Matthew LaWell

Tuesday, 26 January 2010 19:00

Preventing the exodus

Week after uncomfortable week, Donald Trump leaned across the edge of his famous boardroom table, his hands locked together, his lips curled in a sneer, and stared some poor sucker right out the door. During eight seasons of his reality television show, “The Apprentice,” Trump has mastered the ability to pound out the two words that no employee, not even a contestant eager for fame and fortune, wants to hear.

You’re fired.

As has been the case so many times during the last couple of decades, Trump proved to be far ahead of the curve. He mastered the fine art of the fire long prior to the start of our current recession, long prior to millions of workers hearing the same words, more or less, as that unfortunate contestant on the other side of the table. But perhaps Trump — and you — will not need to utter those words as often this year as you did last year.

The national unemployment rate dropped to 10 percent in November 2009 from 10.2 percent in October, according to the Bureau of Labor Statistics. That figure, however slight, represents enough of a drop to provide some glimmer of hope to human resources and human capital experts across the nation and some hope that the start of a long recovery will soon be under way.

“This is providing an opportunity to step back, re-evaluate and reset the human capital agenda,” says Jan Rose, market business leader for human capital, Mercer LLC. “Everything is up for examination. Many of our clients are reviewing the effectiveness of all their human resources programs and assessing whether the programs are having the effect they want it to have for their investment.”

All of which means that, after a long and frustrating year filled with layoffs, wage freezes, the elimination of bonuses and perks, and the addition of more assignments for employees already under stress, the economy — and the human resources industry — might start to take a turn for the better at some point this year. Challenges do remain, of course, but there is hope.

Whenever the figures and charts tick upward, the time to move will be as soon as possible. Will you be prepared?

Focus on your top employees

The challenges throughout the last year focused on how to maintain the revenue, trim the budget and retain as many employees as possible. Almost every business of every size lost something and, more important, somebody — as evidenced by that aforementioned unemployment rate, which has increased during almost every month since April 2008.

You might still need to trim your budget, but you will also need to focus on identifying and retaining your high-performance and high-potential employees. So often, those employees might think the grass is greener on the other side of the proverbial fence. But what about when the grass is brown? What about when there is no grass? Heck, forget the grass, what about when there is no fence? They remain where they are for as long as necessary, as they are doing now because there are so few available positions in the marketplace.

Then they leave.

That is, at least, the consensus among dozens of human resources and human capital experts.

“When the economy turns around, and we all believe it will, and jobs become more available, employers will have to ask themselves what they have done to ensure that the people who are important to their success are going to stay with them, that they are engaged, that they are motivated and that they are committed to the organization,” says Thomas Grass, senior consultant, Towers Watson. “Because what they don’t want is to be in a position where they have their employees right now, but as soon as things turn around, those employees say, ‘Good, I made it through that. Now let me go and find a good job.’”

The process of retaining those high-performance and high-potential employees has already started, with your top workers likely influenced by how you handled the fallout from the shock of the recession. If you handled layoffs with dignity, communicating why decisions were made and what they meant for the future, that helped — so did any revenue investment in those top workers, from compensation and bonuses to training programs and seminars. And if you talked with those top workers and relayed to them where they fit in the vision for your business, that would have been about the best thing you could have done.

“Communication is really a key to getting employee commitment and engagement,” Grass says. The businesses that achieve the most internal success with employees are those who “really work hard with communicating with employees, that talk with employees about where we’re headed, why we’re headed there, what decisions we’re making, how we’re going about getting over these hurdles, what’s our long-term view, on and on and on. What employers can be doing is working real hard with employees in terms of what they’re doing, what they’re trying to accomplish.”

Develop and share your plan

In addition to identifying and targeting your high-performance and high-potential employees to prepare for a future of healthy economics, you should develop a plan to address possible human resources challenges and plot the path you want your business to follow during the next couple of years.

“With all of the downsizing, when the economy ramps up again, will businesses be in a position to step up, to be ready and to be proactive when they need to be?” Rose says. “The firms we’re working with that are doing this well are trying to get ahead of their competitors, thinking about innovative ways to manage that pipeline, so that they don’t lose their staff and are ready to ramp up when they need to be.”

Chief among your objectives for that plan should be the development of a balance between continued cost reduction and simultaneously positioning for growth. During the last year, many companies have aimed to manage and contain all costs related to human resources and human capital because they have been trying to do little more than survive. Survival is important, but it is also important to not damage the viability of your business in the big picture, well beyond these few years and even beyond this new decade.

Once you develop your plan, share it with your employees, especially your key employees. That advice might sound obvious, but experts say that too many business owners fail to relay information to their managers and their employees. And even in a good environment, employees who only hear about meetings behind closed doors and have no idea what is happening — and what is about to happen — will often speculate incorrectly, either causing additional stress or inadvertently spreading incorrect information. In short, you can still have those meetings behind closed doors, just be sure to share what is said on the other side of the oak.

Communication is a key to developing a successful human resources department, either internally or by bringing in an outside firm. You want your employees aware of what is happening in your business, and you want them to be engaged.

“I want someone who knows where we’re going as an organization and who knows how they’re helping us get there,” Grass says. “That’s engagement.”

Tuesday, 26 October 2010 20:00

Center of attention

There are so many stereotypes about attorneys. Some of them are true, of course, but most of them are not.

Some attorneys are, for instance, sharp dressers, every bit the models for the top designers that you might expect, with perfect hair and a packed brain to match, but not all attorneys look like they belong on the cast of some courtroom drama that moves through its story arc each week in 44 minutes flat.

Some attorneys are fast and slick and out to make a quick dollar — or a quick couple of thousand dollars — but not many.

And, yes, some attorneys are blindingly intelligent and able to rattle off laws, statutes, regulations and court cases long since decided as if it was their job because, well, it is.

Your attorney is not a heart surgeon, a rocket scientist or a neurophysicist. They might as well be, though, to handle the level of work and degree of difficulty required during the last couple of years. After all, you have probably rarely called your attorney for something casual during these strapped economic times. Calls always seem to be reserved for something expensive and stressful that has to be handled correctly.

“Managing the tough times is always harder,” says Vincent J. Garozzo, principal, Greensfelder, Hemker & Gale PC. “I think businesses are trying to use their legal counsel in a more efficient way. They don’t want the simple problems to have to go to the business lawyer for resolution. They think they’re able to handle those themselves.

“What you’re seeing is that, when a business owner calls us, the problem has either escalated to the point where it’s in need of damage control or it’s so mind-numbingly complex that the business owner doesn’t know where to start.”

You might be in the midst of one of those swelling problems at the moment. A majority of attorneys say this is an opportune time to think, then think again, about your business strategy and to examine the economic landscape, because there are opportunities available right now, even in slower industries, that will not be available for long. If you can afford to, this is the time to move. And if you have a good attorney on your team of advisers — no stereotypes here — you already have about as good an ally as possible to help steer you forward.

Remember the past

The last couple of years have provided you with a new set of challenges. Perhaps you needed to lay off a percentage of your employees, close a branch of your business or just do more every day with an already overworked, if not smaller, staff. Odds are your attorney was with you during many of those moments — because even if you didn’t work more with your attorney in order to save legal fees, you probably called and talked more often.

That is, at least, what many attorneys are saying.

“Our relationships have been more related to general corporate counseling, specific to litigation needs, and in the areas of general business and litigation, it has probably experienced a bit of an uptick just because there have been things that needed to be addressed,” says Austin L. Hirsch, partner, Reed Smith. “We are viewed as a business adviser as opposed to someone who is providing a task, and these are the times when that really counts, these are the times when it really shows whether you have a relationship.”

The amount of work and communication required of some attorneys will also likely increase through the rest of 2010 and during the early months of 2011.

“I think a lot of companies are really focused on cleaning their own house in anticipation that when market conditions improve, they’re going to be in a better position either to profit or potentially sell themselves through a liquidity event,” Garozzo says. “So they’re doing what I call an internal audit — looking at all their contracts, their personnel files, their financial statements — because that makes the business more valuable.”

And that makes for more work for attorneys. Until then, the existing bump in bankruptcy, commercial litigation and corporate reorganization — sure signs of an economy that has seen better days, months and years — will likely continue.

And valuations are still historically low — though not as far in the cellar as they were during much of 2009 — which means now is still a good time to examine and consider estate and succession planning. What will your business do after you’re out of the top spot? Who will own the business? Who will be in charge? And were you able to take advantage of a down market to pass it along at a better rate?

There are plenty of other things you should consider with your attorney before the economy starts to bump up a little more.

Look ahead and plan

Did you manage to obtain any sort of credit during the last two years? If so, congratulations. That is quite an accomplishment. If not, no worries, because not many other companies did either. That said, some good news for the coming year is that credit is expected to be more available in 2011 than it has been in several years.

More credit is just one of the major points of interest for attorneys during the next six to 12 months. Because of those increased lines of credit, much of the next year will likely include a focus on mergers and acquisitions. Some attorneys say that M&A activity increased during the first half of 2010 before slowing some during the last four months, but no matter your city or region — and St. Louis is expected to be no different — M&A activity will likely be prevalent by the time the calendar turns.

“In the last couple of years, there has been less merger and acquisition activity on both sides, for buyers and sellers, particularly in the upper middle market,” Hirsch says. “But certainly, if the economy does pull itself out — and we’re starting to see some of our more successful clients step out because they’ve been more profitable during this time — more businesses will start to think strategically about opportunities in the marketplace.

“If that trend continues, there will be more M&A activity in the course of the next year.”

Alternative fee structures and arrangements — or at least discussions about them — are also expected to increase in 2011. Some firms have provided them for years as an option, others have added them only during the last couple of years as clients asked for them, but there does seem to be a split between clients who are more open to alternative fee structures and those who hold tight to the hourly rate.

Even if you have no interest in alternative fee structures and will renew your proverbial subscription to the hourly rate, at least starting a conversation with your attorney or legal team about some other option might not be a bad idea, especially with the economy and cash flow still in flux.

“We hear and see in the news a lot about how clients want to get away from the billable hours and move to alternative fee structures,” Garozzo says. “But when I sit down with a client and try to discuss an alternative fee structure, 95 percent of the time, we wind up back at the billable hour. My astute business clients like the billable hour rate for business law services. I have not had one come up to me and say, ‘Would you consider an alternative fee structure?’ Now, in litigation, that’s happening every day.”

Ensure your value

How can you be certain that you will receive as much value as possible from your partnership with your attorney? Communication, of course — the seemingly simple center of every conversation and great relationship remains the top priority. If you do not talk regul arly with your attorney or if you rarely, if ever, ask questions or send recent documents and forms, you need to communicate more.

Most attorneys say they like to talk with clients at least once per month, just a casual meeting for breakfast, lunch or coffee to sit down and talk about you and your company, especially if they work with you more as an adviser than as an auditor — though every relationship is different.

“I like to use the term ‘staying sticky’ with your clients,” Hirsch says. “I think it is something in which you try to continue to meet with the clients regularly to go over strategy. Now, you have to tailor your relationship. It’s hard to say that every client relationship is the same, but clearly, there are benefits that we can provide by going out to lunch, by going out to a client’s place of business, by sending articles of interest that will stir and stimulate thinking about different tactics or approaches for their business or their customers.”

If you are not pleased with the quality or the nature of the relationship you have with your attorney, for any number of reasons, the time to consider a move might be now. Rates are historically low, and this is perhaps the best buyer’s market of any of our lifetimes.

“If you don’t have qualified corporate counsel — and you’ll know if you have it by dealing with them — you need to change out of that right away,” Garozzo says. “If you’re working with lawyers now who are narrow in scope and who can’t advise on what I call multidiscipline issue — tax, accounting, corporate — you probably need to move on in any economy, because your dollars are too precious.”

You might want to consider a change if you have just outgrown your firm and need a firm with a larger regional, national or international footprint.

You might also consider asking your attorney about any changes in rules and regulations for 2011 and beyond. Asking whether the firm offers any corporate education that you and your employees might be able to put to use would also be a good idea. And asking for a review of your corporate structure, especially for possible inefficiencies, would not be a bad use of time or money. What are your employees earning? What are your executives earning? What else are you paying for? And is it really worth the cost?

“A good business lawyer will work with his client to keep him ahead of the curve, knowing that the economy changes on supply and demand and that how a business reacts to that will affect the bottom line,” Garozzo says. “And staying ahead of the curve is the goal.”

Because in a world and an industry filled with so much change during the last couple of years, something needs to stay the same.

Tuesday, 26 October 2010 20:00

Center of attention

There are so many stereotypes about attorneys. Some of them are true, of course, but most of them are not.

Some attorneys are, for instance, sharp dressers, every bit the models for the top designers that you might expect, with perfect hair and a packed brain to match, but not all attorneys look like they belong on the cast of some courtroom drama that moves through its story arc each week in 44 minutes flat.

Some attorneys are fast and slick and out to make a quick dollar — or a quick couple of thousand dollars — but not many.

And, yes, some attorneys are blindingly intelligent and able to rattle off laws, statutes, regulations and court cases long since decided as if it was their job because, well, it is.

Your attorney is not a heart surgeon, a rocket scientist or a neurophysicist. They might as well be, though, to handle the level of work and degree of difficulty required during the last couple of years. After all, you have probably rarely called your attorney for something casual during these strapped economic times. Calls always seem to be reserved for something expensive and stressful that has to be handled correctly.

“I try to get my clients, particularly those that don’t have an in-house legal staff, to look at lawyers as part of the management team,” says Steven N. Haas, member and vice chairman of the corporate practice group, Cozen O’Connor. “Legal issues pervade so many decisions and a lawyer who has experience in those areas has a perspective that could be very constructive for clients.

“A lawyer can’t be effective counsel without your information, and that means there has to be constant communication.”

Constant communication. Do you have that with your attorney? If not, you might be in the midst of a missed opportunity. A majority of attorneys say this is an opportune time to think, then think again, about your business strategy and to examine the economic landscape, because there are opportunities available right now, even in slower industries, that will not be available for long. If you can afford to, this is the time to move. And if you have a good attorney on your team of advisers — no stereotypes here — you already have about as good an ally as possible to help steer you forward.

Remember the past

The last couple of years have provided you with a new set of challenges. Perhaps you needed to lay off a percentage of your employees, close a branch of your business or just do more every day with an already overworked, if not smaller, staff. Odds are your attorney was with you during many of those moments — because even if you didn’t work more with your attorney in order to save legal fees, you probably called and talked more often.

That is, at least, what many attorneys are saying.

“It does depend on the nature of the client,” says Paul J. Jaskot, partner, Reed Smith. “We have two significant focuses here — the life science health industry and the financial industry — and each of those categories of clients has been reaching out to us more, particularly as it relates to how regulatory reform is going to impact their businesses. That work has increased. Another area that has increased is the workout-type work — whether it’s in real estate or general commercial loans — because there’s such a high volume of that type of work.”

The amount of work and communication required of some attorneys will also likely increase through the rest of 2010 and during the early months of 2011.

“There probably is now a better feeling that things are turning around,” Jaskot says. “It’s not quite there, but I do know we’re getting more phone calls, particularly about transactional work and putting in proposals for work. I would say that, if you asked me two or three months ago, I might have given a different answer, but now, for 2011, I’m cautiously optimistic that the increased usage is going to inch up.”

Until then, the existing bump in bankruptcy, commercial litigation and corporate reorganization — sure signs of an economy that has seen better days, months and years — will likely continue.

And valuations are still historically low — though not as far in the cellar as they were during much of 2009 — which means now is still a good time to examine and consider estate and succession planning. What will your business do after you’re out of the top spot? Who will own the business? Who will be in charge? And were you able to take advantage of a down market to pass it along at a better rate?

There are plenty of other things you should consider with your attorney before the economy starts to bump up a little more.

Look ahead and plan

Did you manage to obtain any sort of credit during the last two years? If so, congratulations. That is quite an accomplishment. If not, no worries, because not many other companies did either. That said, some good news for the coming year is that credit is expected to be more available in 2011 than it has been in several years.

More credit is just one of the major points of interest for attorneys during the next six to 12 months. Because of those increased lines of credit, much of the next year will likely include a focus on mergers and acquisitions. Some attorneys say that M&A activity increased during the first half of 2010 before slowing some during the last four months, but no matter your city or region — and Philadelphia and Eastern Pennsylvania are expected to be no different — M&A activity will likely be prevalent by the time the calendar turns.

“On the business side, we’re seeing the strengthening of M&A activity, and we’re seeing public offerings for the first time,” Haas says. “Clearly, there is headway being made in the financial markets. There’s a different outlook, and companies are having to plan for that.”

Alternative fee structures and arrangements — or at least discussions about them — are also expected to increase in 2011. Some firms have provided them for years as an option, others have added them only during the last couple of years as clients asked for them, but there does seem to be a split between clients who are more open to alternative fee structures and those who hold tight to the hourly rate.

Even if you have no interest in alternative fee structures and will renew your proverbial subscription to the hourly rate, at least starting a conversation with your attorney or legal team about some other option might not be a bad idea, especially with the economy and cash flow still in flux.

“I think alternative fee structures are becoming more prevalent nationally,” Haas says. “There have been plenty of articles written about it, and I think people are looking more at them and clients are demanding them. There are a number of clients the last couple of years who have arranged freezes in rates. There’s no question that there is downward pressure on increasing rates, and there are all kinds of creative solutions.

Ensure your value

How can you be certain that you will receive as much value as possible from your partnership with your attorney? Communication, of course — the seemingly simple center of every conversation and great relationship remains the top priority. If you do not talk regularly with your attorney or if you rarely, if ever, ask questions or send recent documents and forms, you need to communicate more.

Most attorneys say they like to talk with clients at least once per month, just a casual meeting for breakfast, lunch or coffee to sit down and talk about you and your company, especially if they work with you more as an adviser than as an auditor — though every relationship is different.

“It’s all relative, but if you haven’t heard from a client in weeks and you call them and you hit them with charges, are you being fair to the people you care about the most?” Jaskot says. “It goes both ways. Are they being fair to us? Are we being fair to them? It’s a symbiotic relationship. My belief is that more is better. The best relationships are those where you’re in sync with each other.”

And if you are not pleased with the quality or the nature of the relationship you have with your attorney, for any of a number of reasons, the time to consider a move might be now. Rates are historically low and this is perhaps the best buyer’s market of any of our lifetimes.

“If a client has a relationship with its law firm where they hesitate to pick up the phone because they’re going to be billed for the 10 minutes it takes to answer a quick question, that’s not the type of relationship we want with our clients,” Jaskot says. “If they hesitate to pick up the phone, it’s going to end up costing them more money.”

You might want to consider a change if you have just outgrown your firm and need a firm with a larger regional, national or international footprint.

You might also consider asking your attorney about any changes in rules and regulations for 2011 and beyond. Asking whether the firm offers any corporate education that you and your employees might be able to put to use would also be a good idea. And asking for a review of your corporate structure, especially for possible inefficiencies, would not be a bad use of time or money. What are your employees earning? What are your executives earning? What else are you paying for? And is it really worth the cost?

“Lawyers bring a unique perspective to business issues,” Haas says. “For a lawyer who has many years of experience, that would provide the client with that experience they wouldn’t otherwise have on their own. It’s important for clients to appreciate what lawyers can help them do for their business, and it’s important for lawyers to listen.

“If clients use their lawyers as part of the management process and lawyers do their job in listening and keeping in touch with their clients, then there are opportunities for both sides to maximize the benefits of having a relationship between a lawyer and a client. That, to me, is where the services really are.”

Because in a world and an industry filled with so much change during the last couple of years, something needs to stay the same.

Tuesday, 26 October 2010 20:00

Center of attention

There are so many stereotypes about attorneys. Some of them are true, of course, but most of them are not.

Some attorneys are, for instance, sharp dressers, every bit the models for the top designers that you might expect, with perfect hair and a packed brain to match, but not all attorneys look like they belong on the cast of some courtroom drama that moves through its story arc each week in 44 minutes flat.

Some attorneys are fast and slick and out to make a quick dollar — or a quick couple of thousand dollars — but not many.

And, yes, some attorneys are blindingly intelligent and able to rattle off laws, statutes, regulations and court cases long since decided as if it was their job because, well, it is.

Your attorney is not a heart surgeon, a rocket scientist or a neurophysicist. They might as well be, though, to handle the level of work and degree of difficulty required during the last couple of years. After all, you have probably rarely called your attorney for something casual during these strapped economic times. Calls always seem to be reserved for something expensive and stressful that has to be handled correctly.

“We have seen a lot of companies that have tried to not use their lawyers as much because they don’t want to incur the fee,” says Susan Zaunbrecher, partner, chair of the corporate department and chair of the financial institutions practice group, Dinsmore & Shohl LLP. “Now, for some businesses, that will be an issue, because at some point, it builds up. At some point, it would have been less of a problem than it is now.

You might be in the midst of one of those swelling problems at the moment. A majority of attorneys say this is an opportune time to think, then think again, about your business strategy and to examine the economic landscape, because there are opportunities available right now, even in slower industries, that will not be available for long. If you can afford to, this is the time to move. And if you have a good attorney on your team of advisers — no stereotypes here — you already have about as good an ally as possible to help steer you forward.

Remember the past

The last couple of years have provided you with a new set of challenges. Perhaps you needed to lay off a percentage of your employees, close a branch of your business or just do more every day with an already overworked, if not smaller, staff. Odds are your attorney was with you during many of those moments — because even if you didn’t work more with your attorney in order to save legal fees, you probably called and talked more often.

That is, at least, what many attorneys are saying.

“I think that businesses — particularly family-owned and middle-sized businesses — are much less likely to pick up the phone and spend 15 or 20 minutes kicking around whatever problem came up today,” says Alan S. Brown, member, Frost Brown Todd LLC. “I have certainly seen clients who fall into that category become more cost-conscious about picking up their phones and calling their lawyers.

“The level of problem that causes good businesspeople to pick up the phone, it has to be much more acute than it was three years ago.”

The amount of work and communication required of some attorneys will also likely increase through the remainder of 2010 and during the early months of 2011.

“I do think we’re going to see more use of lawyers in some industries, especially the regulated industries — financial institutions, health care, insurance companies,” Zaunbrecher says. “They are so heavily regulated and the government is regulating them even more stringently today, that I think you’ll definitely see those industries using their lawyers more because they have to.

“As we start to pull out of this recession, you’ll also see some other industries starting to go back to their lawyers and relying on them more for the assistance they used to get.”

Until then, the existing bump in bankruptcy, commercial litigation and corporate reorganization — sure signs of an economy that has seen better days, months and years — will likely continue.

And valuations are still historically low — though not as far in the cellar as they were during much of 2009 — which means now is still a good time to examine and consider estate and succession planning. What will your business do after you’re out of the top spot? Who will own the business? Who will be in charge? And were you able to take advantage of a down market to pass it along at a better rate?

There are plenty of other things you should consider with your attorney before the economy starts to bump up a little more.

Look ahead and plan

Did you manage to obtain any sort of credit during the last two years? If so, congratulations. That is quite an accomplishment. If not, no worries, because not many other companies did either. That said, some good news for the coming year is that credit is expected to be more available in 2011 than it has been in several years.

More credit is just one of the major points of interest for attorneys during the next six to 12 months. Because of those increased lines of credit, much of the next year will likely include a focus on mergers and acquisitions. Some attorneys say that M&A activity increased during the first half of 2010 before slowing some during the last four months, but no matter your city or region — and Indianapolis is expected to be no different — M&A activity will likely be prevalent by the time the calendar turns.“

“This is a period of opportunity,” Brown says. “If someone is anticipating a growth mode or they’re in a space that doesn’t fit them, this is an awfully good time to consider real estate options, both from a purchase and a lease standpoint, because there is plenty of space available, at least here in Indianapolis. This is a great time to do it, but it’s not going to be that way forever. If you have the need and the wherewithal, it’s an awfully good time to investigate your real estate options.”

Alternative fee structures and arrangements — or at least discussions about them — are also expected to increase in 2011. Some firms have provided them for years as an option, others have added them only during the last couple of years as clients asked for them, but there does seem to be a split between clients who are more open to alternative fee structures and those who hold tight to the hourly rate.

Even if you have no interest in alternative fee structures and will renew your proverbial subscription to the hourly rate, at least starting a conversation with your attorney or legal team about some other option might not be a bad idea, especially with the economy and cash flow still in flux.

“Every business should be making a pretty thorough assessment of where they are and where this recession has left them in the market,” Brown says. “All sound businesses should be thinking about the round of growth that, I think, is coming up.”

“What’s happened to most of my clients around Indianapolis is that as growth, sales and business activity have slowed, they have turned inward and looked at themselves internally. The advice I give them is to get their house in the best possible order — operationally, administratively — and be prepared to be a lean and mean participant in the growth that’s on its way. This is a period of time when you can do things you can’t in periods of growth. Tend to that and be ready to roar when the time comes.”

Ensure your value

How can you be certain that you will receive as much value as possible from your partnership with your attorney? Communication, of course — the seemingly simple center of every conversation and great relationship remains the top priority. If you do not talk regularly with your attorney or if you rarely, if ever, ask questions or send recent documents and forms, you need to communicate more.

Most attorneys say they like to talk with clients at least once per month, just a casual meeting for breakfast, lunch or coffee to sit down and talk about you and your company, especially if they work with you more as an adviser than as an auditor — though every relationship is different.

“In good times, I have had contact with my major contacts quarterly and as often as monthly, just on a how-are-things-going kind of basis,” Brown says. “That type of contact has fallen off with the cost-consciousness.”

And if you are not pleased with the quality or the nature of the relationship you have with your attorney, for any number of reasons, the time to consider a move might be now. Rates are historically low, and this is perhaps the best buyer’s market of any of our lifetimes.

“There are a lot of lawyers who don’t have as much work as they did two or three years ago,” Brown says. “That means it’s a buyer’s market out there.”

You might want to consider a change if you have just outgrown your firm and need a firm with a larger regional, national or international footprint.

You might also consider asking your attorney about any changes in rules and regulations for 2011 and beyond. Asking whether the firm offers any corporate education that you and your employees might be able to put to use would also be a good idea. And asking for a review of your corporate structure, especially for possible inefficiencies, would not be a bad use of time or money. What are your employees earning? What are your executives earning? What else are you paying for? And is it really worth the cost?

“I would urge people to emerge from this in good shape and with all of their institutional practices and contracts in order,” Brown says. “Make sure all risk management pieces are covered, because those things tend to fall by the wayside when commerce picks up, because you do get too consumed by sales and growth and revenue.

“This is the right time to be thinking about those issues and to get your house in order.”

Because in a world and an industry filled with so much change during the last couple of years, something needs to stay the same.

Tuesday, 26 October 2010 20:00

Center of attention

There are so many stereotypes about attorneys. Some of them are true, of course, but most of them are not.

Some attorneys are, for instance, sharp dressers, every bit the models for the top designers that you might expect, with perfect hair and a packed brain to match, but not all attorneys look like they belong on the cast of some courtroom drama that moves through its story arc each week in 44 minutes flat.

Some attorneys are fast and slick and out to make a quick dollar — or a quick couple of thousand dollars — but not many.

And, yes, some attorneys are blindingly intelligent and able to rattle off laws, statutes, regulations and court cases long since decided as if it was their job because, well, it is.

Your attorney is not a heart surgeon, a rocket scientist or a neurophysicist. They might as well be, though, to handle the level of work and degree of difficulty required during the last couple of years. After all, you have probably rarely called your attorney for something casual during these strapped economic times. Calls always seem to be reserved for something expensive and stressful that has to be handled correctly.

“We have seen a lot of companies that have tried to not use their lawyers as much because they don’t want to incur the fee,” says Susan Zaunbrecher, partner, chair of the corporate department and chair of the financial institutions practice group, Dinsmore & Shohl LLP. “Now, for some businesses, that will be an issue, because at some point, it builds up. At some point, it would have been less of a problem than it is now.”

You might be in the midst of one of those swelling problems at the moment. A majority of attorneys say this is an opportune time to think, then think again, about your business strategy and to examine the economic landscape, because there are opportunities available right now, even in slower industries, that will not be available for long. If you can afford to, this is the time to move. And if you have a good attorney on your team of advisers — no stereotypes here — you already have about as good an ally as possible to help steer you forward.

Remember the past

The last couple of years have provided you with a new set of challenges. Perhaps you needed to lay off a percentage of your employees, close a branch of your business or just do more every day with an already overworked, if not smaller, staff. Odds are your attorney was with you during many of those moments — because even if you didn’t work more with your attorney in order to save legal fees, you probably called and talked more often.

That is, at least, what many attorneys are saying.

“Our relationships have been more related to general corporate counseling, specific to litigation needs, and in the areas of general business and litigation, it has probably experienced a bit of an uptick just because there have been things that needed to be addressed,” says Austin L. Hirsch, partner, Reed Smith. “We are viewed a business adviser, as opposed to someone who is providing a task, and these are the times when that really counts, these are the times when it really shows whether you have a relationship.”

The amount of work and communication required of some attorneys will also likely increase through 2010 and during the early months of 2011.

“I do think we’re going to see more use of lawyers in some industries, especially the regulated industries — financial institutions, health care, insurance companies,” Zaunbrecher says. “They are so heavily regulated and the government is regulating them even more stringently today, that I think you’ll definitely see those industries using their lawyers more because they have to.

“As we start to pull out of this recession, you’ll also see some other industries starting to go back to their lawyers and relying on them more for the assistance they used to get.”

Until then, the existing bump in bankruptcy, commercial litigation and corporate reorganization — sure signs of an economy that has seen better days, months and years — will likely continue.

And valuations are still historically low — though not as far in the cellar as they were during much of 2009 — which means now is still a good time to examine and consider estate and succession planning. What will your business do after you’re out of the top spot? Who will own the business? Who will be in charge? And were you able to take advantage of a down market to pass it along at a better rate?

There are plenty of other things you should consider with your attorney before the economy starts to bump up a little more.

Look ahead and plan

Did you manage to obtain any sort of credit during the last two years? If so, congratulations. That is quite an accomplishment. If not, no worries, because not many other companies did either. That said, some good news for the coming year is that credit is expected to be more available in 2011 than it has been in several years.

More credit is just one of the major points of interest for attorneys during the next six to 12 months. Because of those increased lines of credit, much of the next year will likely include a focus on mergers and acquisitions. Some attorneys say that M&A activity increased during the first half of 2010 before slowing some during the last four months, but no matter your city or region — though Detroit and much of Michigan are expected to lag some behind much of the rest of the country — M&A activity will likely be prevalent by the time the calendar turns.

“In the last couple of years, there has been less merger and acquisition activity on both sides, for buyers and sellers, particularly in the upper middle market,” Hirsch says. “But certainly, if the economy does pull itself out — and we’re starting to see some of our more successful clients step out because they’ve been more profitable during this time — more businesses will start to think strategically about opportunities in the marketplace.

“If that trend continues, there will be more M&A activity in the course of the next year.”

Alternative fee structures and arrangements — or at least discussions about them — are also expected to increase in 2011. Some firms have provided them for years as an option, others have added them only during the last couple of years as clients asked for them, but there does seem to be a split between clients who are more open to alternative fee structures and those who hold tight to the hourly rate.

Even if you have no interest in alternative fee structures and will renew your proverbial subscription to the hourly rate, at least starting a conversation with your attorney or legal team about some other option might not be a bad idea, especially with the economy and cash flow still in flux.

“There are specific advantages we can discuss in terms of alternatives if the business is sputtering,” Hirsch says. “We can try to give advice to the client about certain renegotiations or techniques they should consider. We can certainly tailor those discussions, depending on the client’s need. It might help them get through whatever challenges are out there.”

Ensure your value

How can you be certain that you will receive as much value as possible from your partnership with your attorney? Communication, of course — the seemingly simple center of every conversation and great relationship remains the top priority. If you do not talk regularly with your attorney or if you rarely, if ever, ask questions or send recent documents and forms, you need to communicate more.

Most attorneys say they like to talk with clients at least once per month, just a casual meeting for breakfast, lunch or coffee to sit down and talk about you and your company, especially if they work with you more as an adviser than as an auditor — though every relationship is different.

“I like to use the term ‘staying sticky’ with your clients,” Hirsch says. “I think it is something in which you try to continue to meet with the clients regularly to go over strategy. Now, you have to tailor your relationship. It’s hard to say that every client relationship is the same, but clearly, there are benefits that we can provide by going out to lunch, by going out to a client’s place of business, by sending articles of interest that will stir and stimulate thinking about different tactics or approaches for their business or their customers.”

And if you are not pleased with the quality or the nature of the relationship you have with your attorney, for any number of reasons, the time to consider a move might be now. Rates are historically low, and this is perhaps the best buyer’s market of any of our lifetimes.

“There are a lot of lawyers who don’t have as much work as they did two or three years ago,” says Alan S. Brown, member, Frost Brown Todd LLC. “That means it’s a buyer’s market out there.”

You might want to consider a change if you have just outgrown your firm and need a firm with a larger regional, national or international footprint.

You might also consider asking your attorney about any changes in rules and regulations for 2011 and beyond. Asking whether the firm offers any corporate education that you and your employees might be able to put to use would also be a good idea. And asking for a review of your corporate structure, especially for possible inefficiencies, would not be a bad use of time or money. What are your employees earning? What are your executives earning? What else are you paying for? And is it really worth the cost?

“I would urge people to emerge from this in good shape and with all of their institutional practices and contracts in order,” Brown says. “Make sure all risk management pieces are covered, because those things tend to fall by the wayside when commerce picks up, because you do get too consumed by sales and growth and revenue.

“This is the right time to be thinking about those issues and to get your house in order.”

Because in a world and an industry filled with so much change during the last couple of years, something needs to stay the same.

Tuesday, 26 October 2010 20:00

Center of attention

There are so many stereotypes about attorneys. Some of them are true, of course, but most of them are not.

For instance, your attorney is not a heart surgeon, a rocket scientist or a neurophysicist. They might as well be, though, to handle the level of work and degree of difficulty required during the last couple of years. After all, you have probably rarely called your attorney for something casual during these strapped economic times. Calls always seem to be reserved for something expensive and stressful that has to be handled correctly.

“There has been a true shift in how clients use and compensate lawyers,” says George C. Gaskin, member, Taylor English Duma LLP. “I would like to think the days of lawyers being paid $700 or $800 an hour to get work done is going to change. I think that’s what the world is coming to — companies are going to push back on paying for real expensive lawyers; they’re going to push back on paying for very young lawyers.

“People will want to use those resources differently.”

You might be doing exactly that right now. A majority of attorneys say this is an opportune time to think — then think again — about your business strategy and to examine the economic landscape, because there are opportunities available right now, even in slower industries, that will not be available for long. If you can afford to, this is the time to move. And if you have a good attorney on your team of advisers — no stereotypes here — you already have about as good an ally as possible to help steer you forward.

Remember the past

The last couple of years have provided you with a new set of challenges. Perhaps you needed to lay off a percentage of your employees, close a branch of your business or just do more every day with an already overworked, if not smaller, staff. Odds are your attorney was with you during many of those moments — because even if you didn’t work more with your attorney in order to save legal fees, you probably called and talked more often.

That is, at least, what many attorneys are saying.

“Clients have used their attorneys less often, and often to their detriment, which is why clients should communicate on a regular basis with their attorneys” says Linda A. Klein, managing shareholder, Georgia offices, Baker, Donelson, Bearman, Caldwell & Berkowitz PC. “Law firms have reacted by creating specialized industry service teams to assist clients in reacting quickly to their industry-specific changes.”

The amount of work and communication required of some attorneys will also likely increase through 2010 and during at least the early months of 2011.

Until then, the existing bump in bankruptcy, commercial litigation and corporate reorganization — sure signs of an economy that has seen better days, months and years — will likely continue.

And valuations are still historically low — though not as far in the cellar as they were during much of 2009 — which means now is still a good time to examine and consider estate and succession planning. What will your business do after you’re out of the top spot? Who will own the business? Who will be in charge? And were you able to take advantage of a down market to pass it along at a better rate?

There are plenty of other things you should consider with your attorney before the economy starts to bump up a little more.

Look ahead and plan

Did you manage to obtain any sort of credit during the last two years? If so, congratulations. That’s quite an accomplishment. If not, no worries, because not many other companies did either. That said, some good news for the coming year is that credit is expected to be more available in 2011 than it has been in several years.

More credit is just one of the major points of interest for attorneys during the next six to 12 months. Because of those increased lines of credit, much of the next year will likely include a focus on mergers and acquisitions. Some attorneys say that M&A activity increased during the first half of 2010 before slowing some during the last four months, but no matter your city or region — and Atlanta and the rest of Georgia are expected to be no different — M&A activity will likely be prevalent by the time the calendar turns.

“M&A dried up for a number of years for the bigger firms, simply because there was no money to do financing,” Gaskin says. “But I do expect M&A to come back in 2011, because I keep hearing there’s a lot of money out there in chasing deals, and I have to believe that, because of the economy, you have some people who are positioned to be sold for a nice price, perhaps even for a premium. Activity is [already] picking up.”

Alternative fee structures and arrangements — or at least discussions about them — are also expected to increase in 2011. Some firms have provided them for years as an option, while others have added them only during the last couple of years as clients asked for them, but there does seem to be a split between clients who are more open to alternative fee structures and those who hold tight to the hourly rate.

Ensure your value

How can you be certain that you will receive as much value as possible from your partnership with your attorney? Communication, of course — the seemingly simple center of every conversation and great relationship remains the top priority. If you do not talk regularly with your attorney or if you rarely, if ever, ask questions or send recent documents and forms, you need to communicate more.

“You need to be touching base with each client at least once a month, just to see what’s going on,” Gaskin says. “I do have a handful of clients that generate a lot of work, and I check in with them at least that often, sometimes as often as a couple of times a day.”

And if you are not pleased with the quality or the nature of the relationship that you have with your attorney, for any of a number of reasons, the time to consider a move might be now. Rates are historically low, and this is perhaps the best buyer’s market of any of our lifetimes.

You might also consider asking your attorney about any changes in rules and regulations for 2011 and beyond. Asking whether the firm offers any corporate education that you and your employees might be able to put to use would also be a good idea. And asking for a review of your corporate structure, especially for possible inefficiencies, would not be a bad use of time or money. What are your employees earning? What are your executives earning? What else are you paying for? And is it really worth the cost?

“You have to try to run your business and grow your business,” Gaskin says. “You have to think about taking the right steps and doing the right things and making sure that everything in the back office is running the way it should.”

In September 2008, the global economy was on the brink of its historic collapse, about to slip from the precipice to the abyss. In September 2009, the financial challenges posed by that collapse ranked as the overwhelming top risk for businesses, according to several national surveys. And now, in September 2010, well, the inevitable recovery appears to have started and some sense of optimism has seeped back, but the risk that swirled just last year remains — heavy, ominous — for businesses large and small, for businesses like yours.

If you do not have a thorough risk management and business insurance plan in place now, you should start to develop one as soon as possible. After all, recovery or not, there remains a great deal of uncertainty about the economy, and you should pay attention to and manage your risk. If you do not have a relationship with a risk management firm — or at least have an internal executive in charge of that department and those decisions — you need to pick up the phone now.

Because just as the economy has changed, so, too, has risk management.

“Over the last decade, risk management has really been maturing toward an enterprise or strategic approach to identifying, analyzing and managing risks,” says Deborah Luthi, vice president of the board of directors, Risk and Insurance Management Society Inc. “This approach really targets key risks, both insurable and uninsurable business risks, that most directly affect organizational performance.”

Those risks can include things like workers’ compensation, property insurance and general liability.

“The financial meltdown and the economic slowdown have really brought a heightened duty of care, disclosure and discussion regarding risk to the board level of organizations,” Luthi says. “So I think putting a strategic risk management process in place provides a framework for the board to consider risk and reward for balancing profit and risk against accomplishing the organizational mission.”

Plan and move forward

If you do not work with a risk management firm now, the first question is, of course, “Why not?” The second question is something along the lines of, “Do you really need to work with an external firm?”

Especially today, with revenue and profits just inching up — if they are increasing at all — and every dollar a precious commodity, would you really benefit more from bringing in more experts from the outside rather than turning to your own internal experts?

“You can keep this process relatively simple, and organizations that are farther down the road in terms of enterprise or strategic risk management have found that you can sometimes get wound up in the process and not get it linked into the planning,” Luthi says. “The response that we hear most often is, ‘Keep it simple and designed and customized for your organization.’ I don’t think any organization that practices risk management uses a cookie cutter. Everyone needs to customize it to their own organization.”

You might delegate the responsibilities to a team of executive leaders, with your chief financial officer or chief risk officer at the helm. As always, keep in mind that so many of your employees are already strapped for time each day and might be overwhelmed by additional tasks — especially one so important and intrinsic to the future of your business.

If you do work with an external firm, build a relationship with it as you would with any other business adviser. The firm is on or near the same level as your accountant, your attorney and your banker. The longer and more closely you work with the firm, the more your risk management will actually take effect in your business plans.

“We need to make sure we understand what their key business objectives are,” says Regina Spratt, U.S. national brokerage leader, Marsh Inc. “How are they measuring themselves? Is it growth in the near term? Is it cost containment? We need that underlying understanding of where they are today, the challenges they face, where they want to go. The next step is how to design a risk management or insurance program around that.

“Those two sort of key pieces of discussion really drive what comes next for that company. It’s about building the structure internally, and then, with the support of brokers or insurance carriers, building it in terms of other resources that can help meet their business challenges and those risks that have been identified.”

No matter which route you choose, you will likely want to listen to experts who recommend you chart and graph — yes, graph, just like back in geometry and physics — a framework to use in order to reach your decisions. Chart both insurable and uninsurable risks — your uninsurable is your brand and your reputation — in order to be able to make decisions and define your risks.

“It helps to get it down, so you can make some decisions,” Spratt says. “It’s also a tool businesses can use, in the years going forward, to take a look at their risk profile. They need to understand the profile of their business and their risk management. From there, they can design an insurance and risk management program that helps them today and as they attempt to grow in the future.”

Invest and remain active

At many businesses, risk management and business insurance were in that first batch of budget cuts back in late 2008 or early 2009. Everyone needed to cut costs, and a good chunk scaled back on insurance. But the commercial insurance market was soft in 2009 and has become even softer in 2010, making this an ideal time to either jump back in or invest even more.

But money is only one part of the plan to take advantage of your risk management and insurance. Talk with either your internal leader or your external firm and determine where you are and aren’t covered. Many businesses have invested heavily in product recall, privacy coverages, and employee health and benefits during recent months. The only way to keep track of all that is to remain involved on a regular basis.

“The clients we can help the most are the ones where senior leadership is actively and consistently involved in risk management — and I don’t just mean in the concept but in building the principles in the organization,” Spratt says. “You end up working as a provider with both kinds of companies, but the benefits and the returns for those companies are very clear when the leadership is actively engaged in the process. I suspect that’s not news, but that’s how we see that play out time and time again.”

You need to pay more attention to your risks and insurance now than during the best of times, and with the soft market still very much in play, you should probably continue to invest as much, if not more, in protecting your business for the future.

“I think it’s valuable no matter what size the company,” Luthi says. “All companies serve a purpose. They have stakeholders or shareholders, they’re there to provide a service or a product — and organizations often do this intuitively. But there’s something about having a process that facilitates, that documents, that gets this process down on paper or on the computer.”

In September 2008, the global economy was on the brink of its historic collapse, about to slip from the precipice to the abyss. In September 2009, the financial challenges posed by that collapse ranked as the overwhelming top risk for businesses, according to several national surveys. And now, in September 2010, well, the inevitable recovery appears to have started and some sense of optimism has seeped back, but the risk that swirled just last year remains — heavy, ominous — for businesses large and small, for businesses like yours.

If you do not have a thorough risk management and business insurance plan in place now, you should start to develop one as soon as possible. After all, recovery or not, there remains a great deal of uncertainty about the economy, and you should pay attention to and manage your risk. If you do not have a relationship with a risk management firm — or at least have an internal executive in charge of that department and those decisions — you need to pick up the phone now.

Because just as the economy has changed, so, too, has risk management.

“Over the last decade, risk management has really been maturing toward an enterprise or strategic approach to identifying, analyzing and managing risks,” says Deborah Luthi, vice president of the board of directors, Risk and Insurance Management Society Inc. “This approach really targets key risks, both insurable and uninsurable business risks, that most directly affect organizational performance.”

Those risks can include things like workers’ compensation, property insurance and general liability.

“The financial meltdown and the economic slowdown have really brought a heightened duty of care, disclosure and discussion regarding risk to the board level of organizations,” Luthi says. “So I think putting a strategic risk management process in place provides a framework for the board to consider risk and reward for balancing profit and risk against accomplishing the organizational mission.”

Plan and move forward

If you do not work with a risk management firm now, the first question is, of course, “Why not?” The second question is something along the lines of, “Do you really need to work with an external firm?”

Especially today, with revenue and profits just inching up — if they are increasing at all — and every dollar a precious commodity, would you really benefit more from bringing in more experts from the outside rather than turning to your own internal experts?

“You can keep this process relatively simple, and organizations that are farther down the road in terms of enterprise or strategic risk management have found that you can sometimes get wound up in the process and not get it linked into the planning,” Luthi says. “The response that we hear most often is, ‘Keep it simple and designed and customized for your organization.’ I don’t think any organization that practices risk management uses a cookie cutter. Everyone needs to customize it to their own organization.”

You might delegate the responsibilities to a team of executive leaders, with your chief financial officer or chief risk officer at the helm. As always, keep in mind that so many of your employees are already strapped for time each day and might be overwhelmed by additional tasks — especially one so important and intrinsic to the future of your business.

If you do work with an external firm, build a relationship with them as you would with any other business adviser. They are on or near the same level as your accountant, your attorney and your banker. The longer and more closely you work with them, the more your risk management will actually take effect in your business plans.

“We need to make sure we understand what their key business objectives are,” says Regina Spratt, U.S. national brokerage leader, Marsh Inc. “How are they measuring themselves? Is it growth in the near term? Is it cost containment? We need that underlying understanding of where they are today, the challenges they face, where they want to go. The next step is how to design a risk management or insurance program around that.

“Those two sort of key pieces of discussion really drive what comes next for that company. It’s about building the structure internally, and then, with the support of brokers or insurance carriers, building it in terms of other resources that can help meet their business challenges and those risks that have been identified.”

No matter which route you choose, you will likely want to listen to experts who recommend you chart and graph — yes, graph, just like back in geometry and physics — a framework to use in order to reach your decisions. Chart both insurable and uninsurable risks — your uninsurable is your brand and your reputation — in order to be able to make decisions and define your risks.

“It helps to get it down, so you can make some decisions,” Spratt says. “It’s also a tool businesses can use, in the years going forward, to take a look at their risk profile. They need to understand the profile of their business and their risk management. From there, they can design an insurance and risk management program that helps them today and as they attempt to grow in the future.”

Invest and remain active

At many businesses, risk management and business insurance were in that first batch of budget cuts back in late 2008 or early 2009. Everyone needed to cut costs, and a good chunk scaled back on insurance. But the commercial insurance market was soft in 2009 and has become even softer in 2010, making this an ideal time to either jump back in or invest even more.

But money is only one part of the plan to take advantage of your risk management and insurance. Talk with either your internal leader or your external firm and determine where you are and aren’t covered. Many businesses have invested heavily in product recall, privacy coverages, and employee health and benefits during recent months. The only way to keep track of all that is to remain involved on a regular basis.

“The clients we can help the most are the ones where senior leadership is actively and consistently involved in risk management — and I don’t just mean in the concept but in building the principles in the organization,” Spratt says. “You end up working as a provider with both kinds of companies, but the benefits and the returns for those companies are very clear when the leadership is actively engaged in the process. I suspect that’s not news, but that’s how we see that play out time and time again.”

You need to pay more attention to your risks and insurance now than during the best of times, and with the soft market still very much in play, you should probably continue to invest as much, if not more, in protecting your business for the future.

“I think it’s valuable no matter what size the company,” Luthi says. “All companies serve a purpose. They have stakeholders or shareholders; they’re there to provide a service or a product — and organizations often do this intuitively. But there’s something about having a process that facilitates, that documents, that gets this process down on paper or on the computer.”

By the time financial markets around the globe started to tumble in October 2008, much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home, their labor and their experience no longer needed because of more efficient machines and the rise of globalization. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was all gone for good.

Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession. Publishing and newspapers had been on the decline for years, and the domestic automotive industry, technically under the umbrella of general manufacturing, had been in a slide for a generation. But perhaps no industry was affected more since the turn of the millennium than manufacturing. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, millions of workers were laid off from the collective work force, but manufacturers often still let go of the most employees.

The cycle was vicious, and it continued, month after month.

How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, not yet, but all of the indicators do point up, however modest, rather than down.

“It’s really an opportunity, after you’ve survived the last two years and you’ve streamlined your business, to leverage off of those hard decisions you had to make and to figure out how to do business better,” says John Fenton, partner of assurance services, BDO Seidman LLP. “Do you want to go back to normal, where you were two years ago? Or do you want to build off the efficiencies you’ve already gained?”

“And what is normal?” says Scott Yancey, senior manager of assurance services, BDO Seidman LLP. “Is normal what you had five years ago? Are you hoping to get back there? Or will normal reflect improvements in the future?”

Prepare for more change

What was normal two years ago will almost certainly not be normal during the second half of 2010 or even during the first months of 2011. What was normal then, in fact, might never be normal again. Even though it might be a cliché, change really is the new normal in manufacturing — and plenty of other industries, too.

Among those changes are the new gaps in the supply chains of some larger original equipment manufacturers, the result of smaller companies closing during the last couple of years, which might cause delays and problems in receiving supplies in a timely manner. A number of industry experts say the availability of credit will also likely change, with banks starting to somewhat relax their requirements for the first time in two years. But the biggest change might be the addition of manufacturing jobs.

“Manufacturing is now the only business sector that has been adding jobs for five months,” says Emily Stover DeRocco, president, The Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we call mass customization, as opposed to mass commoditization. This reflects, again, the industry’s response to globalization, which is that U.S. manufacturers, in order to maintain their global leadership, have had to move to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to more changes in the way manufacturers and so many other companies plan and do business. It is the ripple effect across industries.

For example, if you have not already reassessed your vision and your plan for your company — especially in terms of green initiatives and a more green production cycle — that should move to the top of your priority list.

“Reassess your priorities and really have a vision for what you want the company to be five or 10 years down the road,” Fenton says. “Keeping a lid on costs is important, so technology and investment are important, as is investing in employees.

“One of the things you hear about a lot are green initiatives. We have a client in Atlanta that, about 15 or 20 years ago, began their green initiative with the goal of having no carbon footprint by 2020. They were ahead of the curve, but more and more companies are starting to look at that and adopt policies around that. From a business perspective, it can help to reduce waste in companies.”

It can also help you better position yourself and your company for the continuing changes and the eventual uptick in the economy and the industry.

Keep the long term in perspective

Two years ago, few manufacturers — few companies at all, really — were prepared for the recession. But you can prepare for the ascension, however slow and modest it might be, by being smart during these coming months and years.

You might think about diversifying your product lines into other markets, so you aren’t as dependent on single-source customers, and, more generally, diversifying your portfolio. You might also research how to best tap in to loans, grants or tax credits that are available from various levels and departments of federal, state and local government to help increase business during challenging times. And you will likely want to consider your risks, especially over the long term.

“You can help yourself by really developing a business plan or a manufacturing strategy that embodies the risk associated with the business, with a customer-centric focus and the quality of the products, exploring existing markets or looking at other markets where you can expand,” Fenton says. “Consider your supplies. How do you manage the possibility of wild swings over time in the prices of commodities? How do you plan for significant variations?”

Technology and education, as would be expected, can also play a role in increasing your business. Several experts discussed how the advantage of companies that are owned and operated in the United States is the technology that is developed in the United States. Domestic manufacturers continue to be at the forefront when it comes to utilizing technology in their processes, a trend that will only continue. To ensure that the technology is operated correctly and efficiently, workers should be more educated than they were 40, 20, even 10 years ago, and with so many quality workers still unemployed, there is a deep talent pool from which to hire.

How you handle all of that now might be the difference between a quicker return to profitability and increased production, and the far less appealing option of a long struggle back to respectability and some small sense of comfort in the market.

Most important, though, is to do everything with the long term — and that refers to years and decades, not just months and quarters — in mind.

“There has been some talk about a double-dip recession,” Fenton says. “I don’t know if that will happen or not, but companies are being cautious right now, and rightfully so. Consumer spending is still down, and consumers are retrenching and reducing their personal debt loads. That’s a good thing overall for the economy, though there is a ripple effect on the manufacturing industry. Companies need to continue to be frugal and wise and to look at the horizon.”

Ask questions

As you prepare for the last months of 2010 and the first months of 2011, it will be important to keep any number of questions in mind. Write them down. Type them and print them out. Keep a copy on your desk. Distribute copies to your executive team, perhaps even all of your employees. Just keep them in mind. No matter how well you know your business and your industry, that list of questions will be as important now as it has ever been.

And just what questions should make the list? Well, a lot will depend on your industry, your goals and your financial standing at the moment, but there are some questions that all businesses need to be asking right now. And those are: What is happening in your industry? Is it expanding or contracting? Is your company expanding or contracting? Where do you see your company in 2015? In 2020? Is your company in the right market? Is it in the right position in the market? What are the strengths and expertise that your company has that could be adapted to another market or product line? Where can you turn to think through your situation? Will your company be able to receive a large enough line of credit during the next year? Will you be able to fund your growth? How sustainable are the current demands? And, the great unknown, how will global events affect your company?

“Analyzing and determining what events in the global workplace impact you and how they impact you is important,” Yancey says. “For instance, there will be increased regulation for those companies that operate or sell in the space of the Gulf of Mexico, just because of the failure of the oil spill. That’s something that used to be confined to one or two industries, but companies are going to have to start looking at things like that.”

With all of that in mind, you will also need to consider whether your supply chain will be able to respond to the innovative approaches required for future growth and success, which means supply chain capabilities and locations become more important. The demographics of your work force are also important, especially with a generation of baby boomers still on the brink of retirement. And innovation is important, too. How will you move ideas from the collective mind of your company to the drawing board to the marketplace? Live in the present but remain focused on the future.

“Eyes on the future, but remember the volatility of this market,” DeRocco says. “There’s a constant threat to every business sector and there are some very large factors in play right now that will determine manufacturers’ cost structure for continued operations, so they’re keeping an eye on all of those — public policy, the global impacts around the world, certainly the European financial crisis.

“Every one of those issues has an impact and creates new challenges for manufacturers operating in that environment.”

By the time financial markets around the globe started to tumble in October 2008, much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home, their labor and their experience no longer needed because of more efficient machines and the rise of globalization. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was all gone for good.

Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession. Publishing and newspapers had been on the decline for years, and the domestic automotive industry, technically under the umbrella of general manufacturing, had been in a slide for a generation. But perhaps no industry was affected more since the turn of the millennium than manufacturing. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, millions of workers were laid off from the collective work force, but manufacturers often still let go of the most employees.

The cycle was vicious, and it continued, month after month.

How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, not yet, but all of the indicators do point up, however modest, rather than down.

“I think that companies are getting back to capital investments,” says Petra Mitchell, president and CEO, Catalyst Connection. “I think that demand has already increased modestly and our manufacturers are continuing to project modest increases in getting back to, maybe not the level of 2008, but getting back to moderate levels.

“We also have quite a few companies that we are working with that are projecting some significant hiring. That’s not across the board, but we are definitely seeing a lot of hiring going on. Capital investments are back on track, and in general, there is an optimism that, in the end, I think will continue to modestly increase over the year as the economy improves.”

Prepare for more change

What was normal two years ago will almost certainly not be normal during the second half of 2010 or even during the first months of 2011. What was normal then, in fact, might never be normal again. Even though it might be a cliché, change really is the new normal in manufacturing — and plenty of other industries, too.

Among those changes are the new gaps in the supply chains of some larger original equipment manufacturers, the result of smaller companies closing during the last couple of years, which might cause delays and problems in receiving supplies in a timely manner. A number of industry experts say the availability of credit will also likely change, with banks starting to somewhat relax their requirements for the first time in two years. But the biggest change might be the addition of manufacturing jobs.

“Manufacturing is now the only business sector that has been adding jobs for five months,” says Emily Stover DeRocco, president, The Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we call mass customization, as opposed to mass commoditization. This reflects, again, the industry’s response to globalization, which is that U.S. manufacturers, in order to maintain their global leadership, have had to move to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to more changes in the way manufacturers and so many other companies plan and do business. It is the ripple effect across industries.

For example, if you have not already reassessed your vision and your plan for your company — especially in terms of continued improvements and innovation — that should move to the top of your priority list.

“Every industry is focused on change at a fast pace, but companies have to know how to keep up with that,” Mitchell says. “Those companies that really pay attention to those outside factors look outside their walls for input — whether it’s technical advice, benchmarking or competitive research — you know, whatever that is, really looking outside your walls for input to planning and strategy development.”

It can also help you better position yourself and your company for the continuing changes and the eventual uptick in the economy and the industry.

Keep the long term in perspective

Two years ago, few manufacturers — few companies at all, really — were prepared for the recession. But you can prepare for the ascension, however slow and modest it might be, by being smart during these coming months and years.

You might think about diversifying your product lines into other markets, so you aren’t as dependent on single-source customers, and, more generally, diversifying your portfolio. You will likely want to consider your risks, especially over the long term. And you might also research how to best tap in to loans, grants or tax credits that are available from various levels and departments of federal, state and local government to help increase business during challenging times.

“Be engaged in the economic development community,” Mitchell says. “Every region, every county has some sort of economic development outreach resources, and those people can put you in touch with all sorts of resources at the state and federal level. That’s everything from the educational providers to the welfare investment boards. The Small Business Administration now has programs in place to help manufacturers on the financing side.

“We are part of a national program called Manufacturing Extension Partnership, or MEP, which is a federally funded program with the idea that modest public investments go to help manufacturers grow their business, to be more competitive, to innovate, to grow more products and to improve productivity. Taxpayers see a significant return on their taxpayer investments. That is exactly why we are in business, to work with small and medium-sized manufacturers to help them improve and be more competitive.”

Technology and education, as would be expected, can also play a role in increasing your business. Several experts discussed how the advantage of companies that are owned and operated in the United States is the technology that is developed in the United States. Domestic manufacturers continue to be at the forefront when it comes to utilizing technology in their processes, a trend that will only continue. To ensure that the technology is operated correctly and efficiently, workers should be more educated than they were 40, 20, even 10 years ago, and with so many quality workers still unemployed, there is a deep talent pool from which to hire.

How you handle all of that now might be the difference between a quicker return to profitability and increased production, and the far less appealing option of a long struggle back to respectability and some small sense of comfort in the market.

Most important, though, is to do everything with the long term — and that refers to years and decades, not just months and quarters — in mind.

“We have to innovate and we have to continue to invest in improvement,” Mitchell says. “We need to have trained and skilled people to help with that. Where are those people going to come from? Obviously you need to train your existing work force, but you need to be thinking about where that future work force is going to come from. What are the skills and confidences they are going to need in the future and how are they going to get that adequate pipeline of workers? That’s a huge challenge.

“You need to be engaged and you need to be willing to provide for their needs, so that we can have a place to respond to business.”

Ask questions

As you prepare for the last months of 2010 and the first months of 2011, it will be important to keep any number of questions in mind. Write them down. Type them and print them out. Keep a copy on your desk. Distribute copies to your executive team, perhaps even all of your employees. Just keep them in mind. No matter how well you know your business and your industry, that list of questions will be as important now as it has ever been.

And just what questions should make the list? Well, a lot will depend on your industry, your goals and your financial standing at the moment, but there are some questions that all businesses need to be asking right now. And those are: What is happening in your industry? Is it expanding or contracting? Is your company expanding or contracting? Where do you see your company in 2015? In 2020? Is your company in the right market? Is it in the right position in the market? What are the strengths and expertise that your company has that could be adapted to another market or product line? Where can you turn to think through your situation? Will your company be able to receive a large enough line of credit during the next year? Will you be able to fund your growth? How sustainable are the current demands? And, the great unknown, how will global events affect your company?

“One of the things that is going on in Europe that might affect companies here is the devaluation of the euro,” Mitchell says. “I think companies really need to pay attention to that.”

With all of that in mind, you will also need to consider whether your supply chain will be able to respond to the innovative approaches required for future growth and success, which means supply chain capabilities and locations become more important. The demographics of your work force are also important, especially with a generation of baby boomers still on the brink of retirement. And innovation is important, too. How will you move ideas from the collective mind of your company to the drawing board to the marketplace? Live in the present but remain focused on the future.

“Eyes on the future, but remember the volatility of this market,” DeRocco says. “There’s a constant threat to every business sector and there are some very large factors in play right now that will determine manufacturers’ cost structure for continued operations, so they’re keeping an eye on all of those — public policy, the global impacts around the world, certainly the European financial crisis.

“Every one of those issues has an impact and creates new challenges for manufacturers operating in that environment.”