Jason Stahl

Thursday, 26 July 2007 20:00

Health Savings Accounts

A healthy and happy workplace is a productive and profitable one. That’s why many companies have started offering Health Savings Accounts (HSAs) to their employees.

“There are no retirement plan vehicles that offer a triple tax preference — tax-free in, tax-free growth and tax-free out — like an HSA does,” says Amy Chambers, director of consumer engaged health care for Priority Health, a Michigan-based health insurance plan. “Employers are able to lower their premiums immediately, and employees get the peace of mind knowing they can cover any unexpected future medical costs.”

Smart Business spoke with Chambers on what advantages both employers and employees can gain by getting involved with HSAs.

What is an HSA?

HSAs are employee-owned, portable, tax-free trust accounts. Employees, their employers or both can contribute to an HSA when the employee is covered by a high-deductible health plan. Employees may use the money at any time to pay for qualified medical expenses or save it for future expenses.

What are the advantages employers gain by offering HSAs to employees?

The financial benefit is that employers are able to lower their premiums immediately with HSAs and set themselves on track for lower long-term premium trends in the future. Another benefit is that HSAs will also play a competitive role in the labor market as many new workers are gravitating toward these types of plans. As these accounts take hold, employers will have the opportunity to maintain a competitive cost advantage while increasing their ability to attract and retain good, qualified employees.

The engagement of employees in their own health care will prove a benefit for both employees and their employers. Finally, employees will learn that there’s a direct connection between their good or poor lifestyle decisions and the higher costs that come with the poor decisions. We’re certainly not saying that all medical costs are attributable to lifestyle decisions, but we do know that many of them are.

What are the advantages employees can gain in participating in an HSA?

Employees must pay for their own services up to the deductible, but above that, there’s the security of the high-deductible plan with an out-of-pocket maximum. HSAs also carry great tax savings since HSA money goes in tax-free, grows tax-free and comes out tax-free, as long as it’s used for qualified medical expenses. There’s no other tax shelter like it out there.

Additionally, these accounts are portable, meaning that the money belongs to the employees and follows them through their careers. Employees can make their own health care decisions, and those who manage their costs well are rewarded with increased savings.

Finally, the longer they’re in the plan, the greater the savings. For many people, that will form a powerful part of their retirement plans in years ahead. The rewards of an HSA can be great. If an employer is willing to invest in their employees’ HSA education and can make a contribution to each employee’s account to get the ball rolling, an HSA can make financial sense for almost any employee.

Are there any disadvantages to HSAs?

The biggest is that they’re new, and for employees who don’t like change, ‘new’ can be bad. So, we don’t suggest that employers can just drop an HSA into their business and consider it done. They have to work at educating their employees on how these plans work. Employers need to make sure they understand how these plans will work for them. We also think it’s important for employers to keep supporting the plan after it has been launched. They must keep demonstrating their commitment to its success, keep educating people — especially new employees — and continue to help employees use the plan well and effectively. This isn’t a one-year tryout. Employers have to be in it for the long run for the benefits to accrue for themselves and their employees.

Where does an HSA stand in value in comparison to other employee benefits an employer can offer?

I would put an HSA right up there with the best that both health care and retirement plans have to offer. There are no retirement plan vehicles that offer a triple tax preference — tax-free in, tax-free growth and tax-free out. The best an employee can get with a retirement plan offering is two tax preferences out of the three. Providing employees with a high-quality, sustainable health care product like a high deductible health plan, accompanied by a tax-preferred account like an HSA, could be an exciting addition to any employer's benefit lineup.

AMY CHAMBERS is director of consumer engaged health care for Priority Health, a Michigan-based health plan. Reach her at (616) 464-8540.

Monday, 25 June 2007 20:00

Wellness counts

In the current economic climate, employees rank among a company's most important assets. It makes sense that healthy people make for healthy companies. Yet, experts suggest preventable illnesses make up approximately 70 percent of illness and associated costs in the United States.

“Investing in your employees’ health is one of the soundest investments employers can make,” says Eugene Sun, M.D., M.B.A., vice president of Medical Affairs for HealthAmerica. “By initiating a health promotion program, employers can take important steps toward preventing unnecessary sickness.”

Smart Business spoke to Dr. Sun about why employers should be concerned about their employees’ wellness.

Why would a company invest in workplace wellness?

More and more health experts are turning that question around and asking, ‘How can a company not invest in the health of its employees?’ The evidence is becoming quite convincing that keeping employees healthy and on the job is worth the effort. After all, if you can reduce the burden of illness among your work force by preventing major causes of sickness, more of your employees will remain healthy and productive. You most likely will save money in the process.

What’s the real return on investment with worksite wellness programs?

That turns out to be one of the most incisive questions of all. In the last decade, large-scale studies on the effects of work-place health programs have shown a dependable bottom line. These studies show worksite wellness programs often result in a reduction of health care and insurance costs, as well as declines in absenteeism, injury rates, and improvements in performance and productivity.

One recent study showed that when employees used fitness facilities at least eight times a month over two years, hospital and clinic claims declined by more than 64 percent, physician claims dropped by 13 percent and claims for prescription drugs decreased by more than 9 percent. It’s encouraging to see when facts match your intuition; healthy people really do use health care less.

Have you seen an increase in companies investing in wellness programs?

Definitely. According to the United Benefit Advisors' (UBA) 2007 Employer Survey, the number of employers of all sizes and industries that are adopting personal health management strategies continues to increase. Roughly, 25 percent of all employers currently provide various wellness or health risk assessment programs, and an additional 50 percent of employers would like to add such programs in the future. In addition, employers now overwhelmingly believe there should be a difference in benefits or costs based on an employee's involvement in managing chronic conditions.

What would you say to an employer who says starting a worksite wellness program is too expensive?

Successful workplace health interventions don’t always need to be big-budget affairs. Most health insurers have a variety of health resources to make it easier for employers to start their own wellness program.

Ask your health insurer about integrating worksite wellness and benefit plan design through consumer-directed health plans. These lifestyle-driven plans reward healthy choices. One study found that employees in consumer-directed programs are 25 percent more likely to engage in healthy behavior and 20 percent more likely to participate in wellness initiatives.

Several excellent Web sites provide free information employers can use. Welcoa at www.welcoa.org/freeresources provides employee presentations, incentive campaigns, free reports and much more. Wellness Proposals at www.wellnessproposals.com is also a good place to start, as is the American Journal of Health Promotion at www.healthpromotionjournal.com.

Anything else an employer should consider?

Every little bit counts. The most cost-conscious program can help create a health-positive environment. When the goals are well-defined and the approach well-designed, success can be affordable. Furthermore, worksite health programs that appear to have only a modest, immediate result are of great value. Not only will the programs improve performance and satisfaction of current employees, good health and fitness programs tend to attract good applicants.

EUGENE SUN, M.D., M.B.A., vice president of Medical Affairs for HealthAmerica. Reach him at (412) 553-7385 or efsun@cvty.com.

Wednesday, 28 February 2007 19:00

Business education

Business is always changing, and it seems today those changes happen faster than ever. Right now, it’s more global than ever before, and those who want to succeed need to recognize that and educate themselves on global business principles.

Communication is the number one skill demanded by companies recruiting employees who can make an impact right away, says Dr. David D. Long, chancellor and COO of Northwood University in Midland.

Smart Business spoke with Long about the importance of modern-day businesspeople getting a global business education and the avenues available for them to do so.

Why is business more global today than ever before?

Technology changes in the last decade, and particularly the past five years, have allowed even the smallest of business operations to engage in the global marketplace through the Internet and other technologies that are instantaneous. Plus, our economies around the world have become more open. As these economies become more free and markets open to trade, all the aspects of business and management bring into play the fact that even a very small business entity, say in a rural area to use an extreme, can be shipping product or services internationally with a couple keystrokes. So the competitiveness of that market has been thrust into our environment in many ways.

When you see the outsourcing that’s come into play in many corporate entities in the past five years, that’s another indicator that business functions are being spread throughout the world.

What kind of tools or skills do businesspeople need to cope in the global business world?

Whether you’re an undergraduate or graduate student, you need strong math skills such as calculus and statistics.

Also, students need to understand how to prepare spreadsheets and be able to do analyses and projections. If they will be in management roles some day, those kinds of math-based analytical skills are very important as a way to measure the enterprise’s performance, if nothing else. The technical skills needed to operate computers are a given at this point.

But most employers would say today that the skill set that is still in high demand is communication. Can you formulate your thoughts? Can you express them in a concise manner, both verbally and in written form, so you can communicate your ideas? Can you show leadership through transposing those ideas through all forms of communication?

How important is it to have entrepreneurial skills today?

Entrepreneurial acumen also is important today. You can teach a person to be an entrepreneur, because many people already have some innate capacity for this. Entrepreneurs are hard-working and have interesting ideas, but they’re also very creative. Getting individuals to understand their creativity and being able to follow that through and expressing it is more challenging. Creativity is something most people have some skills for, and sometimes just recognizing it and how to apply it are critical skills in the business world.

It’s important to understand that — in the decision-making process and in marketing — various cultures approach the marketplace differently, solve problems differently, and usually come to reasonably common solutions. But they don’t always come to those solutions in the same fashion. In a negotiation or exercise where you’re trying to compete with other companies regarding a bid or implementation of a strategy, you need to know those cultural aspects as you work your way through the complexities of each project.

What value does a global-business-educated person bring to a company?

Most companies are realizing today that their competitors aren’t just local or regional concerns in the U.S. but they’re international as well. As they’re hiring people to work for them and represent them and negotiate different opportunities for them, I think obtaining people with a global perspective is a prime order. There’s a maturity and confidence most employers recognize quickly in someone who’s received a broad business education with firm ethical values, and they realize this is a person who will not only grow and continue to learn but be able to impact their operations right now.

Companies are struggling because they’ve had to engage these markets and work with people already on staff who may have no understanding of international cultures or economic systems or the legal and ethical ramifications of their decisions. Therefore, new people coming into the organization with a global business perspective is essential.

DR. DAVID D. LONG is chancellor and COO of Northwood University in Midland. Reach him at (989) 837-4367.

Wednesday, 31 January 2007 19:00

Family business

Handing down the family business to the next generation can be a proud moment, but it can also be a complicated one. Proper preparation is critical to ensuring a smooth transition for all involved.

It’s never too early to start that preparation, says Joe Astrachan, Ph.D., director of the Cox Family Enterprise Center of the Coles College of Business at Kennesaw (Ga.) State University. Astrachan says children should be raised from the day they’re born to handle the issues they’ll face in heading the business.

Smart Business spoke with Astrachan on what family business owners can do now to prepare for the moment they’ve been waiting for in the future.

How far ahead should a business owner plan the transition of the business to the leadership/ownership of a son or daughter?

Even before children are born, there are things that can be done in a family business to prepare the way. It’s important to have discussions with other family members about who’ll be allowed to work in the business, by what rules, as well as who gets to own stock and how it can be transferred. This can save a lot of potential strife in the future. For example, when one brother is worried that his other brother wants his children to have top roles without starting at the bottom and the children are already in their 20s. It’s a much easier conversation before the children are even born.

Children should be raised to be able to work together, make decisions and understand risk, reward and patient capital (delayed gratification). At an early age, they should learn what money is, how to save and how to wait for things they want.

Next, they need to learn that actions and consequences are linked. This is the primary route to self-confidence.

Next comes the importance of learning from failure, which is essential in business. Unfortunately, it seems that our modern culture abhors failure and only celebrates success. That leads to children who aren’t in touch with reality as they’ve learned that they aren’t allowed to say, ‘I lost’ or ‘I failed.’ This means they don’t learn how to learn from problems, challenges and failure.

Later, they should learn to make decisions together by selecting the places to go to dinner or having a vacation. Learning that they need to work together and that there’s no excuse for not being able to cooperate are important early life lessons that can cut down on sibling rivalry.

After that, they need to learn the basics of business and responsibility to employees and customers as well as understanding finance.

Is it as easy as saying, ‘Son or daughter, you’re now the president!’?

For a well-prepared family, yes, that’s all you really need to do because they can and will take over. They’ll have the right conversations and do what’s needed to succeed. In fact, there’s almost no scientific research on succession that shows what works and what doesn’t. There are as many examples of young leaders who succeed not out of any planning but because they had to learn to swim without a lifejacket.

A second route is to prepare the next generation through training and experience. A good program is to give the next generation the opportunity to earn their stripes by putting them ‘in combat,’ where they have to succeed or fail. When the time comes to select a successor, the future owners should take part in the decision.

How should the transition be handled among employees?

Hopefully, they’ve known for a long time that a transition is taking place and who the leaders and owners will be. The most important thing they need to be told is that the family is committed to the long-term ownership and stability of the business. During the transition, they need to be told that the new leader is the new leader and his or her decision will be backed. Then, the new leader’s decisions need to be reaffirmed, no matter who those decisions hurt or benefit. Do not, under any circumstances, allow employees to plead their cases to former leaders. Respect the transition.

What if someone not only wants to relinquish a title but sell his or her share of the company outright or sell/transfer it to a family member?

The easiest way to do that in a small business is to give the shares to the next generation because that has the least impact on the company’s cash flow. Hopefully, the senior generation will have other means of income and will have done appropriate planning so taxes are minimized.

To sell the company means that a new leader not only has to establish his or her credibility but also do so while making substantial noncompany development-related payments, a hard task even for seasoned entrepreneurs. Couple that with trying to keep brothers, sisters and cousins happy and you have a mountain to climb.

If you want to sell, it depends on what the company’s value is and how long you’re willing to wait to be paid. There are all kinds of IRS rules about this, so anyone considering it needs to get the advice of a tax lawyer or CPA.

JOE ASTRACHAN Ph.D., is Wachovia Eminent Scholar chair and the director of the Cox Family Enterprise Center of the Coles College of Business at Kennesaw (Ga.) State University. Reach him at (770) 423-6045.

Sunday, 31 December 2006 19:00

Finding good employees

Finding good employees has never been harder for companies than it is today. There exists a shortage of qualified workers, and filling the holes that large numbers of retiring baby boomers promise to leave won’t be easy.

According to Terry Phillips, vice president of Robert Half International in Akron, companies will need to enhance their recruiting efforts to meet their staffing needs.

Smart Business spoke with Phillips about how companies can pursue a more targeted approach to finding the talent they need.

Why is it so hard for companies to fill their employment needs today?

More than half (52 percent) attribute recruiting challenges to a shortage of qualified workers. Right now, many of the most skilled professionals are already employed, and there’s a more shallow talent pool to draw from. With large numbers of baby boomers expected to retire, there simply aren’t enough highly skilled replacement workers to draw from in the Generation X and Generation Y work force.

Also, firms are being highly selective and often seek that elusive perfect hire. They want to hire professionals who can start contributing immediately with little training and staff members who have diverse skill sets.

What sort of positions are the hardest to fill today? What are the easiest?

As we discussed earlier, there’s a shortage of highly skilled labor, so positions requiring advanced degrees and certifications are the hardest to fill. That’s also because the workers with those skill sets are more apt to stay in their positions and are less likely to be looking for other work opportunities.

What sort of strategies can a company undertake to get the staffing it needs?

Employers need to enhance their recruiting efforts, including using more targeted methods such as working with specialized recruiters and posting opportunities on job boards, to attract skilled candidates.

Companies should start focusing on retention now if they haven’t done so already. The last thing firms want to do is create an environment where professionals don’t feel their work is valued or feel they have to jump ship to get ahead. One way companies can reduce recruiting challenges is to do less of it — and that means keeping their top performers on board.

What sort of strategies can a company undertake to retain the good employees it currently has?

Approximately 70 percent of employers have not instituted any retention programs in the last year, which is down only slightly from 77 percent from last year.

With the changing work force and impending retirement of the baby boomer generation, the task of attracting and retaining qualified employees won’t be easy for employers. Implementing a program is vital. Hiring managers say the most common measures they are taking to retain employees are offering salary increases, bonuses and flexible work schedules.

While most employees won’t jump ship over a modest amount of money, nobody wants to feel undervalued. Firms need to examine prevailing wages for professionals in their regions and make sure their compensation doesn’t come up short. Salary guides, such as those published by Robert Half International, are a good source of information.

Now is an excellent time for managers to reach out to key players and find out how they feel about their jobs, and what types of things might increase their professional satisfaction.

Will this employment picture continue and perhaps get worse in the future or will it improve?

Our survey shows 21 percent of hiring managers said their employee turnover rate is higher than it was 12 months ago; and the same percentage expect it to be even higher 12 months from now. More than 80 percent of hiring managers expect it to be equally or more challenging to locate qualified candidates 12 months from now.

TERRY PHILLIPS is vice president of Robert Half International in Akron. Robert Half is a specialized staffing firm headquartered in Menlo Park, Calif. Reach Phillips at (330) 253-8367.

Wednesday, 20 September 2006 20:00

Business schools

Today’s business world is all about advancement. Stay still for too long and you get left behind.

A good way to get ahead is to obtain an MBA. Sharon P. Smith, provost and vice president for academic affairs for National University, says that now is as good a time as any to pursue that coveted degree and advance your career.

Smart Business spoke with Smith about how to find the right school for you and figure out if you’re ready to challenge yourself.

What is the climate like for business schools right now?
Over the last 50 years, the MBA degree has become the ticket of entry into the upper levels of management, whether as a filter for innate ability or because of the skills MBAs have mastered. MBAs comprise about 25 percent of all the master’s degrees awarded in the U.S. The number of MBAs granted has grown 65 percent since 1990-91, while the number of degrees in law and medicine has been nearly flat. The climate for business schools — like the climate for business — is challenging now.

The business world has been transformed by deregulation, the spread of information technology and globalization. Today’s manager needs a different set of skills and faces a different set of opportunities than the manager of 50 years ago. Today’s manager is a professional who needs specialized skills in such subjects as marketing, accounting, financial analysis, information technology, etc. Career advancement for this professional will depend on growing knowledge and reputations and won’t necessarily be linked to one firm.

The rise of the professional manager is both a consequence of the growth of the MBA degree and a validation of that degree. With these challenges in mind, it is a good time for people to pursue a business program both to demonstrate their innate abilities and to gain a strong foundation in the specialized skills managers need to operate effectively, skills they will build upon over a lifetime. At the same time, they will build on experiences they have already had and acquire personal networks to learn from and tap into both in school and afterwards.

What attributes should people look for when deciding on a business school? How do they know a business school is right for them and their personal goals?
When deciding on a business school, people should seek information from a variety of sources. They should examine the published ‘rankings’ from many sources, as these provide a variety of metrics to compare programs, though each is flawed and all focus most strongly on full-time programs. Students must also consider their own personal attributes as well as lifestyle and resources.

Those who are committed to a business career; who are willing to master rigorous, analytic methods; who like the idea of working in a large organization or as an entrepreneur; and who are willing to commit the time, money and energy for an MBA should certainly consider pursuing one.

Those who prefer isolated, independent activity; find change difficult; care little about the profit motive or competition; and have difficulty with quantitative analysis should probably pursue other paths.

If the MBA is the right path, then individuals must consider whether they’re willing and able to make the personal sacrifice to pursue studies full-time or whether they prefer to keep working while seeking an MBA.

Are most business schools offering an online option now as well?
Online learning is an important option that responds directly to the challenges of a global business world in which managers have neither fixed working hours nor a fixed work location. Online learning toward an MBA may be the only option for managers whose careers and lifestyles preclude full-time studies, as their work life may not accommodate attendance in onsite classes at a set time. Moreover, online learning may imitate their work life both now and in the future.

What are the payment options these days for people worried about not being able to afford a business school?
There are many payment options these days: loans, scholarships, tuition remission from employers. In assessing the right mode and program, students should consider that the largest expense of attending any school is the foregone income if studies are pursued full-time.

SHARON P. SMITH, Ph.D., is provost and vice president for academic affairs for National University. Rankings in this article are discussed in detail in the new book titled “Finding the Best Business School for You: Looking Past the Rankings,” by Everette E. Dennis and Sharon P. Smith. Reach Smith at (858) 642-8000.

Tuesday, 29 August 2006 10:52

Handling security threats

Safeguarding a company’s network from security threats has never been as important as it is today. Computer technology has advanced to the point where most employees within a company now do their all of their work on a computer. This higher level of integration means that there are more avenues of attack for malicious hackers. And there is so much more at stake.

Sadik Al-Abdulla, security solutions specialist for Berbee Information Networks Corporation in Madison, Wisc., says that in order to see the real problem, security professionals must examine the whole picture and not simply isolated data points in a vast network.

Smart Business spoke with Al-Abdulla about security threats and what companies need to do to keep their networks safe.

How much more important has it become to protect one’s network now than several years ago?
Much more so. More assets reside as information on the network, and in many cases the network itself has become a mission-critical asset that must be protected.

As an example, most accounting systems 10 years ago required manual entry of data, and were entirely self-contained. Today, modern systems interface directly with point-of-sale systems, invoicing, accounts payable/receivable, and even the IRS. This level of integration has delivered tremendous agility to many businesses, but in doing so has also dramatically increased the attack surface of the solution and put business-critical data at risk.

How do you define true network security?
True network security relies on achieving three things: confidentiality, integrity and availability.

Confidentiality requires that information and assets be protected from unauthorized disclosure.

Integrity requires that information and assets be protected from unauthorized, unanticipated or unintentional modification. This includes, but is not limited to, authenticity, nonrepudiation and accountability.

Availability requires that a technology resource, be it system or data, be available on a timely basis to meet mission requirements or avoid losses. Availability should also require that resources be used only for their intended purpose.

How can a system reduce ‘false positives’ to free up more resources?
Mostly by looking at the environment as a whole and applying the same intelligence to the problem that a human being would.

The term ‘false positive’ is intriguing. If a system reports an event, from the perspective of that system it is obviously true. The falseness comes into play when that individual data point is examined in a larger context. For example: If an intrusion detection system reports that Host A attacked Host B, from the context of that system it is a real problem. In the larger context of the environment as a whole, the event might be false for any number of reasons: a firewall between Hosts A and B might have dropped the attack, Host B might not be vulnerable, etc.

A security information management system can reduce false positives by parsing each of those individual data points into a larger context. Each piece of information can be correlated across every device that reported on the event. Each correlated session can be mapped to the topography of the network. Intelligence can be applied across sessions such that, rather than simply looking for attacks, the system can also look for matching responses. Each potential incident can be filtered if the victim isn’t vulnerable.

At the end of the day, what we’re talking about here is holism.

How can a company simplify audit compliance?
Most regulatory audits require companies to provide accounting information for certain security data points — for instance, who has logged onto systems with administrative access. The Information Technology (IT) department typically has to track this information across every system in the environment, and the major challenge posed by the audit request is finding the right information ... and finding it in every system.

Companies that have implemented a form of security information management are able to dramatically simplify this equation. First off, the information management system centralizes all of the relevant information. More importantly, the intelligence in the information management system is interpreting each data point as it comes into the system. This interpretation comes down to parsing the data, understanding it, and building it into a database with relationships to every other relevant data point. Using the above example, when an administrative logon event reaches the information management system it’s filed into the database as an administrative logon event. This means that at audit time, a simple database query in a single place would be able to retrieve every administrative logon to every type of system for any time period the auditor is interested in.

SADIK AL-ABDULLA is a security solutions specialist for Berbee Information Networks in Madison, Wisc. Reach him at (608) 288-3000.

Tuesday, 29 August 2006 06:47

Tapping into the emerging work force

The labor pool of qualified people in the U.S. today is smaller than it has been for quite some time, so many companies’ employment needs are going unfilled as they desperately search for the people they can’t operate without.

With that in mind, Lisa Kyle, district director for Spherion, a recruitment and staffing agency headquartered in Ft. Lauderdale, says the key thing that companies need to focus on is employee retention and come up with more ways than just raising one’s pay to keep employees around.

Smart Business spoke with Kyle about the characteristics of the emerging work force and how companies might best tap into it.

How does the work force in the modern era differ than any in the past?
For 10 years, we tracked and benchmarked what motivates workers as well as what steps employers were taking to attract and leverage talent. We found that, by the end of the decade, there will be 10 million more jobs available than workers to fill them. We also found that there were a lot of serious misconceptions about retention among employers and their current as well as future employees. There were a lot of areas of disconnect between what employees need and want and what employers were providing.

We also found that employers on average believe that 14 percent of the work force will leave their current job within the next year. But through our survey, we found that over 40 percent were planning on leaving their current jobs within the next year.

Nearly 45 percent of companies believe that work force planning is a minor initiative. But because of the recruiting crunch, this will have to increase as the baby boomers exit the work force. In addition to providing a contingent work force for our clients, our main goal right now is to try to help our clients focused on the retention of their current employees so they have fewer turnovers.

What are some retention strategies that companies can use?
One of the most important is offering employees solid training and development. The desire for more training and career development has been driven by the digital and computer age where people are trying to gain the skills they need in this new age of business.

Compensation and benefits are always important. We’ve entered a new age of compensation deflation where little or no pay increases are taking place but benefit costs are rising.

Being sensitive to the work/life balance by offering employees flexible hours and vacation time is paramount, too.

How has the increasing number of immigrants affected the work force?
It’s a good thing, in that all companies are focused on diversity. We work with some local organizations that assist immigrants by placing them in jobs comparable to what they did in their native country. Many clients are looking to become more diverse and are thus asking to tap into this work force.

Do you believe outsourcing labor to foreign countries has been good or bad for the labor pool?
I believe it has a positive side and a down side. For example, we never like to see a 500-seat call center moved out of the country because it eliminates jobs for Americans. If you look at it exponentially across the country, that could be thousands of jobs lost. However, when those jobs are moved overseas, suddenly 500 qualified people are looking for work.

With the recruiting crunch employers are facing today, that’s a virtual gold mine of good, experienced people who can be placed. It’s rewarding to help people that way.

How can a company be assured it is receiving quality people?
Companies should set up a list of criteria, including educational background, references, skill sets. Do managers want background screening and drug screening completed in addition to past work experience?

The candidate should not only be qualified for the job but also fit the company’s culture. We funnel candidates through several steps in order to make sure that happens.

Prior to a face-to-face interview, candidates must pass an automated three-tier questionnaire via the phone. If all three tiers are passed, they are then directed to the Candidate Resource Center where they can apply to work with Spherion. That, in turn, allows the pre-screened candidate to become an applicant. A face-to-face interview takes place next, followed by intensive screening, testing, referencing, employment eligibility and any other criteria requested by the client.

LISA KYLE is a district director for Spherion in Atlanta, Ga. Reach her at (770) 960-0607.

Monday, 31 July 2006 11:17

New rules

It was only a matter of time before the Securities and Exchange Commission (SEC) scrutinized existing executive compensation laws and decided to propose amendments to the disclosure requirements. A number of high-profile CEOs have received compensation or retirement benefits and perks many perceived as outrageously high, and many shareholders and potential investors previously left in the dark wanted to know exactly what was being paid to executives and how compensation decisions were made.

Merritt Cole, partner in the business department of White and Williams LLP in Philadelphia, says that the SEC is focusing on three main areas of disclosure: compensation and perks paid within the last three years; holdings of stock options and other kinds of equity incentives that can provide a gain in the future; and retirement, change-in-control and other post-employment payments. The bottom line? Expect to see more detailed disclosure in the future.

Smart Business spoke with Cole about the proposed expanded disclosure laws and what they mean to corporations and their shareholders.

What in your opinion prompted the SEC to expand executive compensation laws?
The SEC felt that shareholders were not getting adequate information regarding executive compensation, including perks, retirement and post-termination benefits. Plus, a number of high-profile individuals had made splashes in the news, such as when Jack Welch retired from GE and information came out about what many perceived to be extraordinary retirement benefits.

In the instances of executives at Tyco International and Enron, there was significant public and regulatory concern about what was being paid, who knew about it and how compensation decisions were made.

There has been concern that the compensation committees of some companies have not been given full information concerning executive compensation and benefits, including forgiveness of loans, in understandable form and that the methods by which some of the committees determined executive compensation and benefits were not always adequate.

What do you think is the SEC’s ultimate goal of expanding these laws?
As SEC chairman Chris Cox has said, the SEC’s goal is ‘wage clarity, not wage controls.’ The new rules are intended to provide investors with a more complete picture of the compensation and benefits earned by a public company’s highest-paid executive officers, including the CEO and CFO. The new disclosures include new total compensation tabular information, a new retirement plan payments-and-benefits table and a new director compensation table. The SEC wants not only to improve the compensation information available to shareholders, but to require that public companies disclose in greater detail how their compensation committees actually make decisions. In short, the SEC wants more transparency. By means of these disclosures, the SEC hopes to improve the performance of compensation committees.

At what point does such disclosure become too personal?
One of the new rules would require a change in the reporting of stock ownership by executive officers. The SEC proposes to require disclosure of the pledge of stock as collateral for loans or other obligations. I don’t know if there is a benefit to disclosing pledges of stock where, for example, the amount of stock pledged is only a small part of the executive’s holdings.

Are these new laws going to be good or bad for business?
On one hand, the new disclosure requirements will increase the amount of work management, compensation committees and their professional advisers will have to do to prepare this expanded disclosure. The resources and budgets of smaller companies are already stretched thin as a result of the compliance efforts necessitated by Sarbanes-Oxley, and I am concerned that the new rules — some of which are very technical — will add to their burdens.

In addition, I am troubled by one of the new disclosure requirements in particular. The SEC has proposed to expand the disclosure to include the compensation of certain highly compensated individuals who are not executive officers (without naming them). These might include insurance or software salesmen and others whose compensation is primarily commission-based. This type of disclosure could harm companies competitively and cause problems among employees. Companies in the entertainment industries, where nonexecutives often have very complicated compensation packages, might find it difficult to determine how to comply with this requirement.

On the other hand, expanded disclosure should increase investor confidence. Right now, many shareholders are unhappy because of the perceived abuses of a relatively few bad apples. Increased disclosure will encourage compensation committees to be more thoughtful and more thorough. Increased investor confidence strengthens our capital markets, and that’s what disclosure rules are intended to accomplish. But the devil is in the details. We’ll have to see exactly what the new rules ultimately require when they are in final form.

MERRITT COLE is a partner in the business department of White and Williams LLP in Philadelphia. Reach him at (215) 864-7018.

Monday, 31 July 2006 10:30

Technology concerns

Telecommunications and Internet technology are advancing at the speed of light these days. Companies want the latest and greatest offerings out there, but integrating upgrades to existing systems without disrupting day-to-day operations can be a major challenge. Pair that with a move from one physical location to another or the opening of additional offices and the stage is set for a potential nightmare.

The ultimate goal, says Kevin Teeters, vice president of marketing for Mpower Communications in Pittsford, N.Y., is to achieve a seamless transition that allows the company and its employees to continue performing day-to-day business operations without experiencing a single hiccup. Crucial to that is selecting the right network provider for the job, which means doing a lot of homework and research.

Smart Business spoke with Talbot about what a company needs to do to avoid common pitfalls when upgrading technology systems and how to pick the right provider to offer the right solutions.

Why do business owners need to be aware of the disruptions that can occur when integrating technology upgrades or transferring systems to a new facility?
Any time there is potential to disrupt operations, there is also potential to lose customer contact. So whenever you upgrade or add technology, or move from your current technology, you need to work hand-in-hand with your network provider.

It’s important for a business to integrate its service or technical people with its provider’s service technicians to ensure a seamless transition to the new or upgraded services. For example, a business could have 24/7 operations and do a lot of international business as well so that most of their network use comes between 11 p.m. and 4 a.m. That kind of business probably should be working with a provider who can customize a system that will minimize the interruption of services at peak flow times.

Also, when you look at upgrades, make sure you look future-forward and implement technology that will allow you to future-proof your communications. If you look at Voice-over-Internet Protocol (VoIP) solutions, for instance, customers should look at it not as a product but a solution that could provide cost reductions, not to mention enhanced services, integration of data and voice systems, a stable platform and more productivity.

What are some strategies a company can use to ensure a smooth integration of new technology systems?
Look at the support structure that will be provided by the telecommunications provider to make sure there is training available for new technology and services. Also, make sure your provider has demonstrated fiscal stability and longevity. To do this, check out their standing with the Better Business Bureau and ask for references from other customers. Ask those customers about the provider’s reliability and support response times. Also, study the provider’s service agreements and other contracts, and make sure all commitments are in writing.

What can a company that’s moving locations do to ensure the same such smooth integration of new technology systems?
Make sure communications are top-notch, and that the provider has offered and communicated a detailed timeline for the network upgrade or the initialization of new services. Also, make sure your team has a high comfort level and that your provider understands their needs and listens and responds to them adequately. Make sure there is a tightly delineated schedule of events, multiple people available for contact, and a clear escalation list if there are any concerns or problems.

Where do companies tend to go wrong in this regard? What challenges do they face?
The biggest mistake that companies make is letting providers give them a generic, predetermined product and not pushing them to go back and understand their specific challenges and come back with a customized business solution that’s tailored to their needs. Regional Bell Operating Companies (RBOCs) are so large that they can’t scale a customer’s solution quick enough, so they’re more inclined to simply provide such a precut, predetermined product. A smaller, more nimble company would be a better bet to provide that kind of customized solution.

The challenge is finding time to fully research the best solution and find a provider willing to understand your company’s needs and be a consultative solution.

What final advice would you give a company on the brink of upgrading its technology or moving to a new office?
Start thinking outside the box and research what’s been done before. Don’t replicate what you had in the old location, but consider things you haven’t considered before like Virtual Private Networks (VPNs) that now allow businesses to connect securely at their location or from somewhere else remotely via intranet or extranet. Start looking at the cost-benefit analysis of VPNs, VoIP and other new technologies that can help you out.

KEVIN TEETERS is vice president of marketing for Mpower Communications in Pittsford, N.Y. Reach him at (714) 453-6705.

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