Putting it succinctly, Junior Achievement’s mission is to help give students — who are inspired to be the young entrepreneurs of tomorrow — a taste of the business world. Since 1919, JA has been educating students about entrepreneurship with passion and integrity. It is the world’s largest organization devoted to that purpose.
One of the keys to JA’s success is the hands-on programs that help prepare young people to operate their own business. Many alumni of the program have cited their experience in JA as the foundation for their interest in being self-employed.
For instance, an inductee into a local chapter’s Hall of Fame recalled that when he was 13, he wanted to be an astronomer. Then, with five friends, he got into Junior Achievement and created a little company to market a useful product.
“We made money in the end,” he says. “After three or four months, we distributed $40 to each person of the company. Forty bucks doesn’t sound a lot today, but that was in 1955. At any rate, I decided, ‘Hey, I’d better go into business because I can’t make any money as an astronomer.’ That’s when I decided to go into business.”
Today, he owns a multimillion-dollar successful company.
JA Worldwide reaches more than 9 million students each year in 380,000 classrooms as well as after-school sites. There are 330,000 classroom volunteers globally who come from a wide range of backgrounds: retirees, businesspeople, college students and parents.
Local chapters each year honor distinguished business leaders who have acted as role models for students.
This year’s honorees for Junior Achievement of Central Ohio include Jim Budros, chairman of the board of Budros, Ruhlin & Roe Inc., the largest independent wealth management firm in central Ohio; Chuck Kegler, director with Kegler Brown Hill & Ritter LPA and a member of the firm since 1968; and Dwight Smith, founder and CEO of Sophisticated Systems Inc., a business technology partner in the Columbus region, and co-founder with his wife Reneé of the Thanks Be to God Foundation to support entrepreneurship and children worldwide.
They join the more than 80 business leaders inducted into the Junior Achievement of Central Ohio Hall of Fame in the past 25 years who give inspiration and purpose to young people to succeed in a global economy.
As companies grow, the demands on human resources departments also increase. To satisfy demands, employers have to be aware of the advances in self-service technology in HR that can increase productivity and create real cost savings.
HR departments can see tremendous benefits from technological innovations such as online HR/Benefits administration.
“Online automated HR/Benefits administration is attractive to companies with a sizable work force — generally 200 or more employees — because at this size, HR departments can become bogged down with daily administrative activities,” says John Galley, president of EBenefits Solutions, which is part of the UPMC Insurance Services Division. “Automation of these activities via the Web can eliminate these daily tasks for HR departments so that they can focus more of their time and energy on strategic initiatives that have a greater business impact. Online HR/Benefits administration also saves companies money, while increasing efficiency and security.”
Smart Business spoke with Galley about the benefits of online HR/Benefits administration and why it matters to employers.
Why would an employer want to make use of online HR/Benefits administration?
For many companies, the HR function has become more complex, difficult and time consuming. Oftentimes, more strategic initiatives can be squeezed out by the daily demands and volumes of administrative issues that must be addressed because they affect the work force every day. Fortunately, solutions are available.
The advantages of online HR/Benefits administration to an employer are many. Massive amounts of paperwork associated with benefits and payroll can overwhelm an HR department. There is a need to handle a number of documents that need to be filled out, signed, dated, reviewed, entered into various internal and external systems, such as carrier databases and the employer’s payroll/HRIS (Human Resource Information System) platform, and then filed. But online HR/Benefits administration can automate much of that process for employers.
Online HR/Benefits administration frees staff from duplicate paperwork, prevents errors and places all employees’ files in the same system, making it easier to access and retrieve. Other databases, such as a carrier system or payroll/HRIS platform can then be securely updated in an automated fashion via an electronic exchange.
Online HR/Benefits administration can also include a host of special features, such as embedded communications tools that allow HR departments to customize messages to various employee populations. The most advanced technologies do much more than handle open enrollment — they handle new hires, life events such as marriages, birth of a child, divorce, etc., as well as employment events such as a promotion or a move from part-time to full-time employment. Each of these has benefits and other HR implications that may be automated by a single solution.
And, because HR/Benefits administration virtually eliminates mailing costs and reduces time and other third-party related costs from operations, most companies realize a return on investment of 200 to 300 percent in the first year. In short, employers can receive better service at lower costs.
What advantages are there for employers with an online HR/Benefits system in place?
Most employers are thinking about strategies to help advance their work force so they are better equipped to handle change and move more swiftly. What is their communications strategy? What is their portal strategy? How can they move wellness initiatives forward to provide meaningful impact on medical trends and other lost productivity costs?
An online HR/Benefits system can provide answers to these key questions — the most advanced and state-of-the-art technologies in the market can create an integrated and seamless experience for employees, one that allows them to easily navigate a single system to accomplish their daily HR/Benefit activities.
These technologies also provide a gateway into other platforms such that wellness, absence, and other key initiatives can be easily and seamlessly managed through the same integrated portal. Because employees could perform all of these tasks without contacting HR or leaving their desks, this saves time for employees and HR staff, thus increasing productivity for the employer.
The right online HR/Benefits system ensures greater security and privacy of information for employees. Electronic exchanges are secure and data is protected via various levels of security. For example, HR administrator access can be limited to HR administrators only, and the information they have access to can be further limited by role, department and location.
What strategic advantages can an employer gain?
We have found that getting the work force onboard with online communications can help to make the organization more nimble and quick. Key messages can be communicated instantly to the work force, and these messages are actually heard and, when needed, responded to. Our work force has been given online tools to help them make decisions about which medical plan option might be best for themselves and their families. This saves them time and money and helps them make better decisions and better use of their pay, which increases employee satisfaction.
Lastly, because we have a fully integrated HR/Benefits portal, our employees can easily navigate among sites without having to remember separate Web addresses, user names or user IDs, and passwords. This integration helps employees quickly and easily get where they need to go and is one of the key reasons that we achieve more than 90 percent participation in our wellness program each year.
Employers need to think beyond just employee benefits when developing their Web strategy. They should think about all aspects of online self-service for employees and if they are looking for a strategic partner, find one that has the ability to offer additional services when they are ready.
John Galley is president of EBenefits Solutions, part of the UPMC Insurance Services Division. Reach him at (412) 647-3393 or firstname.lastname@example.org.
Insights Health Care is brought to you by UPMC Health Plan
While the future of health care reform in its entirety remains uncertain, many provisions of health care reform are already in place as a result of the Patient Protection and Affordable Care Act (PPACA). And there are things that businesses must be doing now to stay on the right side of the law.
As an employer, have you taken the necessary measures to ensure your business is compliant? If you haven’t, you could find yourself in trouble with the Department of Labor, says Ron Smuch, insurance and benefits analyst at JRG Advisors, the management arm of ChamberChoice.
“The DOL has begun exercising its investigative authority to enforce compliance with the health care reform law, requesting that health plan sponsors provide proof of compliance with PPACA’s mandates,” says Smuch.
Smart Business spoke with Smuch about the DOL’s audit requests related to PPACA compliance and what businesses need to know to stay on the right side of the law.
What areas has the DOL been looking into?
The DOL’s audit requests related to PPACA compliance have been divided into three categories — requests for grandfathered plans, requests for nongrandfathered plans and requests for all health plans.
A grandfathered plan is a group health plan that existed as of March 23, 2010 — the date PPACA was enacted — and that has not had certain prohibited changes made to it since that date. If a plan is grandfathered, it is exempt from certain health care requirements, such as providing preventive health services without cost sharing. However, if a plan makes changes — including changing providers, increasing co-insurance charges, significantly raising co-pays or deductibles, significantly lowering employer contributions, etc. — it loses its grandfathered status and must comply with additional health care reform requirements.
Regulations require a plan to disclose to participants (every time it distributes materials describing plan benefits) that the plan is grandfathered and, therefore, not subject to certain PPACA requirements. For grandfathered health plans, the DOL has been requesting records documenting the terms of the plan on March 23, 2010, and the participant notice of grandfathered status included in materials that describes the benefits provided under the plan.
If a plan has lost its grandfathered status, what must it do differently?
Plans that do not have a grandfathered status must comply with additional PPACA mandates, including providing coverage for preventive health services without cost sharing. For nongrandfathered health plans, DOL audits are requesting documents related to preventive health services for each plan year beginning on or after September 23, 2010, the plan’s internal claims and appeals procedures, contracts or agreements with third-party administrators, and documents relating to the plan’s emergency services benefits.
Some of PPACA’s mandates apply to all health plans, regardless of whether they have grandfathered status. For example, all plans must provide dependent coverage to age 26 and must comply with the PPACA’s restrictions on rescissions of coverage and on lifetime and annual limits on essential health benefits.
The DOL has been requesting the following information from both grandfathered and nongrandfathered health plans: a sample notice describing enrollment opportunities for children up to age 26; a list of participants who have had coverage rescinded and the reason(s) why; documents related to any lifetime limit that has been imposed under the plan since September 23, 2010; and documents related to any annual limit that has been imposed under the plan since September 23, 2010.
What else do employers need to demonstrate?
Employers should be prepared to further demonstrate their compliance by producing records of the steps they have taken to comply with PPACA requirements, including plan participation information, plan amendments or procedures that were adopted, and notices that were provided to those covered, such as the notice of grandfathered status or notice of enrollment for children up to age 26. Plans must also show that they cover out-of-network emergency services without requiring more cost sharing that would otherwise be required by covered participants using in-network emergency services.
If a plan’s PPACA compliance documents are maintained by a service provider, the employer should make sure the necessary documents are being retained and can be produced upon request. Your adviser can work as an intermediary with the insurance company/service provider to ensure compliance requirements are satisfied.
And if your company receives a PPACA audit request from the DOL, consult with your advisors immediately for more information on how to proceed.
What are the penalties for failing to comply?
Penalties are significant. Under PPACA, employers with more than 50 employees are required to provide coverage. Those that fail to do so will be assessed a fine of $2,000 per employee per year, minus the first 30 employees. So an employer with 50 employees that does not provide coverage would pay a penalty on 20 employees, or $40,000 a year.
An employer that offers coverage can also find itself in trouble. For example, an employer’s willful and intentional failure to comply with the Summary of Benefits and Costs requirement may result in a penalty of $1,000 per day per participant. And while the cost of providing coverage for employees is tax-deductible for employers, the cost of paying penalties is not.
Ron Smuch is an insurance and benefits analyst with JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7017 or email@example.com.
Insights Employee Benefits is brought to you by ChamberChoice
A significant part of the risk management process for any business enterprise is the proper classification of its work force for federal employment tax purposes as either employees or independent contractors.
“The risks from misclassification are a potentially significant underpayment of employer Social Security, Medicare and unemployment taxes, as well as the interest and penalty from failure to pay such employer taxes and for failure to withhold income taxes,” says Walter McGrail, senior manager, Cendrowski Corporate Advisors LLC.
Employers, he says, are responsible for withholding taxes for employees, but they are not responsible for such taxes on independent contractors.
Smart Business spoke with McGrail about the Voluntary Classification Settlement Program (VCSP) and how it can be used to a business’s advantage.
What are the factors for determining work force classification?
For more than 20 years, the IRS has adopted the so-called ‘common-law’ test for classification of workers as employees or independent contractors. The common-law test for classification is used to determine whether business managers have the right to direct the ‘means and details’ of the services being performed. Under the ‘means and details’ standard, it doesn’t matter whether the business managers actually direct the means and details, only whether they have the right to do so. The IRS has published a list of the ‘20 factors’ used to make the common-law determination of classification. Generally, such factors fall into one of three categories: behavioral control, financial control and the relationship of the parties.
What is the IRS Voluntary Classification Settlement Program?
Work force classification has long been a source of acrimony between the IRS and taxpayers. For prospective employers, classification of its work force using independent contractor status has some obvious advantages: lower employment tax costs, less burdensome reporting (1099s vs. W-2s) and non-inclusion in employee benefit programs. While the IRS has a real economic incentive to audit potential employers for taxes, interest and penalties related to prior years can be very costly for the IRS to conduct.
In an effort to coax voluntary compliance from taxpayers, the IRS has rolled out what amounts to a relatively inexpensive amnesty program, the VCSP. In exchange for taxpayers’ agreement to voluntarily treat their work force as employees for federal employment tax purposes going forward, the IRS will limit the exposure of qualifying employers to employment taxes on previous periods to a one-time surcharge equal to approximately 1 percent of the most previous year’s wages. The surcharge can be a bargain compared to the actual cost of tax, interest and penalty for all years open to IRS inspection, as well as the cost of defending an IRS audit.
How do employers qualify for the program?
In the event that a taxpayer’s risk management analysis demonstrates that the VCSP is a cost-effective means of managing its employment tax risk, the employer must meet the following qualifications: the taxpayer must enter into a closing agreement and pay the entire surcharge at closing; the taxpayer must have treated its work force as independent contractors for the previous three years; the taxpayer must have filed U.S. Form 1099 reporting the payments to such work force as non-employee compensation; and the taxpayer or its business must not be currently under audit.
What additional risk assessment might be required before taking advantage of the VCSP?
For any employer that has assessed its exposure to employment taxes, and related interest and penalties for misclassifying its work force in a prior year, there are other risks to assess. First, and as suggested, the VCSP requires full funding of the amount due at closing. To the extent that a taxpayer is in financial difficulty, they should assess whether it makes sense to even apply for the VCSP.
Secondly, taxpayers opting under the VCSP must agree to keep the statute of limitations for audits open for six years after the first year a taxpayer participates in the program. Normally, a taxpayer’s statue of limitations period for assessment of employment taxes closes after three years.
Third, the VCSP in its current form does not necessarily shelter the work force from assessment by the IRS from penalty or interest with regard to personal tax returns. While it is unclear that the IRS would pursue any claims against such employees, the IRS would have authority to do so if it chose to. The possible cost to employees should at least be considered.
Finally, each state provides for its own employment and withholding tax requirements. As it currently stands, the VCSP does not preclude a state or local taxing authority from relying on participation in the VCSP as an admission by the employer of responsibility for such state and local employment taxes for any open year.
For each of these reasons, any employer that has weighed the cost and benefit of complying with IRS guidelines for registering its work force for employment taxes must evaluate all of the risks associated with participating in the VCSP. Contact a CPA to assist you with the difficult task of properly executing the risk management process for employment taxes.
Walter McGrail is senior manager of Cendrowski Corporate Advisors LLC. Reach him at (866) 717-1607 or firstname.lastname@example.org.
Business litigation is an expensive process. Indeed, it is now common for parties to spend years producing documents, attending depositions and arguing motions, all of which happens before reaching a trial. As a result, experienced executives and in-house counsel often want to know how they can promptly settle a dispute on favorable terms.
Smart Business spoke with Richard L. Miller II, a partner at Novack and Macey LLP, about settling a lawsuit on the best terms possible.
What is the secret to settling a case?
In a word, information. In order to settle a complicated case, it’s important for an executive to know four things. First, he or she needs to know the facts. What do the key documents say and what will the players actually testify to? Parties are commonly surprised by such things as: a third party’s recollection of what happened; a damaging email that they did not know existed; or the meaning of an overlooked contract provision.
Second, it’s critical to know the law. The law will tell you what claims, counterclaims and/or defenses you have. But there are two sides to the majority of business disputes that make it to a courthouse. In order to make sound settlement decisions, you will need straight advice from a seasoned litigator about the likelihood of prevailing on each claim or defense.
Third, it’s vital to understand the motivation of the other side. Many times, people think that business litigation is purely about dollars. This is usually not the case. For instance, is the opposing entity in dire financial straits such that it simply cannot pay the amount? Or, does the opposing party fear having its conduct or practices publicized in the course of litigation? All too often, parties incorrectly assume that they know what is driving the opposition’s decisions.
Fourth, have a clear and realistic sense of your tolerance for risk and uncertainty. It commonly takes two to four years from the time a case is filed until a jury renders a verdict. After that, the loser may appeal. The appeal could result in a second trial or yet another appeal to a higher court. This process can be a roller-coaster ride — particularly if a judge makes a bad ruling, new evidence is discovered or key witnesses become unavailable.
What are a few common mistakes you see when parties are trying to settle?
One common mistake is rushing the process. It’s natural for busy executives to desire a fast resolution. However, at the same time, most decision-makers are loath to take a ‘first offer.’ Consequently, several counteroffers are often necessary. This back-and-forth usually takes at least a few days and, more likely, a few weeks. If your opposition senses that you need a quick settlement, it will attempt to use that information to its advantage.
Another mistake is overreaching. At the outset of a dispute, less experienced negotiators sometimes make an outrageous demand. This can stiffen the resolve of the recipient. Then, the overreaching party finds it difficult to make a reasonable offer without losing all credibility. Consequently, the parties proceed with litigation. This problem can be avoided by making demands and offers within the realm of reason.
A third mistake that’s frequently made is not understanding damages. In order to obtain a monetary award, you must have a legal theory that entitles you to relief. For example, if a former employee steals a customer list, you probably will not be able to obtain a money judgment if you cannot prove that the employee used the list, or shared the list, in a way that caused you to actually lose a sale or customer.
Are settlement conferences with judges effective?
It depends. If the parties and their attorneys are reasonable and experienced, a judge rarely tells them something that they do not already know. However, this is frequently not the case. In such instances, the right judge can be of tremendous assistance.
If the plaintiff is behaving outrageously, the judge can tell that person that his or her case has serious weaknesses and that his or her settlement position should be adjusted accordingly. Likewise, if one of the attorneys is not giving his or her client good advice, a judge can offer a fresh perspective.
Because judges are impartial and imbued with authority, litigants will often accept advice or arguments from them in a way that they will not from either opposing counsel or even their own lawyer. Still, some judges excel at resolving cases, while others do not.
In order to truly add value, a judge must become familiar enough with the evidence to be able to express opinions on the parties’ legal theories and settlement positions. Merely giving a canned speech about the costs and uncertainties of litigation rarely adds value.
Are written settlement agreements worth the time and expense of preparing them?
Yes. If a case was worth litigating, it is surely worth sewing-up with a written settlement agreement. Remember, the attorney who handled your case is already familiar with your business, your adversary and your concerns. Now that he or she has that knowledge, spending a bit more to protect your rights is a sound investment. Moreover, the best person to protect you against future litigation is someone who litigates for a living — we know all of the tricks of the trade.
Richard L. Miller II is a partner with the business litigation firm Novack and Macey LLP. Reach him at (312) 419-6900.
Insights Legal Affairs is brought to you by Novack and Macey LLP
On November 15, spend the morning with world renowned speaker and author Bob Burg at the special event, "Endless Referrals: The Go-Giver Way," and you’ll learn how to quickly and easily build a prospecting and referral "machine" to continuously create more sales than you ever dreamed possible.
If you’ve ever asked yourself the question, “Who do I talk to next, now that my list of prospects has run out?” then this program is for you. Combining humor, entertainment, and a whole lot of “nuts & bolts” information, bestselling author and internationally-acclaimed speaker Bob Burg shares principle-based methods that will accelerate your ability to meet and connect with new people and build the trust that is essential in life and business!
During this powerful program you will also learn the philosophy at the heart of The Go-Giver embraced by so many of today’s top producers and leaders, including the principle behind Law #3: The Law of Influence; specifically how to apply this principle in order to cultivate a network of endless referral business. In fact, by the time you leave this event you will have a complete action plan ready for immediate application and success.
For more information and to register, please click here.
Before that, though, check out this special interview that Kristopher McCrone, the founder of Interdependent Coaching, conducted with Burg about the program:
Indemnity clauses are included in contracts to provide a means by which the contracting parties can shift the responsibility of risk.
“Indemnity clauses can expand, limit or even eliminate the obligations of one party to another with regard to property damage, personal injury and contractual obligations,” says Paula Devaney, Director, Claims Services, at ECBM. “Indemnity clauses are drafted in order to establish the terms and conditions upon which one party can shift risk associated with the performance of the contract.”
Smart Business spoke with Devaney about how to make indemnity clauses work for you, shifting risk away from your business.
What’s an example of how indemnity clauses work?
Here’s an example: Company A owns a building and retains Company B to complete parking lot repairs. As a result of the activities of Company B, a visitor to the building falls and sustains an injury. The visitor files a claim for damages against Company A. Pursuant to the indemnity clause in the contract, Company A demands that Company B respond to the claim since it arose out of their operations. If the contract did not include a properly drafted indemnity clause, Company A would have to bear the risk and costs of resolving the claim on their own behalf.
Do indemnification or insurance provisions apply first?
Indemnification provisions are evaluated first, as these clauses establish the parameters that will govern the risk being shifted. Insurance provisions are then evaluated to determine if the circumstances of the claim or demand will fit within the purview of the insurance coverage requested to be purchased. Not all of the risk that is shifted by an indemnity clause is or can be covered by insurance.
Both indemnity clauses and insurance are risk transfer vehicles. In a contractual relationship where an indemnity agreement exists, the parties will also include insurance language to support the indemnity. In the insurance world, the indemnity clause is commonly referred to as the ‘belt’ and the insurance provisions are referred to as the ‘suspenders.’
If the indemnity clause and insurance provisions are successfully drafted and implemented, the insurance purchased by the indemnitor will provide the indemnitee with a certain level of comfort that there is a means by which the indemnitor will be in a position to pay for the risk that has been shifted to them.
How does the language of the indemnity clause affect the end result?
Language that must be thoroughly evaluated is anything in the clause that establishes very broad terms of the risk being transferred. Both parties who are depending on the viability of an indemnity clause should draft indemnity language that is specific to their relationship, complies with the jurisdiction in which the clause will be interpreted and clearly, or as best as possible, defines the proposed intent of both parties entering into the agreement. Effective communication is paramount to ensure that intent is clearly understood.
What must you include when creating a contract’s indemnity clause to provide the most protection for your company?
One way to establish a high level of clarity is to include or create definitions of key terms in the indemnity clause. Terms such as claim, damages and contractor/vendor conduct can be included in a definitions section of the contract so that there is little to question as to what type of act constitutes a breach, what constitutes a claim and what damages are subject to indemnification. Simplifying and defining the terms can allow a more clear and concise interpretation of the indemnity clause against the circumstances giving rise to the demand for indemnity.
The identification of the parties to be indemnified is also crucial. The party potentially granting indemnity will wish to limit the parties to be indemnified, whereas the party requesting indemnity will seek to expand or broaden the list of potential indemnitees.
The duty to defend and associated costs must be clearly established and can also include issues such as which party controls and/or must consent to defense, the degree to which one party must consent to settlement and the remedies available if there is a refusal to defend an indemnified claim.
Other factors to be addressed are:
- Losses/damages or limitations on types of damages. Issues such as attorney’s fees must be included as a recoverable cost, while consequential damages should be contemplated along with fines and penalties.
- The period of time in which an indemnity clause survives the contract.
- Including and/or defining the type of event that can trigger the obligation to indemnify.
- Insurance procurement. The indemnity clause in a contract should not rely on the viability of the entity granting the indemnity. If the indemnitor goes out of business, their insurance may still be in effect.
When your business is signing a contract that includes indemnity clauses, what should you watch out for?
It is crucial for both parties to read the contract, and specifically the indemnity provisions, carefully. Every indemnity clause is different. There is nothing standard, and many times nothing fair, about an indemnity clause. If you do not read the clause and carefully consider the implications, you can be accepting a tremendous amount of risk you never intended to undertake.
The indemnity clause should be drafted in a manner that carefully considers the intent of both parties. When negotiating indemnity provisions, you may win some battles and lose others. However, with effective communication between both parties and effective review of the contract by legal counsel and, just as importantly, your insurance broker, the intent of the contract will at least be understood. Therefore, you can enter the contractual relationship with an understanding of the risks and liabilities.
Paula Devaney is a Director, Claims Services, at ECBM. Reach her at (610) 668-7100, ext. 1216, or email@example.com.
Insights Risk Management is brought to you by ECBM Insurance Brokers and Consultants
The Internet is an integral part of doing business — from sending emails and hosting a website to setting up virtual private networks and interconnecting locations. Today, more than ever, organizations require reliable Internet connectivity with increasingly higher speeds to satisfy growing application requirements, while carefully managing IT costs.
“Internet usage continues to grow and evolve significantly from its simpler Web browsing and email origins,” says Mike Maloney, vice president of Comcast Business Services. “Organizations, large and small, now extensively rely on the Internet to increase productivity, provide business-to-business or business-to-consumer services, streamline their supply chain and outsource IT applications to reduce costs.”
With Internet bandwidth requirements continually increasing, Ethernet dedicated Internet access is becoming a cost-effective and more flexible option to connect to the Internet, Maloney says.
Smart Business spoke with Maloney about how Ethernet stacks up against T1 connections.
How has the adoption of new technology increased the need for better Internet connections?
The potential for new technology to lower the cost of business operations is clear. For example, by moving applications to hosted or ‘cloud-based’ services, an organization can eliminate the capital expense of the application servers and operational expense of software licenses and support, while reducing the burden on their IT support staff. Spending on public IT cloud offerings is forecast to reach $55.5 billion in 2014, representing a 27.4 percent compound annual growth rate, according to a recent report from the International Data Corporation. This rapid growth rate is more than five times the projected growth rate for traditional IT products.
Meanwhile, utilizing this new technology will require a higher-speed Internet connection. An organization’s bandwidth requirements may increase due to:
- An increasing number of visitors to your locally hosted public website for e-commerce transactions.
- An increasing use of cloud-based services where you move applications from running locally to a remote data center or hosted server in the cloud.
The capital expenditure and recurring operating savings of cloud-based services typically provide a better return on investment than the additional Internet bandwidth costs. During times of accelerated growth, organizations can leverage the Internet to rapidly respond to increased productivity and supply chain, while carefully managing costs.
How have businesses been using T1-dedicated Internet access?
A popular way for organizations to connect to the Internet has been via a T1-based dedicated Internet access (DIA) service. T1 DIA services are typically offered over one or two T1 circuits so the bandwidth options are limited, inflexible and costly as an organization’s bandwidth and application requirements grow. To be competitive, you need to quickly and cost-effectively adapt your Internet access bandwidth, so T1 DIA services are challenged to meet these elastic bandwidth requirements.
With a single T1 circuit operating at 1.5 megabits per second (Mbps), you need to purchase upgraded service to get more bandwidth, which may require a new T1 router to support the bonding of the two T1 circuits. Typically, that will cost another setup charge, as well as a higher monthly recurring cost for the service. Additionally, there will be service disruption if you must replace the existing T1 equipment, and new equipment or circuits may delay the upgrade days or even weeks.
Many T1 DIA service providers cannot provide Internet access beyond two T1s. If your Internet access bandwidth needs increase beyond that, you will have to switch to a different technology with higher bandwidth choices.
Why is Ethernet-dedicated Internet access a better choice for businesses?
Ethernet DIA services are typically delivered over a single Ethernet fiber optic connection that can handle any amount of bandwidth between 1 Mbps and 10 gigabits per second (Gbps). Ethernet DIA service can be purchased in flexible bandwidth increments up to the Ethernet port speed, and the port speed depends upon your initial and anticipated bandwidth needs for the duration of the service agreement. A 10/100 Mbps Ethernet port speed is sufficient for most organizations. Unlike T1-based DIA services, Ethernet DIA services are not offered based on circuit speed.
Capital expenses are also low to non-existent with Ethernet DIA. If your building does not have a fiber optic connection, your Ethernet DIA provider will deliver a fiber optic connection, which has a one-time cost associated with that installation. Otherwise, if you can use an available Ethernet port on your router you are ready to go, as the Ethernet DIA service demarcation device is included in the setup cost. Ethernet DIA enables you to better manage your IT capital and operating expenditures during varying economic cycles. Cost savings can be achieved because you don’t have to switch Internet access technologies or providers when your organization’s bandwidth needs exceed 3 Mbps (two T1s).
Your Ethernet DIA service provider can remotely reconfigure the Ethernet service demarcation device to support the new bandwidth you require, and you can continue to use the service up until that upgraded amount. If the Ethernet service demarcation device needs to be restarted, you may only experience a minimal service disruption. This is in contrast to T1 DIA service, where new equipment and new, higher speed circuits may take days or even weeks to get implemented.
Organizations increasingly utilize the Internet as a critical business tool, and Ethernet-based DIA services provide many benefits over T1-based DIA services. The most obvious benefit is higher bandwidth. Ethernet DIA services also enable organizations to more quickly and cost-effectively add Internet access bandwidth to optimally manage their IT costs while they grow their business.
Mike Maloney is a vice president of Comcast Business Services. Reach him at firstname.lastname@example.org.
Insights Telecommunications is brought to you by Comcast Business Class
When visiting one of InfoCision’s offices, you’ll notice more than the tables, chairs and water cooler found in a typical workplace. It is not out of the ordinary to pass a yoga class practicing downward dog, a physician scribbling a prescription or a preschool class reciting the alphabet.
While these scenes may be out of place in many employers’ offices, InfoCision has worked hard to make them a staple. The company recognizes its employees are the heart of its business, so it focuses on recruiting and retaining them with a variety of amenities and benefits, says Kim Murphy, vice president of employee benefits at InfoCision.
"We strive to give our employees a work-life balance," Murphy says. "We want to provide opportunities for employees to handle things like exercising at work so when they go home, they can focus on their families. And we believe that contributes to a happier, healthier employee."
- InfoFitness centers: These 1,500- to 2,000-square-foot gyms include top-of-the-line equipment such as treadmills, elliptical machines and recumbent bicycles. The centers also offer classes such as aerobics or yoga, and are open from 7 a.m. to 11 p.m. They are free for InfoCision employees and family members covered under the company’s health plans. Many InfoCision employees and even entire departments attend classes together. "My department works through lunch, then at 4 p.m. we all go down as a group," Murphy says. "It's nice to have that support — on the days when you don't want to go, you have your coworkers pushing you, and it makes it a lot easier."
- InfoWellness clinics and programs: InfoCision provides on-site doctors for both employees and family members regardless if they participate in its health plans. The company also has a prescription concierge service so employees don't need to run out to pick up their medications. Other wellness programs include free smoking-cessation programs and subsidized weight-loss programs.
- InfoKids Early Learning Center: This fully licensed child care center at InfoCision's corporate headquarters in Akron can care for more than 90 children ages 6 weeks to 14 years. The center offers summer programs, two infant rooms and toddler and preschool rooms, play areas, educational toys and computers. It provides a creative curriculum education model. InfoCision's satellite call centers offer subsidized child care options.
- InfoCision Management Corporate University: Geared toward salaried staff who have a clear path of advancement within the company, IMCU offers free or discounted workforce development through on-site programs as well as outside classes and workshops through the University of Akron and other local institutions.
- Employee assistance program: InfoCision provides employees with a toll-free number to call for financial advice or free counseling sessions for anything from a death in the family to a divorce. The employee receives recommended local counseling services, and he or she can use the services as much as he or she needs.
- On-site delis: InfoCision's Café 5 on-site delis offer healthy hot and cold meals, snacks and gourmet coffee. In addition, InfoCision's vending machines now offer healthy choices.
InfoCision also offers a comprehensive benefits package for both salaried and hourly employees, Murphy says. These benefits are available upon hire and include health care, vision and dental plans, paid holidays, free life and disability insurance, paid personal and vacation time, quarterly bonuses, paid training and tuition reimbursement. InfoCision also offers 401(k) participation after 90 days of employment.
Aside from amenities and benefits, InfoCision also strives to create a work environment in which employees can excel. "For as big as we’ve gotten, we still have a family feel," Murphy says.
"It starts when you enter the front doors and the receptionist greets you like you're family even if you've never been here before. We also have a newsletter for employees every month, and our executives speak regularly to our employees and are open for questions or available to talk afterwards. That open communication really makes a big difference."
InfoCision also has a group that travels to its facilities and speaks with employees about what's happening at the company and in the workplace. This program, in conjunction with an employee suggestion box, is meant to provide an open forum for employees to voice ideas or concern.
"We have an open-door policy," Murphy says. "Our employees have the opportunity to speak to not only to their supervisors and team leaders — as our supervisor to communicator ratio is one to nine — but our executives as well. That's not something that's typically found at other companies, but we believe it is a key part of recruitment and retention."
For more information on employee benefits and amenities, contact Kim Murphy at email@example.com or visit www.InfoCision.com.
Years ago, a friend told William F. Hutter that every organization is perfectly designed to achieve the results it is getting. Hutter, president and CEO of Sequent, explains it this way.
“The easiest way to explain this idea is to look at a sports organization,” says Hutter. “As a spectator, it is really easy to see things about a play, a player or a team dynamic that the coach must not be seeing. Everyone has played the role of Monday morning quarterback or armchair coach. In that role, we see things that need to be fixed for the team to perform more effectively. Passing stats are off — ‘get a new quarterback.’ Two missed PATs — ‘get a new kicker.’ The armchair coaches will tell you, ‘The team is designed to get the results it is getting.’”
Smart Business spoke with Hutter about this analogy and how it relates to leadership.
How does ‘Every organization is perfectly designed to achieve the results it is getting’ relate to leadership?
To answer this, it is important to understand the difference between managers and leaders. In the most basic definition, leaders help define the direction, the culture and the belief in the yet-to-be-accomplished objectives for the organization. While managers execute directives and tasks critical to the operations of the organization, neither managers nor leaders can exist without the other.
Generally, leaders don’t manage well and managers often don’t lead. Leading and managing are different skill sets that are both necessary and that must complement one another. Now that the ground rules are defined, let’s look at a common mistake companies often make in selecting their next leader. It’s called the ‘last person standing’ rule.
What is the ‘last person standing’ rule?
Consider a common method for selecting the next person in leadership, the ‘last person standing’ rule. This is essentially what happens when companies choose to not be purposeful in determining the next level of leaders. Instead, a decision is made by default.
So why does this happen within good companies? The collective knowledge of employees is extraordinarily important to all companies. Any company that has suddenly lost a key, long-time employee knows how this affects the entire organization. As a result, seniority or longevity of service tends to justify to business owners that the employee who has been there the longest and/or is the most technically competent should be in a leadership role. These employees may also have a leadership expectation due to their length of service and contribution to the company.
Does every outstanding manager or worker have the potential to be an effective leader?
Consider this illustration of what can happen when a business begins to grow and evolve. The business owner of a thriving small business has relied on a key employee, Bob, for more than 15 years. The owner trusts Bob to manage the day-to-day aspects of running the business. Bob is also genuinely liked by the staff and has a good understanding of the owner’s goals. Due to the owner’s leadership and Bob’s ability to manage, the company grows and prospers.
Then, after years of working together, the owner decides to hire another person to help lead the company. Following the ‘last person standing’ rule, Bob is given the opportunity and is now focused on the overall business, not on operations. As a result, Bob needs to hire a new manager. Not wanting to disappoint, he, too, makes a decision by default rather than on purpose and hires his best worker to be the new manager. Unfortunately, the company is left without a good leader or effective manager and the best worker is now a manager.
Why does this rule continually play out in business?
Essentially this happens because it is easier to let it happen than to make a purposeful decision on leadership and address the difficult discussions with employees who will be disappointed when their expectations are not met.
Just because the key person is a great manager does not mean that he or she is prepared to be the next leader. Longevity and great results from an exceptional employee in a defined role could mean that the person is exactly where he or she fits best within an organization.
Every business has a key employee who works diligently, making sure the daily operation runs smoothly. However, the real challenge comes in knowing how and when to train key employees for natural transitions in the growth of the business. Unfortunately, businesses do not spend as much money training their employees as they do on keeping equipment running smoothly. Most entrepreneurs tend to think that everyone is blessed with the same leadership skills that they possess, but that is often not the case.
How can business be more prepared to avoid this situation?
It is imperative for any organization to plan for a transition by providing training for employees and helping them prepare for their next responsibility. As the leader, the business owner should work on the following:
- Create a culture that emphasizes the importance of every function.
- Acknowledge and remember the value of long-term employees.
- Match the skills of individuals with the jobs to be performed.
- Be honest with every employee about their potential and their fit within the organization.
- Purposefully plan for transition.
- Make the investment in training your most important people.
- Don’t be afraid to hire people with the skills your organization needs to grow.
If you know you need to change your organization, you must change first. Do things differently than you have in the past. It’s not easy ... be a leader ... decide to make the change.
William F. Hutter is president and CEO of Sequent. Reach him at (888) 456-3627 or firstname.lastname@example.org. For more information about Sequent, visit www.sequent.biz.
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