China’s economic growth has been praised by some, feared by others. But while the strength of the Chinese economy represents a paradigm shift in the global business environment, U.S. businesses should not fear the implications of the Chinese boom.
Instead, American managers should work to embrace the benefits that Chinese economic growth can offer their businesses, and begin to make peace with this burgeoning giant.
If China is the country that everyone is talking about, outsourcing is usually the theme of the conversation. More and more businesses are sourcing products from China, where labor is abundant and relatively inexpensive, and manufacturing processes have been refined by increased market demand.
Rising pricing pressures have increased global competition, creating a race to the bottom line and forcing companies to procure products from the lowest cost sources globally.
China has become a recognized powerhouse in global production and supply chain operations. Sourcing product from China allows companies to obtain savings of 30 percent to 50 percent, ultimately driving down prices and making businesses more competitive.
This downward pressure on prices delivers tangible savings to a company’s bottom line, all the while improving cost structures and making goods more affordable. The end result? Increased profits for businesses and abundant choices for consumers.
The benefits of implementing a sourcing initiative are clear, but oftentimes managers are unsure of where to begin. Luckily, there are three steps businesses can follow to help simplify the process and maximize their return.
- Step one: Start small. All too often, businesses that have decided to source products from China begin with their most popular or expensive product.
But business owners should recognize that there is a learning curve associated with sourcing products from global markets, and should begin their sourcing experiment with a simple product to test the initiative and make adjustments if needed.
- Step two: Find the right partner. For businesses that choose not to establish a Greenfield manufacturing operation or acquire an existing manufacturer, choosing a suitable agent or sourcing office is the business equivalent of finding a spouse; it is one of the most important decisions a business can make.
When choosing a supplier, managers should discuss quality standards, lead times, procurement practices and payment terms at length with any potential business partners. Factors such as duties and tariffs, as well as transportation and freight forwarding costs, should also be considered.
Outsourcing part of a business’s production process or supply chain can carry costs unfamiliar to U.S. businesses, and managers should take care to calculate and analyze these costs before deciding on specific business partners.
- Step three: Measure performance. After managers have outlined the sourcing strategy, they should establish a system to monitor, record and report the results of their sourcing experiment. They should monitor product quality, as well as the movement of products through the supply chain, in order to identify areas in need of improvement.
Each business partner should understand its role and responsibilities, and the performance of the global sourcing initiative should be tracked and discussed. Where have cost reductions been attained? What impact has the sourcing initiative had on product lead times and inventory levels? How has the operation affected the company’s bottom line? Managers should consistently reevaluate their sourcing initiative in order to refine and improve their strategy.
Paradigm shifts within the global business environment have always been met with a mixture of praise and fear. China’s rise as a global economic power raises serious questions regarding the future of outdated business processes, inefficient cost structures and protectionist economic policies.
But it also offers American business owners an opportunity to leverage the strengths of the Chinese business environment and improve their own businesses. In the upcoming years the Chinese economy will continue to grow, and American businesses will be forced to further adapt their behavior in order to accommodate China’s presence.
The best strategy to manage change is to embrace it, and adopting global sourcing solutions is the first step toward making peace with a rising star.
Denny Bolzan is a principal with Pfingsten Partners L.L.C., an operationally oriented private equity firm located in Deerfield, Illinois. For more information, visit www.pfingstenpartners.com.
Businesses may be confident they have strong management teams in place today, but will they be ready for the changing realities of tomorrow? An effective enterprise’s response to this question will reflect its core organizational priorities, its strategic perspective and its capacity for effective corporate governance.
A significant fraction of today’s crop of business leaders is drawn from the baby boomer generation, born between 1946 and 1964, and many will reach retirement age over the next three to seven years.
Companies that anticipate and address in advance the challenge this exodus presents will facilitate their new leaders’ ability to sustain organizational progress. In the process, they will achieve clear strategic advantages over their less far-sighted competitors.
Many organizations that are vulnerable to the disruption inherent in corporate-level turnover have not implemented succession initiatives. More disturbing, they do not even have such critically important plans on their drawing boards.
In general, organizations are aware of the negative implications of baby boomers aging and the resulting executive turnover. But many are unwilling to commit corporate resources to resolving the issue.
Developing well-trained corporate leaders is a continuing challenge for every organization. It requires a best-practices approach that goes beyond one-dimensional replacement plans that simply exchange one executive for another in the shortest possible time.
Instead, organizations should design and implement systematic, long-range leadership-development solutions that:
- Identify high-potential people
- Diagnose developmental opportunities
- Create individual development plans
- Monitor individual progress toward the desired end result
In addition, organizations must look at themselves and how they can improve their approaches to leadership and succession. Three organizational characteristics are key to an effective leadership-development strategy.
- Strategic alignment. The organization’s approach to leadership and succession must be consistent with its long-term business plan and aligned with its strategic objectives, mission and vision. The enterprise must make an ongoing, across-the-organization commitment to leadership development, and allocate the time, talent and dollars necessary to sustain it.
- Executive ownership. Leadership development and succession management must be key priorities at the organization’s executive level. Present-generation leaders should be actively engaged in the company’s leadership initiative, providing effective mentoring, review and assignment management to high-potential individuals.
- Cultural commitment. The organizational culture should promote continuous feedback, assessment, selection and development of high-potential candidates. People across the company should seek opportunities to promote and develop leadership at every level. As a function of its culture, the company must be committed to identifying and preparing next-generation leaders from within.
A best-practices approach to leadership development results in a process that promotes these organizational characteristics and integrates them into an organization’s development and succession process. The model above illustrates the sequence and flow of the process’s implementation.
Effective leadership development demands sustained effort and a continuing organizational commitment. The return on this investment is well worth the outlay, because organizations that proactively manage the development and succession of their leaders take effective control of their own futures. Conversely, companies that choose a hope-for-the-best approach run the risk of having their futures controlled for them.
Clearly then, the only real decision is the decision to act.
Patrick J. Cole, SPHR, can be reached at (616) 752.4248 or firstname.lastname@example.org.
Krishnamurthy was previously vice president and chief information officer of UAL Corp.
Timothy J. Theriault, president, worldwide operations and technology at Northern Trust says, “Nirup’s appointment as CTO is an important step in our continuous efforts to strengthen and advance our competitive position, and he is an outstanding addition to our global IT management team.”
Prior to his 2003 appointment as chief information officer for United, Krishnamurthy worked as vice president of United’s information services division, and led its joint global IT efforts with the Star Alliance. He served as managing director of applications development, with responsibility for all software development, as well as manager of applications development, where he was responsible for developing and executing automation strategies for United’s flight operations, onboard service and cargo divisions.
Krishnamurthy began his career in the finance division at United in 1990, developing key optimization models for airline scheduling, operations planning and aircraft maintenance.
“I am excited to join Northern Trust at this time. It is a great opportunity to be a part of this growing and dynamic organization,” says Krishnamurthy. “In addition to helping create more value for clients through strategic use of technology, I look forward to contributing to Northern’s longstanding heritage of technology innovation and leadership.”
Krishnamurthy holds a Ph.D. and a master of science degree in industrial engineering from the State University of New York in Buffalo.
IMMTECH INTERNATIONAL INC.
Immtech International Inc. hired Dina Grinshpun in the newly created position of vice president, general and IP counsel.
Grinshpun previously worked at Fish & Richardson PC. Prior to that, Grinshpun was a judicial clerk for The Hon. Randall R. Rader at the United States Court of Appeals for the Federal Circuit.
She has a strong technical background, having worked as a pharmaceutical chemist at Procter & Gamble Pharmaceuticals Inc. prior to becoming an attorney.
Grinshpun received her bachelor of science degree in chemistry from the University of Western Ontario and her J.D. from the University of Michigan Law School. She is a member of the Bar of the State of California.
Kurt Rittenburg will lead HTP Inc.’s new Chicago office.
Before joining HTP, Rittenburg spent seven years as vice president of client development with Argen Healthcare and HealthRev. Inc., both formerly known as HHL Financial Services. Before that, he worked as director of client development and account management for HHL for six years.
Rittenburg earned a bachelor’s degree in political science from George Washington University.
Caterpillar Inc. chairman and CEO James W. Owens was selected by Stark’s Truck & Off-Highway Ledger as its 18th annual “Manager of the Year.”
The business publication cited continuing efforts to diversify its product portfolio through aggressive investment in new innovative technologies, especially at its key construction machinery-making division and diesel engine unit, as a primary reason for the selection of the Caterpillar chairman as its “2005 Manager of the Year.’”
Owens has been a director of the company since 2004. Prior to his current position, he served as vice chairman and group president of Caterpillar Inc.
Rx EDGE appointed Robert J. Blazek director of new business development.
Blazek brings a diverse and extensive health care industry background to Rx EDGE. Most recently, he was with CVS/pharmacy, where he served as manager of patient intervention programs. Prior positions at CVS included regional health care manager and staff pharmacist/pharmacy manager.
Blazek earned a bachelor of science degree in pharmacy from Purdue University.
Tribune Co. appointed John Reardon president and CEO of its broadcast group, overseeing the company’s 26 television stations.
Reardon had been responsible for the company’s television stations in the Western and Southern regions.
He holds a bachelor’s degree from Loyola University Chicago. He is a board member of the Television Bureau of Advertising and serves on the board of the Lincoln Park Zoo in Chicago.
Also at Tribune, John Vitanovec was promoted to executive vice president.
Vitanovec has had responsibility for overseeing the division’s television stations in the Central and Eastern regions and Superstation WGN.
He holds a bachelor’s degree from DePaul University and an MBA from the University of Chicago. He serves on the DePaul University board of trustees and as an advisory council member for the College of Commerce, and he is an advisory board member for the Northwestern University Media Management Center.
He is a member of the board of directors of the Peggy Notebaert Nature Museum and is a member of the Executives’ Club of Chicago.
SOUTHERN WINE & SPIRITS OF ILLINOIS
Michael J. Thompson was hired as vice president, general sales manager for Signature Wine and Spirits Co., a division of Southern Wine & Spirits of Illinois.
Thompson most recently held a managing director position at Millennium Import LLC in Minneapolis.
He earned a bachelor of arts degree in restaurant and institutional management from Michigan State University and an MBA from the J.L. Kellogg Graduate School of Management at Northwestern University.
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When the CEO of a company with global revenue of more than $570 million kicks off an interview like that, it’s a good indication that he is an unpretentious person who doesn’t stand on ceremony. As president and CEO of Information Resources Inc., a provider of market data, consumer intelligence and management solutions for the consumer packaged goods, retail and health care industries, Scott Klein is a man of some influence and responsibility.
His company has 2,800 employees, 700 at corporate headquarters in Chicago and the rest in offices around the world. Those employees manage a vast web of integrated information for companies including PepsiCo, Kellogg’s, Anheuser-Busch, Target and Johnson & Johnson that reflects point-of-sale data from more than 32,000 retail outlets in the United States and the buying decisions of 110 million households.
But with those three words “Call me Scott” Klein instantly does away with any sort of formal hierarchy. The invitation to use his first name comes across as the verbal equivalent of a welcoming handshake and a friendly slap on the back rolled into one. Within minutes, we’re talking like we’ve known each other for years.
Forging that personal connection is about more than being sociable. It also reflects the high value this leader places on relationships. And he’s been working hard to forge and foster good ones with both customers and employees since he came on board at IRI in January 2004.
Those efforts are paying off. Last year, IRI earnings hit a 12-year high, and sales are growing at double digit rates.
“2005 will be the most profitable year in the company’s history,” says the 48-year-old Klein. “Every contract except one that came up for renewal has been renewed. In the same period, we’ve landed three dozen major new clients in the United States and Europe. And in the 20 months I’ve been here, turnover, which was a huge problem, has decreased by half.”
But he doesn’t suggest that he deserves credit for these achievements. That credit, Klein insists, should go to IRI’s customers and staff.
“I start from the point of view that clients determine our success,” says Klein. “Without them, the rest of us have nothing to do. So the goal in business is to get people to choose us over the competition. To do that, we have to listen, find out what they need, constantly look for ways to serve them better and show that we can deliver more value than anyone else.”
Achieving this, he says, requires a highly motivated, creative and well-trained staff. And to recruit and retain the best, Klein has committed to making IRI what he calls “a destination place of employment.”
“I’ve always believed that companies take on the personality of their leader,” says Klein. “If the guy at the top focuses on results but also wants his people to have a good time in the process, things go better.”
Being a leader
Klein became CEO and president of IRI at a time of great change the company had recently been acquired by Silicon Valley entrepreneur and billionaire Romesh Wadhwani’s Symphony Technology Group. A major restructuring was initiated and the company invested $300 million in a new grid computing platform called MarketKnowledge that facilitates advanced store-level and consumer insights and analytics.
All this was prompted by the need to turn the company around. The pioneering shopping data provider had, in Klein’s words, lost its edge.
“Innovation is in the company’s DNA,” says Klein. “But at some point, leadership may have gotten too comfortable. We’ve recommitted to being the catalyst that helps the industries we serve reinvent themselves.”
Technology is enabling that transformation. The objective is to provide 100 percent accurate data to all clients all the time, allowing them to act quickly and make better-informed decisions to optimize sales and profits. Utilizing the next generation of measurement tools is essential but Klein knows that in the long run, people make the difference and power the company’s performance.
“Leadership is the ability to teach individuals and organizations to surpass themselves,” says Klein. “My job is to get employees to see where we’re going and how we’re going to get there.”
The best leaders, he says, are able to paint that picture in vivid colors and inspire everyone to pull together.
“Everybody who works here, from the administrative assistants to division managers, knows the mission,” he says. “They realize that if they’re spending time and effort on anything that doesn’t contribute to what we’re trying to do, it’s a distraction. And they understand how their job relates to everyone else’s.”
Communication is critical to that understanding. That’s why Klein has members of the senior management staff talking together for an hour via conference call every month, and once a quarter, there’s a dial-in global town hall meeting. Because Klein values input from everyone in the organization, he pursues it aggressively.
At a global leadership meeting last year, he asked the 100 people in attendance to go home, think about what the company needed to do to be more successful and give him three suggestions. “About 42 responded,” Klein says. “So I personally called the other 58. They’d say, ‘Oh, I didn’t know you really meant me.’ This year, I made the same request to the same group, and I heard back from 98 people.”
He’s also meticulous about follow-up.
“If someone promises me something by a specific date or time and doesn’t deliver, that person will get a call or an e-mail from me,” he says. “If I say, ‘You’ll hear from me in two weeks,’ on Day 15, you do.”
And he’s convinced that modeling this keep-your-word behavior prompts others throughout the organization to do the same.
Building employee relationships
To proceed on its growth trajectory and provide top-tier service, Klein knows IRI must work smarter, faster, bolder and more responsively. To do that, he’s promoting an entrepreneurial culture in which all employees are encouraged to maximize their potential and are empowered to be innovators.
To make sure he had the right people in place to achieve those goals, his tenure began with the difficult task of letting people go.
“I got rid of the demotivators,” Klein says. “There weren’t many, but eliminating them made those who stayed much happier. We had to bring in a few people, but one of the things I’m most proud of is that the company’s turnaround has largely been effected by those already here.”
The next step was disseminating the message that when companies and individuals make mistakes, as they inevitably do, the best way to handle the problem is to own up to it, take care of it quickly, learn from it, and then, move on.
“When you try new things, it doesn’t always work out,” says Klein. “What’s important is to get better every day.”
How managers react to mistakes is also crucial. Klein has zero tolerance for those who show a lack of respect toward coworkers.
“When I joined the company, I announced that there would be no screaming or yelling,” he says. “It’s OK to express disagreement or disappointment, but no one is allowed to treat employees like misbehaving 4-year-olds.”
In addition to respect, there’s a big emphasis on training and assessment at IRI. Classroom and online seminars support professional development, and monitored programs track performance so staff members can see where they are relative to specific goals at all times. Everyone gets formalized written and verbal feedback twice a year, because once people master their own domain, says Klein, they’re better able to mesh their knowledge and skills with other areas and departments.
Good news is shared news and victories get a companywide shout-out. And in keeping with his have-fun philosophy, Klein likes to do it with humor.
“When we won the Campbell’s account, everyone got a note from me attached to a can of chicken noodle soup,” he says. “For Welch’s, it was a jar of jelly on the desks. We just landed 3M, so I distributed pads of Post-its imprinted with the phrase, ‘Make a note of it.’”
He’s also a big believer in giving credit and honoring contributions. A number of recognition programs are in place, and Klein personally signs every award and milestone certificate himself.
Most new hires participate in an intensive three-week orientation and training class, and Klein speaks to every group. One of his presentations concentrates on the art and science of getting and keeping customers. He calls it, “Seven keys to success, or how do I get clients to like me better than anyone else?”
He talks about expertise, integrity and reliability. He emphasizes going the distance and beyond. He mentions the need for enthusiasm and pride. It all adds up to forming long-term partnerships, in large part by being a great listener.
For Scott Klein, it’s a fundamental part of doing business. But that’s just what you’d expect from a man who’s built a career by building relationships.
How to reach: IRI Inc., www.infores.com
However, not much has been said about the possibilities the new Part D plan holds for America’s small and mid-size employers. If these employers offer their retirees prescription drug coverage that is at least as generous as the government’s standard Medicare Part D coverage, these employers may be eligible for an employer subsidy, payable for each Medicare-eligible person enrolled in their plans. Sounds simple, right?
Unlike very large companies, which have many thousands of retirees and larger staffs to manage benefits programs, small and mid-size companies face challenges as they strive to incorporate the advantages of the Part D coverage into the benefits package they offer while minimizing the administrative hurdles.
As the Medicare prescription drug program becomes effective this January, employers should not wait for too long to investigate Part D coverage. For most, it comes down to two options: apply directly for the Medicare subsidy or work with a Medicare-approved health insurer that can offer a Prescription Drug Plan (PDP) for retirees.
Those thinking about applying directly for the subsidy should consider such factors as the utilization patterns of retirees, the demographics and geographic dispersion of the retiree base, and whether the number of retirees makes it worth the administrative demands that may accompany the direct-subsidy route.
The initial application process is lengthy, and takes more than 40 hours by Medicare’s own estimates. After that, you must provide monthly paperwork in order to confirm that your company is indeed providing such benefits. In addition, you may need to maintain six to 10 years of retiree benefits data in case of a government audit.
So, it’s crucial to have a human resources infrastructure particularly experienced benefits managers to help manage the considerable paperwork involved. You may also need to hire an actuarial company to help ensure that your plan delivers the right benefit level to meet the eligibility requirements for the Medicare Part D program.
With such significant requirements, it’s not surprising that many small and mid-size companies are turning to PDPs for a one-stop-shopping solution to this dilemma.
Here’s how it works. The employer receives the value of the government subsidy through a reduced premium from the PDP. Because the PDP has economies of scale, it can provide employers and retirees with myriad services that go beyond what an individual employer could reasonably provide. Among the highlights:
- The PDP handles all of the government requirements, including applications and updates. If there is a government audit, the PDP handles this as well.
- Because they provide health and other benefits to retirees, the PDPs have the educational tools to help retirees better understand the new drug program. The PDP handles plan enrollment and often provides excellent communications programs, as well as high-tech Web tools to help retirees investigate, price and compare drugs.
- The PDP may also offer a ready-made suite of flexible plan designs for employers, so you can find a plan that matches your benefits strategy.
- Many PDPs also offer Medicare Advantage, allowing you to integrate the new drug coverage into your health benefits program for your retirees who are Medicare eligible,[BS1] which streamlines your procurement and benefits administration process. What’s more, retirees can access the entire range of medical-related benefits using one ID card.
If you are on the fence wondering whether to establish a relationship with a PDP or go it alone your broker or consultant may help you assess your options. With careful consideration and execution, you should be able to enjoy the government subsidy while ensuring that your retirees receive the greatest possible value from the benefits package you provide.
Heather Dowell is manager of sales and service, covering Illinois and Wisconsin. She is responsible for managing sales and client management for Aetna’s select accounts segment, which includes businesses with 51 to 300 employees. Reach her at (312) 928-3585 or DowellH@aetna.com.
Sherard worked from 2002 to 2005 as CFO of SiteStuff Inc., a Web-based procurement company focused on the real estate industry. She joined SiteStuff from Morgan Stanley’s investment banking division, where she served clients on a variety of M&A transactions in the power and utilities, real estate and retail industries. Prior to Morgan Stanley, she spent four years at LaSalle Partners, where she was responsible for financial projections and analyses, investor relations and M&A execution.
“Shelby’s extensive background in corporate and real estate finance, accounting and M&A activities make her an extremely valuable addition to our management group,” says CEO Mark E. Rose. “We are excited by the range of experience and talent she brings to the leadership of our financial team as we pursue our near- and long-term growth objectives.”
Sherard’s primary responsibilities include oversight of financial and administrative operations, including corporate finance, accounting, human resources, risk management, facilities administration and information technology.
Sherard earned an MBA with an accounting and finance concentration from The Wharton School and a bachelor’s degree from Northwestern University.
Morris-Anderson & Associates
Daniel F. Dooley of Morris-Anderson & Associates came in No. 9 on The Deal magazine’s list of “Top Non-investment Bank Professionals.”
Dooley has more than 20 years of experience in general management, operations, finance and project management.
He is 2005 president of the Chicago/Midwest chapter of the Turnaround Management Association, the largest TMA chapter worldwide.
He earned a bachelor’s degree in business administration and an MBA in finance from the Carlson School of Management at the University of Minnesota in Minneapolis.
InnerWorkings named Jack M. Greenberg to its board of directors.
Greenberg is the retired chairman and CEO of McDonald’s Corp. He joined McDonald’s in 1982 as executive vice president and CFO and spent 20 years with the company before retiring in 2002.
He serves on the boards of directors of Abbott Laboratories, The Allstate Corp., Manpower Inc., Hasbro Inc. and First Data Corp. He is also a member of the board of trustees of DePaul University, the Institute of International Education, the Field Museum and the executive committee of the Chicago Community Trust.
Greenberg graduated from DePaul University’s School of Commerce and earned his J.D. from DePaul University School of Law. He is a CPA and a member of the American Institute of CPAs, the Illinois CPA Society and the Chicago Bar Association.
UAL Corp., parent company of United Airlines, named Douglas Leo vice president, revenue management. Most recently, Leo was vice president of sales, distribution and international for US Airways. Previously, he spent 16 years with Northwest Airlines in a variety of management roles.
Leo is a CPA and holds a bachelor of science degree in accounting from Minnesota State University at Mankato.
Kenneth I. Feldman was named vice president, loyalty and e-commerce. Most recently, he served as president of Ameritrade’s private client division. Prior to Ameritrade, Feldman spent eight years at America West Airlines in leadership positions. His experience also includes nine years of progressive finance, planning and business development roles at Frito-Lay and General Mills Restaurants.
He earned an MBA from the University of Chicago and a bachelor of arts degree in economics from Rollins College in Winter Park, Fla.
Grubb & Ellis Co.
Grubb & Ellis Co. promoted Jean Kennedy to senior vice president, chief accounting officer.
Prior to joining Grubb & Ellis in 1999, Kennedy was vice president, corporate controller at Chernin’s Shoes Inc. Earlier, she spent eight years at Arthur Andersen LLP as manager of audit and financial consulting.
Kennedy earned a bachelor of science degree in accounting from the University of Illinois and is a CPA.
Donald Olinger was promoted to senior vice president, finance and treasury.
Olinger joined Grubb & Ellis in 1997 as vice president, finance. Prior to that, he spent two years at McGladrey & Pullen as director of contract accounting services. Earlier, Olinger spent 12 years at Balcor, rising to vice president, financial reporting.
Her earned a bachelor’s degree in accounting from the University of Illinois and is a CPA.
Waterstone Management Group LLC
Waterstone Management Group LLC appointed Roger Nelson chairman.
In recent years, Nelson worked as a special adviser to private equity firms and Tata Consulting Services. He was a member of corporate and nonprofit boards, and an adjunct professor at Northwestern University’s J. L. Kellogg Graduate School of Management. Nelson also worked as deputy chairman of Ernst & Young throughout the 1990s.
Eric Pelander joined Waterstone as partner.
Pelander joins Waterstone from IBM, where he was global leader for strategy and change services with IBM Business Consulting Services (BCS). At IBM, he directed one of the world’s largest strategy practices and was a member of the IBM BCS global business leadership team. Previously, Pelander was senior vice president, consulting services, at Mainspring Corp. and managing director of strategic advisory services for Ernst & Young Consulting.
Michael Wujciak also joined Waterstone as partner.
Previously, Wujciak was a vice president with Cap Gemini, leading the management and IT consulting practice for the global automotive sector. Wujciak joined Cap Gemini through the acquisition of Ernst & Young Consulting, where he was a partner and leader of the Americas automotive industry team. Wujciak began his career at General Motors.
Communication (days 1 through 15)
At the point of closing, communication to employees, customers and vendors is essential to minimize anxiety and potential disruptions to the business. The content of the communication should be tailored for each stakeholder, and include topics such as ownership transition, customer focus, growth and a team-based management style. Shortly after closing, establish long-term communication programs for shareholders, employees, customers and vendors, using input from managers and the employees themselves.
Planning (days 60 through 90)
Clear strategic and tactical plans are essential for building a better business. One way to set the strategy is to hold a two-day, offsite meeting with senior management and middle managers. Share due diligence findings, historical financial data, operational performance data and industry benchmarks with the managers. Armed with this data, new ownership and managers can work together to identify strategic goals and a tactical plan to address growth opportunities, customer satisfaction, human resources, infrastructure, operational improvements and financial management. After this initial planning meeting, the team can produce a financial plan that supports the strategic goals and tactical plan. Then execution begins.
Organizational alignment (days 90 through 120)
Cultural and economic alignment between ownership and management is essential for building a better business. Open communication (e.g. employee surveys, newsletters, employee meetings, events, planning sessions and management meetings) and a team-based management style (which empowers employees and promotes cross-functional cooperation) accelerate the cultural alignment, particularly at companies that previously had centralized decision making and an autocratic management style. Economic alignment is achieved during this period through the creation of incentive-based compensation programs and offerings to purchase or earn equity in the new company.
Tools for execution (days 120 through 180)
After plans are completed and execution begins, establish visual metrics to measure progress versus goals or other benchmarks. Display these performance metrics in common areas of each facility to serve as both a measurement and a communication tool for employees, customers and vendors.
The first six months following an acquisition is a critical period. A properly executed transition plan that provides open communication, strategic and tactical planning, organizational alignment and tools to enhance execution will accelerate the process of building a better business and shareholder value.
Denny R. Bolzan is a principal at Pfingsten Partners LLC. Reach Pfingsten Partners at (847) 374-9140 or www.pfingstenpartners.com.
Despite having an outplacement benefit available, few top executives take advantage of it. A recent survey found out why.
- Reality of retirement. Executives pictured retirement as days filled with endless rounds of scratch golf. Only in hindsight after their outplacement benefit had expired did they realize the need for greater intellectual challenge and engagement, and then they had no support system or structure to pursue other alternatives.
- Unrealistic expectations. Executives who wanted to move into another top management role had been courted by executive search firms throughout their careers. They fully expected their phones to ring as soon as headhunters learned they were available. That didn’t happen they allowed their networks to grow stale, and didn’t know where to turn.
- Limited value. Senior executives viewed outplacement as a service designed for entry to middle-management staff. A one-page psychological profile, a 30-minute meeting with a junior consultant every couple of weeks, a shared office and a basic resume were considered a waste of a senior executive’s time.
The last reason is the most common, and traditional outplacement models really have become a waste of a senior executive’s time. Typical outplacement has become a cost-driven commodity where service is limited, consultants have little personal contact with clients and their approach is one-size-fits-all.
Clearly this approach does not meet a senior executive’s needs. For them, a career transition represents a life transition that raises questions about the future they had once imagined. The complexity of these issues requires highly customized service designed to address sophisticated and complex choices.
Research demonstrates that most senior executives want to remain actively engaged in some type of work, but only 50 percent want a job like they held before. In many cases, executives seek multiple roles where they can reduce the pressure but utilize their hard-won knowledge <\m> a life of variety as a member of a board perfectly describes it.
And let’s face it, the traditional job market isn’t friendly to senior executives whose career horizon only spans another five or ten years. That means that executives have to find resources that connect them to nontraditional channels. After advising hundreds of top executives through successful transitions, we know that 83 percent did not hear about their next career opportunity through a recruiter or an ad. They learned about it by networking at the right levels the top.
Although executives know many people, most focus on the challenges of their business and fail to keep their personal and professional networks current. Although they network at business club meetings, they do it to promote their businesses, not to develop relationships that could be called upon at a time of transition. At the senior executive level, active networking is the name of the game and there are only three degrees of separation between an executive and the next opportunity. If someone is pursuing a nontraditional role, networking is the only way to be considered for something new, whether it is consulting, board work, an entrepreneurial venture, academia or leading a not-for-profit.
It is possible to successfully translate your life’s passion into your life’s work but not through traditional channels. A lifetime in a specific industry doesn’t limit what you do next if you work with transition advisers.
Gail R. Meneley is a principal in Shields Meneley Partners, a firm that provides confidential career and life transition services to senior executives. Reach her at (312) 994-9500 or at firstname.lastname@example.org. To learn more about Shields Meneley Partners, visit http://www.shieldsmeneley.com
Today’s business executives want more than attention-grabbing ads they are demanding ad messages that are in sync with their company’s strategic plan for growth, says Peter Krivkovich, president and CEO of Cramer-Krasselt Co., a 500-employee marketing communications firm that last year billed more than $550 million from clients including CareerBuilder, Hyatt Hotels, Master Lock and Steve Madden shoes.
“Creativity by itself is nothing,” says Krivkovich. “Creativity that is rooted in strategic insight is the key to success.”
Over the past year, powered by effective ads such as CareerBuilder’s “Working with Monkeys” campaign, Krivkovich and his team have delivered just that. Smart Business spoke with him about how CEOs are adapting to this brave new world and what it takes to remain on the creative cutting edge.
How have technological advancements altered the dynamics of advertising?
The fundamentals of compensation our revenue stream have changed dramatically. The bulk of compensation came out of traditional media television, newspaper, radio and magazines. At one time, it was a very simple formula of a fixed percentage; now, it’s a combination of hourly and percentage. But it’s always been tied to some expenditure of dollars.
Now, when you get into new media and the Internet, there is not a lot of cost involved. All of a sudden, your budget parameters are different, yet your labor costs can be fairly high because your labor intensity can be higher.
[Previously,] if you did three or four television commercials, you sat back and ran them. Now everything is viral, so on-demand in terms of messaging, that it is a constant action.
What new factors should a CEO take into consideration when thinking about how to craft and disseminate a message?
[There is] a whole series of different talents you have to incorporate. That doesn’t mean that those other ones go away, but there is a much broader spectrum of communication opportunities. It also requires certain kinds of people that, 10 years ago, you didn’t need. Think about it text messaging, product placement, a mini-series. We’ve done [that] for Sea-Doo and Ski-Doo eight half-hour shows on The Outdoor Network. This is something that just wasn’t done before.
Or even doing viral Web sites, as we have done for CareerBuilder, where we created a fictitious company that is run by monkeys. All of those things get young people involved in the product, the category and, ultimately, with the brand.
How does that affect creativity?
Creativity, more or less, hasn’t changed. The spectrum of opportunities for the creativity that can be utilized is much broader. There are more avenues to express it and more avenues that are extremely untraditional.
It’s everything from creating unusual Web sites to wrapping buses and posters to text messaging to video streaming.
How do you foster that type of creative thinking?
The biggest thing is getting people enthused and aware of all the opportunities. We have lots of group sessions. We bring in people who are working on niche technology or niche ways of getting something more interesting done, [such as] putting a chip on a cup of Coke that sings to you every time you drink it.
You constantly try to expose your people to many ideas and options, which may or may not be relevant, but may spark an idea somewhere else. You create a very fertile ground for ideas. (That) absolutely has to start at the top. It’s not going to be at the bottom; otherwise, it would get squashed.
Who are some of the most creative CEOs and how do they separate themselves from the pack?
Clearly, Phil Knight at Nike. All of the things that [Gregory D. Brenneman, CEO of] Burger King is doing. Also, [Matthew Ferguson, CEO of] CareerBuilder.
They are willing to look outside the box at ways to solve a problem. If you are solving problems in the traditional way, then your only hope is to outdo someone who is doing the same thing.
You may have a shot of outdoing someone once. Maybe you outdo someone twice. But it is highly unlikely that you are outdoing other competent competitors if they are doing the same thing you are doing and you are doing the same thing that they are doing.
It’s those CEOs who look at something and say, ‘We could do this, but here is a different avenue or two or three that we can get at the same consumer with the same loyalty, whatever the needs are.’
How important is it to integrate that thinking into a company’s strategic planning process?
It’s critically important. In today’s environment, you have technology and competition in almost any industry moving at such an incredible pace. Your ability to differentiate is windows that are increasingly open and closed at a faster and faster rate. What used to be a year advantage becomes eight months’ advantage becomes five months’ advantage. Sometimes, it’s literally weeks.
When you hit the market, when you launch something, when you introduce something, when you expose something to your user, whether it is B-to-B or B-to-C or any other combination, it has to be something that gets immediate attention, not attention that they’ll think about in six months, because in six months, they’ll have five other options.
What can happen in the execution stage that turns a good idea into a bad one?
When the people who are creating the idea get so wrapped up in the idea itself that they forget who they are talking to. They are more enamored with the execution of an idea than they are with the strategic underpinning of an idea.
What has made Cramer-Krasselt so successful?
We are basically brand transformers. We look at a brand and take all the attributes on the left hand side the rational things that a company is proud of and try to distill them down to one sentence. That is very hard to do. It takes us months of working with the company.
Then we take the right side, where the consumer is, and look at the issues the consumers have happiness, fears, anxiety, joys, etc. We take all of those things and distill that down to a sentence that is relevant to the issue.
And then we try to find a connection between the two. That connection is the insight that begins to drive you toward an execution that resonates.
How to reach: Cramer-Krasselt, (312) 616-9600 or http://www.c-k.com
Executive couples almost always discuss and negotiate various career moves and options. But when it comes to retirement the most significant transition of all they tend to make large assumptions based on very few facts. If they talk about retirement at all, it is to discuss where they might want to live, or to calculate the answer to the all-important question, “Do we have enough money?”
What most couples completely ignore is the importance of asking and answering the single most important question “What are we going to do with the rest of our lives?”
Today’s executives are retiring younger, healthier and wealthier than any generation in history. They have the opportunity to escape the pressures of a top job and pursue other interests while they are in the prime of their lives. Yet, they often have difficulty adjusting to full-time relationships with their spouses and balancing day-to-day family responsibilities with leisure pursuits.
Retired executives no longer have the structure and focus that their former positions imposed. To make the transition even more difficult, their spouses are often redefining their own personal and professional goals as they hit their mid-life stride.
Despite these challenges, retirement presents a unique opportunity for a couple to reconnect and redefine their goals, and to make conscious decisions about how they want to live the next stages of their lives.
Ironically, senior executives who routinely use sophisticated planning tools to solve problems in their business lives rarely invest equivalent resources to make complex decisions in their personal lives. They often think that once they complete a financial plan, their work is done. They haven’t even considered the broader issues that directly impact a financial plan health, lifestyle choices, family responsibilities, work and leisure pursuits.
The majority of executive couples need help thinking through the issues involved in retirement planning. Whether you work with an executive consultant or do this work on your own, we recommend that you include clear goals, action plans and metrics to measure your progress and to keep yourselves on track. Draft individual goals and then come together to refine them in an open discussion that ensures that the final plan reflects the needs of both partners.
Here are some examples of topics worth exploring.
Health and wellness. Address exercise, nutrition, preventative strategies, stress reduction, and other such topics. This issue more than any other, impacts future options and possibilities.
Financial planning. Revisit your financial plan since your life plan will capture how you want to live and provide far greater insight into the financial structure required to support it.
Work. This category focuses on paid work, because it is of great importance to executives who want to remain engaged in a more limited way in business for the intellectual challenge.
Family. Develop individual goals for your spouse, children, parents, siblings and others, since family issues can directly impact or constrain your options.
If you are a 40-something, invest the time and money required to create a written plan that reopens lines of communication, aligns your values and goals, addresses each spouse’s needs and accommodates unforeseen events. A Life Plan is both a journey and a destination, and like all journeys, it begins with the first step. Take your first step today.
Gail R. Meneley is a principal in Shields Meneley Partners, a firm that provides confidential career and life-transition services to senior executives. Reach her at (312) 994-9500 or at email@example.com. To learn more about Shields Meneley Partners, visit www.shieldsmeneley.com.