Matt McClellan

Determining who can lay claim to an invention under patent law can be difficult. In the U.S., the key factor is contribution to the conception of an invention.

“Reduction to practice is typically irrelevant for purposes of determining inventorship,” says John M. Ling, a partner with Fay Sharpe LLP. “Rather it is conception that is the threshold criterion for determining inventorship.”

Smart Business spoke with Ling about inventorship and idea conception.

How is conception defined and determined?

Simply, it is who had the idea. When one or more parties were tasked with solving a problem, and they arrive at the solution to the problem, then the invention is born.

A person who contributed to the conception is an inventor whereas a person who did not is not. Merely being in the room when the idea is born is not enough.

There is also an oath and declaration that is signed when the patent application is filed. The patent office will presume that anyone whose signature is on that document is an inventor.

It’s a good strategy to memorialize conception. If a couple of engineers in the R&D department conceive of an invention at a meeting, it’s a good idea to get them to draft a paragraph or two describing the invention in broad strokes, sign and date it, and have a department manager sign and date the document as a witness.

What has to be done to prove creative contribution?

It seems counterintuitive that conception could be a joint endeavor. But the doctrine of joint inventorship permits multiple parties to claim inventorship on a patent application, so long as they contributed to the conception of the claimed invention.

Inventor A bounces an idea off inventor B, who has an idea to help improve the first idea. If that’s what ends up being claimed in the patent application, they are co-inventors.

The claims are a series of short paragraphs at the end of the application that describes succinctly and specifically what the inventor believes he has created. For example, there might be 20 claims in a patent application, and if inventor A conceived and contributed to claims one through 19 and inventor B only contributed to claim 20, inventor B is still a co-inventor.

It should be noted that if claim 20 is deleted or otherwise amended to remove the subject matter that inventor B contributed, then inventor B should be removed as an inventor. Conversely, if someone should have been named as an inventor but was not, that person should be added. If the correct inventors are not listed on a granted patent once it has been issued by the patent office, a door is opened for third parties to attack the validity of the patent. But as long as that error occurred without deceptive intent, the patent holder has a right and opportunity to correct the inventorship listed on the patent.

What steps should an inventor take before collaborating with another party?

In cases where an inventor has conceived an invention but wants to collaborate with a second party, such as an engineering firm to help reduce it to practice, it is recommended that the inventor work with patent counsel to file a provisional patent application for the invention before any collaboration takes place. That provisional application can be seen as a placeholder. It gives you a filing date for your invention, and then you have 12 months to file a non-provisional conversion application.

If collaboration alters the invention slightly, and as a result the collaborator wants to be listed as an inventor, the inventor has the provisional application to fall back on. It provides a measure of protection for them. That approach will mitigate inventorship ambiguity down the road and help determine the fruit of the collaborative efforts, as opposed to the original inventor’s contribution.

Also, as a result of the recently passed America Invents Act, the U.S. will become a ‘first inventor to file’ country on March 16, 2013, meaning that the first inventor to file a patent application for a given invention is entitled to the patent once it issues. Presently, an inventor filing in the U.S. has a one-year grace period from an earliest date of disclosure of the invention to file an application therefor. Unlike other first to file countries, that grace period will be retained when the U.S. becomes a first inventor to file country on March 16, 2013, in order to protect inventors from having their own inventions used against them as prior art. However, filing provisional applications (or even a full non-provisional application) early and often remains the best strategy for obtaining an early filing date and protecting your invention.

What are shop rights?

Shop rights are an implied license that permits an employer to use but not sell a patented invention of an employee when the invention was made within the scope of that person’s employment but with the financing and/or resources of the employer.

We recommend employers have their employees sign an employment contract that includes an assignment clause whereby the employee is required to assign to the employer his or her interest in the invention produced as a result of the employee’s employment.

That means if an employee is hired to improve fuel efficiency and he files for a patent on improving fuel efficiency, the assignment clause ensures that the patent rights belong to the employer. However, if the employee files a patent application for a spoon handle with a unique bend in it, that is likely not within the scope of his employment.

Absent such a contract and the assignment of the invention to the employer, the courts will typically analyze the circumstances of how the invention was made to determine whether the employer has a right to use the invention, and they will look at whether the invention falls into the scope of the employee’s employment, and whether the employer provided funding, tools, or resources, without which the inventor would have been unlikely to make the invention.

In those cases, the employer may have shop rights, despite the lack of contractual obligation on the part of the inventor to assign the rights to the employer, but it should be noted that those rights are generally nontransferrable. The shop just gets to use the invention — it can’t sell or license it or obtain any of the other good features that come with patent protection.

John M. Ling is a partner with Fay Sharpe LLP. Reach him at (216) 363-9000 or jling@faysharpe.com.

There are many benefits to having a safe culture. Safety leads to more productivity. It has a physical effect on employee morale. But one aspect that is inherent in nearly every organization is a difference between the reality and the perception of what is done for safety.

“If there are no injuries, employers may feel it is a safe organization,” says Jonathan Theders, president of Clark-Theders Insurance Agency. “But the perception doesn’t always match the reality.”

Smart Business spoke with Theders about how to improve company safety and ensure that your employees’ perception of workplace safety matches the reality.

How can you gauge employees’ perception of safety?

There is one key way to gauge perception: Survey on a regular basis. It doesn’t have to be extensive. Some surveys have 500 questions, some have 10. The whole purpose of the survey is to have everybody be a part of the culture of safety, to realize that it is important.

You can have the greatest safety manual in the world, but if it is not being implemented on a day-to-day basis, or not being followed, it’s really just collecting dust on a shelf. By gauging the entire work force, you are getting employees involved in the process. Set a benchmark for where the company stands now, and as you move forward, do an annual assessment of how the business has matured.

With today’s technology, surveying is an easy and inexpensive way for a company to gauge its safety practices.

How can surveys help you improve safety?

People focus on the injury rate, OSHA logs and workers’ compensation injuries, but those are always lagging. They have already occurred. They’re good to discuss because you have to talk about them to prevent them from happening again. But a survey is more of a leading indicator. It can help you look proactively and see potential holes in a safety program before the injury occurs.

How can surveys affect employee perception of safety?

Often, management struggles with the implementation of safety practices due to breakdowns between management and frontline workers. Get them involved in the process. Allowing them to draw up problems makes them part of the solution.

If you establish a committee for surveying safety in a company, it has to be a cross-section of employees. You need management and front line workers to create buy-in. If your work force is unionized, you need someone from the union, as well.

Allow the people who historically are resistant to change to become part of the solution, and the buy-in will be a lot easier and results will be better.

People think committees slow things down. Although the beginning may be slower, the implementation is always quicker than it would be with a decree from management because you have a broad spectrum of people working together. If a plan comes down with an iron fist, people may be resistant, even if it is a good idea.

When you receive feedback, how can you incorporate that into your safety plan?

Let’s say you have a benchmark of a score from one to 10 and the average score on a particular area is four. That tells you two things. First, it’s the perception of the employees that this area isn’t as important to the company as it should be. If it was, they would have marked it a 10. Second, it says there is a hunger for it because they rated it low. They still want it. So the survey’s feedback is twofold. It draws out what your employees believe and what they are asking for because it is important to them.

Employers should take that feedback and say to employees, ‘We scored low on this area — how do we score higher?’ That allows groups to become actively engaged in solutions.

What impact can a favorable perception of safety have on the workplace?

Safety is a hard thing to measure. Especially in today’s world, where people try to measure the justification for everything, safety is atypical. It is not as black and white as, ‘I do this and get that,’ but the alternative — not focusing on it — can cost companies hundreds of thousands if not millions of dollars in the short and long term.

If you improve safety and the perception of safety, you will see huge improvements in morale and productivity. When people are safer, they are less prone to get injured, they are feeling good about their jobs, that their employer cares about them and their safety. They will work better, smarter and harder for you.

When a worker injury occurs, many employers say, ‘I had one workers’ compensation claim and then they all started coming out of the woodwork.’ Maybe there is a degree where people learn the system. But workers’ compensation claims happen when people are tired, are doing something they are not familiar with, or there are unsafe work practices. If one person gets injured, that job still needs to get done. The next people who do it may not be as familiar with it. They will get it done but may have to put in more time. As a result, they are more tired and stressed, working on not enough rest. They’re not concentrating as well as they could be, and boom — they get hurt.

The trickle keeps funneling down and it can have a huge impact. Your goal should be prevention of the first claim, because if you can prevent the first one, you may be preventing many claims that would follow.

Jonathan Theders is president of Clark-Theders Insurance Agency Inc. Reach him at (513) 779-2800 or jtheders@ctia.com.

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After the hit insurance companies took in 2011, businesses should expect changes in the property market for 2012.

“Companies can expect modest upward rate pressure due to severe global property losses,” says Rick Miller, managing director of the National Property Practice for Aon Risk Solutions. “Capacity remains stable and some increased underwriting discipline is apparent, particularly around the peril of flood.”

Risk Management Solutions’ (RMS) latest version of catastrophe modeling software is estimating increased damage impact from Atlantic-based tropical storms from Texas to Maine. Miller says the new software has translated to many underwriters pushing for higher pricing for exposures subject to losses from tropical storms.

Smart Business spoke with Miller and Bill Novak, assistant director of Aon’s National Property Brokerage Group, about what is happening in the property market and what new developments companies should expect to see this year.

What kind of market conditions can businesses expect as a result of recent developments, and who will be most affected?

Businesses can expect a modestly firming property market for natural catastrophe — exposed risks (windstorm, earthquake and flood) and generally flat pricing for all other risks. Windstorm and earthquake are more geographically predictable: Gulf Coast and Eastern Seaboard for windstorm and California and Pacific Northwest for earthquake, while flood-prone areas exist in every U.S. state.

The newest versions of catastrophe modeling software contemplate more severe losses further inland for windstorm than previous models. While global earthquakes have been severe over the past couple of years, the U.S. property marketplace has only been minimally impacted.

Earthquake risk in the U.S. is more commonly associated with the West Coast, but Virginia had a moderate earthquake felt from Washington to Boston this past August. There are seismic areas in the middle of the U.S., as well.

What is behind the firming market?

The biggest driver behind the firming property market and the resulting upward price pressure are insurer-incurred losses and lack of profitability. Most large property carriers suffered significant losses in 2011.

The good news for businesses looking for property coverage is industry surplus or capacity is near historic highs. Buyer demand has been (at best) flat following a few years of a slow economy. Strong supply and lagging demand has maintained a relatively competitive pricing environment despite the recent lack of profitability for insurers.

How quickly will these changes occur?

 

We saw modest upward pricing pressure the last two quarters of 2011. That’s not to say that if you look at the entire portfolio of accounts that all received an increase. Certainly, accounts that are more challenging from an exposure perspective or those that have had losses have already seen pricing pressure.

Most natural catastrophe property business renews in the first two quarters of the year as these buyers do not want to be in negotiations during hurricane season of June through November. Many large businesses say, ‘I don’t want to be in the market buying insurance if there is a big storm coming.’ You lose negotiating ability and potentially are exposed to reactive market behavior.

The flip side to that argument is that if there isn’t a big storm, you might have a market that is keener to do business; however, most buyers still choose to renew their property insurance in the first two quarters.

How will new developments affect limits, deductibles and coverage?

As far as limits, deductibles and coverage, we expect the market will remain generally stable. Some increase in underwriting discipline is likely to be felt in respect to coverage, limits, deductibles and pricing for commercial flood coverage (not the national flood insurance program).

What new products and services have been developed for the property market, and how can these benefit companies?

Aon has developed bed bug and rent protect insurance products. The bed bug product can provide cleanup/extermination and loss of income coverage to a variety of businesses and has seen the most interest from the hospitality and real estate industries.

The rent protect product can help real estate owners protect their income stream from tenants that default on their obligations.

Rick Miller is managing director of the National Property Practice for Aon Risk Solutions. Reach him at (617) 457-7707 or richard.miller@aon.com. BILL NOVAK is assistant director of the National Property Brokerage Group with Aon Risk Solutions, Southfield, Mich. Reach him at (248) 936-5257 or bill.novak@aon.com.

After the hit insurance companies took in 2011, businesses should expect changes in the property market for 2012.

“Companies can expect modest upward rate pressure due to severe global property losses,” says Rick Miller, managing director of the National Property Practice for Aon Risk Solutions. “Capacity remains stable and some increased underwriting discipline is apparent, particularly around the peril of flood.”

Risk Management Solutions’ (RMS) latest version of catastrophe modeling software is estimating increased damage impact from Atlantic-based tropical storms from Texas to Maine. Miller says the new software has translated to many underwriters pushing for higher pricing for exposures subject to losses from tropical storms.

Smart Business spoke with Miller about what is happening in the property market and what new developments companies should expect to see this year.

What kind of market conditions can businesses expect as a result of recent developments, and who will be most affected?

Businesses can expect a modestly firming property market for natural catastrophe — exposed risks (windstorm, earthquake and flood) and generally flat pricing for all other risks. Windstorm and earthquake are more geographically predictable: Gulf Coast and Eastern Seaboard for windstorm and California and Pacific Northwest for earthquake, while flood-prone areas exist in every U.S. state.

The newest versions of catastrophe modeling software contemplate more severe losses further inland for windstorm than previous models. While global earthquakes have been severe over the past couple of years, the U.S. property marketplace has only been minimally impacted.

Earthquake risk in the U.S. is more commonly associated with the West Coast, but Virginia had a moderate earthquake felt from Washington to Boston this past August. There are seismic areas in the middle of the U.S., as well.

What is behind the firming market

The biggest driver behind the firming property market and the resulting upward price pressure are insurer-incurred losses and lack of profitability. Most large property carriers suffered significant losses in 2011.

The good news for businesses looking for property coverage is industry surplus or capacity is near historic highs. Buyer demand has been (at best) flat following a few years of a slow economy. Strong supply and lagging demand has maintained a relatively competitive pricing environment despite the recent lack of profitability for insurers.

How quickly will these changes occur?

We saw modest upward pricing pressure the last two quarters of 2011. That’s not to say that if you look at the entire portfolio of accounts that all received an increase. Certainly, accounts that are more challenging from an exposure perspective or those that have had losses have already seen pricing pressure.

Most natural catastrophe property business renews in the first two quarters of the year as these buyers do not want to be in negotiations during hurricane season of June through November. Many large businesses say, ‘I don’t want to be in the market buying insurance if there is a big storm coming.’ You lose negotiating ability and potentially are exposed to reactive market behavior.

The flip side to that argument is that if there isn’t a big storm, you might have a market that is keener to do business; however, most buyers still choose to renew their property insurance in the first two quarters.

How will new developments affect limits, deductibles and coverage?

As far as limits, deductibles and coverage, we expect the market will remain generally stable. Some increase in underwriting discipline is likely to be felt in respect to coverage, limits, deductibles and pricing for commercial flood coverage (not the national flood insurance program).

What new products and services have been developed for the property market, and how can these benefit companies?

Aon has developed bed bug and rent protect insurance products. The bed bug product can provide cleanup/extermination and loss of income coverage to a variety of businesses and has seen the most interest from the hospitality and real estate industries.

The rent protect product can help real estate owners protect their income stream from tenants that default on their obligations.

Rick Miller is managing director of the National Property Practice for Aon Risk Solutions. Reach him at (617) 457-7707 or richard.miller@aon.com.

Wednesday, 01 February 2012 11:51

How to build a strong safety culture

Every company wants to believe it is a safe place to work, but are you doing what is necessary to create a culture of safety in your business?

If you’re not, an unsafe workplace can be costly, and not only in terms of disability and medical costs.

“In addition to the more obvious costs, there are many other reasons for employers to focus on improving safety in the workplace,” says Eric W. Sandoe, claims account executive with ECBM Insurance Brokers and Consultants. “Lost productivity as a result of replacing injured workers with other employees who may not be trained for the job they are being asked to do, higher insurance premiums and a hit to your reputation are only the beginning.”

Smart Business spoke with Sandoe about how to build and maintain a strong safety culture in your company.

Why is having a strong safety culture important for a business?

Having a strong safety culture brings large benefits to your business. One obvious benefit is increased productivity. Having fewer worker injuries means less down time. It reduces disability costs and the hidden costs from lower employee morale.

The cost of an unsafe workplace is much, much more than simply the hard dollar costs that the employer will pay for disability and medical treatment. The lost productivity caused by replacing injured workers with less experienced staff creates inefficiency and exacerbates the cost of injuries.

A safe workplace protects your business from higher insurance premiums, experience modification rates and regulatory issues. It allows you to bid for more work, especially if you are in any type of contracting business. Most important, it provides a strong reputation for your company and helps you attract the best workers available.

What must be present for a business to define its culture as a strong safety culture?

All levels of the business must be focused on safety and buy in to the idea of a safe workplace. There must be a focus on providing the proper equipment that is necessary to protect workers, such as machine guarding, safety glasses, earplugs and the like. Also, there must be proper ongoing training on lifting techniques and material handling procedures, and any other procedure where safety is required to protect from injury. Management must ensure that these and other proper protections are used at the proper time and that any violation is enforced. There must be constant review with all levels through seminars and other employee and management communication vehicles using lessons learned and real workplace examples. It should be stressed to all levels the costs associated and the jobs lost when these procedures are not followed.

How can a business build a strong safety culture?

Building a strong safety culture is not a top-down strategy. It should involve all levels of your organization. It means being committed to safety regardless of any other concerns in your business. Everyone must hold each other and themselves accountable for safety.

Employees should be encouraged to speak up and give their input to avoid injuries. Avoidable accidents should not be tolerated and regular training should be provided to prevent them. Constant communication is key, and the sharing of ideas to prevent accidents and injuries should be encouraged at all levels.

What are the keys to getting employees to buy in to this culture?

Companies need to create and implement a written program that is consistent with other policies and procedures and encourages employees to report concerns about safety conditions. It’s also important to ensure timely and appropriate responses to employees concerning known hazards, with real action plans in place to address and remove them.

Employees should be encouraged to report safety concerns without fear of reprisal from management and to help in the enforcement of work safety rules. For example, a company could tell an employee, ‘Joe, you need to put your safety glasses on before you get something in your eye.’ Not only is enforcing these rules in the best interest of the employees, but it is vital for employers, as well, because lost workers translates to lower profits and the potential for job losses.

What steps must a business take to maintain the culture?

Communication is key. Procedures must not be allowed to go stale. To keep everything fresh and up to date, these procedures must constantly be reviewed in light of any recent accidents or injuries. Reinforcement of current safety practices must be maintained through ongoing employee coaching and discipline where necessary. Ongoing training must be provided to demonstrate lessons learned and educate new and existing employees in proper safety techniques and procedures.

Metrics should be established to determine what is working in terms of reducing accidents and injuries. Then, those metrics should be reviewed and revised on an ongoing basis.

What results can a business expect from committing to safety?

Increased productivity is a given, due to the lower employee absentee rates that occur when a business commits to safety. Companies can also expect better employee morale resulting from a sense of buy in and reduced injuries. Another welcome result is lower insurance premiums and costs due to fewer injuries and workers’ compensation claims. Also, companies can expect a better overall reputation, which will help them attract the best and brightest workers. No exceptional employee wants to work in an unsafe environment.

Finally, companies will benefit from an increased ability to bid for work due to lower experience modification ratings.

Eric W. Sandoe is a claims account executive with ECBM Insurance Brokers and Consultants. Reach him at (610) 668-7100, ext. 1276, or esandoe@ecbm.com.

The “gap” between facilities and IT organizations has become an industry standard term over the years. While some companies are making strides to overcome this challenge, most struggle with this issue. So, what is the gap? Simply stated, it is when two departments don’t see eye to eye, and in many cases don’t work well together.

Over the past few years there has been a surge in the need for high-capacity and high-density data center facilities to meet the growing demands to store and manage information. This is being driven in large part by social networking, social media and cloud computing services growing at unprecedented rates. Data centers, unlike any other portion of a company’s real estate portfolio, requires input and support from both facilities and IT management and staff.

“IT is in the business of managing information — how it flows at the application layer, how it is transported, processed and stored at the hardware layer, and how it is protected,” says Rich Garrison, senior principal of Alfa Tech. “That is done through a combination of server, storage and network infrastructure designed to deliver and manage information, which in today’s information age is the greatest asset of most companies. Facilities are all about managing the real estate portfolio, space, power and supporting infrastructure.”

Smart Business spoke with Garrison about how to create a more productive work environment in which these two departments can work more effectively together.

Why is there often a gap between facilities and IT?

The gap occurs because of several factors, most originating from the human element. First, IT and facilities speak different languages and often simply don’t understand each other’s needs and priorities. Another major contributor to the gap is that in most companies IT and facilities are two separate organizations with separate budgets, schedules and agendas with competing priorities.

Some companies have rolled up the two groups into one organization to help align the two groups. The fundamental problem is getting those groups on the same page — or even to speak to each another in some cases. This leads to the more subtle interpersonal issues, like pride and ego, that often get in the way. It’s common for power struggles to occur over who is controlling what, allowing both sides to lose focus on what is really in the company’s best interest.

What are some consequences of the gap?

Employees become frustrated. They get tired of beating their head against a wall, make poor decisions and often are forced to settle for solutions that really don’t meet the business’s needs with respect to capacity, reliability and scalability. IT has a history of asking for ‘more than they need’ when it comes to space, power and other facilities resources. This is often due to the fact that long–term requirements are unknown, yet IT must be able to support whatever comes along. Some of these unknown factors may include changes in technology, mergers and acquisitions, changes in the companies’ products or services to name a few. Facilities on the other hand are pressured to ensure that real estate assets are cost effective and operationally efficient. Therein lies the gap, a gap in priorities, business requirements, budgets and management support or direction.

At the end of the day, the company ends up suffering because it doesn’t get the right solution or it spends too much money getting a solution that meets the business’s needs. We have seen IT groups choose colocation simply so they can maintain control of the data center, not because it was the most cost-effective way to meet the company’s data center demands.

Today’s server, storage and network hardware platforms are forcing IT to understand more about power and cooling due to the significant increase in density in recent years. However, having IT staff responsible for planning or managing space, power and cooling is not always the best solution. They usually end up getting it wrong, which can result in unnecessary risks or even catastrophic failures of the data center facility itself by not understanding the underlying facilities infrastructure.

How can companies bridge the gap between facilities and IT?

In almost every instance where this gap is an issue, the companies lack a strategic plan for IT, facilities or both. When companies get serious about developing a formal data center strategy they get much closer to bridging this gap. One particular tool I’ve developed to help bridge the gap is the OPR (Owner Program Requirements) document. The purpose behind this document is to facilitate a process to get facilities and IT to stop thinking about technical solutions, take a step back and start thinking about the business requirements, corporate goals and objectives. It then looks at the functional requirements of both organizations necessary to meet these corporate objectives. Next is to define in their own language the supporting technical and operational needs of both organizations necessary to be successful. This collaborative approach to developing a strategy and plan has proven to be a successful method to begin to bridge this gap.

Getting the two organizations to collaborate and talk in their own languages while finding that common ground is the point of the OPR. It demystifies technology by defining the requirements in terms both IT and facilities groups can understand. For a new data center project, this can be expanded to include a set of design considerations and criteria, written in more technical language that designers and engineers need to understand.

When we see IT staff taking an active interest in understanding facility operations and facilities staff take an active interest in understanding IT requirements, the results have been positive and bring about successful projects that deliver cost-effective solutions for the companies they work for.

Rich Garrison is a senior principal with Alfa Tech. Reach him at (408) 487-1209 or rich.garrison@atce.com.

In the Akron/Canton real estate market, what’s old is new again. Many companies have taken a chance on a redeveloped older building and turned bad news into a great opportunity.

“When Lockheed Martin decided to increase efficiency by selling its building in Akron and leasing back a smaller portion for its operations, it left a big hole,” says Terry Coyne, SIOR, CCIM, an executive vice president with Grubb & Ellis. “But that opened up space for other companies, and there are as many jobs in that building now as there were when Lockheed was the sole tenant.”

Other examples are everywhere. Canal Place is a 12-building complex in downtown Akron that used to be headquarters for The B.F. Goodrich Company. These buildings, originally built in the early 1900s, have been thoroughly updated and now house seven communications companies and three computer software firms. More people work there today than when the former tenant was at its peak.

When Rubbermaid left its facility in Canton, two Northeast Ohio companies filled the building right away.

Smart Business spoke with Coyne about how to take advantage of redevelopment and what to watch for when considering an older building.

How can you take advantage of this?

If you are thinking about moving, these buildings are a great, inexpensive alternative to new construction. The people doing the redevelopment are bringing a product that is excellent quality and fantastic value. So the next time you hear that a company like Lockheed Martin is doing a sale/leaseback and opening up vacancy, it may not be great news in the short term, but it could provide inexpensive space for the next guy in. Pay attention to bad news because it really might be good news from a real estate perspective.

Why should companies consider buying or leasing space in a redeveloped building?

You wouldn’t build these buildings today, because they have amenities that are specific to a manufacturing world that has passed us by for competitive reasons, and because of today’s focus on efficiency.

These buildings have cranes that are hard to come by, floors that are thicker than would be built today, and power distributed throughout in a way that FirstEnergy wouldn’t be too eager to do. These are amenities that — from a replacement perspective — would destroy your budget. But rather than being scrapped, people are taking the risk on redeveloping them.

As a result, they are giving great rates with plenty of amenities and tons of outdoor parking. It’s a built-in infrastructure that supports a lot more than you would ever need at a price you could never touch.

What concerns should potential tenants have before moving forward with this type of project?

Because of the age of the buildings, you need to be more diligent at the beginning. Try to shift the burden of physical maintenance — building, wall, structure, power, anything not specific to your operation —to your landlord, who is the expert in that business. Sometimes the landlord will ask you to maintain part of a building, and with these older ones I wouldn’t take that risk. The reason why they offer some amenities is because it would be very expensive to replace them. If the landlord asks you to maintain a big-ticket item that you wouldn’t normally see, like a transformer, say no. It could cost you in the tens of thousands of dollars to replace.

Also, a new building will have higher ceiling heights and bigger column widths which allow you to store products more efficiently. Many older buildings have lower ceilings and tighter columns. So you’ll be paying less, but you might need more square feet. If you are a manufacturing company that is not worried about ceiling height, then it’s no problem. However, if you are a distribution company, you need to figure out your cubic space requirement. This isn’t just floor space, but how high you can stack products, which is important if you are looking at converting old manufacturing buildings to distribution buildings.

Another issue to consider is the rate. Don’t just say, ‘Well for $1 per square foot, I can buy as much as I want.’ Be careful that you don’t get lulled into just looking at the lease rate and buying three times what you need. If you do it right, it should be a great deal, but these are questions you have to ask yourself before moving forward.

What about environmental issues with older buildings?

Whether you are buying or leasing, you should be much more aware of environmental issues. A lot of these buildings will have toxic substances like PCBs (polychlorinated biphenyls) in their transformers. That, along with asbestos, is a common issue you will see in old manufacturing buildings that you would never see in a greenfield development. So you want to be much more aware of the environmental issues, but don’t be afraid of them. You have to have your eyes open. These are manageable issues; they just are issues you have to deal with up front.

If a building has an environmental issue, it’s not the end of the world. It could be an opportunity to make money as long as you get the right environmental consultant to manage it. So often the average guy looks at it and says, ‘No way, I won’t even consider it.’ That’s not smart. There are experts in the environmental field who can help you manage around it and as a result, you can get a good deal. Don’t just run away; you could be running away from a good opportunity.

Terry Coyne, SIOR, CCIM, is an executive vice president with Grubb & Ellis. Reach him at terry.coyne@grubb-ellis.com or (216) 453-3001.

Most businesses want the same thing when it comes to their phone system: quality phones, reliable service and helpful features, designed with flexibility in mind and fitting neatly within their budget.

To achieve those things, some companies are letting their service provider do the heavy lifting. A hosted IP private branch exchange (PBX) solution integrates multiple locations in a feature-rich package, while eliminating the up-front costs that often make businesses reluctant to upgrade.

“The premise behind hosted IP PBX is that your company will run its phones off the hosting company’s switch — a large, expensive piece of equipment that you are sharing with a bunch of other companies,” says John Putnam, national sales director for PowerNet Global. “The only equipment in your building is the phone handsets themselves.”

Smart Business spoke with Putnam about the advantages of switching to a hosted phone system and how to determine if doing so could help your company.

Why are companies moving to a hosted IP solution?

It comes down to a couple of different reasons. Obviously, financial reasons play a major part, but also, companies are looking for features that allow them to run their business better.

Many organizations upgraded their phone systems for the year 2000. Those systems don’t have the features and capabilities that companies want, but the capital expenditure of buying a new system in today’s economy makes them uncomfortable.

However, if they choose a hosted solution, the capital expenditure is much less because they are running their system off the hosting company’s phone switch. With some of the handset leasing programs available, companies can get by without a large capital expenditure up front.

What types of features are available?

Aside from financial concerns, many companies decide to switch to a hosted solution because they want features their current system is unable to provide, such as caller ID, individual voice mail for everyone in the company and the ability to forward calls to cell phones. If your phone system is missing these features, but you don’t want to write a check for $30,000 to $60,000 for a new phone system, a hosted solution is ideal. Even for smaller companies, a $5,000 capital expenditure for a new phone system is daunting given the uncertainties in today’s economy.

Now those features are available without a huge up-front capital expenditure. For a small business with 10 handsets, you may be looking at $60 a month versus a $5,000 to $10,000 capital expenditure.

What are the benefits of integrating multiple sites through hosted telephony?

Multisite companies with premise-based PBX systems have to maintain, upgrade and support those systems at each site. Sending someone out to make the necessary changes to each system is costly and is not the most effective use of resources. With a hosted solution, companies can make a change at one location to update the phone systems at each of their sites, reducing their continuing cost. Each phone handset is running off the hosting company’s equipment, so they are all integrated.

That allows you to treat the customer in a different manner. For example, if a customer calls one store and it doesn’t have the item he or she is looking for in stock, the hosted system can transfer the customer to another store without requiring that person to call another number. If someone at one store doesn’t answer, the system can automatically dial another store. If a store needs to transfer a customer back to the corporate headquarters for centralized billing functions, the customer is transferred, not called back from a different number.

What are the other advantages of using a VoIP system for telecommunications?

Typically, if you are using VoIP technology, there is a lower cost for the service itself. Companies can take advantage of VoIP services that are traditionally less expensive than traditional services. The cost per line is lower, the cost for long distance is lower and the continuing costs are lower. And because it is an IT-based solution, if you call from one store to another, there is no long distance involved at all. A Milwaukee store calls a Chicago store, and because all phones are on the same switch, that is now a zero-cost call.

For what type of companies does this strategy makes sense?

Smaller businesses, the three to 20 handset market, have been the early adopters. Now, larger corporations are adopting this strategy, as well, as this technology is particularly well suited for large companies with 200 small sites. These enterprise clients have recognized that they aren’t necessarily an enterprise; they are a bunch of small businesses.

For example, if a business has 1,000 sites and each of those sites has five to 10 phones, this strategy becomes very attractive. It looks like an enterprise play, but, in fact, it’s a small business play multiplied a thousand times.

What kind of results can companies expect from a switch to a hosted IP phone solution?

A number of clients have been able to take advantage of a new phone solution for either the same price or less than they were paying for service before. So, in essence, it is a free service, because if you paid $500 for service before and save enough on the service that, when taken in conjunction with the handset leasing program, your total spending is about the same as it was before. However, you’re getting all these new features and capabilities and the service.

John Putnam is national sales director for PowerNet Global. Reach him at (513) 645-4848 or jputnam@pngmail.com.

After a year marked by unprecedented economic and catastrophic losses, many companies are wondering what impact this will have on the insurance marketplace in 2012.

With insured losses expected to exceed $90 billion, 2011 will likely be one of the costliest years on record for insurance companies.

“We expect to see rates going up,” says Dave Schaake, resident sales director of Aon Risk Solutions. “Generally, underwriters are becoming more cautious and re-evaluating their books of business, both in terms of rates, as well as terms and conditions.”

Smart Business spoke with Schaake about what companies can expect in 2012.

What does 2012 hold for the property and casualty markets?

We are beginning to see strong movement from property underwriters to get more rate, particularly from companies with natural catastrophe (CAT) exposures such as flood, wind and earthquake. The introduction of Risk Management Solutions (RMS) U.S. hurricane model version 11 guidance for expected losses is up by 25 to 55 percent for most wind exposed accounts.

As far as casualty, workers’ compensation is the one line of coverage where we are seeing rate increases. Businesses are being forced to do more with less, which has had a direct impact on the well being of their employees.

Also, because of the inherent liability, doctors and hospitals are becoming much more cautious when treating injured workers. Coupled with the uncertainty of health care reform, this all adds up to more costs for the insurance companies, which are ultimately being passed on to the consumer.

For certain risks, we are also seeing umbrella/excess liability rates trending upward, despite an abundance of available capacity.

What factors are affecting the 2012 outlook?

Companies with CAT exposures, a poor loss history or a lower risk quality are more likely to be faced with underwriters requiring rate increases and possibly higher deductibles/attachment points. Another factor that continues to impact the insurance industry is the lack of investment income. In the past, insurance companies were able to offset higher loss ratios by the yields obtained on their investments, but underwriters have not had that luxury in recent years. As a result, to achieve acceptable margins, insurance companies are forced to underwrite to a lower loss ratio.

How will the new outlook affect companies’ insurance purchasing and risk management plans?

The impact will depend on how companies budgeted for the upcoming year. Often, when faced with the prospect of higher premium costs, companies will re-evaluate their insurance program and assess the limits and deductibles being purchased.

They will likely also want to seek alternatives from other markets to ensure their program provides the best value for the dollars being spent.

What risk management issues should companies watch for in 2012?

It sounds basic, but companies need to understand their risk and how to control it. They also need to be able to convey that to management and to underwriters. For property risks, this means understanding the potential for loss at their various locations. Companies should also know the impact suppliers and other vendors have on their business. Underwriters will tell you that the recent catastrophes caused many of their insureds to suffer significant ‘indirect’ business interruption losses as a result of losing one of their key suppliers.

For casualty related risks, it is important to have a strong loss control/safety management program. Underwriters want to know how serious a company is about controlling risk. That means not only protecting their employees, but also others while on their premises.

Regardless of the risk, the key is to have the metrics to make sound business decisions, rather than arbitrary decisions based simply on cost. Determine the appropriate level of coverage and work toward it.

What steps can companies take to handle these challenges?

Begin the process well in advance of your renewal. Communicate early and often with your broker. Establish objectives for your renewal, along with a course of action to help you achieve these objectives. This should include meetings with your underwriters to ensure they understand not only your risk but also what makes it better than your peers.

Work with your broker to ensure your renewal submission is thorough and complete; the better the submission, the better the results. Again, talk to your broker throughout the process, but also make sure you have the opportunity to talk to your underwriter. Remember, no one can tell your story better than you.

Although many businesses are concerned about their insurance costs, they often look in the wrong places for relief. In fact, there are a few areas that many businesses fail to consider despite their potentially huge impact on an insurance program and profitability.

Two of these areas are contracts and additional insured, says Brian Chance, vice president of claims and services at ECBM Insurance Brokers and Consultants.

“Companies assume liability in the contracts and purchase agreements they enter into,” Chance says. “It’s always best to make sure you understand what those liabilities are before you find yourself paying for them.”

Smart Business spoke with Chance about the keys to managing the impact of contracts and additional insured on your insurance program.

What types of problems could companies encounter if they are unaware of the resulting liabilities of contracts they sign?

Companies can wind up being responsible for paying for damage suffered by their business partners, or to members of the public. As a result of these contracts, they may be forced to give up rights and defenses they have under the law for accidents that take place. They could even be agreeing to give someone else insurance coverage under their own insurance policy — an additional insured.

Why is allowing a business partner to be an additional insured a bad idea?

It creates additional expense and risk. When you make someone an additional insured under your policy, you give that person coverage under your policy, even for the things that they do wrong. So you essentially become the insurance company for someone else. You and your carrier become responsible and liable for those actions.

Without a proper contract review, you will find yourself paying for things or forcing your insurance company to pay for things that you didn’t anticipate because you can’t control the behavior of the people with whom you do business.

What steps can companies take to manage contracts and additional insured?

Companies should first limit and control the people who are allowed to execute contracts with anyone for anything. Once they know which people will be allowed to work on their contracts, they should train them on the problematic issues they should be looking for in any agreements they may enter into. Additional training is important for anyone working on contracts

Finally, they should work with a competent insurance professional to help evaluate what they are being asked to sign and to determine what liabilities they are taking on for their company. An insurance adviser can help you identify some of the common problems in the agreements he or she is reviewing and find ways avoid those problems.

What particular issues should companies look for in contracts

It is standard practice in most industries, especially in leases or construction agreements that, as part of a business transaction, you become responsible for anything and everything that goes wrong. For example, in a lease agreement, if you are a tenant, your landlord might include language in the lease that makes you responsible for things that happen in the parking lot. So if something were to happen in the parking lot, you could be surprised to find out that you are responsible, under some circumstances, for taking care of it on behalf of the landlord.

What can happen as a result of signing a contract that isn’t properly evaluated?

You could become responsible for paying the other party for damages that arise under that contract that aren’t covered by insurance. The simple fact that you have an insurance policy doesn’t mean that it covers everything that you might find yourself doing.

If you sign a contract with someone, and as part of that contract you agree to be responsible for something your insurance policy doesn’t cover, you have to pay for it — not your insurance company.

How can a company determine whether someone should be added as an additional insured

First, you should avoid doing it as much as possible. But in business today, that’s not always possible. When it is unavoidable, you need to be as careful as possible as to who you are giving insurance coverage to — and what responsibilities you are taking on.

For example, if you are hiring a contractor to do work for you, you want to make sure that person has a very good safety record.

On the flip side of that argument, when you are doing business with someone else, you should always try to get the other party to give you additional insured status under its policy. It can be helpful because it gives you some protection that you aren’t paying for. Otherwise, you would have to fall back on your own insurance policy or pay for it out of your own pocket.

It’s like playing offense and defense. You don’t want to give additional insured status to others, but you should try to get it yourself if you can.

What can companies trying to gain additional insured status under another company’s policy do to increase their chances of success?

Many business owners don’t understand the value of the insurance coverage that is provided to them as an additional insured. Therefore, you should always ask for it with the hope and expectation that the other side will give it to you because they don’t understand how valuable it is.

Brian Chance is vice president of claims and services at ECBM Insurance Brokers and Consultants. Reach him at (610) 668-7100, ext. 1325, or bchance@ecbm.com.