Our economic forecast for 2013 comes down to one simple phrase: "It all hinges on Washington." The President and Congress must decide whether tax rates rise or fall, whether fiscal stimulus or austerity rules the day, and whether the long term budget deficit issues (entitlements) will be addressed. The Federal Reserve has now promised to hold short term rates low until the unemployment rate falls to 6.5 percent, unless they determine inflation is likely to exceed 2.5 percent. Will the Fed's newest $85 billion monthly quantitative easing (bond buying) program continue to suppress longer maturity bond yields in 2013? To paraphrase the European Central Bank's Mario Draghi: "believe us, it'll be enough" to keep the U.S. Treasury 10 year bond yield from rising much in 2013.
We continue to view the Washington glass as "half full," so we expect fiscal cliff compromises will be reached by early 2013. Taxes will be raised on the "rich" (however that is defined) but the impact of tax increases on everyone else will be limited by extending the middle class tax cuts, "patching" the Alternative Minimum Tax, and gradually ending the FICA 2 percent payroll tax holiday. Alas, anyone who has a taxable investment account will pay more taxes through higher capital gains rates and higher tax rates on common stock dividends. Entitlement reform will likely be kicked down the road, but we expect the credit rating agencies will be assuaged by an agreement to create a Congressional commission, lessening the risk of a January ratings downgrade. Likewise, there should be just enough spending cuts to allow a compromise on raising the debt ceiling.
The downside risk from here hinges on Washington: policy errors that take us over the cliff might leave the economy crushed at the bottom of the gorge by another severe recession.
Sounds horrifying, doesn’t it? Well, it is — but we think this worst-case scenario is VERY unlikely. Even if taxes are raised, the increase shouldn't be too stiff and history shows that the impact on spending will be minor. Modestly higher capital gains rates also have a limited impact. Changes to corporate taxes and deductions will be a mix of plusses and minuses, as always. The regulatory burden only goes in one direction — heavier, but who could be surprised by that? Despite volatile gasoline prices, the CPI inflation rate has dropped to roughly 2 percent and that trend should continue in 2013. Energy prices should not rise significantly as increased supply meets very slow demand growth. With regard to consumers, housing activity and prices are on the upswing. In fact, residential construction has been additive to GDP for the past six consecutive quarters! Combined with the doubling of the S&P 500 since 2009 and decline in consumer debt outstanding, household net worth has improved sharply. Continued modest, but steady job growth should result in lower unemployment rates during 2013.
Basically, the economy can do one of three things: improve, stay the same, or get worse. The presence of feedback loops often determines which of these occurs. We began 2012 with a positive feedback loop — rising production of goods and services meant more hours worked, which meant incomes grew, which resulted in greater demand for goods and services, leading to rising production of goods and services! Unfortunately, fears arose during the year that caused great uncertainty for both businesses and consumers. Uncertainty weakens the links of a positive feedback loop and can eventually forge a negative chain. Fortunately, much of the current uncertainty should be alleviated by even a partial resolution of the fiscal cliff/budget deficit issues.
All in all, we expect a slow start to 2013 due to the hangover from Washington's partisan battles and going over the fiscal cliff (fiscal slope?) to some extent. However, as uncertainties are alleviated, we expect GDP growth to re-accelerate toward 2.5 percent+ in the second half.
Bob Leggett, CFA, is the Senior Investment Strategist at FirstMerit Wealth Management Services. Reach him at email@example.com or follow him on Twitter @firstmerit_mkt.
The opinions and information contained in this message have been derived from sources believed to be accurate and reliable, but FirstMerit Bank N.A. makes no representation as to their timeliness or completeness. This message does not constitute individual investment, legal or tax advice. All opinions are reflective of judgments made on the original date of publication and do not constitute a guarantee of present or future financial market conditions.
In our world of quick text missives, sharing the daily joke via inner office email, and generally more relaxed workplaces, informality can become a workplace hazard. Studies show that employers and managers often assess an employee’s career potential based on how that employee carries himself or herself in the workplace. None of us wants to be judged by the externals, but our respective “book covers” matter.
Poor manners at work – however unintentional - can lead to workplace conflict because they distract fellow employees from working or, in the worst cases, offend co-workers who have differing viewpoints and cause potential legal liability for the employer.
Therefore, it’s ideal to avoid these 8 bad work habits:
- Talking loudly on telephones and in person in common areas.
- Interjecting comments into conversations between other employees, unless your opinion is solicited.
- Taking supplies – even if they were bought by the office – from other employee’s work areas without getting prior approval.
- Wearing perfume that can be smelled even after you leave an area.
- Gossiping about co-workers or people outside the workplace.
- Sharing racial, religious or sexual jokes in any format.
- Arriving late to meetings.
- Regularly using large chunks of work time to resolve personal and family matters.
Most employees want to be viewed as valuable, contributing members of the company team. Thus, it’s worthwhile to periodically assess our workplace demeanor and, perhaps, adjust our behaviors, to help convey that image. Your future with your employer likely depends on it.
Patricia Adams is the CEO of Zeitgeist Expressions and the author of “ABCs of Change: Three Building Blocks to Happy Relationships.” In 2011, she was named one of Ernst & Young LLP’s Entrepreneurial Winning Women, one of Enterprising Women Magazine’s Enterprising Women of the Year Award and the SBA’s Small Business Person of the Year for Region VI. Her company, Zeitgeist Wellness Group, offers a full-service Employee Assistance Program to businesses in the San Antonio region. For more information, visit www.zwgroup.net.
One of the signs of a boom — or at least a boomlet — is that companies start wanting to drive their competition crazy. This occurs when “survival” is no longer an issue and optimization or maximization can become a goal. However, the desire to do things to the competition can lead a company astray — or drive it to even greater heights.
Companies go astray when defeating the competition becomes more important than taking care of customers. When companies become obsessed with the pursuit of excellence, by contrast, they often reach new levels of greatness. Here’s how to avoid the former and achieve the latter.
1. Know thyself. Before you can drive your competition crazy, you have to understand what your company stands for. Otherwise, you’ll succeed only in driving yourself crazy. For example, Apple stands for cool technology. It will never represent a CIO’s safe bet, an “enterprise software company,” or service and support. If it decided it wanted to drive Microsoft crazy by sucking up to CIOs, it would drive itself crazy — that is, if it didn’t perish trying.
2. Know thy customer. The second step is to truly understand what your customer wants from you — and, for that matter, what it doesn’t want from you. One thing that your customer seldom wants to do is to help you drive your competition crazy. That’s in your head, not your customer’s. One more thing: A good company listens to what a customer says it wants. A great company anticipates what a customer needs — even before the customer knows it wants it.
3. Know thy enemy. You cannot drive your competition crazy unless you understand your competition’s strengths and weaknesses. You should become your competition’s customer by buying its products and services. I never truly understood what it was like to be a customer of Microsoft until I bought a Sony Vaio and used Windows. Sure, I had read many comparisons and competitive analyses, but they were nothing compared with hands-on usage.
4. Focus on the customer. Here’s what most people find surprising: The best way to drive your competition crazy is to succeed because your success, more than any action, will drive your competition crazy. And the way you become successful is not by figuring out what you can do to the competition but for the customer. You succeed at doing things for the customer by using the knowledge that you’ve gained in the first three steps: understanding what you do, what your customer wants and needs and what your competition doesn’t do. At the intersection of these three factors lies the holy grail of driving your competition crazy. For most companies, the key to driving the competition crazy is out-innovating, out-servicing or out-pricing it.
5. Turn customers into evangelists. There are few things that drive a competitor more crazy than unpaid customers who are evangelists for a company. Create a great product or service, put it out there (“let a hundred flowers blossom”), see who falls in love with it, open up your arms to them (they will come running to you), and then take care of them. It’s that simple.
6. Make good by doing good. Doing good has its own, very sufficient rewards, but sometimes you can make good and do good at the same time. For example, if you own a chain of hardware stores, you can help rebuild a community after a natural disaster. You’re bound to get a lot of publicity and create bonds with the community — this will drive your competition crazy. And you’ll be doing something good!
7. Turn the competition into allies. One way to get rid of your competition is to drive it out of business. I suppose this might be attractive to you, but a better way is to turn your competition into allies. My favorite author of children’s books is Tomie DePaola. My favorite DePaola book is “The Knight and the Dragon.” This is the story of a knight and a dragon that train to slay each other. They are smashingly unsuccessful at doing battle and eventually decide to go into business together. Using the dragon’s fire-breathing ability and the knight’s salesmanship, they create the K & D Bar-B-Q. For example, if a Home Depot opens up next to your hardware store, let it sell the gas barbecues, and you refill people’s propane tanks.
8. Play with their minds. If you’re doing all this positive, good stuff, then it’s OK to have some fun with your competition — that is, to intentionally play with their minds. Here are some examples to inspire you:
- Hannibal once had his soldiers tie bundles of brush to the horns of cattle. At night, his soldiers lit the brushwood on fire, and Hannibal’s Roman enemies thought that thousands of soldiers were marching towards them.
- A pizza company that was entering the Denver market for the first time ran a promotion offering two pizzas for the price of one if customers brought in the torn-out phone directory ad of its competition.
- A national hardware store chain opened up right next to a longtime community hardware store. After a period of depression and panic, the store owner came up with a very clever ploy. He put up a sign on the front of his store that said, “Main Entrance.”
Guy Kawasaki is the co-founder of Alltop.com, an “online magazine rack” of popular topics on the web, and a founding partner at Garage Technology Ventures. Previously, he was the chief evangelist of Apple. Kawasaki is the author of ten books including Enchantment, Reality Check, and The Art of the Start. He appears courtesy of a partnership with HVACR Business, where this column was originally published. Reach Kawasaki through www.guykawasaki.com or at firstname.lastname@example.org.
While attending an event we put on with a local charity, I was impressed with the difference that seemingly minor things can make in someone’s life. I was proud of the contribution and effort that our employees put into the event and the dedication the nonprofit showed for its mission.
The event made me think about the business community and all of the wonderful things companies do for those in need. Take the recent destruction from Hurricane Sandy as an example. Businesses have pledged more than $90 million in assistance, two-thirds of which was monetary donations to organizations like the American Red Cross.
While companies give back in as many ways as possible, even during these difficult economic times, I was wondering if there wasn’t more that could be done in our local communities. Not every effort has to always include a financial component.
Here are some nonfinancial ways to give back in addition to what you already do for the community:
- Give more time. Some organizations have a greater need for man-hours in addition to financial backing. Your business may already give generously on the financial side, but maybe your favorite charity could use a labor boost as well. Nationally, about 35 percent of companies have some sort of formal volunteer program. Consider donating employee time to help out with a big project or basic cleaning and organizing.
- Offer advice. You probably already serve on one or more boards for a nonprofit, but there is always another charity out there that could use your help. You don’t have to become a full-fledged board member, but you can offer advice as needed to help the existing members navigate through a problem that plays to your strengths. If the nonprofit is looking for a board member and you don’t have the time, help it find the right person by making a recommendation or referral.
- Hire nontraditional employees. One way of giving back to the community is helping others help themselves. There are many skilled employees with either physical or mental disabilities that could be a great addition to your company if given the chance. When you have a job opening, make sure you are considering all candidates, including those from nontraditional backgrounds.
- Do pro bono work. If you can provide a service that a nonprofit needs, consider donating it. Marketing, printing, IT services — basically anything an office needs is probably something a charity could use. Find out what the nonprofit could use, then figure out a way to help out. Even if your company can’t help, maybe you know someone else who can.
In this season of giving, it’s not hard to find a worthy cause. There’s also no question that you and your company have most likely already given a lot, assuming you are in a position to do so. But there’s an old question that asks, “How much charity is enough?” The answer is easy: Just a little more.
Take the time to evaluate whether you can do just a little more than what you are already doing to make an even bigger difference.
If you are in search of a worthy cause, consider donating to The Pillar Fund, a donor-advised fund administered through the Cleveland Foundation. For more information, contact Dustin Klein at email@example.com.
Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or firstname.lastname@example.org.
The federal government provided $600 billion in grants in 2011 for more than 1,000 programs. It takes considerable time and paperwork to apply for and monitor these grants, which is where a grants management system can help keep everything organized and on track.
“Automation really allows grant-giving organizations to focus more on the actual content and performance of the grant rather than get bogged down in the administrative and manual tasks of the grant process,” says Joseph Rodrigues, director, projects - Electronic Grants Management and Administration System at HTC Global Services.
Smart Business spoke with Rodrigues and James Joseph, vice president, government services, at HTC Global Services, about grant management systems and the advantages of automating the grant process.
What are the benefits of automated grants management?
Among the benefits of automation, the most important is that the grant administration staff can provide quality services to their grantees and focus their efforts on the core aspects of grants performance and monitoring as opposed to spending considerable time on administrative tasks, such as paper management, manual verification and validation. The second most important benefit is timely completion of the various steps in the grant life cycle process. Other benefits include consolidated repository of grants data that enables timely and effective information retrieval, analysis and reports.
Automated review process enables accuracy and consistency of reviews across reviewers. Automation of post award processes and notification ensure compliance and timeliness.
What are the challenges faced by grantors in automation of grants?
The biggest challenge is to find a truly configurable grants management software that can be configured to automate all the grant programs in an agency. Most grant giving agencies give out multiple grant programs that have varied requirements in terms of regulations and business rules. Most grant automation products available may address a specific grant program or a specific kind of business rule set. The most cost effective and efficient solution is configurable software that can automate all the programs that an organization has to offer through configuration rather than expensive and time consuming customization.
How does automation benefit grant applicants?
The biggest challenge that grantees face is submission of a complete and error-free grant application by the submission deadline. This is enabled through an online application that is intuitive, has context-sensitive help and validation features with recommended corrective actions.
An automated system assists grantees in identifying potential grant opportunities, based on eligibility. The application process enables multiple grantee staff to work on the same application, thus facilitating collaboration. In addition, it also provides transparency of status, online progress reporting and improved communication and responsiveness.
Good automation software is user friendly, does not require any third party software or plugins and caters to all levels of computer proficiency.
How does a grant management system cut down on inappropriate payments?
The reduction and eventual elimination of inaccurate and inappropriate payments is one of the major goals of the federal grantors. Automation has been identified as the primary strategy to ensure that payments made are accurate, appropriate and verifiable.
Automation verifies that payments are spent in the approved expense categories. When payments are made, they are normally made against the budget specified in the application. If an award of $100,000 is made, the award may be spread across several expense categories such as salary and wages, fringes, supplies, etc. When expenses are booked, they can be submitted only against the approved expense categories and/or within any deviation limits, if applicable. In the absence of an automated system, the grantor would have to manually match these expense categories and ensure that the expenses do not exceed what has been requested in the budget, which may lead to errors. With an automated system, all the validation and cross-verification is done by the system, thereby saving a lot of time, avoiding errors, overpayments and payments misapplied to the wrong categories.
What is the future of grant management systems?
The federal government has been trying to mandate transparency in grants. With the paper process through which the grants are given out, it’s very difficult to maintain transparency because it’s lost in the paper. If you have a system, it is possible to make the grant process transparent and minimize inappropriate payments. This is possible only through automation. The expectation is that the federal government will start insisting that a higher degree of automation is utilized in the grant management process.
With the proliferation of tools such as tablets and smartphones, grantees will demand that they can apply for a grant using these devices. Enabling mobile devices for grant management will be a trend in the future.
State governments will increasingly use software to automate the grant-giving process, submit their reports and help get all the grant money they can. Some already have. In addition, Software as a Service would be the preferred acquisition model.
JAMES JOSEPH is vice president, government services, at HTC Global Services. Reach him at (248) 530-2528 or email@example.com.
JOSEPH RODRIGUES is director, projects at HTC Global Services. Reach him at (248) 530-2554 or firstname.lastname@example.org.
Insights Technology is brought to you by HTC Global Services.
Gary Rabine has been trying to please people ever since his father questioned whether he was smart enough to go to college.
“He’s always been kind of envious of the college education or threatened by it,” Rabine says of his father. “He didn’t believe in it. The reason I started my business back in 1981 was the fact that I wanted to earn enough money to put myself through college.”
Rabine didn’t make it to college, but it wasn’t due to a lack of intelligence. He had that along with the drive and determination to succeed. Instead of going to school, he ultimately decided to focus on building his business paving driveways, along with the landscaping he did for his father and the patio work he did for a concrete guy he knew.
“I did whatever I could to make a buck,” Rabine says.
As time went on, Rabine’s business kept growing. There were moments when things didn’t go so well too, but Rabine persevered and his company, Rabine Group, began to earn a solid reputation for its paving skills.
“As you make mistakes and experience failure, it’s not a bad thing as long as you learn from those mistakes,” Rabine says. “Early on, I held grudges with my dad. But it’s a waste of time and energy to be teed off for more than a few minutes. It’s a waste to have envy.
“I had friends of mine that always envied the rich guy. Those friends of mine still envy the rich guy and they are not as good of friends with me anymore.”
Rabine didn’t worry about the past and he didn’t dwell on what he didn’t have. The positive attitude helped him take a company that he started with his own blood, sweat and tears and turn it into a $184 million business with about 350 employees.
But it was that idea of trying to please everyone that proved to be one of the biggest hurdles he had to overcome in order to achieve such a high level of success.
Focus your efforts
It was right around 2003 when Rabine took an honest look at his customer base and didn’t like what he was seeing. This was one of those low points for his company, and he wanted to figure out what had caused his business to drop off.
“The rewarding customers were those who owned property that had to maintain it on an annual basis,” Rabine says. “The non-rewarding customers, the ones I was losing money with, were the one-time shots. These were the general contractors who were doing a building in your market for the first time and the last time ever. Or the developers who were trying to nickel and dime you and at the end, only pay you 60 or 70 percent of the job because they didn’t care about the long-term relationship.”
What Rabine began to understand was that not all business was good business. Not all customers were good customers. The reward he got from all his effort wasn’t worth it with customers who didn’t value his strong work ethic and commitment to do the job right.
“Up until that point, I thought I had to work for everybody and anybody as long as they were breathing. I thought I had to do business with them,” Rabine says. “But I began to understand how to fire bad customers and service the heck out of the best customers.”
He gives a lot of credit for this revelation to Victoria Knudson, a facilities manager for a property management company he had done business with in Chicago called Trammel Crow Co.
“She was very tough to work with because she was very demanding,” Rabine says. “But she was very fair. She looks at every property like it’s her own and she cares about them a lot.”
It’s easy to look at a demanding client and see the headaches and stress that often arise in dealing with them. But look beyond that and you’ll probably find a customer who really values your service and is just pushing you to provide the best product or service you can.
When you return that passion, you’re likely to build a relationship that will benefit both you and your client for a long time.
“My thing was to rise to the occasion,” Rabine says. “If I can please this company and this person and I can market for that person with the programs and solutions we develop to make ourselves better for that person, now we can go after the pickiest, choosiest customers there are where there is going to be less competition.”
Knudson changed Rabine’s outlook on achieving success. Working hard had never been a problem. But now he realized that his best plan of action was to find customers who valued his hard work and desired a great result just as much as he did.
“I had to figure out ways to differentiate my business,” Rabine says. “We came up with the slogan, ‘Discover the Difference.’ It pushes our customers to ask the question, ‘What does that mean?’ Here’s how we differentiate with value-added solutions that you won’t find from anyone else.”
Step up your game
The slogan was just a start for Rabine. Now he had to go after those customers who value commitment and hard work and prove that it was more than just talk.
He decided one way he could do that was by guaranteeing not only the end product but the work that went into it.
“We’re the only company we know of in the country that not only warranties the product, the labor and the materials, but we also warranty the engineering specifications on the job at no extra cost,” Rabine says. “If there is a problem with engineering specifications, it’s on our back.”
Rabine hired engineers that had specific expertise in paving. He believes it gives him a crucial edge on his competition. The mindset of being the best and doing whatever it takes to satisfy customers and solve their problems is one that begins with him and has to become contagious to his workforce.
“My conversation with everybody on our team is we don’t accept complacency,” Rabine says. “We want you to challenge everybody around you. We want you to challenge yourself and challenge everybody around you to get better. If you care about the people and care about the company, you’re going to care about challenging old ways. You’re going to care about making a difference and being part of an improved business model.”
It was a dual process of selling his team on the idea of hard work and going after the customers who wanted a company that would apply that hard work toward their needs.
“Most often 20 percent of your customers deliver 80 percent of your revenue and your business,” Rabine says. “So you look at that 20 percent. Who are they? What are their expectations? Why do they like us? How come we are serving them? What do they look at? What do they read every day? How do we become their experts?”
Whatever industry you do business in, you can always do more to connect with your customers. Maybe it’s joining an industry association or becoming more active in one of which you are a member. Make an effort to get to trade shows and keep up with what’s happening out in the field.
“Give back to them and serve them and they are going to serve you,” Rabine says.
As for the customers who do more harm than good, that has a way of working itself out as you spend more time with your valuable customers.
“If you just say, ‘I have to raise my prices to serve this group,’ you’re going to lose a big chunk of those guys just by raising prices because they’re going to be price-driven and not relationship-driven,” Rabine says. “You’ve spun your wheels with these customers that you’re not making a profit with anyway. Take that same energy and use it to market to that target market that appreciates you. I believe that’s when we became much more successful.”
The results of Rabine’s commitment to excellence were crystallized when a friend who happened to see a patch job Rabine’s company was doing in the Chicago area told him about it. The friend didn’t know that Rabine’s company was doing the work, but once he found out, he had to tell Rabine about what he had seen.
“He called me all excited one day,” Rabine says. “One guy had left some pebbles in the curb and gutter. The other guy said, ‘Come on, that’s not world class.’ The first guy said, ‘The rain will wash it away.’ And the other guy said, ‘That’s not world class. Clean it up.’ And sure enough, they cleaned it up and left the job in impeccable shape.
“It’s fun when you get everybody on board and passionate enough to care. If that message doesn’t carry all the way through, we can’t be the same company we are.”
Rabine is realistic and doesn’t expect his employees to completely buy in to the ideals that he preaches every day.
“But if you have 75 to 90 percent buy-in across the board compared to one leader or a couple of leaders saying, ‘This is where we’re going,’ it’s a lot easier,” Rabine says. “Our growth in the last nine years has been about clarity of vision and hiring awesome people who will carry out that vision.”
He says the goal of continuous improvement and of finding a better way to serve those great customers that do business with you is one that should always be a target for you, your team and your business.
“We have strategic planning that goes on for a couple of weeks at the beginning of every year,” Rabine says. “We get feedback from everyone who has new ideas. We love when we have people on our team come up with, ‘Hey, you know what, this works, but this could work better. This really doesn’t work worth a darn. This could really work well if we do it.’
“Those are the people in our business who will continually grow in our company. They are the ones who are consistently thinking outside the box and the ones who are pushing the envelope to change things. That’s who we look for.”
When you find those people and bring them in on what your plan is, your odds of success become so much better.
“If you can get every employee to understand a good day from a bad day, you’re going to be successful because 98 percent of the population wants to go to work and they want to have a good day,” Rabine says. “They want to be successful and they want to create profits for the company they work for.” <<
How to reach: Rabine Group, (888) 722-4633 or
Gary Rabine, CEO, Rabine Group
The Rabine File
Born: North Chicago, Ill.
Rabine on the importance of metrics: Measurements are the key to success. The year I lost money, it was because I didn’t pay attention. When I first started my business and I did a driveway a day and four or five driveways a day, I knew every day, every job within minutes if I was profitable or not, if it was a good job or a bad job, a good day or a bad day.
As I grew, I got complacent. I kind of lost track. I wasn’t keeping track as well as I did early on. Instead of understanding in a couple hours of doing a job if I was successful or not, I wasn’t paying attention. So at the end of an 8-month season, I thought I made money and I lost money. I didn’t have the measurements in place and the dashboards in place that I had early on.
If I had continued to operate like that, today I’d be out of business. If you don’t have clear measurements and dashboards that everybody understands, you’re setting yourself up for failure.
Rabine on challenging his people: You’re going to get some people who like being part of it and others who think it’s too much of a challenge. They want to be in a more relaxed environment. You create clarity in the vision and the people who are excited to be on board are passionate and excited and they know what’s coming. It’s a lot better than the alternative where you don’t know the direction, you don’t know what your job is or what your opportunity is and you lack direction.
Focus on people who want to help you.
Never stop looking at how you can exceed expectations.
Bring your employees in on your plan.
Have you ever stopped to think about what leads to great outcomes in your business? How about when a plan doesn’t work? Was it the plan itself that failed or something larger?
It’s important to remember excellent results come from more than just excellent strategies and tactics. It is the character of our organizations that determines the ultimate success or failure of our plan.
The fact that your success will rise and fall on the collective personal character of your organization can be a sobering thought. Of course, there can be other circumstances at play. But all too often, the missing component in reaching strategic and tactical success is a gap in the company’s collective character.
And make no mistake about it: Your company’s character starts with you.
People turn to leaders who exhibit consistent great character. And customers turn to companies who exhibit consistent great character. This is a chain reaction that begins with you and can end with wonderful success for your organization.
Here are five points of character I believe we CEOs should keep in mind when leading our organizations. Modeling these points drives the creation of a collective culture that delivers excellent results from well-laid strategies and tactics:
Employees who aren’t fearful of mistakes reach for new ideas, create new ways to help customers and develop better methods of doing business. Encourage this desire in your team members. Release them from worry of doing the wrong thing and set them free to create the next big thing.
Treat everyone equally
Some years ago, Raytheon CEO Bill Swanson wrote a booklet of leadership observations in which he cautions, “Watch out for people who have a situational value system, who can turn the charm on and off depending on the status of the person they are interacting with.”
From your leadership peers to the man hauling out your recycling, treat everyone with the same respect and care. When your employees feel valued at all levels and see that everyone matters to you, it fosters an environment of respect and kindness that will naturally carry over to how they treat your customers. You’ll have employees who genuinely want your company to succeed — and who better to carry out your strategies and tactics?
Stay on top of the most recent research, tools and education in your field, and encourage your employees to do the same. Provide ample opportunities for them to better themselves, both professionally and personally. Smarter, more engaged, happier employees serve your customers better, deliver more and execute plans better. In simple terms, put the best into your people, so you’ll get the best out.
I often tell my wonderful employees that I want to send them home safer and healthier than when they arrived in the morning, and I work to implement processes and programs to support this. Genuine caring for the people who carry out the business of your business reverberates throughout the organization.
As with all of these character points, they ripple from you to your employees to your customers, helping excellent work be done all along the way, resulting in great successes. Care about your employees and they’ll care about your business.
Do the right thing
Helping others, taking responsibility, owning up to mistakes, honoring your word — when these are the types of things you are known for, they become the types of things your organization is known for. A culture of responsibility, kindness and honesty. That is the type of culture that does the right thing — even when the boss isn’t looking.
Joseph James Slawek is the founder, chairman and CEO of FONA International, a full-service flavor company serving some of the largest food, beverage, nutraceutical and pharmaceutical companies in the world. For more information, visit www.fona.com.
Health care costs are increasing at an alarming pace and many businesses are struggling to maintain the level of health care benefits provided in the past.
While executives are keenly aware that comprehensive benefit programs play a significant role in attracting top-notch talent, many companies have neglected to analyze the effectiveness of their benefit strategy.
Reviewing your employee benefit program regularly offers the opportunity to revisit your carrier’s rates and ensure they are still competitive, says Steve Slaga, chief marketing officer at Total Health Care. Further, it presents an opportunity for employers to ensure their program continues to measure up against others in their industry.
“Health care benefits are important and serve as a very useful tool for employee retention and attracting new recruits,” Slaga says.
Smart Business spoke with Slaga about assessing the needs of your employees, how to determine an appropriate benefit plan and the importance of employee education.
How can a company assess the needs of its employees?
First, examine your health care plan to ensure you’re providing affordable, quality coverage with good service, flexibility and access to care. Make sure your plan isn’t prohibitively priced, so employees can afford to participate, and gauge employees’ satisfaction levels by utilizing surveys to determine which areas of the plan they consider strong and which can be improved upon. Bear in mind all employers are different and operate within circumstances unique to them, so not every health care plan fits every group.
The level of flexibility a health care plan facilitates is also an important consideration. Some plans work through Health Maintenance Organizations, which have a specific provider network, while others offer Preferred Provider Organizations or Point-of-Service plans with which employees have the option to go in or out of a predetermined physician and hospital network of preferred health care providers without fulfilling certain conditions, such as obtaining a referral. When choosing a health care plan, make sure the services fit the needs of your employees and that employees have access to a selection of physicians and specialists in their area.
How can employers determine an appropriate benefits plan for their employees?
Ask your agent or broker to do a comparative analysis among health care plans. That person will review the factors important to your employees, including pricing, access to care and type of benefits. The actual pricing is determined by the health care plan and is dependent on factors including the business, its industry and the average age of employees.
Employers at a minimum should review their benefit plans annually. By comparing your current plan to other plans, you can stay apprised of options in the marketplace, new products and how your premiums compare with other options. By reviewing plans regularly, you can assure employees you have shopped around and are providing them with the best value for their needs.
How can employers best balance the cost of the plan with employee needs?
This is a decision every employer must make on its own, and it hinges on factors including the type of benefit program desired for employees and how much employees will be expected to contribute.
As the cost of providing health care coverage continues to rise, many businesses have scaled back benefits. Among those companies that continue to offer benefits, their employees are more often asked to make higher contributions to offset costs. Other companies pass along a portion of the increased costs through higher deductibles or higher co-insurance; both solutions reflect the challenge of dealing with today’s rising medical costs.
Companies are also coping with escalating health care costs by implementing wellness plans designed to encourage employees to take preventive action to improve their health. The idea is that a healthier pool of insured employees makes fewer claims.
How can employers help employees understand the features of their health care plan?
Education is key. Employees need to have a clear, concise understanding of their benefits from day one. There are numerous ways to make information available to employees, including health plan websites, interactive assessment tools, newsletters and other communications.
It is also important to provide employees with forums where they can ask questions about the plan and provide feedback. In addition, many employers are looking beyond employee communication and implementing multipronged education programs that engage employees throughout the year.
Most employees receive benefit information during open enrollment periods and that’s often the last time they examine the details of the plan. Instead, there should be ongoing education with information distributed regularly to employees so they are fully aware of what their benefits cover. This will allow your employees to utilize and access their plans efficiently and effectively.
What value should a benefit provider bring to the table?
Your benefit provider should present clear and concise information about the health care plan in a timely manner. On a group level, a provider should be able to help you with billing, invoice and claims questions. On the member level, the provider should be able to answer benefits questions. Contact your provider to see what other services are available.
Steve Slaga is chief marketing officer at Total Health Care. Reach him at (313) 871-7810 or SSlaga@thc-online.com.
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When employees understand where their company is headed and the role that they play in the process, they are naturally motivated to do a better job.
“Actively engaged employees become emotionally vested in an organization and are willing to go the extra mile to get their jobs done well,” says Mark Matuscak, President and CEO of Benefitdecisions, Inc. “Actively engaged employees thoroughly understand the strategic goals of the organization and where they fit into those goals.”
However, studies indicate that approximately 27 percent of employees are actively engaged with their employer, while 60 percent are ambivalent toward their jobs and 13 percent are actively disengaged in the workplace, Matuscak says.
Smart Business spoke with Matuscak about how to promote employee engagement and the ensuing benefits of increasing the number of actively engaged employees.
What is employee engagement, and how does it differ from employee satisfaction?
Employee satisfaction is about whether people are happy to get up and go to work. Engagement goes well beyond that and addresses whether employees are aligned with the mission of the company and are living it. Employee engagement measures the willingness of an employee to proactively apply extra effort toward the goals and mission of the company. It measures the emotional commitment of an employee toward his or her employer.
Actively engaged employees become ambassadors of your brand and your mission. They have the ability to transform the customers they interact with into your brand ambassadors.
How can companies measure employee engagement?
There are very sophisticated measuring tools, but there are also basic questions that companies can ask their employees on a periodic basis to determine their level of engagement. Questions should include:
- How valued do you feel?
- Can you see the next step in your career here?
- Do you believe in the company’s mission?
- Do you see yourself staying here?
- Would you recommend this company to your friends and family?
There are also certain characteristics of people at each engagement level that an organization can assess. For instance, those who are always willing to work past normal hours without having to be asked and without complaint are actively engaged. An ambivalent employee is one you have to ask to work late to get the job done and that person, begrudgingly, might be willing to do so. Actively disengaged employees watch the clock and are ready to punch out at 4:59 and 59 seconds.
As a manager, observing the actions and behaviors of your employees is also a powerful method to use in conjunction with employee surveys.
What are the drivers of employee engagement?
There are four key drivers for actively engaging employees: believing that the company has a purpose-driven mission and that it is working toward that mission; trusting in the company and the leadership; feeling valued; and having confidence in the company’s leadership while believing that they are leading with the company values toward the corporate mission.
It’s interesting to note that none of the studies on employee engagement show compensation as one of the top drivers of employee engagement; earning the emotional commitment of an employee is about much more than money.
How do you create a mission that will motivate your employees?
Creating a mission that will actively engage your employees and customers is essentially explaining why your company is in business. What is the intrinsic reason or belief that drives your organization? Most employees can easily answer what their company does and even how it does what it does, but answering why can be difficult.
The most powerful thing you can do for employees is to identify why you do what you do and clearly communicate it throughout the organization. You know you have done this well when you can ask any employee for the mission of the organization and you receive the same answer from each person. Your employees will know that they stand for something and that they have a purpose-driven career.
What are the returns on investing in employee engagement?
There exists a strong correlation between high levels of employee engagement and all of the traditional metrics associated with an organization — sales, service, quality, safety, retention, profit and shareholder returns. In organizations that have actively engaged employees, studies have shown that there can be as much as five times higher total shareholder return over a five-year period than in companies with lower engagement. Studies also show faster revenue growth and nearly twice the customer loyalty.
At an individual level, actively engaged employees provide better customer interactions, higher individual customer loyalty, and increased sales and productivity, and they report greater overall job satisfaction. This serves to create a cycle that feeds on itself, to everybody’s benefit. High performance becomes contagious in the right environment. Such a culture attracts those who want to be actively engaged with their careers and tends to select out those who are actively disengaged.
It is worth the investment in taking actions that make employees feel a valued part of an organization. Invest in them personally, invest in their career development and invest in their performance management. Make the effort to get to know them and recognize their contributions.
Maximizing employee engagement isn’t easy and it isn’t automatic, but the dividends it pays are very much worth the investment.
Mark Matuscak is President and CEO of Benefitdecisions, Inc. Reach him at (312) 376-0431 or email@example.com.
Many employers feel they have no control over the health care events of their employee population, seeing themselves as victims rather than informed consumers. However, it’s important to understand there are alternative solutions outside of the “insurance” box options when choosing a health plan for employees.
“As an employer, whether you have 10 employees or 500 employees, there is a whole host of new products and concepts that may make some sense for you — that you really need to explore,” says Mark Haegele, director, sales and account management, at HealthLink.
These options, including small group self-funding, captives, exchanges and co-ops, are growing as the health care industry rapidly changes, based on improved data analysis and the drive to keep overall health care costs down.
Smart Business spoke with Haegele about how these out-of-the-box health plan options work and what advantages they can bring.
What options are available for smaller employers who want to self-fund?
There are a host of new programs under a self-funded environment for employers with 10 or more employees. The 15-life employers may never have thought these options were available, but that’s not the case anymore. Self-funded employers can avoid premium taxes and state-issued mandates, while getting away from insurance company risk and profit. The employer has additional freedom to structure its health plan and can receive more claim information to better manage the health of the employee population, and therefore lower costs. Self-funding continues to be of interest to employers.
How do captives work to some employers’ advantage?
Small employers, with help from third-party claims administrators or benefit consultants, join forces to set up their own captives or use a cell in an established captive to cover risk above a self-insured retention. It’s usually made up of similar-sized employers, not necessarily similar in industry-type. For example, a 50-life employer would take the risk up to $50,000 for each member in the health plan. The captive, getting contributions from all employers, takes the risk from $50,000 to $250,000. The re-insurance carrier would risk all costs over $250,000.
By boosting retentions and pooling risks with other employers — who typically agree to put in wellness, disease management and other programs to lower claims costs — employers hope to keep increases in health insurance costs more in check. Also, all contributions to the captive, such as the $50,000 to $250,000 in the example, are tax-free. Finally, by pooling risks, participating employers can hold on to profits — if premiums exceed claims and other costs — rather than surrendering profits to a commercial insurer, as with a fully insured program. Many employers are looking at captives and starting to understand the advantages.
How are employers exploring the use of health care exchanges, both public and private?
Exchanges are new organizations set up to create a more organized and competitive market for buying health insurance. They offer a choice of health plans, certify participating plans and provide information to help consumers better understand options. Private exchanges are beginning to pop up, and in 2014 government-run exchanges will come on line.
Like a cafeteria plan, the consumer has a menu of insurance alternatives, such as five different insurance companies and six different plans, for one rate. While this creates the ultimate choice, exchanges may not be cheaper. Exchanges take away an insurance company’s ability to decline, drawing bad risk like those with major health problems. Many national insurance carriers say when public exchanges start, commercial population premiums will increase by 40 percent.
Private exchanges may be able use their advantages over public ones to lower costs. Even though they cannot decline, they have more control over who is coming in and can make it less attractive for bad risk through higher prices or benefits. Also, public exchanges must take subsidized members — uninsured with income under a certain threshold — who are likely more of a bad-risk population.
Employers are determining whether to continue to offer a health plan or just pay the penalty and send employees to purchase health care off the exchanges. It’s not as simple as it seems — although an employer may pay $8,000 per employee per year to offer a health plan and the penalty is only $2,000 per employee, typically employees demand higher wages when not receiving benefits. Retaining and attracting key employees could be why employers offer benefits in the first place. There are also tax implications with the decision to terminate, including extra taxes. One model found that Company X with 10,030 employees, where 3,000 highly paid employees purchase health care no matter the cost, paid $26 million more to terminate its health plan rather than raise the employee premium.
What role do co-ops play with alternative health plan solutions?
Health insurance purchasing cooperatives allow small businesses and municipalities to band together to negotiate for improved health insurance coverage for employees. The California Health Care Foundation found that under the right circumstances pools can meet cost and coverage goals and expand insurance choices, but it depends on the cohesiveness of a pool’s members and the market in which it operates.
Whatever health plan alternative you find fits your company best, employers do have options outside of the big box. You can get away from typical insurance companies.
Mark Haegele is a director, sales and account management, at HealthLink. Reach him at (314) 753-2100 or firstname.lastname@example.org.