Stop-loss or reinsurance is a “backup” policy designed to limit claim coverage or losses to a specific amount. This type of coverage ensures catastrophic (specific stop-loss) claims or numerous (aggregate stop-loss) claims don’t deplete your reserves in a self-funded arrangement.
“There are a lot of companies in this stop-loss space, and there are more and more getting into it because the health care law eliminated lifetime limits, and health care costs are driving employers into self-funding,” says Mark Haegele, director, sales and account management at HealthLink.
Smart Business spoke with Haegele about what employers should look for when shopping for reinsurance.
What should employers know about the fixed cost of reinsurance?
The main components of a partially self-funded model are the third-party administrator (TPA) that pays claims; pharmacy benefit manager (PBM) network that contracts with doctors and hospitals for discounts; and the reinsurance carrier, which has the highest cost.
Stop-loss represents a disproportionate amount of the fixed costs for an employer. The smaller the employer, the less risk they’re willing to take, the more stop-loss they’ll need to buy and the more expensive it is. For smaller employers, the reinsurance purchasing decision becomes more relative and important. For example, a self-funded employer with a 500-life health policy might purchase specific stop-loss, paying $200,000 in claims for every member before the insurance kicks in. However, if a 20-life employer purchases $10,000 specific stop-loss, the stop-loss cost will be higher.
How can employers and brokers negotiate with stop-loss carriers?
In the eyes of the reinsurance carriers, there is no perfect model of self-funding components. This opens the door for the employer and broker to play a vital role in controlling the premium and overall stop-loss cost. If you can sell the reinsurance carrier on your vendor alignment — your TPA, network and PBM — you can decrease the premium.
Don’t go to the stop-loss carrier and say ‘I’m a 300-life employer and I want to buy $125,000 specific stop-loss,’ while providing your claims experience. Instead, demonstrate, in a refined and focused way, how you are working to lower the impact of large claims. Your premium might have been X, but you could now get X minus 20 percent. Employers and brokers don’t realize how much negotiation room is available.
How can you demonstrate your management of large claims?
Some ways to control large claim costs are having a dialysis or transplant carve out. You pay a small premium for a transplant insurance policy where any transplant will be completely covered, and then the reinsurance carrier gives you a credit, which often pays for the transplant policy premium.
Another option is working with your PBM. For one reinsurance carrier, more than 25 percent of all of the large claims is represented by prescription drugs. For instance, J-codes — high-cost injectable drugs used for hormone therapy or to treat cancer — often run through the medical plan. Finding a PBM that will further negotiate these J-codes while having a focused managed program can reduce that expense by upward of 30 percent.
When you follow these practices, it helps you when you’re paying your premium upfront with the stop loss carrier and downstream by controlling your overall claims.
How should employers and brokers examine stop-loss carriers to find the best price?
It’s important to know how reinsurance carriers have networks rated. If your network is that stop-loss carrier’s best-rated network, the premium will be lower. Reinsurance carriers evaluate networks with different levels of intensity, and therefore get wide ranging results.
Also, carriers give networks different levels of credibility with respect to discounts. For example, if your network gets a 52 percent discount in metro St. Louis, but the carrier only gives 60 percent credibility to that, that’s only a 31 percent discount. Some carriers give 100 percent credibility to the network.
Mark Haegele, director, sales and account management HealthLink. Reach him at (314) 753-2100 or email@example.com
Insights Health Care is brought to you by HealthLink
Rising health care costs have companies looking everywhere for ways to get expenses under control.
“In years past, we would meet with human resources personnel and explain their renewal increase to them. Nowadays, with benefits costs rising so quickly, it’s an important and high-dollar line item on budgets and profit and loss statements. CFOs and CEOs are asking how to stem the tide of these increases. It’s captured everyone’s attention,” says Dan Wilke, Director of Underwriting at Benefitdecisions, Inc. Wilke says solutions can be found by analyzing medical claims to identify problem areas that can be addressed through plan changes and wellness programs.
Smart Business spoke with Wilke about reviewing claims data and what to do with the results.
What are the major categories of medical claims that impact insurance costs?
Most employee groups are going to have medical claims that fall into six major categories:
• Coronary heart disease
• High blood pressure
How do you gather claims data to analyze?
Most companies can obtain this data from their insurance carrier if the group is larger. There are also analytical tools that mine this data and produce reports that can be reviewed to pinpoint areas of concern that show extraordinary claims history or occurrences. These analytical tools provide detailed claims benchmarks in comparison to other companies of your size and industry. Your benefits consultant should be doing this analysis on a regular basis to advise you on the best strategies for your company.
How can companies use the claims data to lower health care costs?
One method for fully insured plans is to obtain Size of Payments reports from your insurance carriers. These categorize how many claimants incur medical claims in specific dollar ranges. Upon reviewing the data, employers may be able to capture significant premium savings of 25 to 30 percent by pairing a Health Reimbursement Arrangement (HRA) with a High-Deductible Health Plan (HDHP), with limited impact to total out-of-pocket costs.
Can you look at claims reports and tailor wellness programs to fit problem areas?
Absolutely. Some programs, such as smoking cessation, will affect all claim categories and chronic conditions. Companies can educate employees on the damage smoking and poor lifestyles can do, since on average, employees incur three to four times more claims per year if they have negative lifestyles.
When the claims incurred are higher than average in the high blood pressure category, strategies such as a walking program with pedometers can target high blood pressure and help reduce the risk of heart failure.
What else can you do to manage rising costs of health insurance?
The other direct way to manage costs is to have a healthy employee group. Getting employees to participate in a wellness program is the first step, and money can help motivate them. Give them choices whereby if they take a health risk assessment or participate in a wellness program, they’ll get a reduction in their medical insurance premiums, and you’ll start to get their attention.
HR departments also need to work with the C-suite and the owners of the company. When management buys into the concept of wellness, it goes a long way toward improving the culture and motivating employees to change their lifestyles. Even the healthiest groups will include people who have claims resulting from the lifestyles they lead. Companies should promote wellness by changing the culture and getting employees to change their lifestyles, whether it starts with a simple walking program or charging different premium rates based on whether they’re a smoker or nonsmoker.
Claims can be analyzed in a variety of ways to provide cost saving ideas to help manage your medical insurance costs. Work with your benefits consultant to strategize and develop cost-savings options.
Dan Wilke is director of underwriting at Benefitdecisions, Inc. Reach him at (312) 376-0437 or firstname.lastname@example.org.
Insights Employee Benefits is brought to you by Benefitdecisions, Inc.
Companies typically want to do what’s right for those they serve. Key priorities should be customers, investors, employees and the communities in which the company is located — but not necessarily always in this order. The dilemma, however, is that many times short-term decisions can prove to be long-term problems that cause more pain than the initial gain.
It’s difficult to make all constituents happy every time. As a result, management must prioritize decisions with a clear understanding that each action has ramifications, which could manifest themselves in the short, intermediate or long term. Seldom does a single decision serve all of the same timelines. There are no easy answers and anyone who has spent even a short amount of time running a business has already learned this fact of life. So what’s a leader to do?
It’s a sure bet that investors want a better return, employees want more money and benefits, and customers want better quality products, higher levels of service and, oh yes, lower prices. This simply all goes with the territory and is a part of the game. The problem can be that, most times, it’s hard to give without taking something away from someone else. Here are a couple of examples.
Take the case of deciding to improve employee compensation packages. Ask the auto companies what happened when they added a multitude of perks over the years, as demanded by the unions? The auto titans thought they didn’t have much choice, lest they run the risk of alienating their gigantic workforces. History has shown us the ramifications of their actions as the majority of these manufacturers came close to going belly up, which would have resulted in huge job losses and an economic tsunami.
Basic math caused the problems. The prices charged for cars could not cover all of the legacy costs that accrued over the years, much like barnacles building up on the bottom of a ship to the point where the ship could sink from the weight. Hindsight is 20/20, and, of course, the auto companies should have been more circumspect about creating benefit packages that could not be sustained. Yes, the employees received an increase to their standard of living for a time anyway, but at the end of the day, a company cannot spend more than it takes in and stay in business for long.
Investors in public companies can present a different set of problems because they can have divergent objectives. There are the buy-and-hold investors, albeit a shrinking breed, who understand that for a company to have long-term success, it must invest in the present to build for the future. The term “immediate gratification” is not in their lexicon; they’re in it for the long haul. Another type of investor might know or care little about a company’s future, other than whether its earnings per share beat Wall Street estimates. These investors buy low and sell high, sometimes flipping the stock in hours or days. And, actually, both types are doing what’s right for them. The issue becomes how to serve the needs and goals of both groups. When a company effectively articulates its strategy, it tends to attract the right type of investors who are buying in for the right reason. This will avoid enticing the wrong investors who turn hostile because they want something that the company won’t deliver.
When interviewing and before hiring employees, it is imperative that candidates know where the company wants to go and how it plans to get there. Many times, this means telling the prospective newbie that the short-term compensation and benefits may not be as good as the competitors’ down the street, but in the longer term, the company anticipates being able to significantly enhance employee packages, with the objective of eventually outmatching the best payers because of the investments in equipment being made today.
The key to satisfying employees (present and prospective), investors, et al, is communicating the types of decisions a company will make over a specific period of time. Communication from the get-go is integral to the rules of engagement and can alleviate huge problems that can otherwise lead to dissatisfaction.
Knowing what is right for your company, based on your stated plan that has been well-communicated, will help ensure that you do the right thing, at the right time, for the right reasons.
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at email@example.com.
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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 firstname.lastname@example.org 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 email@example.com.
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 firstname.lastname@example.org.
Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.
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 firstname.lastname@example.org.
JOSEPH RODRIGUES is director, projects at HTC Global Services. Reach him at (248) 530-2554 or email@example.com.
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.