benefits. Companies with winning cultures are the ones where senior managers embody the mission. Through their example, it cascades down to all levels so that everyone, from the person at the front desk to the clerk in accounting, up through the C-suite knows the mission, and it’s something people live every day.
How is the mission accomplished?
Theoretically, if a company achieved its mission, the reason for the company ‘to be’ would no longer exist. Therefore, it is important to carefully consider your mission and thoughtfully craft it. The difference between the missions of ‘to feed hungry people’ versus ‘to eliminate hunger’ is evident. The former being an event, and the latter a true mission. An engaged workforce will ‘reboot’ each and every day and strive to achieve the mission.
Greg Stobbe, SPHR, J.D., is Chief HR Officer at Benefitdecisions, Inc. Reach him at (312) 376-0456 or email@example.com.
Insights Employee Benefits is brought to you by Benefitdecisions, Inc.
Small Business Administration (SBA) loan programs can fill needs that traditional bank lending does not.
“The key is going to a bank that is a preferred lender and has dedicated resources or an SBA specialist who really understands the eligibility requirements and programs,” says Tom Doherty, managing director and head of Business Banking at The PrivateBank.
Smart Business spoke with Doherty about how SBA loans can give your business access to vital capital.
How does SBA lending benefit businesses?
What the SBA offers fits into three categories:
• Collateral shortfall — Banks have certain advance rates on the collateral they lend against. If there’s a collateral shortfall, the SBA can provide a guarantee to enhance the financing.
• Lack of equity — Banks have down payment requirements, but the SBA will guarantee loans to allow for a smaller equity injection by the business owner.
• Need for extended terms — If the borrower needs to extend the amortization term of a loan beyond traditional bank financing, the SBA will step in. If, for example, you need financing for a piece of equipment, the bank might offer five years on the loan term. The SBA has a program where you could go seven to 10 years on that deal.
What are some misunderstandings about SBA lending?
What the SBA considers a small business differs by industry, and although there is no minimum, it goes larger than most would think. Visit www.sba.gov/content/small-business-size-standards to find qualifying cutoffs. The standards are expressed in either millions of dollars or number of employees. In some instances, a company can still qualify with 1,500 employees.
Then, there’s a perception that SBA is a lender of last resort. However, the SBA, like a bank, looks at cash flow. Recently, businesses have been returning to profit on their financial statements, so more are eligible for SBA programs.
Many borrowers also think SBA lending is a tedious process with a lot of paperwork. In part, this misconception may come when borrowers deal with an inexperienced lender. But the SBA has listened, too, and streamlined its processes, such as the small loan advantage program, which lends up to $350,000 on a very quick turnaround.
Are certain SBA loans not as well known?
The SBA’s 7(a) loan is the general flagship program with which most banks and borrowers are familiar. The SBA 504 loan program is a little lesser known. It applies when, for example, you want to buy a piece of real estate and put 10 percent down. The bank then takes 50 percent of the loan, and a local certified development company sells the remaining 40 percent as a debenture on the secondary market. Bottom line, it can give the borrower a 20-year fixed rate deal that’s not available conventionally.
What should a borrower know about the SBA loan process?
The SBA website, www.sba.gov, is a great place to find background on the different programs. But the best option is to go to a bank that is a preferred lender with a dedicated SBA specialist. As part of the application, there are SBA requirements to be met and documents to be completed. Many times, lenders don’t do enough of these on a regular basis to have expertise in putting the package together.
Once the application is complete, the loan goes through the normal course of underwriting because the SBA, in essence, has delegated the approval authority to that preferred lender.
What would allow more SBA lending?
Under 504, as part of the stimulus package, the government allowed banks to refinance existing real estate debt where businesses could improve their terms or lock in a longer fixed rate. However, this ended in September 2012 and the level of 504 lending has dropped significantly.
The new congressional budget proposal has suggested this refinancing provision be extended out to September 2014. This provision is something small business owners should push for and keep an eye on.
Tom Doherty is Managing Director and head of Business Banking at The PrivateBank. Reach him at (847) 920-3180 or firstname.lastname@example.org.
Website: Learn more about financing opportunities for small businesses through our small business banking page at http://www.theprivatebank.com.
Insights Banking is brought to you by The PrivateBank
The historical benefits of self-funded health insurance — lower costs, more flexibility and control — are even more appealing when added to the ability to avoid many Patient Protection and Affordable Care Act (PPACA) rules and expected premium increases.
As a result, there’s growing interest in self-funding. A March study by Munich Health North America of 326 executives from health plans, HMOs and insurance brokerages, found 82 percent of respondents saw more interest in self-funding, with nearly one-third seeing significant interest. The survey also found nearly 70 percent of insurance organizations plan to increase self-funding offerings during the next year.
“The PPACA has shed a light on self-funding because it created several new reasons why self-funding or partial self-funding is attractive,” says Mark Haegele, director, sales and account management, at HealthLink.
Smart Business spoke with Haegele about the reasons why self-funded health insurance is getting so much employer interest.
What historical self-funding benefits remain relevant today?
Historically, self-funded employers avoid the risk charge — typically 2 to 4 percent of the total premium — that all insurers build into premiums. Self-funded plans also avoid costs from insurer profit; premium taxes, usually 1 to 3 percent, depending on the state; and the insurance company’s fixed operating costs. A fully insured plan can include fixed operating costs that are 40 to 50 percent higher than a partially self-funded plan with a third party administrator.
Plan flexibility and control is the other overarching benefit of self-funding or partially self-funding. You don’t need to follow state coverage mandates for areas like autism, bariatric surgery and infertility treatments. Employers can customize plans based on member population needs.
Smaller, self-funded employers also receive detailed member data, resulting in the ability to make informed decisions. With the help of consultants and brokers, they can manage their population as much or as little as they want.
Why is health data more critical now?
The health care system is moving from a fee-for-service to a performance-based model, so transparency and information are more critical. If you expect members to make good purchasing choices, then employers and their members must know what services cost. This transparency is one of the staples of a self-funded plan. Employers know what services members partake in, the plan risk factors, what care those with chronic illnesses receive, etc.
What is drawing employers to self-funding because of the PPACA?
A number of pieces from the PPACA aren’t required under self-funding, including the:
• $8 billion insurer tax, currently calculated to be passed onto employers as a 4- to 6-percentage point increase in premiums.
• Medical loss ratio requirements, which force profitable insurance companies to reduce administrative expenses and ultimately lower service levels.
• Community rating rules that group small employers by geography, age, family composition and tobacco use. Thus, healthy, younger insurance groups will pay more — estimated to be 60 to 140 percent — while older, less healthy member groups pay less.
• Minimum essential benefits, where insurance companies are required to limit annual deductibles.
How are PPACA-driven premium increases already factoring in?
Although the PPACA’s community rating rules, insurance tax and minimum essential benefits don’t begin until Jan. 1, 2014, the repercussions have started. Some carriers are including extra 2013 premium increases. For example, rather than a 4 percent premium increase now, insurers might try to get employers to accept a 20 percent increase this year. In addition, despite state pushback, many insurance companies are considering offering an early renewal — changing the plan effective date from Jan. 1, 2014 to Dec. 1, 2013, for instance — to let employers temporarily avoid increases. However, those with a self-funded plan never have to worry about these costs.
Mark Haegele is director of sales and account management at HealthLink. Reach him at (314) 753-2100 or email@example.com.
Video: Watch our videos, “Saving Money Through Self-Funding Parts 1 & 2.”
Insights Health Care is brought to you by HealthLink
One of the primary functions of management is to understand what is actually going on in an organization, as opposed to what is supposed to be happening. However, for monitoring to be truly effective, there must first be good communication, a culture that promotes ethical behavior and a solid understanding of the particular organization’s risk factors.
“Organizational monitoring is not just about protecting a company from fraud,” says James P. Martin, CMA, CIA, CFE, managing director at Cendrowski Corporate Advisors LLC. “Monitoring systems can help ensure quality, that customer needs are being met and that the company is doing everything else that is necessary to achieve its goals.”
Smart Business spoke with Martin about how management can understand what is truly going on within the business.
What are the steps to an effective organizational monitoring plan?
First, the company must clearly define its goals. What is it trying to accomplish and how will it accomplish those goals? Second, what risks does it face? What can get in the way of the company accomplishing those goals? Third, what type of early warning system does the company need? How will it know if and when a risk has occurred or if someone has not performed as expected?
What impacts are electronic monitoring systems having?
Electronic monitoring systems have been around awhile but are drawing increased attention now with more severe penalties and potential outcomes for violations under Sarbanes-Oxley. Electronic monitoring systems are similar to a car’s dashboard. When trigger points, predefined events or hurdles are detected, ‘warning lights’ appear on the manager’s desktop.
While electronic monitoring is useful, it cannot — and should not — replace human involvement. The most important thing managers can do is be involved with operations on a day-to-day basis by walking around and talking with employees, holding regular meetings, receiving regular reports and phone calls, etc.
How are trigger points identified?
An organizational assessment of risk will help management identify areas that have more robust monitoring needs. Examples might include finance, everything related to potential issues arising with cash, or vendor management, such as notification every time a vendor’s address changes. Triggers also can monitor quality metrics, supply chain issues, personnel issues, etc. The system should be proactive so that management can address issues before they get out of control, preventing a crisis management situation.
It’s important to note that a monitoring system is more holistic than the definition of trigger points. The single biggest factor is people — what they will do in a given situation. The overall culture needs good communication systems and a clear understanding of management expectations.
Monitoring techniques need to continuously adapt to consider potential changes in behavior. There are a lot of examples of companies that had defined monitoring procedures, but creative people were able to identify and exploit areas that were not considered in those procedures.
How do private equity firms monitor the activities of the companies they invest in?
Private equity firms have to monitor the operations of the portfolio companies, not to the extent of detail that internal management does, but they do need to define risk. These companies have expectations, and if they identify certain events on the horizon, they can be prepared to take certain actions. Like the companies they monitor, private equity firms also must define their own particular trigger points.
Any tips for improving a system?
Make sure you’re monitoring the right areas. There may be areas you’ve historically monitored that have now changed, which is where the internal audit function comes in. The board’s audit committee must understand what is critical for the upcoming year. In examining the ‘audit universe’ — the model that defines every auditable event within the organization — areas of risk are identified, and then prioritized for audit. It's management’s responsibility to determine how many resources to invest in each given area of risk.
James P. Martin, CMA, CIA, CFE is managing director at Cendrowski Corporate Advisors LLC. Reach him at (866) 717-1607 or firstname.lastname@example.org.
Insights Accounting is brought to you by Cendrowski Corporate Advisors LLC
When you go to the dictionary to look for the definition of focus, you will see such lofty things as:
“the point where the geometrical lines or their prolongations conforming to the rays diverging from or converging toward another point intersect and give rise to an image after reflection by a mirror or refraction by a lens or optical system.”
“a point at which rays (as of light, heat, or sound) converge or from which they diverge or appear to diverge.”
Luckily, for those of us that are not physicists, I did find one definition that makes sense when trying to understand the meaning of focus:
“a point of concentration or directed attention.”
What do you concentrate on the most with your business? Where do you direct your attention? These are the questions of focus. Over the years in my coaching and speaking, I have found them to be of utmost importance to the success of those in the workplace.
Let's look at 5 tips for improving your focus as a busy professional.
1. Stop doing what you are doing.
If you struggle with focus on a daily basis and you continue to think and act in the same manner – you need to stop and stop right now.
The quote that is often attributed to Albert Einstein speaks to us here: “Insanity is doing the same thing over and over again and expecting different results.”
Stop. Breathe. Assess. Evaluate.
This leads us to our second tip.
2. Determine what needs your concentration and attention.
In the workplace, too many people “fly by the seat of their pants” when it comes to what needs to get done. In most instances, it is pure laziness that sustains this way of doing things. It takes work to stay focused and be successful.
As I said above, you will need to assess and evaluate in order to determine what needs your directed attention. Hopefully you have goals in place for yourself and your team. Let those goals be the defining line for your focus.
This leads us to our third tip for improving your focus as a busy professional.
3. Clear all unnecessary distractions.
Once you have determined the areas and actions that need your concentration, it is time to laser target your focus. In order to do this, you must clear away anything that would disrupt, distract or lessen your laser focus.
- Cell phones
- Social Media
- Instant Messaging
- Tasks that could be delegated
Make a list of all the things that you must stop doing in order to stay focused. This is the opposite of the normal to-do list. It will make clear what needs to be cut out from your daily routine.
Some distractions are going to be hard to give up because they have imbedded themselves as habits – and habits take time to change. Development of laser-targeted focus does not happen overnight, but it must be practiced daily in order to achieve its mastery.
4. Work in 60- to 90-minute blocks of time and provide yourself a reward.
Do not expect too much from your focus. Saying that you are going “to work until it's done” is an overload for most of us. It is also too vague and not goal-oriented.
Set aside a specific amount of time for a designated task. Studies have shown that we do well when we block off 60- or 90- minute time frames. This allows you to see the light at the end of the tunnel and know that a break is coming.
As we work, our alertness drops off, increasing the lure of distractions. Set a timer and take a break at the end of each cycle.
How about a reward? We all like rewards in one form or another – even if we are the one giving the reward. Say to yourself, “After this 90 minute session of work I am going to take a 10 minute break and walk around the building.”
Other possible rewards are:
- A snack (be careful not to overindulge and get sleepy)
- Text messaging
- Fresh air
5. Learn to say no.
I mentioned delegated tasks earlier. Many busy professionals struggle with delegation. We tend to hold the old attitude of“if you want something done right, do it yourself.”This might be true in the here and now, but in the long run it will lead to lack of focus and, ultimately, exhaustion.
Learning to delegate is a form of learning to say no. “No, not me, not now.” When we learn to say no, we are truly saying yes to our focus.
There are many other tips that one can use to stay focused. These are the five that I have found to be the most useful. Take the time today to try one, two or all of them. Your goals deserve your focus. Your team deserves your focus. You deserve it as well.
DeLores Pressley, motivational speaker and personal power expert, is one of the most respected and sought-after experts on success, motivation, confidence and personal power. She is an international keynote speaker, author, life coach and the founder of the Born Successful Institute and DeLores Pressley Worldwide. She is the author of “Oh Yes You Can,” “Clean Out the Closet of Your Life” and “Believe in the Power of You.” Contact her via email at email@example.com or visit her website at www.delorespressley.com.
The ultimate endgame in any marketing strategy is conversion.
While conversion means different things to different industry sectors, the actions of reaching conversion are universal. In retail, for example, it means searching for and buying a specific product online or in a store. In business-to-business, conversion could be when a prospective client reaches out with their contact information or and requests more information to engage with your services.
Conversion is a multitiered journey that consists of navigating through three steps — awareness, interest and engagement.
Awareness, essentially developing a brand message that resonates across all channels (such as Web, offline, print, mobile and video) is relatively straightforward if you have the proper brand strategy. You must define two things: who you are and what it is you’re trying to say.
However, converting awareness into interest, and eventually engagement, is where organizations most often lose their way.
I personally see this problem regularly manifest itself during a review of an organization’s website. Often, there are too many words and screens of text to sift through, and those words are either clichés or don’t really mean anything to the organization’s prospective — or current — clients.
The bottom line: The organization gained my awareness but lost my interest. Conversion is less likely a potential outcome.
This, however, is easily solvable.
One way to turn awareness into interest is by creating more consumable content, which is defined as providing, in a simple and nonoverwhelming way, the key points that will grab someone’s attention to learn more about what you do and what you offer.
Think of it this way: Develop clean, concise copy that clearly defines what you do and why you’re different from the competition and that articulates your value proposition, without being wordy. You should not have to scroll down more than one time on a Web page to accomplish this goal.
When you look at traditional advertising, the same problem exists. Review your current ads and ask yourself these questions: Are you running an ad that truly reflects your brand? Does it articulate your intended message and your brand through a series of a few choice words? And is there a defined call to action?
Now consider how you’re messaging to your prospects live, such as through your organization’s presence at trade shows.
At your booth, are you presenting a video reel that drones on for five or 10 minutes and includes every aspect of your company? Why waste a lot of money producing a corporate video that is too long, boring and that no one will watch? You will never see an ROI for your efforts.
Instead, determine whether you can develop a short experience at your booth that captures your desired audience’s attention. For example, combine a simple one-page handout with a brief video — no more than a minute long — that uses powerful imagery, focused messaging on your differentiators and a series of client icons that demonstrate who you work with.
You can always expand upon that brief overview video through a series of short complementary videos that are focused and highlight different segments of what your organization does and how it does it.
Let your prospect choose which area of your business he or she is interested in and wants to learn more about — whether it’s through your website, in print or in person. When someone chooses to learn more, it’s a safe bet that he or she is engaged.
The initial goal of all of this should be to generate interest rather than make a sale. The time for conversion is later, but you’ll never get there if you don’t generate interest and engagement first.
Dave Fazekas is vice president of digital marketing for Smart Business Network. Reach him at firstname.lastname@example.org or (440) 250-7056.
What if the leaders at IBM had stuck to making punch card equipment? What if after making the transition to the personal computer market, they had stayed entrenched there?
Punch card equipment is long gone, and with recent PC sales numbers significantly in decline, the leaders of IBM have stayed ahead of monumental changes in the market and kept the company moving forward for decades.
An open mind.
Too often, CEOs place self-imposed limitations on themselves, both in business and personally. The status quo becomes acceptable and new ideas become verboten. When this happens, growth is stifled — a dangerous situation. Many business gurus will tell you that you are either growing or dying. A stagnant company sees itself as not losing ground, but as its competitors move forward, its relative position in the market fades, even though it views itself as standing firm.
The only way to avoid this is to keep an open mind. CEOs need to constantly grow and learn from a personal perspective — so they constantly improve their leadership and people skills — and also from a business perspective — so new ideas are allowed to push the organization forward.
While there are many approaches to keeping an open mind, here are three ways to get started.
- Embrace trial-and-error. Finding success might require experiencing a dozen failures. Whether it’s a new way of running a meeting or trying to find the next innovative product, accept the fact that success has a cost. Don’t eliminate an idea because it goes against what the company has always done.
- Seek knowledge. As a professional, a CEO should never stop learning. There should always be a curiosity about your industry that drives you to seek an understanding of the latest trends and strategies, but you should be constantly looking at other industries as well. Often, best practices in one industry can be applied to another. If you are the first to make the move, it will give you an advantage over the competition.
- Find a mentor. The right mentor can make you aware of your blind spots. Without someone to offer a different perspective, it is easy to fall into familiar ways of thinking, thus stifling the chance of new ideas taking root.
The longer a CEO runs a business, the easier it is to fall into the trap of doing what worked yesterday or last week. When this goes on long enough, the business ends up with an overall strategy that is several years old.
You would never say, “Let’s use the same strategy we developed five years ago,” but because of a closed mind, that’s what ends up happening by default.
Be vigilant about your search for knowledge. In the end, it will make you a better leader and improve your company’s chances for success.
Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.
When you flip a light switch, turn on the water or start your car, you expect reliability every time. For employees, it’s just as mandatory that they be reliable, by showing up on time, completing the tasks at hand and basically doing their jobs time and time again.
By the same token, your employees expect you, as their leader, to be reliable. This means when you say you’ll do something, you do it, when they need direction, you provide it, and when the chips are down, you’ll be there for them.
Being reliable is good, but being too predictable — not always. In fact, being too conventional can make your company a “me, too” organization that only reacts to what the competition does, rather than taking the lead. It can be a bit more daring to set the trend, but if managed and controlled correctly, the rewards dramatically outweigh the risks.
Warning signs that your leadership has become too predictable occur when your subordinates begin finishing your sentences and know what you will think and say before you utter that first word on just about every topic. Compounding the problem is when your employees begin to perpetuate the negative effect of you being so darn predicable by believing it themselves and telling others, “Don’t even think about that; there’s no point bringing up your idea about X, Y or Z because the boss will shoot you down before you take your next breath.” This bridles creativity and stifles people’s thinking and stretching for new ideas.
It’s human nature for subordinates to want to please the chief. Under the right circumstances, that can be good, particularly if you are the chief. But it can be a very bad thing if you are looking for fresh concepts that have never before been run up the flagpole.
Uniqueness is the foundation of innovation and the catalyst for breaking new ground. George Bernard Shaw, the noted Irish playwright and co-founder of the London School of Economics, characterized innovation best when he wrote: “Some look at things that are and ask why. I dream of things that never were and ask why not?”
The “why not” portion of this quote is the lifeblood of every organization. A status quo attitude can ultimately do a company in, as it will just be a matter of time until somebody finds a better way.
As a leader, the first step in motivating people to reach higher is to dispel the image that you’re exclusively a predictable, same-old, same-old type of executive who wants things a certain way every time. There are dozens of signals that a boss can give to alter a long-standing image and dispel entrenched mindsets. You can always have a midlife crisis and show up at work in a Porsche or Ferrari instead of your unremarkable Buick. This flash of flamboyance will certainly get people questioning what they thought was sacrosanct about you. The cool car might also be a lot of fun; however, the theatrics might be a bit over the top for some, not to mention a costly stage prop just to send a message.
A better solution is to begin modifying how you interface with your team, how you answer inquiries from them and, most importantly, how to ask open-ended questions that are not your typical, “How do we do this or that?”
Another technique is when somebody begins to answer your question, before you’ve finished asking, particularly in a meeting, abruptly interrupt the person. Next, throw him off guard by stating, “don’t tell us what we already know.” Instead, assert that you’re looking for ideas about how to reinvent whatever it is you want reinvented or improved in giant steps as opposed to evolutionary baby steps. If you’re feeling particularly bold, for emphasis, try abruptly just getting up and walking out of the meeting. In short order, your associates will start thinking differently. They’ll cease providing you with the answers they think you want. Some players will hate the new you, but the good ones will rise to the occasion and sharpen their games.
If you want reliability, flip the light switch. To jump-start innovation, you could begin driving that head-turning sports car. Better yet, get your team thinking by how you ask and answer questions and by not always being 100 percent predictable but always reliable.
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at firstname.lastname@example.org.
A unique new book with an unorthodox, yet proven approach to achieving extraordinary success.
What does it take to grow rapidly and effectively from mind to market?
This book offers an unconventional philosophy for starting and building a business that exceeds your own expectations.
Beating the competition is never easy. That’s why it requires a benevolent dictator.
Published by John Wiley & Sons. AVAILABLE NOW! Order online now at: www.thebenevolentdictator.biz
The enterprise risk management process helps businesses identify hidden dangers. If used correctly, it could also uncover opportunity. James P. Martin, managing director for Cendrowski Corporate Advisors LLC, shares how risk management is beneficial.
Q. How might risk affect company value?
A. Risks are uncertainties in the business environment. Alone, they do not degrade a company’s value. Degradation of value often comes from management making poor decisions based on incomplete or erroneous information. Sometimes, this is from long-standing assumptions about the business or the competitive environment that are not founded in fact.
The objective of enterprise risk management is to engage the entire organization in a continuous and proactive discussion about risk, about what could go wrong, and to proactively plan to mitigate risk and perhaps even capitalize on risk events.
When implementing an enterprise risk management process, it’s important to include participants from all levels of the organization — people throughout the organization will have a different perspective on risk and about how things really operate. Senior management will tend to focus on strategic issues, while process operators will tend to focus on process anomalies and nonconformances. The enterprise risk management process should bring these perspectives together.
For example, senior management may have a strategic initiative to increase customer satisfaction scores by a certain percent. The process operators with direct knowledge of customer order fulfillment, including knowledge of complaints and processing issues, would have vital information to help accomplish the strategic initiative. Too often, without a process to gather, analyze and organize such information, companies overlook the wealth of information they have within their own organization. The enterprise risk management system should help facilitate this information flow and allow everyone within the organization to understand their role in accomplishing organizational objectives.
James P. Martin, CMA, CIA, CFE, is managing director for Cendrowski Corporate Advisors LLC. Reach him at (866) 717-1607 or email@example.com.