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 firstname.lastname@example.org.
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With marketplaces expanding across the globe, importing and
exporting have become important parts of business on almost every
level. Leaders are looking at markets they
might be missing overseas as well as how
they can source product there in order to
add to their margin with the same quality
of product made in the U.S.
“Exporting can bring increased revenues, growth of the business and diversification of customers,” says Dan
Flanigan, vice president and senior foreign exchange adviser at Fifth Third Bank
Smart Business spoke with Flanigan
about successful strategies for importing
and exporting, how to manage your foreign exchange and business risks, and
what Single Euro Payments Area (SEPA)
means in today’s global marketplace.
What are some strategies you can use when
importing and exporting?
For companies just entering the global
market, finding a good partner or distribution source is key. It’s hard to access
those markets without doing your
research and finding partners, whether
it’s a joint venture or an entity that you
can lean on a bit to get into those areas.
Think about ways to evaluate the export
potential of your products and services in
an overseas market. The easiest approach
is to look at the success of your products
in the U.S. There’s a good chance they will
be successful in markets abroad, at least
where there are similar needs and conditions as in the U.S. Examine the unique or
important features of your product. If
those features are hard to duplicate, it’s
likely those products are going to add
value outside of the U.S.
Is now a good time to export your goods?
It’s good to look at alternatives. Clearly,
the challenges we have here are being felt
globally. You have companies that are
pulling back and not looking outside the
U.S., trying to focus on their core business. The numbers for exporting have
certainly gone up over the past decade.
The trend in foreign exchange markets,
up until recently, has been a weak dollar,
so the revenue generated outside of the
U.S. has been more tangible for U.S.-based companies in U.S. dollar terms, and
their foreign exchange gains have been
significant. The euro hit an all-time high
of 1.6038 on July 15, 2008. It has lost more
than 20 percent of its value since then.
How do you manage foreign exchange and
The volatility in the current foreign
exchange market is unprecedented. In
order to manage these risks, you first
need to look at how you want to do it.
Based on the business that you’re doing,
if you are exporting and have revenue
outside the U.S., you are going to be in
receipt of foreign currency. As a U.S.-based company, you’re going to need to
come up with a policy where you’re more
disciplined in converting that currency
into U.S. dollars. The most successful
exporters are those that are disciplined in
their hedging programs. Establish a foreign exchange hedging policy and come up with strategy that you want to execute
to manage that risk.
There are three main products in foreign exchange. First are cash or ‘spot’
trades. These are the most risky as you
have left yourself completely open to
market fluctuations. The second is a forward contract, which is simply that ‘spot’
rate and an adjustment to that rate in the
way of positive or negative forward
points. Forward points are simply interest rate differential between the two
countries of the currency pair (i.e.
USD/CAD). These contracts, not to be
confused with rigid futures contracts,
eliminate all downside risk as well as all
upside. They are very conservative. The
last product set are options, which give
you the right, but not the obligation, to
buy or sell a currency for specific settlement date and amount. Options take on a
variety of different looks and can be as
conservative or aggressive as you want
them to be.
What is SEPA and how does it affect businesses?
SEPA is an effort to hook all 27 countries that make up the European
Economic Union into one standardized
payment system across all of those countries. It harmonizes millions of everyday
retail payments in euro all over Europe.
SEPA defines the specific rules, practices
and standards or schemes for SEPA credit transfers and SEPA direct deposits. The
project will impact electronic payments
and card payments, changing and reshaping the role of the automated clearing-house in the Euro Zone, and providing
common standards, enabling true cross-border electronic and card payments in
the Euro Zone. The SEPA pay instruments are credit transfers, direct debits
and payment cards. Since 2008, the
instruments have operated alongside
existing national processes, with full
migration targeted for the end of 2010.
DAN FLANIGAN is a vice president and senior foreign exchange adviser at Fifth Third Bank. Reach him at email@example.com or
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 shouldn’t be separated into a policy,” says Jeffery L. Smith, associate director, global diversity and inclusion, Procter & Gamble Co. “Looking at diversity as a strategy allows you to be the best in your class. Consider having a diverse work force to be a strategic and competitive advantage and a way to build and sustain your business. To be the best in your class, you have to know who will be purchasing your products or services and keep evolving with your customers. Insights of diverse employees make that process possible.”
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.
“Getting past your circle of influence might be the most difficult part of recruiting or being part of a diverse work force,” says Valarie S. Boykins, director of diversity, TriHealth. “If companies operate with that, they’ll block out other opportunities. You’re not helping the business being myopic in your thinking.”
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.
“You can have three generations of people working side by side,” Boykins says. “The differences and similarities of employees is what makes a great business, but ineffective communication between employees will not drive quality. Diversity isn’t a bucket you set aside and think about sometimes. It should be interwoven into everything the business does.”
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’s not one aspect of diversity that is more important than another,” says Jamie Richardson, vice president of corporate relations for White Castle System Inc. “The uniqueness is what makes a company great. Having an array of perspectives and talents helps us all practice prudence and patience with diversity. Not seeing benefits of diversity is shortsighted.”
What you need to know
Diversity isn’t about being politically correct; it’s about keeping your business competitive.
“A strong retention rate has everything to do with hiring the right people to begin with,” Richardson says. “A diversity of employees keeps us in touch with customers and alert to a wide spectrum of ideas so the business can stay a quarter step ahead.”
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.
“You need to allow and support group thinking,” Boykins says. “Promote (employee resource group) meetings by allowing time for meetings in the workday — make sure there is structure to the meetings, goals. It’s possible to go too far with diversity if you don’t understand it. These groups can tell managers multifaceted recruitment techniques. Keep in mind different generations communicate in different ways. Some prefer blogs like Facebook while other stick with the traditional newspaper. You can’t have diversity without inclusion — the very objective is for engagement. A variety of thoughts, perspectives, ideas is what makes you stand out.”
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.
“Diversity and inclusion is more important now that ever,” Boykins says. “Companies are asking employees to work more, have more responsibilities with less people. Everyone has their aha moment or something that triggers them into negative or disparaging thinking so we have to open up the line of communication with dialogue over this issue so everyone feels included in the conversation. We might [not] always agree, but we shouldn’t be disagreeable when we disagree.”
Jeff Osterfeld knew nothing about running a restaurant, but after graduating college in 1983, he decided to give it a try.
He opened Jeffrey’s Delicatessen in the Dayton Mall and quickly found that it was hard work. Osterfeld learned not only how to run a restaurant and the ins and outs of the industry, but he also had to do most of the jobs on his own.
“I feel like in the first 10 to 15 years of the business, from having one store and growing it to 30 to 40 units, I was forced to handle all the different positions and do everything myself,” the founder and CEO says. “I couldn’t afford to hire the right people, and for that reason, I tended to micromanage.”
As the business grew into several locations in the Cincinnati area under the newly created Penn Station East Coast Subs name, Osterfeld knew he needed more people to help keep up with the demands of growth and success. But he first needed to find people who shared the same commitment that he did for the sub sandwich restaurant.
“I became frustrated and disillusioned that people didn’t take the same passion to work every day that I did,” Osterfeld says. “When you create the business, there’s an innate emotional attachment to the success of the business. Other people didn’t treat it the same, and I became frustrated with that.”
Once he found a way to get the right people in place, it was only a matter of empowering them to help him grow the company. The results are a successful quick-service food company with 2008 revenue of $112 million and more than 200 locations.
Here’s how he did it.
Find the right people
Getting the right people in place in your business, especially if you started the company on your own, can be tough. You want to find people who share the same passion and commitment for the business as you do to help you grow.
“You’re only ever going to be as good as how good your employee base is,” Osterfeld says. “You can take any well-run company or any good concept and ruin it in a short period of time with poor people.
“The flip of that is, you can take some pretty underperforming companies and inject a new employee population that is immensely talented and turn that company around in pretty short order. In the end, people will always make the difference.”
Osterfeld uses a strategy of trying to find people that can move up in the company. He has a commitment to hiring from within, so he looks for employees who can become future leaders when he is hiring.
“When you hire from within, employees after awhile understand that and are more motivated when they see a company that’s not only growing, but as they grow, they are taking the employees to fill the upper-echelon positions from the existing employee base,” he says. “If you continually bring in outsiders, their sense of thinking is that there’ll be no room for growth. You’re going to have a hard time holding on to employees and garnering any loyalty with your existing employee base.”
Osterfeld says take the time to go through the interview process and make the right judgment on whether the candidate has the talent and aspirations to eventually move up to a higher position.
“I look at that individual before we hire them and ask myself, ‘Is this somebody who can come in and grow with the company?’” Osterfeld says. “Do they have enough talent and aspirations to want to move up within the company?’ If you do that, and you’re not shortsighted about your hiring, you’ll find that in four, five, 10 years, you have enough talent in the lower levels to replace the people in the upper levels; as there’s turnover in management or as you grow, there are new positions that become available.”
Osterfeld also keeps his eye out for young people who are talented and can bring something to the industry. While building his golf course, The Golf Club at Stonelick Hills, Osterfeld met a young man on the construction crew who impressed him by showing up on time every day, sometimes even coming early and staying late. He kept in touch with the young man throughout college and eventually offered him a job after he graduated.
“You ask yourself constantly whether or not you think that particular individual has talents that fit within your organization,” he says.
Empower your employees
Once you have those right employees in place, you need to spend time with them to get to know them and find out what motivates them so that they will be successful employees for your company.
“It’s just staying connected to your employees and having an ongoing relationship with the individual employees,” Osterfeld says.
You need to treat your employees like individuals and take an interest in them both personally and professionally. Take time out of your day to talk with them and learn more about who they are as a person, where they want to head on their career path and what is going on in their lives outside of the workplace. Find out if they’re happy at your company, what they like and dislike about their job and what their goals are. You can then use this information to motivate your employees toward the things they want to achieve.
“For some people, it’s strictly money; for others, they do or don’t want responsibility,” he says. “Some may want to travel and some not. Some may want to be in operations, another in sales; they may require all sorts of different needs and wants. Just understanding that you care puts you ahead of the game.”
Osterfeld says it sometimes can be difficult to find the time do this, but pushing yourself to do it will have value for your company.
“You simply have to be cognizant of the fact that establishing a connection with those employees has a value and make that effort on a day-to-day basis to remember a name, to spend a little time to talk to people about what they like and dislike, where they’re headed, and how they’re connected to the company,” Osterfeld says. “Show them that you care.”
Being able to motivate your employees comes from not only understanding what motivates them but also from being able to challenge them.
“When employees see you growing as a business, they realize that new positions are going to be created, and there is competition for those new positions,” Osterfeld says. “You motivate them by challenging them to grow with the company, to take on additional responsibilities and move up as the company grows. The degree to which you find out what their motivations, interests and goals are professionally, and you stay in tune to that, you’ll motivate them. As soon as you become, in their eyes, disinterested in what they want out of the business, you’ll end up losing them sooner or later.”
One way Osterfeld has motivated and empowered his employees is through the general manager program. The program puts the ownership mentality behind the counter in his stores, directly tying profits to general managers at each location.
Osterfeld created the program back in the mid-1980s after getting frustrated about how some of his stores were being run day to day. With this concept, general managers were hired for each location and would evenly split profits from that store with the owner.
“Those general managers are not only motivated properly on a day-to-day basis, but we have a lot less turnover, because they split the profits 50-50 with the owners,” he says. “They also need less supervision. What you get is an ownership circumstance behind the counter, and every day, they are as concerned as the owner about sales and expenses, because the only way for that general manager to make money is to maximize sales and minimize expenses. So they do the things necessary to make sure that happens.”
Implementing a program like this was hard at times, as Osterfeld ran into problems when interviewing prospective franchisees who simply did not want to share profits with someone else. But once franchisees found out that putting general managers who were vested in the company behind the counter meant they were able to grow the business and add multiple units faster, it became easier to convince them. The program also helped draw more quality employees to the business.
When creating a program that will empower and motivate employees, you need to make sure it’s quantifiable and that employees will see some measure of their success. Having a contract that both parties sign is good, because it puts the agreement in writing.
You’ve also got to be consistent and not have different deals or goals from one employee to the next so that there is no resentment among them.
“We don’t have a verbal agreement; we have a written, quantifiable agreement,” Osterfeld says. “And the franchisor and the franchisee both realize that it’s in our long-term best interest to make sure that we not only sign a contract that they’re comfortable with but that we honor the parameters of that contract.”
To get people to help your grow your business, you have to learn to delegate responsibility to the talent you have hired. But if you are a micromanager like Osterfeld was, who felt like he had to do every job in the company, it can be hard. Overcoming that hurdle took him some time to realize that the company was better off if he didn’t try to do every job there and delegated some of the responsibility to others.
“In time, you learn that to grow you’re going to have to delegate, and … unless you delegate and trust people, you’ll not get anywhere,” he says. “If you give responsibility to employees but don’t let them make some of the decisions that come with those responsibilities, they sense that, and they realize that you’re still micromanaging.”
Following this recipe has been successful for Osterfeld. After 25 years and 202 locations, he has only had one location fail. He attributes his success to finding the right people who have a vested interest in the company to run the business day in and day out.
“The smart leader is somebody who is self-aware enough, critical enough of themselves to make judgment about what they’re good at and what they’re not so good at and hire accordingly,” Osterfeld says.
Michael M. Menyhart leads Fifth Third Bancorp’s customer experience initiatives across its six business lines. He is responsible for customer loyalty and the deployment of brand and experience improvement strategies. Menyhart joined Fifth Third in 2006 with 10 years of experience in the financial services industry.
Where should customer service sit in importance with any company?
It must be at the top. There must be a voice in the senior portions of business that positions customer service with sales. Investing in managers through training and making customer service a core part of business strategy will be a long-term investment in the company. Knowledgeable employees provide better customer service. The training strategy must be reviewed annually in order to evaluate gaps of where you need to be and where you actually are. In the evaluation, you can determine the percent of which you must invest in maintaining and improving customer service.
What does good customer service entail?
We live in a dynamic world, and the definition of good customer service changes frequently. It also means different things to different customers. One-size-fits-all is the wrong approach, so you must be able to meet customers where they want. You need to keep in mind you’re working with different generations and lifestyles. If you meet and exceed what they expect, you can build your brand loyalty through them.
Does the treatment and salary of employees affect the way they treat customers?
Yes. Customer satisfaction should be part of an employee’s compensation. You need to measure customer satisfaction on a monthly basis by polling customers. The way you poll customers can be designed in a way that best suits your business. In the design, there must be a way to hold employees accountable for actions and issues presented. Engaged employees develop and interact with customers, so the treatment managers give employees comes full cycle and shows in customer treatment. You must have an option to advance in the company for employees, so strong performers can continue to develop.
In these uncertain economic times, just about every company in every industry is looking at ways to reduce or eliminate costs. Because of this, more and more companies are running their equipment (computers, printers, etc.) until the very end, squeezing every last bit of life out of those systems to get the most bang for their buck.
This is a perfectly acceptable — and recommended — practice, but companies need to be fully aware of exactly when to dispose of equipment and how to properly do it.
“To optimize the life cycle of your assets, you’ve got to plan and monitor all life cycle costs, including disposal and recycling,” says Gregory G. Lorenzen, the vice president of operations for Pomeroy IT Solutions.
Smart Business spoke with Lorenzen about end-of-life services and what to do with your equipment when it reaches the end of its value.
How do you know equipment has reached the end of its value?
Resources need to be retired from use when they are no longer suitable or compatible to business. You know it’s time to retire a resource when the risk of business activities being disrupted increases and/or when the cost of operating, repairing or running it to enterprise standards increases.
It should be noted, however, that when you retire an asset you’re not just tossing it in the dumpster. First, you need to determine whether or not the asset could be used elsewhere in your company. Even if a computer or system is completely useless to one user, it could be an upgrade to another. You want to get as much value out of your assets while they still have useful lives.
If it is determined that the asset no longer has any use within your enterprise, look to a company like Pomeroy to handle the recovery logistics. That way you can be sure the asset is cataloged, tracked and processed in such as way that eliminates any chain of custody issues with the assets. Essentially, these types of companies act as the service agent and will process the transfer of both brokerage and disposal class materials using systems and bill of material processes that transfer the ownership of these assets to the purchasing party or to the e-waste recycler.
What should you look for in a good asset recovery vendor?
First, make sure they work with reputable and EPA-compliant recyclers in the United States and overseas. You must ensure the asset recovery vendor selected is a trusted agent. A good asset recovery company will completely sanitize and secure your assets, wiping hard drives to Department of Defense standards to ensure no data, intellectual property or business information remains. Select an asset recovery vendor for its transparency, security and record keeping. It should be able to meet your policies and earn your trust through execution and verification.
What can happen if a company doesn’t dispose of equipment properly?
As stated, there are legal concerns in regards to the EPA along with the moral requirements of being good stewards to the planet and its resources. The less we pull from the ground and the more we recycle will benefit not only our generation but many generations to come. Besides the fines you’ll face from EPA violations, you’ll also have the stigma of being a company that infringed EPA rules. In today’s environmentally conscious world, that negative perception can be far worse than any fine.
Also, if you don’t properly dispose of your assets, you risk exposing your company’s sensitive information. A competitor could obtain your critical business information, or you could violate the rules of SOX (Sarbanes-Oxley Act), HIPAA (Health Insurance Portability and Accountability Act) or Gramm-Leach-Bliley.
So, is proper disposal a legal and regulatory compliance challenge, or is it primarily an ethical dilemma?
Legal compliance is essential, of course, but ethics can have an even greater financial impact on the enterprise, as aging assets can represent financial liabilities.
At this time, legislation is mostly concerned with the disposal of plastic additives and four heavy metals: lead, mercury, cadmium and hexavalent chromium. Broader legislation is expected, as citizens hold governments and enterprises responsible for the cost of pollution and cleaning up the environment. So you’ve got to manage the risk of ecological issues damaging your business reputation, even if a legal case is proven.
Disposal must be a budgeted item, not an unbudgeted contingency. Disposal is increasingly being factored into the cost of acquisitions, with a vendor appointed to manage disposals. You’ll find that your business will need disposal services, and you cannot expect to dispose of assets for free.
Bottom line, when your assets lose their value and can’t be reused or resold, engage an asset recovery provider you trust and build the cost of asset disposal into your project plans and budgets.
GREGORY G. LORENZEN is the vice president of operations for Pomeroy IT Solutions. Reach him at firstname.lastname@example.org or (800) 846-8727 x1521.