Jessica Tremayne

Tuesday, 26 May 2009 20:00

Healthy returns

Revenue is down, the budget has been hacked away and now you’re edging toward reducing employee health care coverage — or even eliminating it outright. Before taking action, take into account the short-term benefits and long-term effects of your options.

A knee-jerk reaction may be to shift the benefit burden to employees. But those who have been down that road, say there are ways to take a strategic approach to generate value from a shrunken budget and employee pool. The most successful organizations over the long-term will be the ones that cut costs now, while improving the health of their employee populations.

Utilize existing resources to find out how you can save money, starting with your health insurance provider.

“All wellness programs aren’t created equal,” says Michele L. Hunnicutt, manager of employee wellness and corporate on-site services for Methodist Wellness Services. “To produce an economic return on wellness efforts, you must develop a comprehensive wellness program working with your insurance provider and employees.”

Awareness of the claims filed by your employees will allow you to determine the best health plan move that will work for their needs and devise a health promotion program that will be most appealing to them. While moving to a lower-cost plan may be a necessity, it is a temporary fix and should be complemented with an emphasis on health that will have a more lasting impact.

A 2009 Watson Wyatt report shows that 67 percent of employer respondents to an Annual National Business Group on Health survey say the top challenge to maintaining affordable benefits coverage is employees’ poor health habits. Only by managing these habits can you truly get your costs under control.

Work with your provider

Work with your health insurance provider to decide what the best options to your budget will be. Negotiating rates with insurers isn’t usually effective, as insurers aren’t offering massive discounts because of the economic downturn. The option you usually have is a different plan with reduced coverage.

One option is cost shifting to save the company money while increasing the cost to employees. But altering plans and shifting costs to employees isn’t solving the problem of high premiums. A Hewitt Associates LLC executives’ survey shows that participants found cost shifting didn’t bring out desired behavior changes in employees and that an emphasis on health at the workplace is needed.

Another money-saving health care option is risk sharing.

“Dallas is the fattest county in the state,” says David Toomey, president and general manager, CIGNA HealthCare of Texas. “Get with your employees and discuss how you can solve the problem of being so unhealthy. See how you can help them manage what health concern or stress is most important to them.”

A third option is a health savings account, which takes money out of an employee’s check pretax and the employer has the option of adding money to the account, as well. If the employee switches jobs, he or she will take this health savings plan to the new position and the employer will retract its contribution from the fund.

“You have to look at your health plan and wellness programs as a business opportunity,” Toomey says. “Someone will be paying a higher rate for health care with an unhealthy population, and you don’t want to be that person. If your employees and budget can’t afford it, you have to try to fix it. Tell employees the plan options and what you are up against.”

While health promotion — or wellness — programs aren’t usually at the top of the list when contemplating short-term health insurance savings, a program will have positive results in the short term with the best outcomes in one to three years. Companies that effectively promote health see immediate savings in premiums of 10 to 13 percent with the potential of reducing future medical costs. The investment has a $3 to $6 payback on the dollar.

Your best bet to cut costs will be a two-prong approach. Change your health plan for instant budget relief and initiate a health promotion plan.

“Wellness programs and the information gathered from health risk assessments don’t matter if you don’t use the information correctly,” Toomey says. “You can expect a 25 percent reduction in absenteeism if you have used the right recruitment tools in your program — so find out what your employees want to do first.”

Design your health awareness plan with consideration of the number of employees that will be participating. A smaller company of 50 employees or less shouldn’t invest more than $25 per employee initially, but should focus on raising awareness by providing educational material that emphasizes preventive care, proper nutrition and health-related Web sites.

A midsized company of 300 or more employees should invest about $90 per person. Providing educational tools, focusing on the population’s main areas of concern and taking a competitive, fun approach is effective. A large company with a willingness to invest about $240 per employee can have a comprehensive program that includes education, financial incentives, inclusion of spouses and perks like gym memberships.

Your insurance provider may have free online health risk assessment surveys. By surveying your employees you can determine ways to meet the company’s and employees’ financial needs. Ask questions about physical activity, stress management, tobacco use and general disease risk factors.

“Measure employees’ current health status and risk factors,” Hunnicutt says. “See ways employees can modify their unhealthy lifestyle behaviors and ways you can maintain the health of healthy employees.”

Discussing what your insurance company provides to you at no cost or at reduced rates is a great first step. Many employers are unaware of fringe benefits included in their plans. If the insurance provider doesn’t offer what you need for free, it should be able to direct you to an organization or local hospital program that does.

The process

After you’ve determined a health awareness focus for your employee population, you can create a plan of action.

“You must get involved in the process,” says Thomas R. Beauregard, CEO, United Essentials, a UnitedHealthcare business. “Think of tangible ways you can connect with your employees, give them individual scorecards on status so they can see when they make optimal health conditions.”

You also need to make an assessment of your workplace wellness environment. Identify strengths and areas that need improvement. Enforce no smoking on the campus; provide healthy choices in vending machines and the cafeteria.

“Offer food that is healthy in the cafeteria,” says Gerald Cleveland, director of employee health promotion, University of Texas Medical Branch, Galveston. “Price healthier foods lower than ones that aren’t good choices. Employees tend to eat healthier when it’s cost-effective. ”

Provide health tips, programs, discounts to gyms and other information through multiple delivery sources. Some employees are more receptive to e-mails or newsletters — or they just need to hear the same message multiple times to get motivated into action.

“Cost shifting isn’t a long-term solution to health care costs,” Beauregard says. “Plan designs will continue to change over time, but you have to get started on a wellness program to change the behavior that helps get the [health insurance] costs hig h.”

Saturday, 25 April 2009 20:00

Wheels of change

The transportation industry has taken a hit in the past couple of years — first pummeled by fuel costs, now endangered because of lack of product demand. Even though the economic forecast may be grim, this is a prime time to evaluate your current network to find wasted money and inefficiencies that may be hurting your customer service.

Delivery delays and poor packing and routing methods can all cost your company money.

The good news is that there are software solutions out there that can help you fix your problems with a minimal investment and lower your logistics and transportation costs by 8 to 15 percent.

“Software reduces the hands in the mix and reduces error risk,” says Walter M. Cline, president, J. Cortina Inc., a Tampa customs broker and freight forwarder. “Many companies are going global, and that means paperwork documenting that regulations have been met and products pass through. Software keeps up with regulations and helps ensure the necessary paperwork is in place. There are no passes on this. If you aren’t meeting regulation, your freight isn’t shipped. This means unhappy customers and possibly fees for you.”

Software programs are available to assist companies from the time an order is placed through the successful delivery of the order. Many executives view their transportation department as a cost center, but through successful management, it can be another way to earn money.

Why logistics software is important

The addition of software to your logistics department will optimize daily and long-term transportation plans and scheduling, carrier selection, route planning, inventory management, and small parcel shipping, which can reduce costs.

While a software investment may cost at least $10,000, improving your shipping processes will allow you to serve more customers and increase profits in the long run.

“There is no one-size-fits-all regarding software options,” says James R. Stock, Frank Harvey Endowed Professor of Marketing at the University of South Florida. “You need to come to the table with knowledge on what you need for your specific industry and where you need to improve your current operations. You can’t just say, ‘I’d like the transportation logistics software please’ and expect it to work for you.”

A common transportation management issue has businesses keeping more inventory on hand than necessary. This typically happens when stock is manually cataloged instead of tracked with software. This means more of your money is sitting in warehouses instead of in your pocket.

“We are experiencing a decrease on the import side and an increase on the export,” Cline says. “We control all of our customers’ goods through software, just as manufacturers do in their warehouses and shipping centers. This minimizes shipping costs since global sea cargo is sold by the cubic foot. Our customers share crates to reduce the costs, and we handle that by putting as much as possible in one crate. Just about everything is handled with software now — it’s a lot different than it was in 1981 when I started working in the industry. It’s just about unheard of to do things manually.”

Human error is a big part of what can go wrong in logistics. Depending on the volume of orders you are receiving, this can add up. The use of software can eliminate these errors and make your inventory and tracking easier to manage. Software can also determine the best carrier for a particular type of shipment and contractual agreements.

“Efficiency means better customer service,” says Jamison Day, professor, University of Houston, C.T. Bauer College of Business. “Software helps you move through the process better, faster and cheaper. If you don’t have the capabilities to purchase all of the necessary software but your company relies heavily on shipping, you should consider a third-party logistics firm.”

What you need to know

Before making a software purchase, you need to assess what areas of your process are in greatest need of assistance. While some companies package their software options, others individualize the programs for specific areas of interest, such as shipping and loading.

To figure out where you need help, you will need to perform an audit that tracks products from production to delivery.

Start by making a checklist. Are your shipments on time? Are your trucks traveling with full loads? What are your current fuel expenditures? Are you utilizing the best routes? What rates are you paying carriers? Are you paying your employees overtime? Are your orders accurate? If you don’t know how to obtain this information or you’re finding inconsistencies, software can probably help you reduce errors and delays.

“There are a fair amount of laws that must be obeyed in shipping, as well,” Day says. “Software will keep you abreast of what is necessary when sending out loads. You will, of course, have to keep upgrading your software, but this cost is much lower than fees and penalties that can be accrued when you don’t have paperwork in order. This delay will also make your customers unhappy.”

After you’ve determined the area you need the most help with, choose a software company you feel comfortable working with. Find a company that will be accessible when you need them. If you decide handling everything in-house is too expensive, find a third-party logistics firm that handles the details while you focus on your core competencies.

“Computers tend to find ways that reduce driving time and improve loading of shipments,” Day says. “The technology doesn’t replace the humans; it augments them, making everything more efficient. Depending on the industry a third-party logistics firm will be a must. Calculate the rate to bring this service in-house compared to that of a logistics firm. Make sure that you find the right company to fit your needs. Don’t partner with the first guy holding a hammer looking for something to hammer even if it’s not the right tool. Look for a tool-independent firm.”

Today’s economic climate may be tough, but by looking for savings in every area of your business — including transportation — you can find money that can be better used elsewhere in your organization.

“You can’t manage what you don’t measure,” Stock says. “If you have the right software in place, you’ll be able to see the amount of stock you have on hand with the click of a few buttons. You can also maintain the best delivery routes for your fleet and maximize the size of each load. By measuring the way your business is conducted today forward, you’ll be able to create a history of what does and doesn’t work for your company and evolve with changing trends.”

Saturday, 25 April 2009 20:00

Wheels of change

The transportation industry has taken a hit in the past couple of years — first pummeled by fuel costs, now endangered because of lack of product demand. Even though the economic forecast may be grim, this is a prime time to evaluate your current network to find wasted money and inefficiencies that may be hurting your customer service.

Delivery delays and poor packing and routing methods can all cost your company money.

The good news is that there are software solutions out there that can help you fix your problems with a minimal investment and lower your logistics and transportation costs by 8 to 15 percent.

“Software will help you minimize the number of employees you need and eliminate errors,” says Emre Ikiok, business manager for Chase Transportation & Logistics LLC. “Supply chain problems tend to have a domino effect, so having one area of your operation managed by software and not the rest won’t eliminate issues that may arise in truck loading, for example, if you’re only managing your routes with software It’s best to just make the investment for the entire system or use a third-party firm that handles everything.”

Software programs are available to assist companies from the time an order is placed through the successful delivery of the order. Many executives view their transportation department as a cost center, but through successful management, it can be another way to earn money.

Why logistics software is important

The addition of software to your logistics department will optimize daily and long-term transportation plans and scheduling, carrier selection, route planning, inventory management and small parcel shipping, which can reduce costs.

While a software investment may cost at least $10,000, improving your shipping processes will allow you to serve more customers and increase profits in the long run.

“Transportation logistics is all about meeting needs,” says Izak Duenyas, a professor and chair of operations management for the Ross School of Business and a professor of industrial and operations engineering at the University of Michigan. “Transportation logistics isn’t a cost center, you have to think of it in a problem-solving fashion. Customers want something and finding the fastest, most efficient process will create customer loyalty. Software plays a big role in this, but it will have no benefit if you don’t know the solution you need. Have a clear strategy then invest in the most appropriate software to assist you.”

A common transportation management issue has businesses keeping more inventory on hand than necessary. This typically happens when stock is manually cataloged instead of tracked with software. This means more of your money is sitting in warehouses instead of in your pocket.

“This economy has been like getting bariatric surgery,” says James Moore, vice president of sales, Ryder System Inc. “If you lose 100 pounds all at once, your clothing isn’t going to fit anymore, and that’s what’s happened with many companies’ networks. They are now way larger than what they need to be and their one-time assets are now financially draining them. If efficiency is a problem with your transportation process, software will help eliminate errors and make the most of all efforts.”

Human error is a big part of what can go wrong in logistics. Depending on the volume of orders you are receiving, this can add up. The use of software can eliminate these errors and make your inventory and tracking easier to manage. Software can also determine the best carrier for a particular type of shipment and contractual agreements.

“Software will also help you bargain with all of your purchases,” Ikiok says. “You can look at the amount of business you do with a company, how frequently they were on time and a variety of other facts that will give you leverage when negotiating rates. The software can even tell you if another company has better rates.”

What you need to know

Before making a software purchase, you need to assess what areas of your process are in greatest need of assistance. While some companies package their software options, others individualize the programs for specific areas of interest such as shipping and loading.

To figure out where you need help, you will need to perform an audit that tracks products from production to delivery.

Start by making a checklist. Are your shipments on time? Are your trucks traveling with full loads? What are your current fuel expenditures? Are you utilizing the best routes? What rates are you paying carriers? Are you paying your employees overtime? Are your orders accurate? If you don’t know how to obtain this information or you’re finding inconsistencies, software can probably help you reduce errors and delays.

“Being more efficient with software also means employees will be free to work on other projects,” Ikiok says. “One of the biggest benefits of software is it will help you to maximize each load and reduce the number of trucks you use to deliver. If you aren’t getting the best rate, you have options to go elsewhere. With the bad economy, clients are looking for the lowest shipping rates possible. If you are working with a company that isn’t flexible, you need to find a new one. But if you aren’t in the loop with technology that can provide rates, you’ll be spending a lot of time evaluating other rates and possibly putting off finding the better company for convenience reasons. That won’t happen with software.”

After you’ve determined the area you need the most help with, choose a software company you feel comfortable working with. Find a company that will be accessible when you need them. If you decide handling everything in-house is too expensive, find a third-party logistics firm that handles the details while you focus on your core competencies.

“If you choose to do business with a third-party logistics firm, you need to have a good relationship with them,” Ikiok says. “We all need to help each other stay in business and a good third-party firm will always look out for clients’ best interests.”

Today’s economic climate may be tough, but by looking for savings in every area of your business — including transportation — you can find money that can be better used elsewhere in your organization.

“It can be challenging to find the legitimacy in making investments when so many companies are in trouble right now,” Duenyas says. “But if you can invest in something, invest in the proper software and don’t look at only the price, take into account everything a partnership can bring to the table.”

Saturday, 25 April 2009 20:00

Wheels of change

The transportation industry has taken a hit in the past couple of years — first pummeled by fuel costs, now endangered because of lack of product demand. Even though the economic forecast may be grim, this is a prime time to evaluate your current network to find wasted money and inefficiencies that may be hurting your customer service.

Delivery delays and poor packing and routing methods can all cost your company money.

The good news is there are software solutions out there that can help you fix your problems with a minimal investment and lower your logistics and transportation costs by 8 to 15 percent.

“Without transportation logistics, businesses can’t operate,” says Luis D. Lopez, president, Dangerous Goods Declaration Inc. & DGD Transport Inc., a Miami-based hazardous materials transportation company. “Software use is critical in transportation logistics, because it manages all areas of the process. Using software can eliminate at least two employees. The efficiency you’ll see immediately after the software is installed. Some types of software will allow you to check inventory or tracking on a load without calling the company. This software is Web-based and allows you to visualize your goods regardless of where they’re housed or where they are being sent.”

Software programs are available to assist companies from the time an order is placed through successful delivery. Many executives view their transportation department as a cost center, but through successful management, it can be another way to earn money.

Why logistics software is important

The addition of software to your logistics department will optimize daily and long-term transportation plans and scheduling, carrier selection, route planning, inventory management, and small parcel shipping, which can reduce costs.

While a software investment may cost at least $10,000, improving your shipping processes will allow you to serve more customers and increase profits in the long run.

“Some businesses shy away from the investment of software, but technology provides techniques that can increase the size of each shipment,” says James Moore, vice president of sales, Ryder System Inc. “Software can tell you your savings if you can get customers on board with two-day shipments instead of same-day, and the rates will be automatically lower for them and you.”

A common transportation management issue has businesses keeping more inventory on hand than necessary. This typically happens when stock is manually cataloged instead of tracked with software. This means more of your money is sitting in warehouses instead of in your pocket.

“Companies don’t need to keep a ton of extra people on board when they don’t have work for them and the economy is down,” says Cynthia Cabrera, lead consultant and president of Global Solutions & Services Inc. “Less people also means less to plan. Software can be very useful as long as it is necessary for your operation and the people using it know what they’re doing. This can save you a ton of money, but like everything else, you have to have a reason for it and know what return to expect.”

Software can help you evaluate your needs for warehouses, your fleet or the need of third-party resources. Before making a software purchase, you need to assess what areas of your process are in greatest need of assistance. While some companies package their software options, others individualize the programs for specific areas of interest such as shipping and loading.

“Load building is one area where errors can occur,” says Karin L. Bursa, vice president of marketing at Logility, a provider of collaborative supply chain solutions. “Using software to maximize the load’s efficiency can save you 5 to 25 percent a year, carrier reduction will go down 1 to 5 percent and the audit/payment process will be reduced by another 1 to 3 percent. This could mean a 10 to 40 percent cost reduction, with ROI inside of 12 months. Most software companies will also provide continued support and upgrades as part of ongoing service plans.”

Human error is a big part of what can go wrong in logistics. Depending on the volume of orders you are receiving, this can add up. The use of software can eliminate these errors and make your inventory and tracking easier to manage. Software can also determine the best carrier for a particular type of shipment and contractual agreements.

“Efficiency means better customer service,” says Jamison Day, professor, University of Houston, C.T. Bauer College of Business. “Software helps you move through the process better, faster and cheaper. If you don’t have the capabilities to purchase all of the necessary software but your company relies heavily on shipping, you should consider a third-party logistics firm.”

Experts say that two-thirds of all Fortune 500 companies use third-party logistics companies for some aspect of transportation, warehousing or inventory management.

“If you decide to perform this part of your business in-house, the cost of the system will need to be reflected in what you charge customers in transportation freight fees by 4 to 7 percent,” Moore says. “IT solutions can provide you with answers to whatever your particular needs are.”

The benefits from buying the right software for in-house use or finding the right outside firm, will include more efficient route scheduling, reduce the need for extra inventory, delivery times, no empty hauling, reduced overtime, possibly less employees and less fuel use. These factors save money directly and by increasing customer satisfaction, creating loyalty and perhaps a willingness to purchase more goods through your company.

What you need to know

Before making a software purchase, you need to assess what areas of your process are in greatest need of assistance. While some companies package their software options, others individualize the programs for specific areas of interest, such as shipping and loading.

To figure out where you need help, you will need to perform an audit that tracks products from production to delivery.

“Different industries have different viewpoints, but basically this economy has been like getting bariatric surgery,” Moore says. “If you lose 100 pounds all at once, your clothing isn’t going to fit anymore, and that’s what’s happened with many companies’ networks. They are now way larger than what they need to be and their one-time assets are now financially draining them. If efficiency is a problem with your transportation process, software will help eliminate errors and make the most of all efforts.”

Start by making a checklist. Are your shipments on time? Are your trucks traveling with full loads? What are your current fuel expenditures? Are you utilizing the best routes? What rates are you paying carriers? Are you paying your employees overtime? Are your orders accurate? If you don’t know how to obtain this information or you’re finding inconsistencies, software can probably help you reduce errors and delays.

“There are a fair amount of laws that must be obeyed in shipping, as well,” Day says. “Software will keep you abreast of what is necessary when sending out loads. You will, of course, have to keep upgrading your software, but this cost is much lower than fees and penalties that can be accrued when you don’t have paperwork in order. This delay will also make your customers unhappy.”

After you’ve determined the area you need the most help with, choose a software company you feel comfortable working with. Find a company that will be accessible when you need them. If you decide handling everything in-house is too expensive, find a third-party logistics firm that handles the details while you focus on your core competencies.

“Computers tend to find ways that reduce driving time and improve loading of shipments,” Day says. “The technology doesn’t replace the humans, it augments them, making everything more efficient. Depending on the industry a third-party logistics firm will be a must. Calculate the rate to bring this service in-house compared to that of a logistics firm. Make sure that you find the right company to fit your needs. Don’t partner with the first guy holding a hammer looking for something to hammer even if it’s not the right tool. Look for a tool-independent firm.”

Today’s economic climate may be tough, but by looking for savings in every area of your business — including transportation — you can find money that can be better used elsewhere in your organization.

“Make sure you have the appropriate network to support your needs,” Moore says. “If your needs have adjusted with the economy, use software to help eliminate unneeded assets and plan the process more efficiently. Because of the economy and companies’ need to take less profit to keep customers, rates of purchasing software or going through a third-party logistics firm are very low compared to even a year ago. Although the rates will rise with the economy, you can take advantage of them while they last. If you maintain your software, your capabilities won’t decline with the economy.”

Thursday, 26 March 2009 20:00

Debunking diversity

The million-dollar question about making an investment in diversity is: Will it pay back?

While experts say diversity in the work force is a business imperative, defining diversity by employees’ physical attributes won’t foster a functional or profitable environment.

In fact, the definition of diversity is always evolving. Twenty years ago, the word spurred thoughts of gender issues since men held a high majority in the work force, while today the gender gap is narrowed and is less of a concern. Diversity’s definition has expanded, and diversity of thought, education, socioeconomics, religion and life goals are only a few of the seemingly endless list of terms people use when defining the term for themselves. These differences in your employees can make or break your business. If you foster an inclusive environment, where all employees can contribute thoughts and plans to improve your product or service in confidence, you will improve your bottom line.

A February 2009 Groundbreakers report by Ernst & Young defines diversity as an equation for success and notes that research has proven diverse groups outperform homogenous groups even in cases where the nondiverse groups have heightened abilities. Scott Page, a professor of complex systems at the University of Michigan at Ann Arbor, created the diversity prediction theorem, which says the collective ability of any crowd is equal to the average ability of its members plus the diversity of the group, claiming diversity is a sure way to attain a strategic advantage.

“Diversity equals business excellence,” says Virginia G. Essandoh, director of diversity for Ballard Spahr Andrews & Ingersoll LLP, which has 570 attorneys and 1,000 staff members who participate in ongoing diversity training. “Diversity training doesn’t have to be a costly investment. It just needs to teach employees to value and respect their differences to have better communication.”

Still, the return on investment is the hard evidence you want to justify devotion of time and money. Some say it’s difficult to quantify diversity ROI, but metrics are attainable. If you start with a plan that establishes your company goals and maps out a strategy, you can document the benefits and obstacles of a diverse team’s functionality that will best benefit your business.

Why it’s important

Since the country’s demographics are continually changing, a failure to branch out and move past your comfort zone when hiring and communicating with employees will ultimately result in financial punishment for the business.

“You hire the best and brightest first, and everything else is secondary,” says Linda York, market diversity leader, Philadelphia Metro and Lake Erie markets, PricewaterhouseCoopers LLP. “In order to acquire the best candidates, you must make it apparent in a mission statement or company policy that you will not discriminate against an employee for race, gender or sexual orientation. Since it’s still legal to fire someone for being gay, you may be eliminating a great employee because they’re afraid of losing their job to discrimination. You also have to make sure you are reaching diverse candidates by advertising positions in areas they’ll look.”

U.S. Census Bureau reports show Hispanics are the fastest-growing population, with an increase of 121 percent since 1999. The Asian population nearly doubled since 1990 and the African-American population is predicted to increase to 65.7 million strong by 2050, an increase of 15 percent since 2008.

“It’s a racist stereotype that says hiring a minority means getting a lower-quality employee, but that mindset is out there,” says Anthony R. Rodriguez, M.D., dean of student affairs and diversity, Drexel University, College of Medicine. “The reality is diversity enhances the educational process and a business. Make sure you don’t have a bad definition of diversity — don’t leave anyone out. You can avoid that by saying inclusive environment.”

Affinity networks — employer-recognized employee groups who share a common race, gender, national origin or sexual orientation — are a great way to attract and retain diverse employees. Networking by affinity groups reduces turnover and gives companies insights to consumers they otherwise may have never understood.

General Motors Corp.’s People with Disabilities Affinity Group has been a consistent resource for providing input and support relative to accessibility of products and services. The group played a role in helping OnStar develop the addition of TTY capability, the text telephone for the hearing impaired, for OnStar-equipped vehicles. Another example of diversity was witnessed in PepsiCo Inc.’s Hispanic professional organization called Adelante. Its Hispanic employee network provided insights that resulted in the development of the guacamole chip. In the first year of distribution, PepsiCo’s Frito-Lay division sold $100 million in Lay’s guacamole chips.

“There are very few women or minorities in upper-management positions despite the proven benefits of a diverse work force,” York says. “After hiring a diverse team, you need to provide them with the tools to continue to grow within the company.”

What you need to know

Diversity isn’t about being politically correct; it’s about keeping your business competitive.

“Clients are global,” Essandoh says. “The Latino population is growing faster than any other, and there is buying power behind the numbers. Considering just this group, the spending will go up 400 percent rapidly. You want to have employees that can help you reach those consumers as well as other demographics.”

Keep in mind the customers who you want to attract and then investigate opportunities in markets in which you want to expand or improve business. If you’re interest is in attracting a broader customer base, employees should mirror the communities in which you want to expand. Forge relationships with diverse community organizations and let them know about opportunities in your organization. Sponsoring events that interest diverse groups makes your company more attractive to diverse candidates.

For example, host events in coordination with Cinco de Mayo, Chinese New Year or Disability Awareness Month, and make your business’s diversity interests and job openings known.

If you’ve established affinity groups within your company, they can also help with recruiting. They may be able to give you suggestions that will help your business attract more diverse candidates and offer ideas of where to post positions.
Starting an affinity group is easy.

“Affinity groups profoundly affect marketing and business strategies,” Essandoh says. “These groups help you ensure nothing is offensive to certain groups. It only takes one mistake to deter a customer from choosing to do business with you a second time.”

Hiring managers also need to keep in mind how to motivate and manage their staff as part of a recruiting plan. Experts encourage incentives for staff contributions to a diverse work force, considering employees’ job satisfaction can be your best advertising.

“I know from experience that a number of patients want to be treated by a doctor that shares their background,” Rodriguez says. “It’s comforting to think someone understands you. This is the same thing in business — especially now. If someone is giving you their hard-earned money, they’re going to want to feel appreciated and comfortable with you. There isn’t a big need to set money aside for diversity, it needs to be the way you think and expose yourself to it so you can better understand others. In fact, that (attaching a dollar amount) is marginalizing the issue. There isn’t a dollar amount that you can attach to something that is essential.”

Thursday, 26 March 2009 20:00

Debunking diversity

The million-dollar question about making an investment in diversity is: Will it pay back?

While experts say diversity in the work force is a business imperative, defining diversity by employees’ physical attributes won’t foster a functional or profitable environment.

In fact, the definition of diversity is always evolving. Twenty years ago, the word spurred thoughts of gender issues since men held a high majority in the work force, while today the gender gap is narrowed and is less of a concern. Diversity’s definition has expanded, and diversity of thought, education, socioeconomics, religion and life goals are only a few of the seemingly endless list of terms people use when defining the term for themselves. These differences in your employees can make or break your business. If you foster an inclusive environment, where all employees can contribute thoughts and plans to improve your product or service in confidence, you will improve your bottom line.

A February 2009 Groundbreakers report by Ernst & Young defines diversity as an equation for success and notes that research has proven diverse groups outperform homogenous groups even in cases where the nondiverse groups have heightened abilities. Scott Page, a professor of complex systems at the University of Michigan at Ann Arbor, created the diversity prediction theorem, which says the collective ability of any crowd is equal to the average ability of its members plus the diversity of the group, claiming diversity is a sure way to attain a strategic advantage.

“Any business will be a richer organization with a variety of diverse perspectives,” says Randi Menkin, director of global work force diversity for UPS. “It’s a business imperative to tell people that you believe in what you do or customers won’t want to do business with you. If you add diversity throughout your business, you will have a better shot at understanding all of your customers needs and predict what they want.”

Still, the return on investment is the hard evidence you want to justify devotion of time and money. Some say it’s difficult to quantify diversity ROI, but metrics are attainable. If you start with a plan that establishes your company goals and maps out a strategy, you can document the benefits and obstacles of a diverse team’s functionality that will best benefit your business.

Why it’s important

Since the country’s demographics are continually changing, a failure to branch out and move past your comfort zone when hiring and communicating with employees will ultimately result in financial punishment for the business.

“You have to push yourself to be in front of opportunities,” says Monica Maldonado, president and CEO of Interprint Communications Inc., a Decatur printing company. “As a Hispanic woman, I’ve had to reinvent the wheel each time I have pitched my services to a new company. New relationships can be difficult at the start. I think businesses can be leery of what and who they aren’t accustomed to working with. In the past, doing business with diverse groups of people wasn’t an aspect you couldn’t do business without. But today, if you want to expand, you have to learn to get past pet peeves.”

U.S. Census Bureau reports show Hispanics are the fastest-growing population, with an increase of 121 percent since 1999. The Asian population nearly doubled since 1990 and the African-American population is predicted to increase to 65.7 million strong by 2050, an increase of 15 percent since 2008.

“When recruiting employees, you need to cast a broader net to allow for a wider range of candidates to apply,” says Jennifer Melton, EEOC/diversity management consultant for F&H Solutions Group. “But proper management is needed — affinity groups and employee resource groups are helpful.”

Affinity networks — employer-recognized employee groups who share a common race, gender, national origin or sexual orientation — are a great way to attract and retain diverse employees. Networking by affinity groups reduces turnover and gives companies insights to consumers they otherwise may have never understood.

General Motors Corp.’s People with Disabilities Affinity Group has been a consistent resource for providing input and support relative to accessibility of products and services. The group played a role in helping OnStar develop the addition of TTY capability, the text telephone for the hearing impaired, for OnStar-equipped vehicles. Another example of diversity was witnessed in PepsiCo Inc.’s Hispanic professional organization called Adelante. Its Hispanic employee network provided insights that resulted in the development of the guacamole chip. In the first year of distribution, PepsiCo’s Frito-Lay division sold $100 million in Lay’s guacamole chips.

“Diversity allows everyone to understand others’ lives,” Menkin says. “This knowledge helps everyone keep rolling in the same direction.”

What you need to know

Diversity isn’t about being politically correct; it’s about keeping your business competitive.

“Effective diversity isn’t about meeting quotas, it’s about functionality and making your business better through understanding, taking action and creation of a desirable product,” Melton says. “You must do this tactfully. Recruit for core competencies with consideration to all of the candidates’ abilities. Think about how they can make you stronger.”

Keep in mind the customers who you want to attract and then investigate opportunities in markets in which you want to expand or improve business. If you’re interest is in attracting a broader customer base, employees should mirror the communities in which you want to expand. Forge relationships with diverse community organizations and let them know about opportunities in your organization. Sponsoring events that interest diverse groups makes your company more attractive to diverse candidates. For example, host events in coordination with Cinco de Mayo, Chinese New Year or Disability Awareness Month, and make your business’s diversity interests and job openings known.

If you’ve established affinity groups within your company, they can also help with recruiting. They may be able to give you suggestions that will help your business attract more diverse candidates and offer ideas of where to post positions.

Starting an affinity group is easy.

“Initiate employee resource groups by providing the resources, such as the facility or work hours, in which they can meet,” Melton says. “Employee resource groups can give a better idea to employers as to where women, for example, or Latinos may look when seeking employment. If you are posting job openings in one newspaper or on one Web site, those might not be sources in which diverse groups are seeking employment. Job fairs are an excellent place to recruit. Post new openings on local Web sites, (and at) colleges historically known to have minority or diverse students.”

Hiring managers also need to keep in mind how to motivate and manage their staff as part of a recruiting plan. Experts encourage incentives for staff contributions to a diverse work force, considering employees’ job satisfaction can be your best advertising.

“In order for companies to compete in a global and multicultural economy, they must understand and leverage diversity in all areas of their business,” Maldonado says. “The diversity of their marketplace should be reflected in the workplace as well as the supply chain. There must be an investment toward diversity efforts. Not investing in diversity because you feel you have a diverse work force is like not investing in a financial department because your finances are currently in check.”

Monday, 23 February 2009 19:00

The science of service

If you’re looking at your budget and considering cutting back on support for customer service, you might want to reconsider. About 96 percent of unhappy customers don’t take the initiative to tell you they’re unhappy with your service, but they will tell nine other people and not return.

Customer service should be as important to you as it is to your customer, and customer service is second in importance only to product quality when it comes to satisfying customers.

The difference in today’s market is that brand loyalty isn’t what it used to be. Businesses are making a new promise every day without credible reasons for the consumer to believe the promise. Customers make purchases because they believe you’re selling something they need, but they also know they have many options. A single bad experience with you can result in your customers making purchases from the guy down the street next week. The products may be similar, but the quality of your customer service can be why they prefer to make purchases with you.

“Understand what your customers want in their whole experience,” says Mike Vermillion, senior manager, operations excellence, Burger King Corp. “Ensuring consistency across your company is the definition of what good customer service is. You’ll always have a competitor trying to simulate your product, but they can’t replicate your customer service. That is where your customers will see the value for their money.”

If customers have a good experience with your business, they’re more likely to return and spend money again. Positive word-of-mouth is one of the cheapest and most effective means of growing your business. It’s also much less expensive to retain a customer you already have than to attract new ones.

Customer service in today’s market entails doing business where and when your customers want to. The trick is to cut costs while being flexible with your ways of improving customer service quality across all avenues, including online and by phone.

There’s an easy formula for this, yet it’s not utilized. It starts with paying better wages. Then you have to invest in your employees’ ability to perform through education and train them to respond to customer needs.

Why a customer service program is important
Your customer service representatives have unlimited access to your customers, products and equipment, yet they’re largely considered dispensable and are treated as such. This is the wrong approach. You can’t personally know who your regular customers are or what their preferences entail, but your employees do, so it’s important to retain them. Investing in customer training and rewarding them with a pay increase upon completion of the course or offering another benefit, such as time off, makes for a more enthusiastic employee.

Although many customer service positions are considered entry level, giving the employee the option to advance within the company will be an incentive for the employee to stay and can help you reduce employee turnover, which on average costs businesses 20 percent of the employee’s annual salary to replace.

“You never want a customer to question if they should do business with you again,” says Tim McGrath, vice president of customer service, Office Depot Inc. “This means training your employees to resolve customer questions in one attempt. You also need to make sure employees are capable of providing for the customer before they’re on their own. A 120-day learning curve is the norm, and they should be partnered with a senior service worker until they learn the ropes.”

You may see investing in customer service training as a luxury in today’s economy, but experts warn that not doing so could lead to your company’s demise.

What you can do
The biggest error you can make is getting too caught up in cutting costs and other internal workings to see your business from the customer’s point of view. Customer service is what keeps the lifeblood of your business — the customers — coming back. Even when inevitable mistakes are made, customers return if the error is handled properly.

“The biggest error companies make with customer service is ranking it in importance below sales,” says Adolfo Perez, vice president of worldwide reservations, Carnival Cruise Lines. “No doubt that sales are crucial to a business, but you won’t have any if your customer service is substandard.”

Another mistake is investing money in loyalty programs focusing on drawing in new customers, while losing focus on appeasing your current customers. If you don’t ask customers about their experience with your business, they’ll likely not tell you — but they will go home and tell others. If you stay flexible and listen to what they say by acting on their feedback, you can best design a customer service program that works for you.

What many companies don’t understand is that good customer service is rare. If you already have brand recognition, you can further your competitive advantage by listening to customers’ concerns and acting on them. You need to define what good customer service means to your specific set of customers before you can best meet their expectations. This can be achieved by polling them in a variety of ways, including comment cards, e-mail or an online form.

“You should always strive to improve — always,” Vermillion says. “Focus on giving customers the value they want then be able to move on to the next thing they expect.”

Even with well-trained employees and a list of customer recommendations, you still need your managers to be an integral part of your program. They should point out positive behavior and not just the negatives. Successes should be noted to encourage employees to do more than the bare minimum, and negative incidents should be handled immediately instead of waiting for an evaluation.

“Employees may repeat a behavior they’re not aware is undesirable,” says Liz Tahir, an international marketing consultant and speaker. “Having the proper communication with employees is essential. If you treat them well on a regular basis, they won’t react negatively when a manager points out an area that needs improvement.

“Employees treat customers the way you treat them. Ask yourself if you greet employees enthusiastically, interact politely and try to accommodate them in their requests.”

Making sure employees have the correct set of tools to perform their jobs is another important step in ensuring good customer service. Proper training and empowering employees to handle customer’s concerns or problems will build employee confidence while expediting the customer’s requests.

“Always putting yourself in the customer’s shoes when determining how to best resolve issues or respond to a request is the best way to resolve issues,” Tahir says. “All of the great companies have incorporated customer service in their core business philosophy, helping to brand their business as one known for great customer service.”

Monday, 23 February 2009 19:00

The science of service

If you’re looking at your budget and considering cutting back on support for customer service, you might want to reconsider. About 96 percent of unhappy customers don’t take the initiative to tell you they’re unhappy with your service, but they will tell nine other people and not return.

Customer service should be as important to you as it is to your customer, and customer service is second in importance only to product quality when it comes to satisfying customers.

The difference in today’s market is that brand loyalty isn’t what it used to be. Businesses are making a new promise every day without credible reasons for the consumer to believe the promise. Customers make purchases because they believe you’re selling something they need, but they also know they have many options. A single bad experience with you can result in your customers making purchases from the guy down the street next week. The products may be similar, but the quality of your customer service can be why they prefer to make purchases with you.

If customers have a good experience with your business, they’re more likely to return and spend money again. Positive word-of-mouth is one of the cheapest and most effective means of growing your business. It’s also much less expensive to retain a customer you already have than to attract new ones.

“The quality of your customer’s experience is one of the most important sustainable advantages a company can have, particularly in a competitive environment,” says Andy Bodea, senior vice president of global operations for Equifax Inc. “Senior leadership must be behind the initiative in order to provide the right tools, and all the elements of providing customer service need to be adopted throughout the company for it to work well. It’s OK to admit that you’re not perfect with customer service, but you should have an execution focus on how to make it happen.”

Customer service in today’s market entails doing business where and when your customers want to. The trick is to cut costs while being flexible with your ways of improving customer service quality across all avenues, including online and by phone.

There’s an easy formula for this, yet it’s not utilized. It starts with paying better wages. Then you have to invest in your employees’ ability to perform through education and train them to respond to customer needs.

Why a customer service program is important
Your customer service representatives have unlimited access to your customers, products and equipment, yet they’re largely considered dispensable and are treated as such. This is the wrong approach. You can’t personally know who your regular customers are or what their preferences entail, but your employees do, so it’s important to retain them. Investing in customer training and rewarding them with a pay increase upon completion of the course or offering another benefit, such as time off, makes for a more enthusiastic employee.

“Companies tend to have poor tracking of the link between training and turnover,” says Robert Smith, senior vice president of marketing and membership for the American Management Association, a professional development firm. “Companies measure only financial or operational aspects and don’t know the money they’ve lost in employee turnover on the employee’s knowledge and training.”

Although many customer service positions are considered entry level, giving the employee the option to advance within the company will be an incentive for the employee to stay and can help you reduce employee turnover, which on average costs businesses 20 percent of the employee’s annual salary to replace.

“If you have different levels of customer care positions in your business, those who are working at the lowest level get bored easily because their job entails performing simple tasks,” Bodea says. “These positions are filled by the newest hires and have a 20 to 60 percent turnover rate. If employees make it to the highest tier, they are very valuable and may not be with the company if not provided the opportunity to advance.”

You may see investing in customer service training as a luxury in today’s economy, but experts warn that not doing so could lead to your company’s demise.

What you can do
The biggest error you can make is getting too caught up in cutting costs and other internal workings to see your business from the customer’s point of view. Customer service is what keeps the lifeblood of your business — the customers — coming back. Even when inevitable mistakes are made, customers return if the error is handled properly.

“Keep in mind that the customer is the priority,” says Sue Park, vice president of customer service, The Home Depot Inc. “They put the money in the register.”

Another mistake is investing money in loyalty programs focusing on drawing in new customers, while losing focus on appeasing your current customers. If you don’t ask customers about their experience with your business, they’ll likely not tell you — but they will go home and tell others. If you stay flexible and listen to what they say by acting on their feedback, you can best design a customer service program that works for you.

What many companies don’t understand is that good customer service is rare. If you already have brand recognition, you can further your competitive advantage by listening to customers’ concerns and acting on them. You need to define what good customer service means to your specific set of customers before you can best meet their expectations. This can be achieved by polling them in a variety of ways, including comment cards, e-mail or an online form.

Even with well-trained employees and a list of customer recommendations, you still need your managers to be an integral part of your program. They should point out positive behavior and not just the negatives. Successes should be noted to encourage employees to do more than the bare minimum, and negative incidents should be handled immediately instead of waiting for an evaluation.

“Employees may repeat a behavior they’re not aware is undesirable,” says Liz Tahir, an international marketing consultant and speaker. “Having the proper communication with employees is essential. If you treat them well on a regular basis, they won’t react negatively when a manager points out an area that needs improvement.

“Employees treat customers the way you treat them. Ask yourself if you greet employees enthusiastically, interact politely and try to accommodate them in their requests.”

Making sure employees have the correct set of tools to perform their jobs is another important step in ensuring good customer service. Proper training and empowering employees to handle customer’s concerns or problems will build employee confidence while expediting the customer’s requests.

“Always putting yourself in the customer’s shoes when determining how to best resolve issues or respond to a request is the best way to resolve issues,” Tahir says. “All of the great companies have incorporated customer service in their core business philosophy, helping to brand their business as one known for great customer service.”

Friday, 26 December 2008 19:00

The power within

The days are long past that energy was so cheap you could afford to waste it. Now, financial and environmental concerns have made saving energy a priority for every business. When done right, you can expect to achieve a savings of 20 to 30 percent off your current monthly utility bill, with minimal investment.

Getting started on saving can be as simple as making employees aware that energy efficiency is a priority for your company. Employees who regularly turn off lights and computers at home don’t bring that same mindset to work. By recruiting employees to help manage your company’s energy usage, you can start to save money.

Fifty-two percent of readers surveyed by Smart Business say they do not expect energy costs to increase over the next 12 to 18 months, but a full dedication to efficiency is necessary to maximize savings, as energy authorities say halfhearted efforts get similar results.

“Getting control of your data is an important factor in energy efficiency,” says Matthew Berke, president and CEO, LPB Energy. “Companies don’t review their utility bills thoroughly; they may be paying their neighbor’s bill or missing bill errors. You can also save 30 percent of your energy bill by shopping through competitive supply. Another area to save is through demand response utilities, where you agree to shut off your power during an emergency blackout. You will likely rarely need to use this, but regardless of use, you’ll receive a percent rebate for agreeing to close in an emergency.”

Why managing energy use is important

Energy efficiency is a prime example of what you don’t know can hurt you. Few people are aware that energy-efficient business desktop computers are available that cost about $10 a year to operate and are about 75 percent more efficient than typical PCs. Installing certain models of smart thermostats allows you to program them wirelessly through the Internet, allowing for temperature adjustments without physically being at the facility. Also, new smart electric meters translate energy wattage use into dollars and allow you to track energy use online.

“New laws say that any new building 10,000 square feet or larger will have to be energy efficient in compliance with LEED,” says Scott Harrison, director of product management, TXU Energy. “This means all new construction will automatically look more attractive to rent or buy because it meets codes. Older buildings will need to upgrade to be attractive when going on the market, especially in today’s economy.”

ENERGY STAR, an Environmental Protection Agency and U.S. Department of Energy program, along with your utility provider and local city hall can help you reduce energy waste by providing regional energy-efficiency tips, financial incentives and energy audits of facilities.

ENERGY STAR endorses more than 50 types of products, which are identifiable by a label that indicates the amount of energy it will require during average use and will tell you the savings you can expect by choosing that product over products that aren’t approved by the ENERGY STAR program. Purchasing the proper equipment and carrying out good habits will reduce your energy expenses exponentially. For example, you will use 30 to 35 percent less energy using an ENERGY STAR battery charger or power adapter over conventional products.

By changing purchasing habits and being more cautious of efficient equipment operation, you’ll immediately reduce your energy bill. By purchasing ENERGY STAR-qualified products, you’ll use about half the amount of electricity that would be used without the efficient product. For example, when a computer is placed in sleep mode, it uses 75 percent less energy and a copier uses 40 percent less energy.

Most businesses use 25 percent of their energy on lighting. Compact fluorescent bulbs last longer than traditional bulbs and use 75 percent less energy. Even if it means renovating your entire lighting system, you’ll see a return on your investment in anywhere from five months to three years.

“Energy costs aren’t fixed,” Harrison says. “Good maintenance practices, lighting retrofit changes and a conservative attitude go a long way to alter a typical bill.”

What you need to know

Performing an energy audit of your business is the first step. This is often performed for free or at a minimal cost through your utility provider. In this audit, you’ll learn what areas of your business are using the most energy. You’ll then be able to work on a strategy to reduce waste.

By visiting the ENERGY STAR Web site at www.energystar.gov, you can compare your company’s energy use to similarly sized companies within your industry and region.

“After you’ve gathered data on what you pay monthly, you can get feedback from your utility provider and ENERGY STAR as to ways to reduce your energy use,” says Rob Schasel, director of energy and resource conservation, PepsiCo.

After your energy audit, you’ll need to strategize a plan of action and goals, and then formally deliver the message to employees.

“You’ll get the best results when you are working toward a goal,” Schasel says. “Set goals such as use 50 percent less water, 30 percent less fuel and 25 percent less electricity, and assign a date to accomplish those goals.”

Assigning an employee to manage energy initiatives and communicate them to the staff will help keep everyone involved and informed about the process. You may want to take things a step further and provide training to employees that can explain operating methods and procedures to reduce energy use, along with ways to monitor and report collected data. ENERGY STAR provides free online training sessions for employees and is a good place to start.

“CEO involvement in an energy-efficiency plan is a must,” Berke says. “Corporate America lets low-level employees make energy decisions, and they don’t care about the outcomes at the same level that upper management does.

When upper management becomes involved, everything seems to work more efficiently.”

The key to success is energizing everyone on your staff to help you save energy.

“Some believe taking small steps works well,” Schasel says. “But at least announcing your goals helps get attention of employees and creates enthusiasm. People on the front line know where the energy problems are and have great ideas. Combine that with the financial team and energy efficiency will come sooner.”

When establishing a project timeline, consider attainable energy grants, rebates and tax breaks weighed against necessary operational changes to accomplish goals. Once you know what you need to change to be more efficient and what finances you have available, you’ll be able to better chart progress and predict the time frame for the return on your investment.

“Culture inside a company must focus on energy efficiency,” Harrison says. “There will be many internal views of why you should be energy efficient, but the one that takes priority today is the savings.”

Tuesday, 25 November 2008 19:00

The road less traveled

With tough economic times taking a toll on all of us, your first instinct to rising business travel costs might be to eliminate the expense across the board.

Don’t do it.

Travel leads to growth and cutting it is counterproductive. If you’re looking to adhere to a more realistic plan, consider re-evaluating your travel policy and consulting with a travel management company to save 20 to 30 percent on travel while keeping worthy trips in the budget.

Travel is the second-largest controllable cost for the average U.S. business, seated between data collection and salaries, yet most companies have little or no management of it.

While your company may have an unofficial policy instructing employees to ‘get the cheapest rate,’ a policy that isn’t managed and enforced is equivalent to not having one at all.

A Smart Business poll showed that 84 percent of respondents’ employees are responsible for making their own travel arrangements. The problem is, if your employees are utilizing online booking agencies or different vendors, your company is likely losing out in the long run. If you lump your travel needs together with selected vendors and submit requests for proposals, your annual negotiated rate will outweigh nickel-and-dime savings earned on a case-by-case basis.

Why travel management is important

If you take steps to retain a travel budget and manage it efficiently, you will most likely see a significant return on your investment.

Sixty-nine percent of companies polled in an October Association of Corporate Travel Executives survey say they will be spending less or the same on travel in 2009.

“Businesses citing lateral travel expenditures in 2009 will likely just be traveling less as the cost of travel has climbed significantly,” says Susan Gurley, executive director, Association of Corporate Travel Executives. “Even those who say they are spending more are barely keeping up with the increase.”

You’d like to think your employees have the company’s best interest in mind, but statistics show companies that place a travel manager or an outside agency in charge of travel finances stay within the confines of their budgets while employee-handled travel has a less successful return on investment.

You need to take a proactive approach to managing your travel costs if you expect to get bottom-line results for a minimum of expense.

But being smart about your budget entails more than waiting for the computerized ping alert of a reduced airline fee like one of Pavlov’s dogs. While airfare is the most costly aspect of travel, you don’t want to arbitrarily eliminate it.

“The first step is to differentiate between strategic and nonstrategic travel,” Gurley says. “Strategic travel generates revenue while nonstrategic travel is anything that results in cost but has no substantial gain in revenue.”

In most cases, meetings with customers are justifiable, as there is a direct correlation to revenue gains. On the other hand, meeting with the head of the Omaha office may not have much effect on your bottom line this year, so consider cutting that — and other trips like it — out of the budget. Use videoconferencing or teleconferencing equipment for these internal meetings whenever possible.

Why? Because internal travel can account for about 40 percent of a business’s travel. Don’t worry, technology has come a long way since the early days of choppy robotic movements and outof-sync voices. Look into Skype and WebEx as a couple of travel alternatives that could save you money while still keeping you in touch with your people in a more personal manner.

What you need to know

Getting your travel budget under control starts with the assembly of an in-house team of policymakers who vow to prevent travel anarchy while clearly defining your terms and expectations. A good policy will answer why travel management is necessary, detail the value of expectations, cite the requirements and give examples of useful practices.

“We’re seeing many businesses saying no to first-class travel, even for executives,” says Bonni Simon, president, TLC Philadelphia. “So, if upgrades were previously part of the travel policy, they’re being largely eliminated. We’re in the eye of the storm with current rates for travel. I see rates trending up into 2009.”

The team involved in policy planning should include you, a scheduler, travelers and the finance team. After the policy is made, one person should oversee its enforcement and keep up to date on travel industry policy. This could be a part-time or full-time position based on need.

A realistic travel budget must be based on destination costs versus a flat-rate figure that is impossible to meet in all travel locations. A rate for things like car rental, hotel and food must be figured depending on the median rates in that city.

A policy needs to be revised annually to adjust to economic and company needs, and some flexibility is required in any plan. For example, an employee’s time may be more valuable than the cost savings from putting the person on a later flight, especially if arriving later could jeopardize a meeting with a client.

Also, you want to make sure the employee’s time is used efficiently on any business trip. A policy should entail what is expected of employees during travel and ways they should make the best use of time outside of the office. Meeting with multiple clients during a conference or calling on one located en route are a couple of ideas to maximize the value of a trip.

Some businesses use online booking agencies, believing their rates will be lowest and eliminate travel management company fees, which can account for 3 percent of all travel costs. But the majority of costs — 97 percent — goes to airfare, hotel and car rental, which is the same arena in which a travel manager will save money.

While travel costs are unlikely to decrease anytime soon, getting through the initial pain may be the biggest challenge facing business.

“Most businesses have put a restriction on travel,” says Dawn Friedman, account executive with Marriott International and a Philadelphia Business Travel Association board member. “They’ve been cutting travel by 10 to 20 percent. This decrease shows the industry that we’ll have to look at ways to offer better rates to compensate for the economy.”

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