David Schottenstein has a well-known name in the world of business. His grandfather helped found the Schottenstein Stores and American Eagle. But over the past few years, the young entrepreneur has focused on making a name for himself.
While attending boarding school in Venice, Italy, Schottenstein developed a passion for Italian suits and custom clothing and decided to make that his business. At age 20, he bought factories in Hong Kong and founded Astor & Black Custom Clothiers, realizing his vision of producing high-quality, custom-made clothing.
In the ensuing four years, Schottenstein has developed a clientele that includes CEOs and professional athletes. The company has no brick-and-mortar presence; sales are dependent on 60 representatives who travel the world, assisting clients in finding the right fabric, patterns and fit for their custom-made creation. Clients’ orders are then shipped overseas for assembly, and the finished product is shipped directly to the customer.
Schottenstein has found three factors that have helped Astor & Black separate itself from the current economic trend, allowing his business to grow at a time when so many clothing companies are struggling to even tread water. First, consumers are more cost-conscious, and the price of Schottenstein’s suits has not risen since the business began operations. Second, many of Astor & Black’s clients enjoy having a representative come to their homes, instead of having to go out to shop. Third, Schottenstein has a reservoir of talented sales representatives who were seeking work in the current economy.
A heads-up approach to business has helped Schottenstein make his presence felt at a young age.
How to reach: Astor & Black Custom Clothiers, (614) 857-9000 or www.astorandblack.com
When Steven Fishman took over as chairman, president and CEO of Big Lots Inc. in 2005, the closeout store chain had generated $27 million in annual profit and $4.4 billion in annual sales. It was a good start, but Fishman saw much more in the Big Lots name.
The company needed a new strategy to realize its larger potential, so upon taking the helm, Fishman designed and implemented a strategy he named “What’s Important Now,” or “WIN.” The WIN strategy focused the entire Big Lots corporation on three specific areas: merchandising, real estate and cost structure.
The merchandising aspect of the strategy focused on giving customers higher-quality merchandise, better values and more brand-name products from which to choose. The real estate aspect focused on improving Big Lots’ return on investment through slowing the rate of opening new stores, improving the efficiency and profitability of existing stores, closing nonperforming stores, and adding new point-of-sale systems in new and existing stores.
The cost structure aspect focused on reduction of inventory at distribution centers by moving more inventory to stores and putting more decisions involving the handling of merchandise and work scheduling in the hands of store-level employees.
The new strategy showed results early in the process. In 2006, Big Lots turned a profit for the first time in the second and third fiscal quarters — traditionally loss quarters for the company. In 2008, the company generated $255 million in operating revenue on $4.6 billion in sales — almost a tenfold increase in profit on a slight increase in sales.
If you ask Fishman the key to becoming a successful entrepreneur, he would tell you to develop a culture of accountability. And accountability starts at the top with Fishman, who knows it is his job to set the vision and make the tough calls to drive Big Lots to continued prosperity.
How to reach: Big Lots Inc., (614) 278-6800 or www.biglots.com
Beginning her entrepreneurial journey right out of high school, Dana A. Bowers worked in the bill pay department of an Elizabethtown, Ky., local bank while attending night classes. Bowers, while still working for the bank, was asked to start her own bill pay company by a member of the community.
At the age of 27, Bowers founded Military Services Inc. in 1986. MSI was a third-party bill payment service for active duty military personnel. At the time, MSI, along with a competitor, represented 80 percent of that particular market. However, in 1997, Bower merged with a competitor to form Call Me Bill, which supplied bill payment services to the banking industry. In 1999, Bowers and company sold Call Me Bill to Netzee Inc. when the company had approximately 75 customers and was not at EBITDA breakeven. Yet with her entrepreneurial zeal, Bowers repurchased her former company two years later and renamed it iPay Technologies LLC.
Today, the bill payment company has 150 customers and met financial stability in just 13 months. Ever since, Bowers’ company has been profitable. The company services more than 2,800 financial institutions in the U.S. and Puerto Rico. iPay’s target market is community financial services institutions.
Much of iPay’s success can be attributed to Bowers’ two rules: Always tell the truth, and surround yourself with smart people and then pay them more than you pay yourself. These two rules have implanted great customer service and performance in the workplace. Aside from founding iPay Technologies, Bowers contributes to St. Jude Children’s Hospital regularly. She also created iPay Cares for her employees, which assists them through short-term hardships. Bowers also enjoys spending time with her six children and two grandchildren. Although she does not plan for the future, Bowers will continue to have great entrepreneurial success.
How to reach: iPay Technologies LLC, (270) 737-0590 or www.ipaytechnologies.com
Stephen K. Melink wanted to influence change, and that’s exactly what he’s been able to do at Melink Corp.
During the past 20 years, Melink has watched his company evolve from measuring airflows to implementing renewable strategies and systems. Long before Melink started his own company, he worked at a large multinational corporation where he quickly became frustrated. He watched as jaded systems and a lack of flexibility slowed any change mechanisms that would make the company more efficient. As a result, he left that company to join a much smaller company where he could regularly develop innovation and drive change. With a sense of ownership and entrepreneurship building inside of him, he was able to tackle myriad tasks ranging from marketing to team leadership.
By 1987, he realized an opportunity to break off on his own. He saw beyond the regional cottage-industry approach of the ventilation industry to a system that allowed air-balancing services with a national, account-driven approach. This simple, yet new, business strategy was the genesis of Melink, which began in his home with his own capital.
Melink first served just the air-balancing industry, measuring and adjusting the airflow from HVAC and exhaust ventilations systems at a local level with a long-term focus on targeting large-scale national accounts. Gradually, the business grew, and with his willingness to adapt his company, Melink grew to 35 technicians spread nationwide to service accounts such as Panera and Texas Roadhouse.
Always willing to evolve, Melink realized another opportunity as his company grew, offering restaurants a drop in energy costs by controlling air systems to prevent too much conditioned cool air from being expelled by kitchen exhaust systems. This step into energy savings has helped drive the company’s most recent growth, as it now has 85 employees and three business units including one dedicated to renewable energy products.
How to reach: Melink Corp., (513) 965-7300 or www.melinkcorp.com
It was 34 years ago when Steve Barlow decided he was ready for a change.
He had grown frustrated with his career in restaurant management, working long, irregular hours and managing teenagers who didn’t share his commitment and work ethic.
Through a relationship he had developed with a regular restaurant customer, Barlow moved into the hearing aid business as a salesman for a Beltone franchise. He soon bought the franchise and spent the 1980s and most of the ’90s growing the Louisville, Ky.-based franchise to five locations.
However, in 1999, with Beltone moving in another direction under new ownership, Barlow and two other Beltone franchisees left the company and formed Hearing Healthcare Management, the umbrella organization that now oversees Avada Audiology and Hearing Care Centers. In 2000, Barlow was named CEO.
Since he and his colleagues struck out on their own, Barlow has focused on leading Avada to the top of its industry. In order to build the company, Barlow has focused on finding other franchisees who share his vision, work ethic and desire to be the best option for their customers. Franchisees who sell their businesses to Avada are made directors in the organization and are kept involved in the day-to-day operations of Avada as regional managers.
Barlow and his leadership team have forged a positive working relationship with Avada’s supply partner, the selection of which took a full year to materialize due to the meticulous research and detailed relationship-building that Barlow undertook with a number of potential supply partners.
Moving forward, one of the biggest challenges facing Barlow is sales-related. Many of Avada’s potential customers might not know that they have a hearing deficiency or might not want to admit it. But if history is any indicator, Barlow is up to the challenge.
How to reach: Avada Audiology and Hearing Care Centers, (502) 253-9802 or www.avada.com
If you are toiling over what to do about training, you’re not alone.
Tuition reimbursement and continuing education look good on paper and are great recruitment and retention tools, but, as businesses are finding out, in today’s economy, those types of programs could also look more like a dispensable employee perk than a business necessity.
While academics will tell you it’s a mistake to cut training from the budget, those closest to financial reality will suggest trimming the fat and adopting a leaner training strategy that ties education to the company’s immediate needs. For most businesses, this means doing away with the nice-to-have training and focusing on the must-haves that affect the bottom line today.
“Training isn’t an overhead expense, it is part of the cost of doing business,” says Dennis N. Ulrich, executive director, Workforce Development Center, Cincinnati State Technical and Community College. “The most efficient manufacturing is necessary in tough economic times, and education can help teach those methods for each industry. Keep this type of training as streamlining production, product quality and customer service is essential to keep up with the competition.”
Keep in mind that the usefulness of what is learned today doesn’t last as long as it once did. Technology’s rapid evolution makes knowledge obsolete when it isn’t built on. Still, the average number of formal training hours has dropped from 25 hours per learner in 2007 to 17.2 hours in 2008, according to Bersin & Associates’ 2009 Corporate Learning Factbook. The report reflects an 11 percent reduction in corporate training spending and claims a trend shift in the types of education that businesses are pursuing.
Training that educates employees on ways to increase revenue or decrease expenses or that improves relationships with customers is a business necessity and has a place in your training regimen.
Determine what your company needs to work on and what areas you need to continue to grow in as well as the basics to keep up with the competition.
“Keep in mind what you’ve done in the past — what worked, what didn’t work and what direction you need to go in order to improve on past mistakes,” says Victoria Culbreth, executive director, educational outreach, Northern Kentucky University. “Ask employees what it would take to do their job better. You can do this through survey or just asking them.”
Considering who will be receiving the training is an important step. Being wise about your budget means training those who are in a position to benefit the company most instead of offering a la carte training to whoever is willing to trade a few hours of work for classroom duty.
“Look at opportunities to reduce costs, period,” says Thomas E. Murphy, executive professor, Miami University. “You can’t think about the employee selection as an emotional choice. People that want to keep learning are the best employees to educate. Not growing or challenging these minds stops the ability to progress as a company.”
Considering the type of education you need has equal importance to the way the education is delivered. While some companies find online courses give employers the best return on investment while saving on travel and driving time, others find in-house courses or a classroom setting to be the best delivery method for employees.
Choosing a trainer
Your company’s goals help determine what institution you’ll use to provide employee training. Look at local colleges and universities first, as these organizations have flexibility in training formats and delivery.
“Colleges want to forge relationships with businesses and have the flexibility to provide what companies need,” Culbreth says. “They have close ties to the community and are willing to work with you to provide a service.”
Universities are often willing to consult with businesses to determine what the immediate training needs are. Community colleges, business schools and specific work force training centers can also provide tailored programs as opposed to off-the-shelf training that serves as a one-size-fits-all education.
“There are many benefits to working with a local university,” Ulrich says. “It’s not uncommon for them to design a class that will teach to a business’ specific needs. Businesses can also get bonuses that don’t cost anything like access to the university’s students seeking internships.”
Don’t think of continued education as a perk to employees, but think of it as a way to keep the business growing.
A common error employers make is accepting a program where the employee misses a significant amount of work to go to school. Options exist that allow you to dictate, within reason, how, when and where your employees are educated.
“If you’re not getting the answers you want from one educator, go to another source,” Murphy says. “There are hybrid teaching opportunities — some online and some on-site, all online, all in the classroom setting. Decide what you need and you can find someone willing to accommodate.”
After you select a program and a university, your strategy must carry over into measuring tactics. Make sure you have a way to calculate the benefits of training and the reason you have selected the specific program.
“The methodology of training is often not thought through, but it’s an essential step,” Murphy says. “You’d be amazed that companies don’t test after the training has been received. You need to test before training, after and six months later to make sure it was retained and is being used.”
Before an employee begins training, testing the skills that will be built upon is important. Testing will help determine where the employees’ skills are today and where they need to be after training. Making sure the employee, trainer and you are on the same page with expectations will help eliminate any miscommunication about future performance expectations.
“In this economy, training has got to be all about the company,” Murphy says. “It has to tie back to the company and meet what the company’s needs are. Results can be measured through testing but also with employee retention, revenue increases and post-education growth.”
Prior to training, discuss the reason for the education and the way the training will be measured with the employee. Tell the employee how the new knowledge directly impacts his or her daily responsibilities. Managers should tie the training into performance evaluations to determine its true impact on the enhanced ability to perform.
“Measure how the training impacted the bottom line and process improvement,” Ulrich says. “Setting up metrics for efficacy of training will help you monitor the impact training has on job performance and revenue in years to come.”
Even after trimming the education budget, some companies say the cost is too much to handle right now. If you still believe in education, but can’t afford it, reassess it in nine months. In the meantime, use in-house training and coaching capabilities.
“Speak with the university to see what options they may have for you when money is tight,” Murphy says. “Don’t run too quickly to, ‘We can’t do anything right now.’”
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.
“Ask your insurance company to provide you with employee health evaluation surveys,” says Perry Braun, market leader, large group market, Medical Mutual. “Insurers can help you conduct surveys to determine how your individual employees view themselves and then how you can make use of that information.”
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.
“Employees have to feel their health is their responsibility,” says Roger W. Sims, director of compensation, benefits and employee health, Health Alliance of Greater Cincinnati. “The cost of their health insurance will go up if they do not do their part to be healthy. Let employees know you are doing your part by paying premiums and giving wellness directives. With encouragement you will get participation. You can also give discounts to nonsmoking employees as an incentive to quit.”
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.
“A health care savings account can be portable and taken with the employee when they leave or an employer can add to the account and deduct their contributions when the employee leaves the company,” Braun says.
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.
“People didn’t get overweight yesterday, so it will take time to change the behavior and bad habits that got them there,” Sims says. “It will be worth it in the long run.”
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, the 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.
“Savings will come over time,” says Laura Robinson, wellness coordinator, business health, St. Elizabeth Medical Center. “Having screenings will show employees health stats they otherwise may have not known about. This can help prevent the onset of disease.”
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.
After you’ve determined a health awareness focus for your employee population, you can create a plan of action.
“You have to help employees get rid of the day-to-day baggage they carry around,” Robinson says. “Creating a culture of health will not only promote any health programs you start but will help relieve employees of stresses when they participate.”
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.
“Employees may have trouble focusing at work,” Robinson says. “This can have everything to do with having a sugar rush, then quick depletion of energy. Provide healthy food alternatives in the office.”
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.
“Many believe the dollars are soft from wellness programs,” Sims says. “But they do come. Wellness programs are part of the solution to high health cost problems. No matter what options employers choose, if employees don’t take care of themselves, everyone’s costs will be higher.”
More likely, he’ll spend his entire leadership lifetime making tiny adjustments to keep the 1,913 employees at Atrium Medical Center on track. The president and CEO even has a name for those little nudges, and identifying those “coachable moments” is a key component to how he develops his employees every day.
Sure, caring for patients is inherent in the health industry. But McNeill — who served as the president and CEO at Middletown Regional Hospital for 14 years before it moved and donned the name Atrium in December 2007 — realizes that you have to care for employees, too. By staying on the lookout for learning opportunities and encouraging his employees to adopt the same awareness, he can keep them equipped with the tools they need.
“Culture is not like making a cake, [where] at the end of adding all these ingredients, you have a final product and you’re done,” he says. “Culture is really a lifelong exercise because circumstances, the environment, the organization and different generations of people are changing all the time. And therefore, organizations have to keep adapting.”
McNeill — who led Atrium to 2008 revenue of $233 million, up from $184 million in 2007 — keeps communicating the expectations that shape the changing organization.
But it’s not just lip service. After all, he’s not the kind of coach that orders his team to run laps while he loafs on the sidelines.
“The most effective way you teach people after you set the expectations is walking the talk,” he says. “They’ve got to see you do it. And then you have to take a genuine interest in helping others along the way.”
Find employees who fit
Atrium’s culture begins with employees who embrace the values of service, respect and compassion. McNeill calls for help to find them, drawing several people from his staff into group interviews.
“It’s helpful to involve people where a candidate may end up working and to involve, also, people at the highest level,” McNeill says.
For example, registered nurses who apply at Atrium may interview with their potential manager, other nurses they’ll be working with and even the vice president of nursing. The variety and amount of interviewers will paint a more complete picture of the candidate than one or two isolated conversations.
Besides the traditional questions about aspirations and expectations, McNeill and his team look for a cultural fit during those interviews.
“The key is really making sure that they embrace our values,” McNeill says. “We talk to them in terms of, not so much, ‘Is this a value that you can identify with?’ but really talking to them about their experience and how they can express those values and how they have expressed those values in prior work experiences.”
So rather than asking general questions like how they work with other people, ask for specific examples, such as how they reacted to a conflict with a previous co-worker. Current employees can pull other questions from their recent experiences.
“Several nurses might take a recent example of how we were dealing with a patient and a really concerned group of family members,” McNeill says. “[The nurses ask] how they would deal with those kinds of situations, how they’ve dealt with them in the past. It’s almost like a conversation.”
You should inform the candidate about your company, your culture and your values, as well. The interview is your first opportunity to begin setting expectations and requirements for new employees. But it shouldn’t just be a forum for you to preach about how you do things at your company.
“Really, what we try to do in these interviews is allow the candidates to do most of the talking,” McNeill says. “We’re really trying to learn from them how they’ve applied their life experience as they’ve dealt with opportunities that have been successful and those that haven’t, and what they’ve learned from it, what they’ve applied from those experiences, how they think that those experiences might apply this time.”
While new hires must adhere to the same set of values, McNeill treasures the diversity in how they apply them. In the same way, you must corral a group of individuals under the common ground of company standards.
“People come in many different packages. That’s OK. It’s not the package that separates one from success,” McNeill says. “Every package has the potential of embracing the right attributes. You’ve got to have a passion for helping other people.”
Coach employees to coach each other
McNeill’s passion for helping other people isn’t like a surgeon performing brain surgery. Instead, he’s more like an ever-accessible first-aid kit, mending his employees’ daily bumps and bruises.
“We’re all about helping people, and part of that definition is coaching and mentoring folks, helping people grow and learn,” he says. “And people grow and learn probably more from making mistakes than from success. So what we’re trying to do is find these little teachable moments.”
While annual evaluations can check employees’ general progress, more meaningful lessons are spurred by everyday behavior. McNeill watches employees interact with each other and with customers to find opportunities for adjustments.
“It is more often outside of the formal evaluation process, where we have opportunities to take a manager and say, ‘I was in that meeting that you led the other day; how did you feel the meeting went? What went right? What didn’t go so well? Here’s what I saw.’ Every day there are lots of opportunities.”
During his rounds one morning, for example, McNeill noticed a nurse struggling to communicate with a patient’s family. So he pulled her aside and asked her to switch roles, imagining herself as the family and considering how she would like to hear the news.
“Part of our job as leaders is daily helping find those coachable moments and act on them,” he says. “And frankly, the sooner you can act on those moments, the more meaningful they are.”
But you can’t spot every opportunity for improvement, nor do you have time to tend to every employee. So encourage managers to step in and coach each other and have them do the same with their employees.
Pay attention to which employees tend to socialize together in order to pair up employees who are already comfortable with each other. Then encourage stronger employees to offer insight to their struggling colleagues.
“If you can have someone that you trust and who is not threatening help you along or at least ask the right questions, make you think about it and weigh one approach over the other, those are the best moments,” McNeill says.
He guides employees through the conversation in three steps. First, ask how your co-worker feels about the decision he or she made and whether he or she would have done it differently.
“We’re always asking the question, ‘Now if we had that one over to do again, how would we have done it better?’” McNeill says. “And I think that that kind of nonthreatening discussion leads to a lot of growth.”
Second, pull examples from your own experience to illustrate a different scale for measuring the options. Explain not just what you did, but why you decided to do it.
“Say, ‘Hey, you know, here’s how I kind of sized it up. Here’s what you might have said instead,’” he says.
Finally, ask for feedback to make it less like a confrontation and more like a conversation.
“Say, ‘Well, what do you think? What are the pros and cons of that approach?’” McNeill says. “And so, in a way, it’s more intellectual and didactic than confrontational.”
These conversations aren’t necessarily about correcting behavior with the right answer. They’re more about opening employees up to other perspectives.
“Having robust discussions about the different approaches we took in certain situations leads to a lot of enlightened thinking,” he says. “A lot of it, too, is just developing the experience and judgment that you can apply. What we’re trying to do is just elevate our fund of common sense and judgment, and we do that by spending a lot of time talking to each other about stuff that’s happened.”
Because other employees could be struggling with similar issues out of your sight, don’t let teachable moments become isolated incidents. McNeill takes examples back to his executive meetings for them to share with their teams, as well.
Ask for feedback
When you make learning a continuous process, you need to balance it by constantly asking for feedback to make sure your lessons are getting through.
This is an obvious step if employees are clearly not meeting your expectations. Asking for their input may help you distinguish between an employee who doesn’t fit the role and one who just doesn’t understand the expectations.
“More often, you will find that it’s either a situation of clarity — they didn’t know what they were supposed to be doing — or they thought they were supposed to be doing something and it turned out to be different,” McNeill says.
“Perceptions have to be aligned with your intentions. And the only way you’re really going to know is to continuously solicit feedback.”
After meetings, for example, McNeill asks for reactions when he runs into people, asking what was clearly articulated and where the ambiguities lie.
“It can be as direct as, ‘What’d you think of the meeting?’ or, ‘What’d you think of the message?’” he says. “And then you say, ‘Well, why? Why did you think that?’ Another key to developing people is always asking open-ended questions.”
But the communication loop still isn’t complete. If you ask for employees’ feedback, you need to use it. For example, they may fire back ideas about how to improve your message or your delivery of it. And those suggestions can’t be ignored.
“Your critics can offer you a very valuable service if you take it constructively and not make it personal,” McNeill says. “Think about what they’re saying and why. Put yourself in the shoes of the critic; why would [he or she] see it that way? Try to understand it from a different perspective.”
And even if employees’ ideas won’t work, you need to let them know why so they don’t think they’re going unheard.
“Usually, the biggest problem you have is someone will say, ‘Well, this is what I think.’ And then if you don’t do it, the common reaction is, ‘Well, they really didn’t listen to me,’” McNeill says. “So … get back to people and say, ‘Thanks for your idea. We tossed it around. This is where we came out. Here’s why.’”
This final step can be done formally. At Atrium, for example, submissions to the suggestion box are printed in the newsletter with answers. But informal personal responses can be even more effective — whether you discuss it at a departmental meeting, send the employee a follow-up note or just stop the person in the hall.
“Look, leadership is a team sport,” McNeill says. “And yeah, there’s only one CEO, but the CEO’s prime responsibility — in addition to serving customers — is to develop a strong team. So you’ve got to learn how to be a good team member. Part of being a good team member is developing this trust so that you can talk candidly about what went right and what didn’t and how you fix it.”
How to reach: Atrium Medical Center, (800) 338-4057 or www.atriummedcenter.org
Jim Graham is a director of corporate sales for Capitol Express Enterprises Inc., a Cincinnati trucking operator. Graham has a degree in transportation management and has been working with Capitol Express for the past six years. He is responsible for maintaining and developing relationships with customers, negotiating terms of agreements with customers and gathering market information.
Q. When selecting a company to handle the transportation of goods, what qualities should businesses look for?
You want to make sure the crew that will be transporting the products are experienced. Their capabilities can make or break your reputation. Drivers can make mistakes, miss deadlines and do a number of things to throw a wrench in the process. The other thing is, in the down economy, many businesses want to renegotiate contracts. Transportation firms will agree to this if they are a good partner so you can both stay afloat.
Q. What can a company eliminate or add to its transportation logistics strategy to save money?
Night shipments and rush deliveries cost the most. If you can extend deadlines that are currently promising same-day delivery to even next-day or two-day delivery, you will save a lot. This is an area we specialize in and people are reducing these transportation methods because our business load is down 30 to 40 percent from this time last year.
Q. What advice can you provide to other companies looking to reassess their in-house shipping process?
Even if you have a contract, you can try to renegotiate the terms of your agreement with any business partner. One way to think positively is to consider that you will be finding companies that you can rely on during hard times. Larger firms may be less likely to agree to lowering costs, but because demand is so much lower than in the recent past, even the big guys are feeling it. We get the overflow from UPS and FedEx and lately those jobs are almost nonexistent they’re handling everything themselves. There has been a domino effect with the economy, and everyone is touched by it. Make sure you aren’t holding onto business assets that your new, smaller network could function without. Operate as lean as possible and recoup when the demand picks up again.
The current recession has created numerous financial problems for businesses, especially the smaller ones. With people cutting back on spending, many businesses are struggling to keep their doors open and remain profitable, as evidenced by the numerous stores closing across the country. Payment cycles have also changed and been shortened for many businesses, making it tougher for them to collect on receivables.
“Customers are having their own financial issues that are causing them to pay slower, which is ultimately causing a slower receipt of cash,” says Bill Lambert, vice president and credit officer at Fifth Third Bank. “On the flip side, vendors are requiring faster payments in some cases, which has snuck up on a lot of companies. These changes in the payment cycle have been a big cash flow issue for a lot of companies.”
Smart Business spoke with Lambert about how to improve your cash flow in this down economy and how creating a cash flow budget can make you flexible for the future.
How can you improve your cash flow?
Take a look at a 13-week cash budget going forward. Simple is better with cash flow. Take a look on a week-by-week basis, roughly a month to a quarter out in the future, and put down what you expect to receive and what checks you actually expect to write. It sounds outrageously simple, but a lot of companies don’t do that. If you look at your historical business from last month or last year, that’s a decent indicator of your ability to be profitable. But when you break out the cash in and cash out, it can be enlightening.
Be more aware of the sources and uses of cash in your balance sheet and working capital accounts. There are three primary issues to be concerned with here, the first being appropriately managing the accounts receivable, which includes preparing bills faster for customers. When economic times were better, some companies could maybe go a week or two at a time without preparing and sending bills because the cash flow wasn’t quite as important. Today, it is more important to prepare and collect the cash faster.
The second component is inventory. Having a lot of cash tied up in your inventory can be a constraint on the company. You need to limit the amount of time that your cash is tied up in inventory. The third piece is with accounts payable and how slowly or quickly you pay your vendors. If you have the ability to wait a little bit longer to pay your vendors without hurting your credit standing with them, that can ultimately be a source of cash, as well.
How does cash flow analysis come into play here?
From a traditional standpoint, companies will look at their net income, add back noncash items like depreciation and consider that their cash flow. Look at more of the cash flow budget, because it adds a little more reality to the scenario. Analyzing your cash flow like that can get to the heart of the issues a lot faster sometimes.
How can you make your budget flexible for any unexpected receipts of expenditures?
The key is to keep it on a rolling basis. Looking at it weekly, you can better account for the things that you didn’t plan on. If you can look out over four to six weeks, to the extent that some vendor credit terms allow you to you delay the payment of an item for a week in order to accomplish paying something else, you can see your short-term future much better. Constantly updating that allows you to be flexible.
What problems can you run into if you don’t improve your cash flow?
Ultimately, it’s not a lack of profitability that causes problems but a lack of liquidity. People talk about the five Cs of credit, but the only important C is cash. That liquidity is either cash the company has or the company’s ability to turn their assets into cash quickly. Without that liquidity, the company has a hard time making its payroll, paying its bills, etc.
What are the benefits of improving your cash flow?
Financial flexibility. When you are as efficient as you can be, that gives you the ability to reduce leverage and not carry as big of a debt load. It allows you to be in a better position if you have a period of time when revenue drops or general economics are tough. That financial flexibility buys you time during those points.
BILL LAMBERT is vice president and credit officer at Fifth Third Bank. Reach him at (513) 965-5163 or email@example.com.