Twelve years ago, EY decided to go global with its Entrepreneur Of The Year awards and establish the World Entrepreneur Of The Year program — and the results have been, shall we say, an international success. The conference, held annually in Monaco, features Entrepreneur Of The Year country winners competing for the World Entrepreneur Of The Year title.
Assembling business leaders from around the world in one place to be honored is a huge accomplishment — the wealth of experience, as well as the variety of successful leadership styles, is outstanding.
Here are some thoughts from the collection of the world’s most accomplished entrepreneurs — innovators, futurists, turnaround specialists and problem-solvers — about leadership styles. ●
“I built the company based on people, not on experience from before. They were willing to learn and try anything. We had a bunch of people who had never done this before. None of us had run companies. None of us had worked in high levels of companies. None of us were from Fortune 500s. Chobani not only became a business that grew, but Chobani was like a school to us, including myself.”
founder, president and CEO
Entrepreneur Of The Year 2012 United States
2013 Entrepreneur Of The World
“Early on, the business was centered on me, and I had to make all the decisions alone. Now I share those decisions with my 10 main directors. If there are differences in opinion, I make the last decision.
The other thing is that I have had to ensure that the people who are invited to work here are people with principles, values, integrity, responsibility and passion. If I don’t see a person with passion, they don’t hang around the company very long.”
Lorenzo Barrera Segovia
founder and CEO
Entrepreneur Of The Year 2012 Mexico
“I’m a very passionate person, which will never change. When you grow, you gain more experience and the kind of problems you face change. As you grow, you need to grow with your organization.”
Entrepreneur Of The Year 2012 Argentina
“In the startup days, you have to be very innovative, hire and retain talent, refine your business as you deploy in the marketplace, and you learn things from it. Today, with a solid track record of business success, I can focus on what’s next and think more strategic and long-term than you’re allowed to in the early days. My style has evolved as the business has matured.”
Chevron Energy Solutions
“Entrepreneurship and leadership is about always having ideas, knowing that it is possible even though everyone says it is too difficult. Maintain the positive and always have new ideas.”
Mario Hernandez, founder and president, Marroquinera
Entrepreneur Of The Year 2012 Colombia
“To keep the entrepreneurial spirit and entrepreneurship alive once you've got past the startup base, I think it is making sure people understand why they are there. There are always things you can do to improve your business. You should be rethinking and retooling it every chance you get. The key thing is to make sure everybody in the organization understands the story, where are you going — how are you going to get there? And the belief that you are doing the right thing —people want to know their purpose. Keep the energy going, keep a strong sense of purpose.”
Dr. Alan Ulsifer
CEO, president and chair
Entrepreneur Of The Year 2012 Canada
“The skill sets of an entrepreneur involve understanding how to create business. Why not work with kids who need it the most and actually teach them and help them to be entrepreneurs? That’s what is going to grow our economy and create stability where otherwise we’re going to have a lot of social unrest.”
President and CEO
Network for Teaching Entrepreneurship
“I like to be involved. I want to know everything that is going on. But I have to delegate to my team. That was the biggest adjustment for me, and it’s not an easy thing to do. It’s that delegating to others, trusting them and reinventing yourself. Now that we’ve grown, I put more responsibility on my team and rely on my team more than I once did.”
President and founder
SME Entertainment Group
“If someone makes a mistake, what do you do? You laugh with them. You don’t yell at them. You laugh. It just keeps things light and lively and people want to do their very best. You let them know they screwed up, but you also let them know it’s OK.”
National Heritage Academies
Leaders often talk about how the traits of accountability and transparency helped make them who they are, but to retired Navy Adm. Mike Mullen, who served as the chairman of the Joint Chiefs of Staff for four years under President George W. Bush and President Barack Obama, leadership is quite simply how you listen, learn and lead.
It’s not just a coincidence that communication is as important in the war zone as it is in an organization — and that’s where Mullen emphasizes listening to what his team members have on their minds.
Smart Business talked with Mullen about the challenges of being in command:
Q. What do you see as the most important trait that any leader must possess?
A. Integrity. Be true to yourself, and obviously true to your values. The value of integrity intrinsically has been a driver for me since I was a midshipman at the U.S. Naval Academy. It has served me exceptionally well.
Integrity encompasses being honest, truthful and consistent — both publicly and privately in leadership positions — and representing that in every situation. It is most evident in the toughest decisions you have to make.
Q. And how can you ensure integrity is present in leadership?
A. What I loved about command was the responsibility and authority that came with it. But more than anything else, the other piece was accountability — accountable leadership. That is not just having someone hold you accountable, but having enough strength yourself as a leader to hold yourself accountable.
I just found that even with those decisions that can be very unpopular, if you are true to that value of integrity, even if it may not seem to some to be the best decision, it [integrity] holds you in the best stead as a leader over the long term. And because of that, it becomes incredibly supportive of those very, very tough decisions.
Q. So what can help a leader make those tough decisions more effectively?
A. As a more senior leader, I learned to keep a diversity of views around me. The more senior I got, the more diverse the people, the recommendations and the discussions had to be in order for me to make the right decision.
I had people around me who were willing to say, ‘Hey, this is when you got it wrong,’ as opposed to the opposite, which is isolation, where nobody will tell the emperor [he] doesn’t have any clothes on.
Q. You’ve mentioned the importance of listening to others in order to help you become a better leader. How did you do that?
A. Everywhere I went, whether we had a town hall meeting or we could call an all-hands meeting, I would take questions from the audience. So, for example, when a young enlisted man would give me a question of which I didn’t know the answer, I said, “I don’t know the answer, but give me your email address. I will go research it and get back to you.”
I did that. I went back and looked at whatever their concern was. And some of those concerns generated significant changes in the military, or in the particular service they were in. For me, as chairman, that was a vital part of trying to understand what I was asking them to do, and then taking that feedback and trying to fix the problem that they raised — if it made sense to do it.
A good leader can make such a difference, and create something out of nothing, whereas a bad leader is unable to do that. The ingredient that makes a difference is leadership. ●
Retired Navy Adm. Mike Mullen served more than 43 years in the Navy, having served as the chairman of the Joint Chiefs of Staff from 2007 to 2011, and as chief of naval operations from 2005 to 2007. He will be the keynote speaker at the Dec. 5 American Red Cross Hero Awards. Learn more about the Hero Awards at www.clevelandheroes.com.
Consider this business scenario: You’ve landed a big account for your company by converting a highly prized prospect into a valuable client. The new client has hired you to handle a specific scope of work and is counting on your team’s ability to deliver work that goes above and beyond.
While nothing is more important than delivering great customer service to satisfy the client, you may not realize that you’re probably overlooking unrealized opportunities to forge a stronger relationship with your customer.
In today’s business landscape, most large companies offer an array of products and services. More often than not, however, your clients use you for a specific service or skill set. And unfortunately, in this scenario, most companies focus solely on the task at hand — delivering what they’ve been contracted to deliver — failing to take ample time to think about the bond they’re creating with the client and what could be next.
In more simple terms, it is one thing to provide service that keeps a customer; it is another to keep that customer and expand the relationship to become a trusted partner.
Provide value in a deliberate way
The good news is that this is an easy fix. Establish a content marketing program that allows you to distribute thought leadership to your clients.
A content marketing program will help you provide value that other service providers may not, and when clients see you as an informational resource and partner, it will be easier to expand the relationship.
Take this example into consideration: You are an insurance provider and your main product is life insurance, therefore most of the communication you have with your clients surrounds that topic.
With a comprehensive content marketing program in place, however, you can educate your clients on the recent trends in the insurance industry and how that affects the individual. At the same time, you can give them an overview of your company’s wellness program and let them know that if they joined, they could reduce their monthly premiums.
As you can see, you’re not just providing your client with the original service, you’re also providing them with both your thought leadership — aka value — and additional offerings.
Personal connections payoff
Aside from providing value to the client with the content you distribute, a strong content marketing program allows you to showcase your brand’s personality. Clients will be able to connect with your brand on a more personal level.
Providing continually updated content through the right channels to the right clients enhances your day-to-day communications. Clients start seeing you as thought leaders and partners instead of just service providers.
It will help you expand relationships and, as a result, generate new business through more products and services.
Show them more than just what they see on the surface — show them how active you are in the community, or how much fun you had during a recent company outing. If may sound trivial, but your clients do similar things, and seeing you connect with the community and/or employees will help forge a more personal connection. You never know; you and your client may support the same charity, organization or team.
Open communication also will help strengthen relationships to the point where you can capture a premium price and eliminate price-jumping clients. Clients will pay more for a valuable relationship than simply look to get the lowest price elsewhere. ●
David Fazekas is vice president of marketing services for SBN Interactive. Reach him at email@example.com or (440) 250-7056.
You would think someone like Douglas Merrill would be a heavy multitasker, with multiple devices in hand, fielding several conversations — both real and virtual — simultaneously.
But you would be wrong.
Merrill, who was the CIO at Google until 2008, doesn’t like to multitask. He says that when you do it, you aren’t using your brain’s full capacity and aren’t as effective. He recommends focusing on one thing at a time.
Billionaire Mark Cuban has his own time management strategy. Cuban, owner of the NBA’s Dallas Mavericks, says you should completely avoid meetings unless you are closing a deal. Otherwise, he says, they are a waste of time.
Both of these proven leaders have learned that how you manage your time is paramount to your effectiveness.
As a CEO, you are swamped every day with calls and emails from people wanting a piece of your time. Some are internal, some are charity requests, some are from friends or family members and others are from service providers.
To help wade through this sea of information, it’s important to have a system in place to help you free up time to think about your business and the things that matter most in life. These open times are what author Richard Swenson refers to as “margin.” They are the spaces between ourselves and our limits that are reserved for emergencies.
But for many business leaders, there are no spaces left.
The way out of this trap is to set clear goals and values for yourself and your organization. Once you do that, you will have a filter through which to evaluate everything. Everything will have an immediate yes or no answer, eliminating the “let me think about it” category completely.
The key is to establish what your goals are first and then prioritize what is important. With your priorities straight, you will find more time to put toward important things on your goals list, but don’t forget to leave time on your daily schedule. There is no way to foresee all emergencies, so by leaving yourself some margin, when something unexpected happens, you already have time built in to deal with it.
Once you have margin built into your life, you have to have the discipline to stick to it. There will always be the temptation to take every meeting or answer every email. But if you use your goals and priorities as a filter, those requests are easily either accepted or declined based on where they fall on your priority list.
If you want a life where you can experience more peace and joy and less anxiety, start looking at your priorities and establish some margin in your daily schedule. ●
Deny, deny, deny; fall, tuck and roll; or put your head in the sand?
The quick answer to this headline is none of the above. A leader, by definition, must do exactly that — lead, which means being in front of a variety of audiences, including employees, investors and customers. Not everyone is going to be a gung-ho supporter. Sooner or later you’ll encounter a naysayer who either has a point to prove or is on a mission to make you and your company look bad.
Many of these verbal confrontations come out of nowhere and when least expected. As the representative of your organization, it is your responsibility to manage these situations and recognize that sometimes a “win” can simply minimize the damage.
When under siege, it’s human instinct to fight, flee or freeze. Typically these behavioral responses aren’t particularly productive in a war of words. Engaging in verbal fisticuffs could simply escalate the encounter, giving more credence to the matter than deserved.
If you flee by ignoring the negative assertions, you’ll immediately be presumed guilty as charged. It’s hard to make your side of the story known if you put your head in the sand.
By freezing, you’ll appear intellectually impotent. Worse yet, pooh-poohing a question will only fuel the aggressor’s determination to disrupt the proceedings. You could use a SWAT-type police and military technique to elude a confronter by falling, tucking and rolling to safety, but that usually only works on the silver screen.
Perhaps the best method to manage unwelcome adversaries is to be prepared prior to taking center stage. This applies to live audiences or a virtual gathering when you’re speaking to multiple participants, which is common practice for public company CEOs during quarterly analyst conference calls.
Most gatherings of this nature include a Q&A segment where the tables are turned on the speaker who must be prepared to respond to inquiries both positive and negative.
Before any such meeting, it is critical to contemplate and rehearse how you would respond to thorny or adverse statements or questions.
A good practice is to put the possible questions in writing and then craft your responses, hoping, of course, that they won’t be needed. This is no different from what the President of the United States or the head of any city council does prior to a press conference or presentation. The advantage of this exercise is that it tends to sharpen your thinking and causes you to explore issues from the other perspective.
In some cases you’ll find yourself in an awkward or difficult situation where there is no suitable yes or no answer, or when the subject of the interrogatory is so specific it is applicable to only a very few.
The one-off question is easiest to handle by stating that you or your representative will answer the question following the session rather than squander the remaining time on something that does not interest or affect the majority.
The more difficult question is one that will take further investigation and deliberation, in which case the best course of action is to say exactly that. Answer by asserting that rather than giving a less-than-thoughtful response to a question that deserves more research, you or your vicar will get back with the appropriate response in short order. This helps to protect you from shooting from the hip only to later regret something that can come back to haunt you.
Effective speakers and leaders have learned that the best way to counter antagonism is through diplomacy. It’s much more difficult for the antagonist to continue to fight with a polite, unwilling opponent.
Finally, when being challenged, never personalize your response against your questioner; always control your temper; and don’t linger on a negative. Keep the proceedings moving forward and at the conclusion keep your promise to follow up with an answer. This will build your credibility and allow you to do what you do best, lead. ●
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. “The Benevolent Dictator,” a book by Feuer that chronicles his step-by-step strategy to build business and create wealth, published by John Wiley & Sons, is now available. Reach him with comments at firstname.lastname@example.org.
My 7-year-old son Cole recently gave me a Rainbow Loom bracelet, which is made of linked rubber bands. It is today’s school-age children’s craze, and Novi, Michigan-based Choon’s Design LLC is churning out the kits at a record pace.
With more than 1 million units sold in the last 24 months, Rainbow Loom is the brainchild of Choon Ng, a former Nissan crash safety engineer who invented it while working on a craft project for his daughters.
And Rainbow Loom, it turns out, isn’t its original name. When it was created, it was called Twistz Bandz.
Timing is everything, and Twistz Bandz may have sounded a bit too much like Silly Bandz — the last “wrist” craze that swept the nation. Between November 2008 and early 2011, every school-age child in sight was wearing layer upon layer of Silly Bandz on their wrists. It was as hot a product as anything since Beanie Babies.
Twistz Bandz’s arrival, it seems, happened just as Silly Bandz ran into what every hot new product eventually faces: competition. Look-a-likes with similar-sounding names began flooding the market. They were cheaper, and you could buy them more readily at more retail locations. The core brand quickly diluted. So Ng did what any smart businessperson would: He changed the dynamics of the situation.
Thus, Rainbow Loom was born.
Enter social media
Within a few months, the product — which allows its young owners to custom-create bracelets — was gaining attention. Much of this was due to a full-tilt social media blitz, including videos on YouTube and an engaging Facebook page, where users could share their designs.
More recently, Ng has become vigilant in protecting his patent and U.S. trademark — battling all wannabe competitors from launching similar-sounding products and flooding the market to dilute his own brand.
His success — or failure — is yet-to-be determined. But his efforts will prove fruitless if he’s not already looking ahead to the next product. This is the dirty little secret to any hot toy craze and the core dilemma every business leaders faces: How do you remain relevant as consumers’ wants, needs and desires ebb and flow — sometimes as swiftly as the wind changes direction.
Get beyond being a fad
Success in business relies upon building a sustainable operation that will outlast any cyclical “must have” product explosion.
There needs to be the creation of an idea continuum — an innovation factory, if you will. Innovative leaders must review, measure and adapt a company’s products, services and solutions to the changing whims of the marketplace. You need to talk to customers, vendors and prospects. And you need to regularly take the pulse of the market.
If you haven’t taken at least some of the gains from today’s success and invested it into research and development for tomorrow, you’re already losing ground. Today is today, and just like the disclaimers for financial investing warn — past performance does not indicate future results.
In the end, the only thing that matters is this: Is your next big thing built to last? Or, like every other craze that’s every hit the market, will your opportunities to remain relevant long into the future fade away after the competition creeps in and dilutes your market? ●
Dustin S. Klein is publisher and vice president of operations for Smart Business. Reach him at email@example.com or (440) 250-7026.
Sue McPartlin’s recruiting the best of the best at PwC Cincinnati & retaining a multi-generational workforceWritten by Gregory Jones
The average age of Sue McPartlin’s counterparts at PricewaterhouseCoopers LLP is 27. That’s roughly equivalent to the number of years she’s been at the Big Four accounting firm. There’s one thing those years of experience at the firm has given her — knowledge — and she’s very proud to share that knowledge with the company’s millennial employees who already make up more than 50 percent of PwC.
“I’ve been here longer than most of our newer hires have been alive,” says McPartlin, who became market managing partner of PwC’s Cincinnati office in 2011. “Because such a large percentage of our employees are millennials, we can’t survive in business if we don’t attract and retain that talent.”
PwC Cincinnati has 210 employees and McPartlin leads an office that is responsible for the Ohio, Kentucky and Indiana region. Since becoming market managing partner two years ago, she has had the growing challenge of leading a multi-generational workforce while also having to compete for the best and brightest talent coming out of college against the likes of EY, KPMG and Deloitte.
“One of our biggest challenges is the competition for talent and developing and retaining that talent,” McPartlin says. “We don’t make any kind of product; we sell services. Our people are our product. It has become fiercely competitive on campuses, as well as for experienced hires. It’s just a different caliber of young talent that we’re seeing these days.”
In a firm the size of PwC, there are numerous opportunities offered to employees who put forth the effort.
Here’s how McPartlin is passing along knowledge to the younger talent at PwC Cincinnati, while also working to retain a multi-generational workforce.
Recruit the best and brightest
On many of today’s college campuses, the competition for a job following graduation has become fiercer than in years past. The competition to attract that talent has also increased for businesses, especially among the Big Four accounting firms.
“It becomes very challenging to recruit and to ultimately retain strong talent,” McPartlin says. “We as a firm just did a global study called a NexGen study looking at millennials vs. non-millennials. We’ve been focused on it for quite a while, recognizing that the next generation of younger employees have different expectations and want different things.”
Those differences in wants and expectations add to that challenge as well. PwC has to make sure it stays current with what younger generations are looking for out of their employer.
“We have to make sure that people who have been around a while, like myself, don’t get embedded in how we grew up in the firm and how things were then,” McPartlin says. “Most of the younger generation doesn’t think they will work for one company their whole career, no matter who it is.”
PwC has always had direct competition for talent among the other Big Four accounting firms, but today the options available to candidates coming out of college are much more than five or 10 years ago.
“That adds to the competitiveness,” she says. “On the other side we have to match our needs and culture with how people want to work today.”
PwC has been around for more than 120 years, so it is imperative that it makes adjustments to be more attractive to the ever-changing workforce coming out of college.
“We’ve been on that journey now for a number of years, and we’re having a lot of success with it,” she says. “You have to stay on top of it, but who knows what expectations of people will be like five years from now. It’s both the true competition with other companies and firms, and the competition to grab the attention of these folks and get them to want to stay and be here.”
The recruiting process starts with getting out to college campuses and getting to know the potential talent you’ll be recruiting.
“It’s about getting to know people on a personal level so potential hires know from a people perspective what they’re getting into,” McPartlin says. “It’s also helpful to have people understand what the culture of your organization is like. That’s really important, and we see that in internal surveys we do of our people, and external data validates that the fit with a culture is really important to people.”
Retain your talent
Within most companies today, workforces are very diverse and expect different things from their employers. No longer does a one-size-fits-all solution keep people happy.
“Our expectation from our people is adaptability and flexibility on their side, but also on the PwC side, and not treating everyone exactly the same,” McPartlin says.
With workforces becoming more unique than ever before, companies have to get creative to retain talent and offer things others don’t, or do a better job offering similar things. PwC focuses on training and development of its employees.
“We offer a lot to our employees in terms of formal training and development,” she says. “Our folks consistently tell us that they think our learning and development is very strong in helping them prepare to do their work. We also offer on-the-job training.”
PwC also puts emphasis on working in team environments, no matter what the work is or in what department.
“You’re always learning from somebody who is a bit more experienced than you,” she says. “Our team members get a variety of clients, which keeps things interesting and they can learn from people with different experiences than they have.
“When we ask people about what they like best about the firm and what keeps them here, they consistently say the people and the ability to team with people and learn from them. That’s one of the key drivers in terms of retention.”
Aside from teamwork, flexibility is another aspect of today’s work environment that younger generations expect to have. Work/life balance plays a bigger role today than it ever has.
“I don’t like the term work/life balance because that implies that it’s always in balance,” McPartlin says. “I view it as scale. Sometimes work takes precedent and sometimes life takes precedent.
“Don’t just focus on that one day that you had to work a lot and didn’t get to spend as much time at home as you wanted. You have to look at flexibility from the bigger picture.”
In a workforce like PwC’s, not everyone is looking for the same things.
“It’s not so much that millennials want different things in a job versus non-millennials, but rather rank those needs in different degrees of importance,” she says. “We’re recognizing that we need to change and adapt to these things.”
Everyone probably can agree on, no matter what generation they’re in, that having different opportunities provided to you is important and desired.
“With a firm of our size and the variety of things that we do from a client service perspective, as well as a lot of the things we need to do to run the firm from an internal perspective, there’s a lot of opportunities out there,” McPartlin says. “I’ve had folks who are on the assurance staff, but move into marketing and sales, and then come back to assurance. Some folks move permanently into those roles because they were able to try something different.”
The other point McPartlin and PwC emphasize to employees is encouraging them to step out of their comfort zones.
“They have to know that the leadership and the partner group will support them in doing that,” she says. “When most people have any angst about moving on to a different role or department, they want to know they’ll be supported.”
The third thing that builds goodwill with employees is making sure they are offered opportunities even if they don’t take them.
“That lets them know that you think highly enough of them that you want to offer them that next role and next opportunity. That’s really important,” she says. ●
- Understand the talent currently coming out of college.
- Offer benefits that will attract millennials and retain current employees.
- Provide opportunities to your workforce to drive retention.
The McPartlin File
Name: Sue McPartlin
Title: Market managing partner
Company: PricewaterhouseCoopers Cincinnati office
Born: Mount Clemens, Mich.
Education: Attended Walsh College and received a bachelor’s degree in accounting.
What was your first job, and what did you learn from it? I ran a 20-ton plastic injection molding press. I worked in a factory all summer long making plastic car parts and refrigerator parts. It was really hard working in a factory and it was really hot because you were working with plastic and injection molding. It was good money as a college student, but it made me realize this wasn’t what I wanted to do for the rest of my life and that I wanted to finish college and get my education.
Who do you admire in the business world? There are a number of client company executives that I have looked up to over the years. I also just read the book, “American Icon: Alan Mulally and the Fight to Save Ford Motor Company.” Based on that book, Alan Mulally is obviously a very inspirational leader.
What are you excited about at PwC? Specific to Cincinnati, I think we have a lot of future growth opportunities here. That excites me as the leader of this marketplace. From a broader perspective, we are very focused on delivering the best both to our people and to our clients, and I see that as being impactful and exciting.
How to reach: PricewaterhouseCoopers LLP Cincinnati office, (513) 723-4700 or www.pwc.com
The aging workforce and retirement of an increasing number of baby boomer business owners is creating a pressing need for new leaders and transitions of ownership among the family and private-owned business sectors.
This is an issue that has been easily pushed off before, but it has become an important reality for a number of businesses. Waiting is no longer an option. The topic of succession planning has become a trend as organizations become more proactive in their growth and sustainability.
A constantly changing business environment also has businesses re-evaluating processes and procedures to remain relevant in their industries. Organizations are realizing the importance of establishing a clear, realistic vision and direction to drive change and growth.
These are topics that are especially important to the family and privately owned business communities as change and leadership development can be very complex from generation to generation of ownership.
Only one-third of second-generation businesses are successful, while an even slimmer one-eighth of third generation owners maintain their predecessor’s success rate. Characteristics such as effective communication, leadership development and driving change play an interesting role in these organizations as well. Lack of formality and standardization in these areas, which are critical to succession planning, can plague progress.
The lean philosophy creates and capitalizes on a sense of urgency for change, preventing a reactive crisis mode, and taking an organized, efficient approach to process improvement.
Although lean is perhaps most recognized for its application in the manufacturing world, the principles in process improvement apply across many industries. Working on a bottom-up model driven by the frontline, lean models address the three E’s essential to every business — education, execution and evolution.
Lean is not about layoffs or downsizing, but about eliminating wasteful activities in a collaborative learning environment. Through value stream mapping, the lean process empowers employees to identify opportunities for growth in daily operations first hand.
Problem solvers and leaders, who are crucial to growth, stand out in the lean process and allow for an easier transition of responsibilities from one generation to the next.
Most often success falls flat not in planning, but in the failure of executing an otherwise good plan. By removing ambiguity in teaching an organization to structure and standardize its activities on realistic terms, execution becomes an integral part of operations.
Lean methods are based in reinforcing and working on a system by helping people, not only identify problems, but solve problems through new applications.
The final and perhaps most important success factor is sustainability. Constantly setting the vision and ideal state creates healthy tension in the business, always working toward the next goal. Lean processes use benchmarks and future-state thinking to drive change and maintain the practice of new learning through application, application, application.
When it comes to tackling a task that affects multiple departments, business leaders need to take a broader look at how the change will impact the operations and productivity companywide. For example, in developing the next generation of organizational leaders, succession planning is often only a small component of the real transition that needs to be executed.
Instilling processes that drive change and promote growth in an organization, no matter how large or small, by identifying true problem solvers can ensure healthier succeeding generations of family and privately owned businesses. ●
David Levine is executive vice president of consulting services at TechSolve, which helps small to midsized companies implement process improvement and business growth solutions through a combination of programs with expertise in advanced machining, aerospace, defense and healthcare. You can reach him at Levine@TechSolve.org. For more information, visit www.TechSolve.org.
At first glance, dropping health insurance for employees and sending them to the exchanges sounds like a win for everyone. Companies can give raises to make up the difference for employees, who then buy insurance for less, and everyone saves money.
But that’s not the result when you factor in all of the numbers, says William F. Hutter, CEO of Sequent.
“Drop your health insurance and give employees the same money is the mantra we keep hearing. It is not a simple decision and should not be treated as such for middle-market companies,” Hutter says.
Smart Business spoke with Hutter about the costs associated with this decision, and its potential impact on your business.
Would companies rather not worry about health insurance because of its volatility?
Companies are tired of thinking about health insurance; it’s becoming another distraction away from their business. Of course, that’s just considering cost and not taking into account the cultural issues involved with the perception of whether you’re taking care of your employees.
For example, a client was advised that it could save money by sending everyone to the exchange and just giving employees raises. That has proven to be a fallacy. When you review all of the numbers, the savings are not there.
The company has 109 employees, and 79 are covered by the health plan. It has a high deductible, so the company contributes to a health reimbursement account (HRA) for employees.
Basic costs of the plan are:
- Total insurance premiums — $653,000.
- Company share — $522,400.
- Employees’ share — $130,600.
- Company HRA cost — $200,000.
- Total cost to company — $722,400.
Dropping insurance and giving those employees $7,500 in raises each — a total of $592,500 — would appear to save the company $129,900. But you have to consider the total cost impact, including deductible burden, taxes and penalties.
What are the tax implications under this scenario?
Because of the loss of the pre-tax deduction, employees and the company both pay more in taxes on the $592,500 in raises — $199,937 by employees and $73,395 by the company.
There’s also an Affordable Care Act (ACA) penalty of $114,000 the company would be required to pay because it would no longer be a health plan sponsor. And now the employees also are paying all of the plan deductible, so that’s another $158,000, assuming a $2,000 deductible.
When you consider all of those factors, the total cost is $779,894, or about $57,000 more to not offer health insurance. When shown the entire picture, the client was blown away.
Are there other variables to consider, even if dropping health insurance for employees made financial sense?
In addition to how it would be perceived by employees, there’s a concern about making a decision based on the short term. Organizations need to think more strategically, rather than looking just at how to fix a current problem.
No one knows how the exchanges are going to shake out. They are getting a tax subsidy for the first two years in the form of a $62 annual tax on every employee covered by an insurance carrier outside of the exchanges. In theory, that provides a pool of money carriers can draw on until the exchanges find their own balance regarding enrollees, costs and risks. That could result in a significant increase in premiums in two years when the subsidy goes away.
Also, you want to be cautious about dropping insurance and giving up the tax advantage of sponsoring a plan because it’s difficult to go back. That’s really the objective of the ACA — it’s a revenue enhancement bill rather than a health care bill. That goes back to the 2005 study by Sens. Max Baucus and Chuck Grassley, which flowed right into health care reform.
This analysis and case study is a dramatic illustration of how the changes written into health care reform are really about closing tax loopholes. Companies may be better off keeping the tax advantage of health care for themselves and their employees by providing access to predictable health care coverage. ●
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The Ohio Bureau of Workers’ Compensation’s (BWC) Destination Excellence program allows employers to choose programs that best fit their risk management needs. It focuses on safer workplaces, return to work and savings options for administrative functions.
“These programs essentially offer discounts for things employers already do,” says Randy Jones, senior vice president of TPA Operations at CompManagement, Inc.
Smart Business spoke with Jones about Destination Excellence and how it fits with Ohio’s other premium discount programs.
What programs make up Destination Excellence and what are the discounts?
- Industry Specific Safety Program — Complete one to three loss prevention activities related to your industry, depending on your total payroll, as well as an online safety management self-assessment. Activities include industry specific training classes, attendance at BWC’s Safety Congress & Expo and/or on-site field consulting with a member of the BWC’s Division of Safety & Hygiene. The benefits are an increase in workplace safety and the implementation of industry best practices. It offers a 3 percent discount.
- Drug Free Safety Program — Prevent on-the-job injuries by integrating drug-free efforts into your safety program. The benefits are an increase in workplace safety, productivity and morale. The basic program offers a 4 percent discount, while the advanced program offers 7 percent.
- Safety Council — Regular attendance at safety council meetings in your community to increase awareness of workplace safety and health issues as well as affecting the frequency and severity of claims in your workplace. It’s a chance to learn best practices, increase collaboration among local business owners, improve public relations and increase safety. It also offers a 2 percent discount each for participation and performance.
- Transitional Work — Program to return injured workers to productivity in the workplace by providing modified job duties and other methods that accommodate medical restrictions. There are 3-to-1 matching grants available from BWC to start a program. This could lead to lower injury downtime, improved employee recovery time and increased worker morale, all of which protect your workforce. It also offers up to a 10 percent bonus discount for using an established and approved transitional work program with applicable claims that have dates of injury within that policy year.
- Go Green — Report your company’s payroll electronically and pay premiums in full on the BWC’s website. This reduces paperwork and helps the environment. It also means a discount of 1 percent of your premium, up to a maximum of $2,000 per policy period.
- Lapse Free — Pay premiums on time without a lapse in coverage during the past 60 months and get a 1 percent discount on your premium, up to a maximum of $2,000 per policy period.
Are the Destination Excellence programs compatible with other BWC discounts?
While participating in the Destination Excellence program, employers can participate in the following programs:
- Group Rating.
- Experience Modifier cap.
- $15,000 Medical-only.
- Grow Ohio Incentive Program.
- One Claim Program (private employers).
- Early Payment Discount (cannot be combined with Go Green).
The Go Green and Safety Council discounts within Destination Excellence are compatible with the above programs, as well as Group retrospective rating, Individual retrospective rating and Large/Small Deductible. Small Deductible also can be used with the Drug Free Safety Program.
What are the enrollment deadlines?
The private employer deadline is the last business day of February. For public employers, it’s the last business day in October. Employers wishing to participate in a Safety Council must enroll in a local program by July 31.
What’s the best way to calculate savings?
Contact your workers’ compensation third-party administrator to request a ‘feasibility study.’ It can help you evaluate how the programs could impact your costs. ●
Randy Jones is senior vice president of TPA Operations at CompManagement, Inc. Reach him at (800) 825-6755, ext. 65466, or firstname.lastname@example.org.
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