Not all of the news is bad, however. The Metropolitan New Economy Index, a study funded by the Progressive Policy Institute and Case Western Reserve University's Weatherhead School of Management, identified what Cleveland business leaders need to do to meet the high-tech challenge.
Robert Atkinson, Ph.D., vice president and director at the Progressive Policy Institute in Washington, D.C., and Paul Gottlieb, associate director of the Center for Regional Economic Issues at CWRU, co-authored the study, which pinpointed areas in need of strategic focus.
How did Cleveland rate? Researchers analyzed indicators including work force education, manufacturing exports, new publicly traded companies, Internet backbone, high-tech jobs and venture capital outlays. The overall economy ranked No. 33, behind Detroit, Indianapolis and Buffalo. San Francisco scored highest with a ranking of 95.6 percent, compared to Cleveland's 29.5 percent.
While Cleveland holds its own in the number of managerial, professional and technical positions, it ranks in the third quadrant and trails far behind comparable cities when it comes to looking outside city limits to provide goods and services to the world.
So what does the Cleveland business community need to do? Atkinson and Gottlieb suggest following the lead of other successful regions.
- Get better, not cheaper.
- Know your region's function in the global economy.
- Create a skilled work force.
- Invest in an infrastructure for innovation.
- Create a great quality of life.
- Foster an innovative business climate.
- Take regional governance seriously.
The push toward high tech is already underway. Upcoming programs centering on high-tech challenges in Northeast Ohio are Tech Transfer and Amenities, Dec. 19, and Creating a Tech Mecca, Jan. 16th. How to reach: NEOSA, (216) 592-2257; National City Bank, (800) 738-3888; Progressive Policy Institute, (202) 547-0001 or www.ppionline.org; The Center for Regional Economic Issues at Case Western Reserve University, (216) 368-5535
When the economy gets stormy, many business owners find themselves having to make some big decisions. Do you cut or increase market? Lay off or retrain your work force? Cut production or re-evaluate your systems? The answers are not alway easy.
In the first of what will be a regular feature focused on sharing opinions on current issues from a variety of business sectors, SBN Magazine took to the streets, or shall we say, the executive offices, to find out what Greater Cleveland's business leaders believe is the first organizational function to feel the pinch when the economy takes a turn for the worse.
Keith Maybee, president, Dix & Eaton
About half of what we do is in the investor relations area, which isn't directly related to economic downturns. On the pubic relations side, although some companies defer budgets, we do not cut back on staff because that's a commitment that we've made to our employees. We manage through it.
We pour our energies into internal initiatives such as our task force dedicated to accelerating our development of the next wave of interactive communication tools and programs. We also accelerated some of our professional development and training programs internally because we have a little bit more time.
Your people are your assets in the service sector so you have to help people kind of reinvent themselves along with the growth of the firm.
Cynthia Dunn, president, CCAD
The first things that get cut are nonessentials. I know companies that have cancelled their company picnics, Christmas parties and those kinds of things.
I've actually worked harder at marketing and getting our name out. If you're not in front of people, then you're not going to get the business and it's going to be a spiraling effect.
Tom Lash, COO, Trivium Technologies
At Trivium Technologies, which is a technology start-up company, we needed to realign some of our expectations regarding potential fund-raising. And like any other company, we took a serious look at expenditures and curtailed any that were unnecessary.
For a company in a start-up mode, there are some very business-critical things that need to go on whether the market is up or down, so set your expectations accordingly.
Edward Hartzel, CEO, Antares Management Solutions
Because we're a service organization that helps reduce other people's costs, we gear our marketing up. Our pitch is we can do it better and cheaper than you are doing it yourself. So a down cycle is a little bit of good news to us.
We have one more way to approach a customer and say, 'Instead of you spending $2 million a year on your systems and your systems support internally, we may be very well able to save you some money. Why don't you just outsource that service to us because we think we can do it for 70 percent of what you're doing it for.
Chris Mather, president and CEO, APSCO International
If you're a product-focused business, you often have backlog you can work with. Problems occur with service industries, such as hotel chains. You have to make moves very quickly or the cost will kill you.
In the manufacturing industry, becoming more efficient is a short-term fix with a long-term payback. Adjustments such as no capital spending, elimination of entertainment and other typical moves will help you ride it out.
If you're looking at a long-term problem, you make long-term solutions, but with a truly short-lived economic drop, the worst thing you can do is lose your work force. Then your organizational IQ walks out the door with it.
Richard Hanscom Jr., senior consultant, Patrick Douglas
Something you don't want to do but that a lot of people do is cut deeply into the sales and marketing departments. If things were going poorly in the markets, you would want to increase your sales efforts for a greater percentage of the business out there and actually reinforce to go more heavily into advertising.
Consumers and buyers all have very short memories. If they don't see your name, they will just forget about you. They have to keep being reminded of what you do and that you do it better than other people can.
But if there isn't a market out there and you're turning out goods, inventories have built up and demand is down. The only thing you can do is eliminate a shift or shut down a line.
A good percentage of our clients come from manufacturing areas like quality control, inspectors and production managers. They were trying to keep people busy painting or doing repair work, but eventually they ended up having to downsize.
Donna Luby, president, Self Funded Plans Inc.
In the current economic climate, companies are clearly focused on reducing costs. Next to payroll, employee benefits are the second greatest cost for most employers, so they are looking at that.
The people I talk to don't want to cut health care and other employee benefits because they feel the economy will pick up again. They want to keep their compensation packages competitive, so companies that would not consider self-funding their insurance during good economic times look to self-funding during a downturn as a way to reduce costs without slashing benefits.
David Enzerra, general manager, The Lubrizol Corp.
When things slow down, we tighten our belts and rely heavily on the versatility of our work force to remain competitive. We cut back on overtime and reduce the need for temporary labor and outside contractors. We value diversification of skills among our employees; therefore, we are able to fill in the gaps with our smaller work force.
When business picks up, we move our own people back across the core process areas as needed. This helps retain work experience and skill sets for protecting our customer service capabilities as well as reducing our costs during swings in the economy.
Dan Kleps, president, BiznessUSA
The obvious, quick answer is to reduce and control costs. But in our case, we pay special attention to how we can take advantage of the downturn to close more business. In fact, we actually have a secondary marketing concept that is launched when a downturn hits.
We sent out the first wave of letters with the following bad times message: ''Cut costs, slash, right-size, down-size, consolidate, pare to the bone.'' When you've done all that you can to reduce costs, it's time to get out there and sell something. How to reach: Dix & Eaton, (216) 241-0405; CCAD, (440) 951-8070; Trivium Technologies, (216) 774-1602; Antares Management Solutions, (440) 414-2000; APSCO International, (440) 352-8961; Patrick Douglas, 216 692 6600; Self Funding Plans Inc., (216) 566-1455; The Lubrizol Corp., (440) 943-1200; BiznessUSA, (440) 824-2000
Deborah Garofalo (firstname.lastname@example.org) is associate editor of SBN Magazine.
If expansion or changes in workflow are in your long-term plans, perhaps another view of your facility is in order. Kucera International Inc. offers that opportunity from its Willoughby office complex at Lost Nation Airport.
Robert Kucera founded Kucera & Associates in 1953 from a small room at Cuyahoga County Airport. By installing surplus military equipment into his plane, he began a company that provided high-tech aerial mapping.
After Kucera's death in 1969, John Antalovich Sr. became president; in 1995, his son, John Antalovich Jr., stepped into the CEO role.
Today, five production offices and 110 employees generate $7 million in annual revenue, mapping more than 700 projects worldwide. And each year, more than $500,000 is spent to maintain the most up-to-date technology.
Mapping services are used in surveying, geographic data acquisition, industrial mining, forestland analysis, large-scale highway design, flood insurance studies, appraisals, planning and facility management. Often, large organizations expand in shortsighted phases. John Antalovich Jr. says that can lead to inefficiency and major logistical problems.
Kucera offers business leaders the opportunity to look at the big picture of facilities and surrounding land from a bird's eye view where wasted space cannot hide.
Ford Motor Co. turned to Kucera a few years ago to document buildings and property at its Avon plant. Lubrizol in Lake County has used the service, as has Owens Corning at its plants across the country. But multisite corporations are not the only businesses finding themselves in need of aerial photography.
Kucera is working with the Cleveland Port Authority mapping the Lake Erie shoreline for planning and growth estimates. And the Cleveland Metroparks contracted mapping services for land development plans and flood studies at the Cleveland Metroparks Zoo and Brookside Reservation. The parks and the zoo will use the photographs for strategic planning.
Kucera uses a variety of photographic and remote sensing technologies that provide details such as the location of manholes, drainage ditches, railroad tracks and utility poles. And infrared imagery is used by nurseries and agricultural companies to detect the health of vegetation and distinguish between small land and water masses.
Real estate companies are among Kucera's fastest growing customer base, along with industrial, engineering and survey businesses, as the company provides site maps that may be required for building permits, says Antalovich.
Facility management has also provided growth for Kucera, and Antalovich says some of the jobs in process are on a large scale.
''They (company managers) need to know where everything is, which way to go, what are points of access and where fire hydrants are,'' he says. ''We're on the front end of that with the photography and the mapping work.''
The bottom line is that now more than ever, it's important to think strategically about expansion. Today's trim and tight mode will eventually give way to boom or bust and as strategists, you'd better be ready when increased sales have your company busting at the seams. How to reach: Kucera International Inc., (440) 975-4230 or www.kucera-gis.com
Deborah Garofalo (email@example.com) is associate editor of SBN Magazine.
As its first president, Michael Benz was a driving force in raising funds and commitments for the Rock and Roll Hall of Fame and Museum.
Today, Benz reigns over another forceful, although less structural, pride of Cleveland -- United Way Services.
In his seventh year as president and CEO, Benz carries a reputation of wizardry. Last year, in the shadow of a faltering economy, he conjured up $42.6 million in donations.
This year's mission is not about cutting up the same size pie, says Benz. It's about building a bigger pie with many more ingredients. But, like every business leader faced with economic uncertainty, Benz is shopping wisely.
SBN Magazine sat down with Benz to discuss methods of survival for an organization that depends on discretionary income and how running a nonprofit like a business is imperative in today's economy.
Should philanthropic giving follow the same roller coaster ride as profits during economic fluctuations?
You can't be philanthropic unless your company survives. But a lot of us benefit from the services, facilities and programs of this safety net of health and human services called United Way. It's not just for people who hit the bump in the road; your life can change in heartbeat.
Three years ago, I was in a car accident and almost died. I needed blood, and a little bit later I needed visiting nurses to help me rehabilitate and learn to walk again. You cannot build the capacity to render that type of service based on a fast or slow economy. It's important that your philanthropy budget remain intact.
What is United Way's strategic plan to ride out the storm?
We look at expenses closer, and you try to maintain where you are with your current set of companies. We are an organization that funds other agencies and programs, as well as assisting at a community level.
You may have to scale back some of those services, but to totally wipe out everything, it's hard to recover from that.
Does United Way have a contingency plan and emergency funds?
We have a reserve. If we got into real trouble operationally, we could go to it. But there isn't enough of a reserve to cover the allocations to agencies for their programs. That's really what we're in business to do --work through agencies and their programs to improve the quality of life.
We raise over $40 million a year, but there's no way we'd have a reserve big enough to cover a whole year of operations. There may be a few less workers and, in some cases, a lot less workers. We can't charge more for our administrative services, so we have to make sure we wring every penny out.
We also have to double our efforts to get people to continue to (donate to) the degree they can handle. We have to be realistic so we don't lose long-term friends and customers for short-term gains.
Finally, we can't be wasteful. We watch our budgets very carefully and have been in the black for the last several years. We'll be in the black this year, even if we have to cut back on programming and/or people and salaries. I don't anticipate that because we've done awfully good planning and we're monitoring it one step at a time. We've been watching the economy for a year, and as it started to slow down, we didn't add a great deal to our budget.
That seems very much in line with a typical business owner, doesn't it?
The mission in a slower economy is to stay in business and keep your current customer base. We can't act like we don't know what's going on in the economy. We have to run like a business because frankly, we're the largest private sector founder of health and human services in this area.
We represent the business community. So if we don't look, act and operate like a business, business leaders and their employees are not going to invest in United Way.
How do you execute this?
We want to be a facilitator, a convener and a better partner for our donors, and create that public/private partnership in health and human services that we've not had before. If it's fact-driven, the facts drive you to a set of priorities. You start attacking those priorities and then you should start being able to measure and benchmark the outcomes.
We communicate and market constantly and give people cause-related marketing opportunities. United Way has to hit certain levels, so we don't want to get into something that won't generate enough recognition and information, as well as the dollars we need.
Are there other changes United Way is going through?
When we do a kick-off, we no longer do it quietly. We continue to make sure that we're in front of the media's eyes. We have our own TV show on cable and we have a radio show. Every chance we get, we try to not only get our name out there but also the purpose of why we're doing this -- we are the most efficient vehicle to bring money in and push it back out. Our administrative fee is approximately 11.3 percent, so almost 90 cents of every dollar goes right back to these programs.
We help people who hit that bump in the road, but we also are kind of this catalyst that works on solving community problems. While we are a charity by organizational structure, at the end of the day our mission is to improve the quality of life for all Greater Clevelanders. We do that by running like a business. How to reach: United Way Services, (216) 436-2100 or www.uws.org
Deborah Garofalo (firstname.lastname@example.org) is associate editor of SBN Magazine.
Economic fluctuations pose challenges for every business.
But when the economy teeters on the edge of recession, the challenges demand action. Often, business leaders face weighing the fluctuating economy against the ability to provide good customer service.
While economists say layoffs decrease the flow of resources and serve to escalate recession, many human resource managers say layoffs are imperative. But others believe in creative alternatives to avoid losing valuable, well-trained employees.
So as some business leaders choose to ride the wave of economic instability, others look at dropping sales and begin to trim jobs. There is no one answer, only one definite fact -- this has been the year for taking a gamble and following your instincts.
Short term vs. long term
When the bottom fell out of the stock market last year, most organizations began formulating short-term and long-term plans. But no one could foresee the recent catastrophic events that sent the service industry into an immediate slump.
Paul Gerhart says working on the human resources side of business today is a daunting task. Gerhart is professor of Industrial Relations and head of the Labor and Human Resources Policy Division at the Weatherhead School of Management at Case Western Reserve University.
He says that to understand the effects of any decision, you must look at different sides of every option. For example, many organizations are opting to rework employees' schedules to lessen costs. However, while shortening your employees' work weeks may seem like a smart way to avoid a general layoff, it may not be the best solution from the human resources aspect.
''Employees want to have some economic security in the job -- how am I going to pay my rent, my auto payment and buy groceries for the kids,'' explains Gerhart. ''The reality is, the same questions start to get asked when you start cutting people's hours.''
Employers may see an immediate reduction in overhead when they shorten hours; however, it does not pack the wallop of a layoff because there is no proportionate decrease in employee benefits. Benefit packages can account for up to 25 percent of the cost of an employee to an organization.
Gerhart says that a shorter work week has an immediate effect on spending patterns because people are forced to tighten their belts.
''I don't know about your household, but if my pay went down by 20 percent, my wife would notice it,'' he says.
Besides, not every company has the team orientation and camaraderie amongst the employees to withstand spreading out the pain to avoid losing anyone. Warns Gerhart, ''It will not work in every organization.''
Daniel Serbin, vice president of human resources at Parker Hannifin Corp. in Cleveland, says it's a matter of balancing the volume of work with the economic environment and your company's pressure to deliver product.
Cutting the work week may mean losing good employees to industries still thriving, says Serbin.
''I think you really have to look at the economy and the recovery cycle,'' he says.
Serbin says employees will not tolerate an extended period of fewer hours and less pay, even if it's done with the intention of saving jobs. If the sales drop in your industry looks like more than a blip in the economy, the better course of action may be letting newer employees, weaker performers and temporary staff go in order to hang on to the more valuable personnel.
But that jeopardizes a company's overall capabilities when the economy does comes back, especially if the industry demands a fast turnaround time from order to shipment.
''You always have to balance it,'' says Serbin. ''If they're blips in the economy, we don't make major work force adjustments.''
At the other end of the layoff debate is a concept known as labor hoarding. Labor hoarding is what happens when workers with technical, semi-technical or machine-specific training move into other positions, even an unskilled position, just to keep them on the payroll.
This strategy also keeps layoffs to a minimum and avoids the high cost of training new employees if or when business picks up.
Alan Clardy, professor of Labor Relations at Towson University in Maryland, studies human resource trends globally. He says employers are becoming more aware of the true loss to a company when employees leave.
Maintaining intellectual capital and knowledge management are two areas on the rise. Because of the high cost of education and productivity losses with new hires, many companies are looking at ways to account for the brainpower and skills of employees.
Before losing an employee, Clardy suggests making sure all that person's knowledge regarding the business is maintained and is accessible.
But Gerhart warns, ''If you're going to use the labor hoarding approach, that suggests you're going to continue to pay your employees at least full-time pay, so you have to be confident that things are not going to be down very long.''
And there's another factor. New, less challenging roles can lead to employees who feel underutilized and start scouring the want ads. So is labor hoarding a reasonable short-term fix?
''Absolutely,'' says Gerhart. ''But it takes more analysis. You have to go one or two steps further to find out what the real impact will be.''
Carla Gold is a general manager in one of harder-hit industries -- hotel hospitality. Gold manages the Radisson Hotel in Cleveland and says business has been dropping approximately 20 percent a month. Reports abound of hotels cutting staff, but the Radisson is not among them.
Because unemployment was so low in 2000, Gold has been running with a lean staff for a year. And, although sales are down, she is not planning layoffs or shorter work weeks.
''We had a meeting with all our managers. ...We're not going to ask for 20 percent pay cuts,'' says Gold. ''We are going to ask you to work 20 percent more.''
Gold's answer to the downturn is, ''Work harder, and give our customer a satisfying experience.''
Few people are willing to predict where the economy is headed and when it will get there. That means companies will continue to make educated guesses on what to do and when to do it to best benefit the organization. How to reach: Case Western Reserve University, (216) 368-2045; Radisson Hotel, (216) 377-9000; Towson University, (410) 704-3215; Parker Hannifin Corp., (216) 896-3000
Deborah Garofalo (email@example.com) is associate editor of SBN Magazine.
They sold high-end products in not-so-high-end consumer markets. County Line offered the best birdfeeder in the world and the highest quality Christmas tree stands.
When microchip voice technology was introduced, County Line designed, manufactured and distributed a battery-operated CPR training and rescue device that talked users through cardiopulmonary resuscitation. Lindseth and his partners saw that device as an opportunity worth pursuing in the commercial product market.
The device failed in the retail market, but Lindseth and his partners were convinced it had potential. They acquired medical training companies and established offices nationwide to provide large organizations and hospitals with CPR and related training services, and in 1997 they formed CPR Prompt LLC.
CPR Prompt grew, but not enough to meet its goals, admits Lindseth.
''The cost of customer acquisition was too high, and the people and facilities infrastructure we had to maintain was killing us,'' he says.
To ignite growth, Lindseth and company bundled training, equipment service, medical direction and process management with a product that had recently been released to the commercial market -- automated external defibrillators (AEDs). They also decided to expand out of just medical training and into a variety of health and safety compliance topics. They renamed the 45-employee company Complient to reflect the greater breadth of services. The idea worked.
Today, Solon-based Complient is infused with $70 million in investments and boasts more than 400 employees working in two distinct divisions. The company designs and implements software-based compliance business process automation solutions that are used by such high-profile clients as Amtrak and Gillette, as well as by 30 malls nationwide.
It's been a fast ride for the bespeckled and highly driven Lindseth and his team. But as he's embraced change and helped craft a business model poised to carry Complient into the 21st century, there's been one constant -- Lindseth has left nothing to chance.
The power -- and distraction -- of compliance
Approximately 600 Americans die every day from cardiac arrest. An estimated 95 percent of those die before reaching a hospital. When defibrillation is provided within five to seven minutes, shocking the heart back into rhythm, the survival rate increases to 49 percent.
Raising that statistic is just one of Complient's missions. Developing and implementing software to get and keep a business compliant with laws, policies and procedures is another. It does so through software similar to that which allows companies to automate such systems as accounting, sales and customer relations.
''Compliance is like friction in the organization,'' Lindseth says, adding that every minute a manager is focused on compliance issues is time taken away from what that person was hired to do. ''If you can minimize that, you can turn compliance into a competitive weapon because you can allow your resources to be focused on getting and keeping customers, not on staying out of the penalty box.''
That's the idea behind Complient's products. Its software takes the guesswork out of staying within regulatory guidelines and even notifies administrators when regulatory deadlines approach and employees do not follow specific procedures and workflows, whether it is reading and understanding a policy, taking training or performing an incident management protocol.
And, because it is people who must comply with regulations and people who jeopardize the health and reputation of an organization when they fail to do so, compliance falls on the shoulders of the people managers. But those duties are only one piece of a manager's total responsibilities, and while high on the list of priorities, compliance often plays second fiddle to day-to-day revenue-driven activities, a risk no manager purposefully chooses to take.
That's why Complient's products are designed to reduce the time needed to devote to compliance issues and to improve the process as a whole, including the ability for a corporation to measure the effectiveness of its compliance programs and improve them where they are not effective.
Kenneth Frato, environmental, health and safety manager at Lubrizol Corp.'s Painesville plant, says meeting federal, state and local regulations is an all-encompassing task. Four engineers work with Frato to integrate regulatory requirements into the 200-person work force that manufactures high-performance chemicals, systems and services for industry and transportation.
Frato agrees that electronic access to information is an important part of monitoring environmental requirements and corporate success.
''You used to be able to take a three-ring binder and put all the information that you needed to know on the regulatory side in this three-ring binder,'' says Frato. ''Now, you'd have to have a couple CD-ROMS to contain all that.''
Compliance, Lindseth stresses, does more than cover environmental health and safety, disaster recovery and business ethics such as sexual harassment and the Foreign Corrupt Practices Act. Following legal regulations is just a single cell within the total organism of a business.
''It (compliance) reaches into everything you do, into every business process,'' including training, managing policy documents, workflow and crisis management protocol, Lindseth says.
Compliance includes all activities associated with meeting or exceeding regulations, policies, procedures and best practices to create a safe, ethical and productive workplace. Following regulated guidelines keeps employees, customers and the environment safe. Haphazard processes left to chance can mean the success or failure of an entire organization or, worse, the life or death of an employee.
And, the billions spent by American businesses to comply with federal regulations can grow exponentially when state and local requirements are included.
Adapting a holistic approach
Complient was born four years ago as a products-oriented business, but as business leaders embraced the idea of creating a safer work environment, it has evolved. Lindseth was quick to recognize that a safety program was more than a CPR device.
He and his team identified a vast opportunity to help clients create an overall safer workplace by managing health, safety and OSHA compliance with Internet-delivered software.
A little due diligence uncovered that American businesses spend $688 billion each year on various aspects of compliance management. Lindseth and his team wondered, ''What if there were a software management system that tied together all the splintered programs?''
By 2000, an expanded version of the firm's initial software that had been developed for internal use was introduced. It allowed for continuous training, documentation, availability of data for an audit trail and means to monitor the program's success. When it became clear that the software tool was a potential product that could be sold to large organizations on a stand-alone basis, Lindseth segmented the company into two groups -- the eBusiness Group, which focuses on continuing to develop and market Axess, the company's business process automation software, and the Services Group, which provides a variety of health- and safety-related solutions, including the company's emergency medical response system.
Together, the two create impressive synergy and offer support to 140 health and safety trainers across the nation. Utilizing their own process and monitoring program to assure consistency and up-to-the-minute data, more than 240,000 people have been trained in more than 100 compliance areas.
''We're interdependent and leverage one another's strengths,'' says Robert Thompson, president and COO of the Services Group. ''Our core competency within the services group is our ability to take any health and safety topic and produce an integration solution for our clients.''
Under this scenario, Complient does not have a true competitor. Instead, fragmented parts of the whole are offered by consulting services or equipment companies. One may offer safety equipment and training; another may have software to monitor programs already in place; a third may have consultants to look at weak policy links and offer advice. None had pulled it all together into a single source solution.
''In order for us to create this total solution, we had to find automation ... otherwise, it's just adding bodies, and that's not a very good business model,'' Lindseth says. ''For business software, there are a variety of kinds of professional services that need to be wrapped around it.''
Further development of the Web-delivered software allowed for automation of federal, state, local, industry and association-driven regulations that define, distribute, administer and measure every internal business process -- much like the lifeblood of a business.
The same software helped Complient build its turnkey management solutions, which last year attracted $70 million in investments from key health care industry players such as The Cleveland Clinic Foundation and Healthcare Equity Partners, and from leading financial partners such as JP Morgan Partners, Goldman Sachs, Chase Capital Partners, Cleveland Pacific Ventures, Roundwood Capital, Medtronic Corp., BancBoston Ventures, National City Ventures and Primus Venture Partners.
The metamorphosis from 45 employees to 400, a supporting infrastructure and the division into two distinct, focused business groups was a process that contained its share of bumps in the road.
But, as Lindseth says, ''Those companies that remain agile remain successful over time.''
A string of hirings in early 2000 set up the current management team. In January of that year, Thompson joined Complient. He had been the COO of DentalCare Partners, the fourth largest dental practice management company in the United States, and had held several executive management positions with Revco D.S. Inc.
To handle the new eBusiness Group, Theodore Frank was appointed president. As co-founder of PlanSoft Corp., Frank brought extensive experience in sales, marketing and business and software development.
To shore up the board of directors, Lindseth attracted John Connolly, president and CEO of Mainspring, now global head of IBM's eBusiness consulting, and Robert Lauer, retired global practice manager for Accenture's high-tech change management practice. And in January of this year, Michael Bukuts was lured away from LuK Inc. to be Complient's CFO.
eBusiness -- the true value proposition
With laws supporting the need for regulatory compliance, perhaps the riskier part of Complient's business model is the eBusiness Group. In the 18 months since its conception, it went from zero revenue to signing several multimillion dollar contracts.
Frank says the deals validate the opportunities that exist.
''You've got to be able to define a market opportunity, act against it and modify it as quickly as humanly possible to go with the market shifts as you refine value propositions,'' he says.
Complient's business process technology is designed to mitigate a company's risk factors. By defining best practices, members of management can understand how they affect various departments within an organization and business partners and customers outside the company. They can then design protocols to launch training, reporting and analysis to understand how the current processes affect the company's success.
''It's the ability to come from that perspective and bundle the appropriate technologies to make and address a business process that makes us unique,'' Frank says.
The prepackaged, pre-integrated applications offer a learning management system, document management system, workflow management system, risk mapping and organization mapping.
''The question is, do you want your people focused strictly on administration vs. the measurement, the analysis and the improvement, which I like to call organization performance?'' Frank says. ''Right now, they're spending 90 percent of their time administering.''
Because of this dilemma, one of Lindseth's focuses as CEO has been on efficient delivery methods.
Thompson agrees and believes the company's software solutions create a competitive advantage for Complient in the marketplace.
''The technology (we use) provided us a differential with our customer,'' he says. ''We can provide a suite of services through the Web-based technology that others can't.''
Lindseth recognized the market opportunity to sell enterprise software like Axess was large and that Complient had the chance to be the first in this market. In addition, by utilizing the application service provider (ASP) model of delivering a hosted application on an annual license, the company could create a recurring revenue model with more predictable future revenue streams.
ASPs require no special servers or configurations, and upgrades are automatic. By using a Web-based application, it can not only be shared within the company but also with business partners, vendors or customers. Under the Right to Use license, customers enter into annual agreement contracts. This, says Lindseth, allows Complient to use the Web as a business tool instead of as a basis for the business itself.
''The days of looking for a pure Internet strategy, per se, are already over,'' he says. ''It's a very important tool, but if you don't have a sound business with real revenues and real gross margins, you don't have a real business.''
And, while Lindseth has surrounded himself with experts in their respective fields, he admits they are not in the regulatory content business. That's one reason he chose PricewaterhouseCoopers as a delivery partner.
PricewaterhouseCoopers is a worldwide consulting organization that employs more than 150,000 people in 150 countries. Its consultants sell knowledge and business process improvement services. Together, they market Complient's software and PricewaterhouseCoopers' consulting services as a total solution.
According to Dion Sheidy, PricewaterhouseCoopers partner located in Pittsburgh, his company has begun utilizing Complient and its software platform to provide integrated solutions to its clients.
''The biggest opportunity initially appears to be in the pharmaceutical industry subsector because of the current regulatory environment and the fact that these are very globally focused organizations,'' says Sheidy.
Although still in the infancy stage of development, Sheidy says, ''I think Complient's platform is a great platform and can bring significant value to our clients.''
Lindseth says that as laws or compliance-related practices change, he's ready to react in a heartbeat. In November 2000, President Clinton signed the Cardiac Arrest Survival Act and The Rural Access to Emergency Devices Act. The Cardiac Arrest Act requires AEDs be placed in all federal buildings.
The Rural Access Act authorized $25 million in federal funds to assist rural communities in purchasing AEDs and receiving the required training. Both could translate into windfalls for Complient's products and services, an opportunity of which Lindseth is well aware.
Remember, it can be a day like any other. You may be working, shopping, riding a bus or watching a football game. Your mind is elsewhere when you first feel lightheaded, then feel pain and pressure. Within seconds, you are out, unconscious, and now your fate lies in the hands of co-workers or strangers.
Will someone know what to do to keep you alive when cardiac arrest stops you in your tracks? Steve Lindseth certainly hopes so.
How to reach: Complient, (440) 498-8800
Keeping employees safe and healthy is one of the biggest concerns for many business owners.
Three out of four companies in the Greater Cleveland have written programs on general safety and safety procedures, according to the second annual Workplace Practices Survey conducted by the Employers Resource Council and SBN Magazine. Approximately the same number of companies provide personal protective equipment such as work boots and safety goggles.
Even though workplace safety is a serious issue, it is the issue of ergonomics that has dominated the minds of both Congress and business owners.
Ergonomics has become a hot topic with the increase in the number of people suffering from carpal tunnel syndrome, an injury caused by excessive and repetitive movement. Ergonomics legislation recently failed in Congress.
Without a doubt, the ethical side of maintaining a safe work environment offers a strong incentive for business owners to comply with governmental safety regulations. A company's expenses due to lost-time accidents and litigation make compliance all the more compelling. But when all else fails, the Occupational Safety and Health Administration (OSHA) steps in as Big Brother, which can end up costing businesses.
Scott Lefelar, an attorney with Cleveland-based Millisor & Nobil Co. LPA, specializes in labor and employment issues. He is well acquainted with the outcry from business owners that occurred when the OSHA ergonomics proposal was moving forward.
Businesses were concerned because they believed "there wasn't enough research done on some of the causes of repetitive stress disorders like carpal tunnel and whether or not this expensive proposal would actually do anything to help," Lefelar explains.
As a result, the proposal was squashed and OSHA was asked to do additional studies on the effectiveness of the workplace changes suggested in the proposed legislation.
James Koewler Jr., a principal in the law firm of Kahn, Kleinman, Yanowitz & Arnson Co. LPA in Cleveland, counsels industrial, manufacturing and service industry clients in occupational safety and health compliance. He also watched the proposed ergonomics law closely and says business that were familiar with it, were, to say the least, not too happy.
"The devil is in the details," says Koewler.
If an employee were absent due to an ergonomic-related health issue, the law would have overridden state workers' compensation laws and required the employer to pay 100 percent of the employee's wages for up to 90 days while he or she was off.
"That, in my mind was the biggest weakness this thing had," he says.
Koewler feared the change would cause healthy employees to cry ergonomic injury. The proposed law also had another flaw, in his opinion. Any ergonomic injury would require employers to respond immediately, taking it for granted that the employee's employment-related activities were the cause of the problem, regardless of individual activities outside the workplace.
There was no provision in the law for the ability to say after investigation that the injury was not job-related.
"Someone that has a sore elbow because they play tennis every night ... if that person's elbow flares up while at work ... they (the employer) have to act as though the job is a problem job, even though it's the employee's lifestyle that seems to be the problem," Koewler explains.
Most business owners agree the initial step in correcting ergonomic problems within any company is to identify problem areas themselves rather than incur the costs of an ergonomic inspector. How to reach: Millisor & Nobil Co. LPA, (440) 838-8800; Kahn, Kleinman, Yanowitz & Arnson Co., LPA, (216) 696-3311
Not only have unions undergone an image makeover but, says Steven Nobil, a partner in the Cleveland-based law firm Millisor & Nobil Co. LPA, the new millennium brings a high-tech, updated corporate feel to the nearly 100-year-old organizations. With millions of dollars at stake, today's unions operate as large businesses; some carry a net worth of more than $100 million.
So be warned. If your employees are unhappy over more than just wages and benefits, your company could be ripe for a union drive. Clever organizers know that when respect and dignity are at the root of disgruntled employees complaints, more often than not, a union drive will succeed.
Nobil asks one simple question: Would you recognize a union organizer if he or she walked through your company's front door? And would a union drive succeed in your company?
Welcome to the 21st century organizer
The sterotype of cigar-smoking, table-pounding intimidators has been replaced by businesspeople who possess all the traits of the accomplished entrepreneur. They are well educated, tactful, patient, likeable, technologically savvy and empathetic. Long-range plans and carefully thought out budgets are also a part of today's unions.
"For example, the steelworkers in 1999/2000 increased their dues in order to triple their organizing budget to a reported $40 million," Nobil says. "During that same time frame, they added 34,000 new members."
It's a simple equation: New members equals new money.
Whether it is an existing employee or a union-paid representative, the person attempting to organize in your plant will know almost as much about your business as your most respected manager. The more that person knows, the greater the success rate. And with salaries based on commissions and incentives, success translates into dollars for the organizer.
The AFL-CIO is starting its recruitment efforts early, utilizing a nationwide program for part-time workers and college students. With its summer intern program, college students are given the opportunity to earn while they learn. While on salary with the union, these part-time workers infiltrate manufacturing companies and fine-tune organizing skills as they drive membership numbers and plant the union seed.
A smarter style
Blue-collar workers have evolved into tech-savvy computer junkies and weekend Wall Street traders, and union tactics have evolved with them, Nobil says. The greatest danger to business owners is not what the unions know about the company, but what the business managers do not know about the unions.
"One of the biggest things unions have learned is to go underground," says Nobil.
Previously, a notice on the bulletin board or union cards in the lunchroom served as red flags for management. Unions recognized this and understand a battle is more easily won when the opposition is asleep. So organizers have replaced authorization cards and closely guarded petitions.
One by one, face to face, union organizers solicit employees, who then carry the movement deeper into the organization.
As the work force diversifies, unions have turned to representatives who fit in with the ethnicity of a company's makeup. A company with a predominantly Hispanic employee base will get an Hispanic representative; a staff made up mostly of women will get a woman organizer. Sometimes, a retired employee is brought in to solicit the campaign effort.
Nobil says today's tactics include spreading Web site names and sending out videos featuring employees loyal to the union movement. But, Nobil says, unions experience the greatest success from personal visits to employees' homes.
"If they go to the homes of employees, they know they're going to win about 75 percent of the time," he says.
That conversion rate drops to less than 40 percent when no home visits are done.
Signs and symptoms
Just because a company has an unhappy work force does not mean the union virus is sure to follow. Nobil says complaints about disrespect rather than about wages and benefits are more likely to result in an organizing campaign.
He points out that organizations with fewer than 75 employees are typically good targets, with a unionization success rate of between 55 percent and 60 percent; work forces with 250 or more employees reject union drives approximately 80 percent of the time. Unions, he says, have learned to play the odds.
With a greater concentration of women in the work force, union organizers view the growing segment as "the future bread, butter and caviar," Nobil says. Women comprise 40 percent of the nation's organized work force. Backing specific issues such as rallying for flexible hours to meet the dual demand of family and career has proven successful in capturing support from women, he says.
One final thought, Nobil says: Unions are not immune to the normal pressures facing traditional business owners, and the old adage holds true -- it takes money to make money. A 1984 poll about union support revealed that only 12 percent to 14 percent of Americans had a positive opinion about unionization. So in true union fashion, leaders poured more than $15 million into a "Union Yes" campaign.
The result? The next poll showed a dramatic leap in positive views about unions, to a whopping 60 percent.
How to reach: Millisor & Nobil Co., L.P.A., (440) 838-8800
Deborah Garofalo (firstname.lastname@example.org) is associate editor of SBN Magazine.
In today's litigious society, businesses are spending more time in court. It is becoming more popular to face a judge than to face an ex-employer. How did people learn to put their fate in someone else's hands? John and Patti Bertschler believe it was taught.
''That's what we've been raised to do,'' Patti Bertschler says. ''Basically, the mindset of people is, 'I am in conflict, call an attorney.'''
John Bertschler, a licensed psychologist, says we learn from an early age how things are handled --bring in the teacher, take it to a parent, turn to the judge.
''We don't settle our disputes for the most part,'' he says. ''It's a new mindset to suggest to people that they settle their own (disputes).''
Some would say that adults have not wandered far from that mentality; therefore, we have an overburdened judicial system. And unlike the watered-down 60 minutes of cross-examination, snappy retorts and alarming evidence on highly rated television legal dramas, litigation is an emotional and financial drain on both parties.
The Bertschlers founded Northcoast Conflict Solutions in 1997 to offer an alternative to litigation. They bring mediation, along with conflict management training and conflict resolution education, into the workplace with educational seminars.
And while other regions have been quick to adopt mediation for business-to-business battles, the Cleveland area has been a bit slower to adopt the process as an alternative to court.
Mediate or arbitrate ... that is the question
Rather than cast one's fate to strangers, mediation offers those most in touch with the issues and facts the opportunity to air their grievances.
A mediator is a neutral person who helps pull out the facts and lay them on the table. When warring factions are familiar with each other, the mediator facilitates face-to-face discussions to get one step closer to resolution.
Mediation requires consent from both parties. That's where an arbitrator comes in. As with mediation, arbitration asks a panel of people to sort through data and pull out the relevant facts. The difference, however, is that the decision handed down by the arbitrators is legally binding.
Is arbitration less expensive than court? Yes. But the drawback is that it doesn't keep the issue in the hands -- or control -- of the warring factions.
The few, the brave, the mediators
A psychology degree does not cut it. Nor does an attorney's license. The role of mediator requires specific education in skills, techniques, processes and disclosure methods.
Jerome Weiss says rather than seeking out someone with expertise in the disputed subject matter, look for someone who conveys neutrality, creativeness, diplomacy and timing.
Weiss formed Mediation Inc. after practicing law in Cleveland for 15 years.
''Mediation is as much as an art form as a skill set,'' he says.
As a professional counselor, Patti Bertschler makes conflict prevention her life's work. By incorporating conflict management, assertiveness training, anger management and communication training into her seminar schedule, she believes costly behavioral issues can be resolved.
Conflict, she says, affects the bottom line by robbing productivity with arguments, depression and even violence. Proactively addressing communication weaknesses helps curb conflict before it ever develops.
Much like choosing a physician, working with a mediator requires a comfort level that comes only from personal judgment. But with almost 100 pages of attorneys in the Yellow Pages and less than one column of mediators, Clevelanders are more often going to court.
Weiss agrees that Ohio is behind the curve in accepting and promoting mediation, but successful mediation statistics have not gone unnoticed. California and Florida incorporated mediation as part of a statutory mandate that requires specific types of cases to go through mediation before entering the courtroom. That's cut down on the backlog in the traditional court system.
Both sides of the bench
The public disclosure of sensitive issues can leave businesses with black and blue marks after a trial ends. With a decade of mediation experience behind him, Weiss sits between disputing parties as often as he stands in front of the bench.
''All too often, I found people walking away from the jury process saying, 'If I'd have known it was going to be like that, I definitely would have done something much different here,''' Weiss says.
It is not unusual for litigation to take from one to two years to work its way through the courts. Weiss says he recently closed a wrongful termination case in discrimination through mediation that took six months. Both he and the corporation's attorney agree that the process saved the company $100,000 just in discovery expenses.
According to Weiss, more than 90 percent of cases filed in U.S courts are resolved through nontrial disposition -- in other words, settlement. In the meantime, those cases require exhaustive time and extensive financial resources and drain all the same from the employee who burned his or her bridges.
Along with obvious cost savings, mediation offers a lasting, more amicable business relationship. Too often, ''everybody gets horribly bloodied through the litigation process,'' says Weiss.
Mediation emphasizes the emotional aspect of feeling wronged. Unlike the court system that deals only with facts, mediation includes emotion by allowing the parties to air complaints not considered relevant in a lawsuit.
And, rather than invest in a process that will end in some type of negotiation anyway, Weiss sees more and more business leaders turning to alternative dispute resolution. But, he says, he doesn't expect it to be enough to make a dent the courts' heavy caseload.
Who could benefit most? Weiss says anyone in a situation in which both parties recognize the virtue of staying out of the judicial process. That includes contract disputes, product quality problems, company dissolutions, discrimination accusations and employee terminations.
In the court system, the person who appears to be the victor is often just as frustrated as the loser, with lost resources. Weiss says he gets a much greater sense of satisfaction when resolving a case through mediation.
''The parties feel much more rewarded walking away from that process than they do from the litigation process.''
Van Uum who at the time was an in-law of the brothers who founded Borders was inspired by that bookstore’s success. Today, he is the sole owner of Joseph-Beth, which has grown into a chain of eight independent stores in four states - impressive in an industry in which Amazon, Barnes & Noble and Borders are competitors. Van Uum spoke with Smart Business about how he remains independent, taking risks and the importance of being humble.
This may sound counterintuitive, but in order to do well in business, you have to have a good deal of humility. And by humility, I mean the sense that I need to recognize my own weaknesses. We all need to know where our weaknesses lie.
Most businesspeople tend to fall either on the functional side or the creative side. Either you’re the kind of guy to come in every day and think about what plans you put in place yesterday and how are they working today, or you’re the type that looks at life and says, ‘Gee, I’ve got issues and problems to deal with; I need to fix them for tomorrow.’
Organizationally, you have to build your management team around you to support your weaknesses. Even then, if you think you’ve got it figured out on one side or the other, you have a sense of always learning from others and trying to understand how to get better.
All along the way, you have to appreciate the people and the relationships you form. You may need to call on them from time to time, whether it’s people that work for you that really dig in and help you solve a problem or work extra hard to get through something ... then having the sense of trying to understand how to honor those relationships and build on them.
Sometimes I look at people who fail and say, ‘You know, you didn’t listen to anybody or look to form win/win relationships.
It takes a lot of different factors to be successful. ... I believe a lot in teamwork and in a management team and it’s so important that you all have good chemistry. It’s important that (your management team) helps you blend into an organization that has all your bases covered.
And then, be willing to work pretty hard and be a good, quick decision-maker.
On being independent
I think there’s good and bad in size. Clearly, larger competitors have a lot more resources at their disposal, whether it’s inexpensive Wall Street money to grow their company, whether it’s buying leverage because they are a much larger customer to their suppliers, whether it’s the ability to leverage technology and information to better, more-efficiently operate their businesses, on and on. Large retailers have a lot of benefits.
If I had 1,000 bookstores, I would, in some ways, be smarter. On the other hand, an independent retailer is more attuned, usually, to their community, usually has management that is more empowered to be reactive instead of sitting back and waiting, and proactive in the sense that I trust the team’s opinion about what to do with this store, what changes to make and what events and what inventory will work. We move much quicker. There’s a difference, pro and con.
We have to be better than (the competition) or we would be dead. We don’t have the brand awareness they do or the buying clout all that goes with being a $5 billion company. So we have to be better at most phases of the game.
On seizing opportunity
I didn’t even want to have more than one store. I had young children and I just was really intrigued by what a bookseller could be. We opened our first store and were successful. A year later, we knocked out a wall and took the space next door and we were at 10,000 square feet.
A year-and-a-half later, the anchor tenant went out, and I said, ‘What the heck? We’re doing well, let’s move down there.’ So we moved the store and then expanded that space twice.
On making a difference
The work we do is important in the sense that ... a lot of people come here at transitional points in their life I’m getting married, I just got married, the doctor says I’ve got an illness, I’m getting ready to take a trip, I’m getting divorced. There’s a lot that happens in this store where people come to us for answers, for hope, or for escape and education.
We try to attach a sense of community to that. We are unabashed in support of local writers you write the book, we carry it.
We do a lot in the way of community partnerships and trying to understand the important organizations in town that we can work with, help, synergize with. As we look at retailing and the people aspect of what we do here, we place a lot of capability or empowerment to make this store as responsive as it possibly can be in the ... Cincinnati community.
I look at these other retailers and I don’t know that they care. I don’t know that anybody comes down and says, ‘Hey, let’s see what we can do to focus on the community.’ There are companies that do, but most companies I don’t think pay much credence.
HOW TO REACH: Joseph-Beth Booksellers, www.josephbeth.com