The Ohio safety council rebate program created by the Ohio Bureau of Workers’ Compensation (BWC) rewards employers for their active participation in a local safety council. It also provides an additional performance bonus rebate for reducing the frequency or severity of workers’ compensation claims.
“With the number of safety councils available across the state with a focus on a variety of industries, employers are able to not only receive information on new safety techniques, products and services to assist their businesses, but also reduce their premium for simply attending these helpful meetings throughout the year,” says Russ Hocutt, vice president at CompManagement, Inc.
Smart Business spoke with Hocutt about how this rebate program works.
How much of a rebate can be earned?
Currently the incentive program enables employers to receive a rebate of 2 percent of their annual workers’ compensation premium through program participation and an additional 2 percent performance bonus based on the reduction of the frequency or severity of claims.
How can a local safety council be found?
BWC’s Division of Safety & Hygiene sponsors more than 80 safety councils across the state, organized through chambers of commerce, trade and manufacturing associations, American Red Cross chapters or other local, safety-minded organizations. A list is available at www.ohiobwc.com.
What are the requirements for the participation rebate portion?
An employer must enroll in a local safety council by July 31. Once enrolled, an employer must attend 10 meetings or events between July 1 and June 30. Two of the 10 meetings may be external educational options such as BWC Safety & Hygiene training courses or industry-specific training. The chief executive officer must attend at least one safety council-sponsored function or meeting. Semiannual reports must be submitted for the calendar year to document attendance. The documentation must be an official certificate of attendance or transcript. Only employers that meet the participation eligibility requirements will be eligible for an additional 2 percent performance bonus.
How is the performance bonus calculated?
Employers that reduce their frequency or severity of claims by 10 percent or more compared to the previous year’s frequency or severity, or employers that maintain both frequency and severity at zero, will receive an additional 2 percent refund of their annual premium, assuming the participation portion of the safety council program is met.
BWC calculates frequency by multiplying the total number of claims reported in the measurement year by 1 million and dividing by the employer’s total reported payroll for that year. Severity is determined by multiplying the total number of days absent during the measurement year by 1 million and then dividing by the employer’s total reported payroll for that year. The measurement period for private employers is claims and payroll reported between July 1 and June 30 compared to the previous year. For public employers, the measurement period is between Jan. 1 and Dec. 31.
What impact would the program have on a midsize company’s premium?
Assuming the participation requirements are met and the employer was able to reduce the frequency or severity of claims as indicated above, a midsize service company could expect the following in annual premium savings, assuming the employer is participating in no other alternative rating programs:
- Payroll — $3,990,000.
- Individual discount — 16 percent.
- Individual premium — $14,683.
- 2 percent safety council participation rebate — $200*.
- 2 percent safety council performance rebate — $200*.
*Based on pure premium which does not include assessments for DWRF and administrative costs for operation of BWC/IC
Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with the safety council program such as Destination Excellence, Drug Free safety Program, Group Rating (performance bonus only), Group Retrospective Rating (participation bonus only), Large/Small Deductible, Individual Retrospective Rating, or One Claim Program. Always have your third-party administrator conduct a feasibility study to evaluate the best savings options available for your organization.
Russ Hocutt is vice president at CompManagement, Inc. Reach him at (800) 825-6755, ext. 65619 or email@example.com.
Save The Date: Safety council enrollment ends July 31 for the 2013 policy year.
Insights Workers’ Compensation is brought to you by CompManagement, Inc.
Much of the discussion about oil and gas production in Ohio has focused on hydraulic fracturing used to facilitate production. But fracking, as it’s often called, is only part of the process that takes the oil and gas from the ground to consumers.
“The wells are just one part of the overall industry. You can drill a well and be prepared to produce gas and natural gas liquids, but these materials have no place to go until you have a pipeline and processing facilities,” says Scott Doran, director, Kegler, Brown, Hill & Ritter Co., L.P.A.
Smart Business spoke with Doran about the various stages in the production of oil and gas, and the permits and regulations that govern them.
What permits are required for oil and gas production operations?
In addition to the drilling permits, you generally need permits for the pipelines that will take the gas from the well pad to collection and processing points. The Ohio Department of Natural Resources (ODNR) manages drilling permits; The Ohio Environmental Protection Agency (EPA) has authority to issue air permits. The Ohio EPA, the U.S. Corps of Engineers and other agencies are involved in pipeline projects. Construction of the pipeline may necessitate impacts to streams or wetlands, and you have to consider historical preservation and endangered species issues.
You have to delineate every resource along the expected path of the pipeline, which means sending engineers or field personnel to identify streams, wetlands, historic properties and potential endangered species habitats. Of course, that also involves getting easements and permission from landowners. Those field people prepare voluminous reports, and you identify the best path for the pipeline that achieves project objectives while avoiding as many resources as possible.
If a project does impact streams or wetlands, you can apply for and obtain a permit authorizing the project, but you also have to mitigate those impacts by restoring the streams or wetlands at the site or somewhere else, or buying wetlands mitigation credits. It’s expensive, but there are a number of mitigation options to compensate for these unavoidable impacts.
Why are air permits needed?
Air emission of certain natural gas occurs during the drilling process, and the U.S. EPA and Ohio EPA have established strict permitting requirements regarding how to manage emissions during and after drilling. After drilling, there are emissions associated with the transfer and storage of materials.
It used to be that companies commonly flared off excess gas — they didn’t want to or were not able to manage the gas, so they would burn it. New permit requirements are being phased in that will require the capture of that gas.
What is required regarding wastewater collected from drilling operations?
In Ohio, a regulatory decision was made that the wastewater associated with oil and gas exploration and production is to be injected into permitted disposal wells. These disposal wells are generally off-site and operated by disposal companies that collect waste from tanks at the well pad. They’re injecting the waste 10,000 feet into the ground in porous rock, where it is designed to remain.
Drillers and wastewater treatment companies are working very hard to demonstrate effective mechanisms to treat and recycle that water, because millions of gallons are used for every well and fresh water is very valuable.
Do you expect regulations to change as the industry expands its operations here?
Regulations will undoubtedly continue to evolve, but the basic structure is in place. There is every indication that companies are continuing to make substantial infrastructure investments in Ohio, and there is a regulatory program that is overarching and impacts every step of the process.
This industry is going to have an environmental impact, but it can be done in a very responsible manner. Economically, it will be a good thing for the state. There will be some trials and tribulations along the way, but overall Ohio is doing a nice job to ensure a very substantial long-term benefit while protecting environmental resources in Ohio.
Scott Doran is a director at Kegler, Brown, Hill & Ritter Co., L.P.A. Reach him at (614) 462-5412 or firstname.lastname@example.org.
For more information on Kegler, Brown, Hill & Ritter, please visit www.keglerbrown.com.
Insights Legal Affairs is brought to you by Kegler, Brown, Hill & Ritter
Don’t wait until you want to sell your business to find out you could have done more to make it more attractive to buyers.
Tim McDaniel, CPA/ABV, ASA, CBA, principal at Rea & Associates, says there are eight key factors that determine the salability of a company. Knowing how your business stacks up in these areas provides benefits even if you’re not thinking about selling.
“The more you make your business sellable, the more fun it is. Your business is sellable when it’s less reliant on you, there’s less risk, more cash flow and higher growth. You might work on all of those things and decide it’s so much fun you wouldn’t want to sell,” says McDaniel.
Smart Business spoke with McDaniel about salability factors and what buyers are looking for when considering an acquisition.
What are the key factors that determine whether a business is sellable?
There are eight main buyer considerations:
- Financial performance. The better and more consistent recent performance is, the more assurance it gives a buyer.
- Growth potential. Whereas financial performance is more about history, growth potential looks at the future. A future income stream with a lot of potential is very attractive. There are times when past performance might not have been great, but there appears to be a growth opportunity on the horizon.
- Switzerland structure. The business does not overly depend on any single customer, employee or supplier — they remain neutral if there is a loss in any of those areas. For example, one business owner had 80 percent of its business with one customer and went bankrupt when it lost that business. Things like that make the business less sellable.
- Valuation teeter-totter. Essentially, this is about having up-to-date equipment. If your equipment is old, you either have to invest in new equipment or a buyer will pay you less because they’ll have to buy new.
- Hierarchy of reoccurring revenue. Alarm systems sell for a premium because they have monthly reoccurring business, which lowers the risk. Reoccurring income is very important to buyers, and it’s particularly attractive if it’s under contract.
- Monopoly control. Future cash flow is important, and the higher the barriers to entry, the harder it is for a competitor to take away market share. Few people can start a business to compete with the iPhone. However, if you want to compete against a painter, you just have to hire people who are skilled at it and advertise.
- Customer satisfaction. High customer turnover will create ill will in the marketplace at some point and certainly makes a business more difficult to sell.
- Hub and spoke. This addresses how well the business can survive without you. Many small businesses are dependent on one person and will fall apart the day they leave. That makes the business less valuable and difficult to sell. A buyer might have some of the purchase price based on you staying, and have you sign an employment contract. That’s why it’s important to start building a good management team and relying on other people.
How can a business improve its salability?
Not all businesses excel in each of the eight areas above. However, an owner needs to work toward improving those areas where it is weak in order to make the company more sellable. Start by identifying what drivers need attention, and then develop specific action plans to positively impact them. You will watch the value of your business increase dramatically. It’s not something you want to start working on two weeks before you sell. It’s a process that takes time and focus.
Often, business owners are too busy running day-to-day operations to sit back and consider their business’ value. Yet, there is benefit in looking at the business through the eyes of someone who might be interested in buying it.
Tim McDaniel, CPA/ABV, ASA, CBA, is a Principal at Rea & Associates. Reach him at (614) 923-6532 or email@example.com.
Determine your business’ sellability score at www.reacpa.com/my-sellability-score.
Insights Accounting is brought to you by Rea & Associates
Some leaders take an “old school” approach to change management — employees get a paycheck, so they’ll deal with any changes without a need for much explanation. But that sets the organization on a path toward failure.
“The biggest problems are when leadership does not account for the fact that resistance is definitely an option,” says Mark Deans, practice leader in Organizational Development & Change Management at Sequent.
“You could build a perfectly streamlined business process, or add the most efficient tool, but if employees don’t understand how to execute it to meet your expectations, it’s not going to succeed. Try as you might, you can’t make people do things,” Deans says.
Smart Business spoke with Deans about ways to ensure successful implementation of a change process.
What is involved in change management?
It’s supporting a change in business processes or systems, technology, etc. The practice of change management applies to any significant change in an organization, including leadership change as part of an acquisition or divestiture. It’s about how employees are supported through the change process.
The methodology is that there is a journey the organization, departments and individuals go through, and each has a completely different time path. Two people might do the same job, but each has his or her own change capability, and it’s a matter of identifying and managing all of those within an organization to make the change as seamless as possible.
How does the change process work its way through an organization?
First and foremost, leadership must be on the same page. Start with getting leaders aligned so they can be the driving force behind the change, helping each individual understand his or her part.
Organizations are taking a more holistic view nowadays. A change might mean more work for some departments but provides an overall net benefit for the organization. It used to be that each silo fought for its own interests. Now, it’s about how departments operate together, and some teams taking a hit if necessary to ensure the overall organization is as successful as possible.
One of the first steps is acknowledging the need to change, and the benefits. There should be some compelling reason, whether it’s regulatory changes, an attempt to improve market share or boost the bottom line. If the overarching goal is to improve margins, explain what that means for each group, and ultimately for each individual. You have to manage change upfront and get everyone onboard at the start rather than waiting for problems. It’s analogous to going to the dentist. If you see your dentist on a regular basis, keep your teeth clean and get X-rays, you can catch cavities when they start and are easier to fix, instead of not going for a long time and having major damage. The same holds true for change management, if you start a project and haven’t thought about how to communicate it to employees, going back and fixing it is much more difficult.
Is it important to state a desired outcome?
Absolutely. That is where some companies fail as well. They make a change and aren’t sure why. A company buys hundreds of iPads as part of a mobile technology strategy without addressing the intended use. So people are updating their Facebook status or playing Angry Birds because they don’t have a burning business reason to utilize these tools. That might be a ridiculous example, but there are plenty of cases in which companies want to hurry up and do something because it’s a shiny, new object.
You also need to accept it if a change didn’t work. Evaluate the success of the change, including what happened and didn’t happen as planned. Change projects always take longer and cost more than expected. Organizations that handle change well go back and figure out what they did well, and what could have been done differently. Then they remediate anything that did not get executed as well as planned. They learn from the experience so the process can be improved next time.
Mark Deans is a practice leader in Organizational Development & Change Management at Sequent. Reach him at (614) 410-6028 or firstname.lastname@example.org.
Website: Visit our website to understand how to successfully incorporate change at your company.
Insights HR Consulting is brought to you by Sequent
In nearly every marketing conversation, I am asked how to measure return on investment. It is a fair question, but the answer is not always simple to address.
ROI, and equally important return on opportunity, are measured differently for most companies and are calculated on factors that are specific to each organization.
Here are some considerations for formulating ROI and ROO:
Establishing marketing goals — Know the marketing outcomes you desire. Are you trying to generate leads, build exposure, get the phone to ring, grow market share or retain customers?
Also keep in mind that marketing goals and sales goals are different. If direct human interaction is not a factor in the sale, they could be the same. For most, this is not the case. Marketing creates the opportunity and sales books the order. They are different disciplines.
Make your marketing goals measurable — in other words, be specific by stating percentage of growth, number of leads, degree of increase in market recognition, increase in market share and percentage of retention.
Understanding tracking — Determine tracking methods for what you want to measure. If you want a hard measurement of increase in market recognition, you can establish a benchmark by implementing before and after research surveys of how well-known your company, product or brand is in the marketplace.
Sometimes tracking can be easy, such as the number of leads generated from Internet advertising or an email campaign. Other times, unless we train customer service and sales representatives to ask how that prospect heard of us, we may never know where that opportunity came from.
Tracking percentage of growth and increase of market share require that we understand current measures as well as the sales team’s impact on the overall result. We need to understand what result we are looking for so the marketing campaign can direct prospects to do what we want to measure.
Calculating investment costs — Determining the cost of advertising, creative development, printing, postage and so on is easy. The more difficult factors are what else you are including in that calculation such as technology costs, staff cost and sales cost including sales tools such as brochures and websites.
Understanding all that you want a return on is a big factor in measuring and managing the expectation for return. Typically the more you factor in, the longer it takes to anticipate a return.
Determining profitability — Cost of goods sold is the typical calculation for understanding what it costs you to produce a product or deliver a service to a customer. How quickly a company will see a return is based on how much gross profit is derived from the sale.
Another consideration is the lifetime value of new customer. If the sale of your product has the potential to generate future maintenance or service work, add-on components, replacement parts, reoccurring revenue and the like, then your return can more readily be met by factoring the lifetime profit your company realizes from acquiring a new customer.
Factoring the sales cycle — What is the typical time frame from when a lead is generated to when a sale is booked (signed, sealed and delivered)?
How quickly you will get a return on investment is largely based on how quickly you can book the new business. If it is a long sales cycle, you may want to engage interim measurements or milestones to ensure your return is on track.
So, what should you be measuring? There are numerous ROI and ROO measurements — I could easily name 25 off the top of my head. You need to determine which are most important to your organization. Choose no more than a handful so that your team can easily manage the tracking and measurement.
Kelly Borth is CEO and chief strategy officer for GREENCREST, a 22-year-old brand development, strategic and interactive marketing and public relations firm that turns market players into market leaders. She has received numerous honors for her business and community leadership. She serves on several local advisory boards and is one of 30 certified brand strategists in the U.S. Reach her at (614) 885-7921, email@example.com, @brandpro or for more information www.greencrest.com.
“A ship in port is safe, but that’s not what ships were built for,” is a quote that hangs in Brig Sorber’s office at Two Men and a Truck in Lansing, Mich. Sorber uses that quote to define the new direction in which his company has been moving.
“I love that quote because this ship, Two Men and a Truck, has been in port for too long,” says Sorber, CEO. “We’ve got to get this into deep blue water. There are a lot of challenges out there and a lot more risk, but that’s where business is done. We need to start moving forward and accept the challenges.”
Sorber and his brother, Jon, started Two Men and a Truck International Inc., a moving company, in the early ’80s as a way to earn money using their ’67 Ford pickup. Today, the business has x4,500 employees, more than x1,400 trucks, more than x200 franchises in x34 states, Canada, the U.K. and Ireland, and 2012 revenue of x$361 million.
“We did it to make beer and book money for college,” Sorber says. “We really never thought that it would get to this point.”
However, in getting to this point, the company had neglected to make necessary changes in order to keep the operation aligned and running well.
“One of the challenges we have had is going from a mom-and-pop-type business to having to grow up and become more corporate,” Sorber says. “We needed to bring in newer and stronger skill sets.”
Here’s how Sorber has helped Two Men and a Truck grow up.
Two Men and a Truck incorporated its first business in Lansing, Mich., in 1985 and began franchising in 1989. The company at this time was run by Sorber’s mom since he and his brother were in college.
Upon graduation, Sorber worked as an insurance agent and also operated his own Two Men and a Truck franchise. He returned to the company in the mid-’90s, became its president in 2007 and CEO, the title he carries today, in 2009. In that time the company had grown significantly, but it wasn’t running as well as it could be. Starting in 2007, Sorber’s job was to help restructure the business.
“We had to take a look at ourselves internally,” Sorber says. “There came a time that I just knew things were broken here.”
Because the company was growing so fast there was no organization chart. It was very loose on who reported to whom. It wasn’t that people weren’t working hard, but things were not getting measured.
“I had an epiphany that something had to change big time,” he says. “I made up something that resembled an org chart on a big piece of paper in my office. I brought in five people that I greatly trusted and had confidence in and gave them three markers — green, which meant that person or that job was important; yellow, which meant I didn’t have an opinion either way about this person or about this job; and red, which meant that this job makes no sense.”
Sorber used that as a starting point to help him identify where the company could restructure and cut costs.
“I wanted to give big bonuses to everyone at the end of the year and share the winnings, but we had to prime the pump first,” he says. “We went from 78 employees down to 51 employees after I went through that chart.
“That wasn’t because we were losing money. It was because by the time we realigned everything, there were some people here who weren’t doing anything.”
To avoid issues such as this, you have to have metrics that you measure to make sure whether you’re doing well or not.
“My metrics are No. 1, customer satisfaction,” Sorber says. “Find out how every one of your customers feels about their service. No. 2 is trucks and driveways. We want to put more trucks in more driveways every year.
“No. 3 is franchisees. Make sure your franchisees are profitable and have the tools to grow. No. 4 is giving back to the community.”
Metrics are a crucial aspect of success, but so is a mission statement that helps employees and customers know what the business is about. It also makes your decisions as a CEO simple.
“If your mission statement is strong, it should be limitless,” he says. “For us, we had our mission statement when we had 25 franchises, and now we’re well over 200 and it still applies. You also need core values that comprise what’s important to your company. Once you have those, you have to stay within the confines of your core values.
“When I was a younger executive I thought that was stuff you say to be nice. It’s something that’s serious. You can’t go into work and keep turning the wheel and expect better things to happen. You’ve got to maintain your mission statement, core values, measure what you’re doing, and then you have to look for ways to make things better.”
Bring in key people
As Two Men and a Truck went through these necessary changes, new employees and executives had to be brought in to give the company the right skill sets to continue growing.
“Sometimes we hold onto our executives too long, and we get comfortable with them,” Sorber says. “They may not question what you’re doing. Not all of them, but many of them can be fine with the status quo and as the world is changing they’re not forcing you as a CEO to question what you’re doing.”
You can’t settle for the people who are in your key positions. You need to find people with the right skill sets and make sure they stay within your mission statement and core values.
“Bringing in new individuals is kind of like working on an old house,” he says. “You think if you put new windows on the house it’s good, but then the siding looks really bad. The same thing happens in business when you get somebody that’s great in a department. You start to think, ‘What if I had someone like that in marketing?’”
Sorber brought in executives to fill his company’s voids, and they began offering all kinds of new ideas for the business.
“When I started bringing in these key executives, they wore my carpet out because they have fresh eyes for the business,” he says. “They asked why we did this or that. Many of the things we were doing were the right things, but it’s good for you to make your point about why you do it.
“The new executives will say, ‘That makes sense’ or ‘That’s different.’ Other times they’ll say, ‘OK, but did you ever think about doing this?’”
That is how your business goes through an evolution, and it starts bringing in more modern thinking and different approaches. A business will have a life cycle of only so long, and you need to continually reinvent it because your customer is changing. If you bring in new people they may bring the great ideas you need.
“It’s really important as a president or CEO to hire people who are smarter than you in their specific fields,” Sorber says. “Our job as president or CEO is to look more strategically at where we want the business, make sure the executives play nice together, ensure there’s harmony in the business and keep an eye on those important metrics.”
During the course of the past six years, Sorber has been able to successfully do all those things within Two Men and a Truck. Randy Shacka became the company’s first non-family member to serve as president in 2012. Now, Sorber and Shacka are looking at the future outlook of the business.
“We think we will be a $1 billion company by the year 2020,” he says. “In the last few years we’ve been doing a lot of internal work on fixing where we are broken and getting the right people in here. Now we want to be more than just a moving company. We want to be a company for change.”
How to reach: Two Men and a Truck, (800) 345-1070 or www.twomenandatruck.com
Many executives do not view the content they distribute as intertwined with their organization’s unique product or service. However, the two are interchangeable. Your product or service has differentiators that cause your clients to select you instead of the competition. Those same factors apply in content marketing.
If your goal is to engage prospects and ultimately lead them to conversion, you must create content that keeps them engaged. Success comes from creating consumable pieces of content that together form a singular thought leadership message and distributing those pieces across multiple channels. You never know through what channel someone will engage with your brand (or branded content), so the message needs to be consistent.
There are a few simple rules to doing this. Your content and what you’re selling should meet four criteria. It must be:
Useful means the content, as well as your product or service, has a defined use for a target audience. It addresses:
- How do I use this?
- How does this help me?
- What problem does this solve for me?
Here’s an example: According to a recent IDC Research report, 49 percent of the entire U.S. population currently uses a smartphone. By 2017, that number is expected to reach 68 percent. That means that within four years, more than two out of every three Americans — regardless of age — will be connected via smartphone. Therefore, a useful product a company might offer could be a solar-operated phone charger. And useful content to distribute to a target audience may include “How to make your daily life easier with these top five iPhone apps.”
To be Relevant, the product, service or content must be new and interesting, and mean something to the market or industry. Your audience will ask:
- What does this mean to me?
- Do I need this?
Let’s say your organization provides a website portal that connects insurance companies. New and interesting content that means something might be, “How your health care plan will be affected by reform . . . and what you can do to prepare for it.”
In a world filled with noise, you must demonstrate how what you do is Differentiated from competitors and explain:
- How does your content, product and service compare to the competition?
- Is it unique?
Let’s go back to the smartphone example. If you sell or service iPhones and Android-platform models, think about creating engaging content that examines the needs of today’s smartphone user, and then go beyond the basic functionality.
It’s also imperative to understand your target audience and the target audience for each product. Android-based smartphones are primarily aimed at businesspeople. iPhones, for all their bells and whistles, are not. This differentiation has led to a lot of confusion in the marketplace when consumers compare one against the other. Understanding this allows smart marketers to create engaging content such as “The top 10 needs of businesspeople: A comparison of Android phones vs. iPhones.”
Finally, your product, service and content must be Available and easily obtained in any channel.
If you run a benefits company that works with employers, for example, health care reform provides a timely opportunity to help clients make sense of the landscape. This might entail delivering a variety of consumable content that’s available to them 24 hours a day, seven days a week, through any channel.
This could include a video that explains the difference in options available to employers. It could be a social media campaign that outlines the top five differences between the health care insurance exchanges and employer-sponsored health care. Or, it may be a series of print mailers or webinars, or even a dedicated microsite that’s filled with content that details what employers need to know.
When your goal is creating engaging content, your ability to consider — and address — each of these factors may be what’s required to transform engagement into measurable conversion.
This is no fish story. Instead, this column is about one of the most important roles an owner or CEO must fulfill on an ongoing basis.
Leaders spend an inordinate amount of time dealing with the issues du jour. These range from managing people, wooing and cajoling customers, creating strategies, searching for elusive answers and just about everything in between. These are all good and necessary tasks and undertakings. Too frequently, however, these same leaders delegate this effort to others or ignore it altogether. To be “in the game,” you have to know when to fish or cut bait.
Successful fishermen know that to catch a fish they have to sometimes cast their lines dozens of times just to get a nibble or bite. The first bite might not result in reeling in that big fish. Frequently, a nibble is just a tipoff as to where the fish are swimming.
The same applies to reaching out — casting a line, if you will, to explore new, many times unorthodox, opportunities for your organization. These opportunities can be finding a competitor to buy, discovering an unlikely yet complementary business to partner with or snagging a new customer from an industry that had heretofore gone undiscovered.
All of this takes setting a portion of your time to investigate unique situations, as well as a healthy dose of creativity and the ability to think well beyond the most obvious.
Too many times even the most accomplished executives lack the motivation to look for ideas in unlikely places. Some would believe that it’s unproductive to spend a significant amount of time on untested “what ifs.” Just like sage fishermen, executives can also cultivate their own places to troll.
Of course, networking is a good starting point, particularly with people unrelated to your business, where sometimes one may fortuitously stumble onto a new idea that leads to a payoff.
Other times, a hot lead might come from simply reading trade papers, general media reports and just surfing the Internet. The creative twist is reading material that doesn’t necessarily apply to your own industry or to anything even close to what you do. New ideas come disguised in many forms and are frequently hidden in a variety of nooks and crannies. This means training yourself to read between the lines.
Once something piques your imagination, the next step is to follow through and call the other company or send an inquiry by email to state that it might be worth a short conversation to explore potential mutually beneficial arrangements. This can at times be a bit frustrating and futile. That's when you cut bait and start anew.
However, reaching out to someone today could materialize into something of substance tomorrow. The often skipped but critical next step, even after hitting a seemingly dead end, is to always close the loop with whomever you made contact. Even if there is no apparent fit or interest at the moment, it’s easy and polite to send a short note of thanks and attach your one-paragraph “elevator” pitch.
That same person just might be casting him or herself, be it in a month or even a year later, and make contact with a different organization that’s not a fit for him or her, but recall you because you followed through and created awareness about your story.
This just might lead the person with whom you first spoke to call you because you had had the courtesy to send that note. Bingo — you just got a bite all because of continuing to cast your line.
Good CEOs and honest fishermen also have one other important characteristic in common: humility. They know that when a line is cast it won’t result in a catch every time. But if nothing is ventured, it’s guaranteed there will be nothing gained. Don’t let that big one get away. Just keep casting.
As an organization grows, changes are inevitable.
New employees are added, promotions are made and job responsibilities shift.
But any time you have change, you have the potential for conflict. Few people are comfortable with change, and each person will react differently in making the adjustments necessary to move forward with the company.
The most important thing a CEO can do is to be active in confronting potential conflict. Conflict goes hand-in-hand with change. Employees begin to question management, co-workers and even themselves as they are forced outside of their comfort zones. Those questions can lead to misunderstandings that can lead to conflict, and that will ultimately slow your growth.
Don’t passively avoid potential conflict. Instead, actively engage members of your organization by providing the necessary forums both for you to communicate your strategy and vision and for them to communicate their concerns back to you. An active conversation will help drive your vision for the company through the organization and will also help foster your next generation of leaders as they take a more active role.
Only when employees are challenged to think — and to challenge you — will you maximize your organization’s potential. Do you want employees who don’t speak up when they recognize what may be a fatal flaw in your grand strategy? Or would you rather have employees who are actively thinking about the big-picture goals of the company and doing their part to contribute?
Regardless of what size company you run, it comes down to a simple choice.
It’s a choice between having employees acting like robots or acting like people. If you choose robots, you will have to have all the answers. If you choose people, you only have to have some of the answers because the employees will help you find the rest.
Engaging employees in conversations, meetings and decision-making helps them take ownership and helps you create a happier work force. If they are not allowed to speak, gossip and rumors will drag down your productivity.
Actively provide two-way communication. Let employees do the talking and hear what they have to say. The results may surprise you. Those closest to the customer often know best what needs to be done to improve sales, service or efficiency.
Too many CEOs lament the lack of good people to help take them to the next level. Maybe the problem is more CEOs need to create good people rather than driving them off with a work environment that’s better suited to a good robot.
The Sarbanes-Oxley Act of 2002 mandates that publicly held companies rotate the lead partner in an audit firm off the audit project every five years. Many private entities have followed suit, accepting audit rotation as a regular business practice even though they aren’t bound by any requirement.
But they’re missing out on benefits that come with an established working relationship, says Mark Van Benschoten, a principal with Rea & Associates.
“My ability to offer valuable advice only increases with the amount of time spent with a client,” he says. “When you change auditors, you lose that ability to cement a relationship where you fully understand each other.”
Smart Business spoke to Van Benschoten about misconceptions regarding audit rotation and the various benefits derived from a long-term relationship with an audit firm.
Why do companies rotate auditors?
Sarbanes-Oxley came about after the Enron scandal when there was a perception that the auditing firm was too close to the company. The thought was that switching auditors would ensure an independent perspective. Private companies followed the mandate even though it doesn’t apply to them. Many of those same business leaders encouraged boards of the not-for-profit organizations they are a part of to require an auditor change every three to five years. As a result, businesses and organizations severed ties with auditing firms that had done excellent work.
What is required by the law?
People misinterpret the mandate to mean that they must switch audit firms. However, only the lead partner in the audit firm must rotate off the project every five years. Businesses can get a new set of eyes on the audit without changing firms. Auditors have a professional responsibility to be objective. But if you believe someone may be too close, working with a different manager or partner accomplishes the same thing. This way you get a fresh perspective while maintaining the benefits that come with a long-standing relationship.
What are the benefits of keeping the same audit firm?
One is institutional knowledge. When there is a change in staff, an auditor can help educate from a historical perspective, explaining how something came about. This is extremely beneficial with nonprofits that have term limits for board members and experience changes in leadership.
You also can take advantage of an auditor’s industry experience. Someone with more than 100 manufacturing clients can take expertise from one and leverage that among other clients. For example, if a business owner is too focused on one specific area and is not abreast of what’s occurring in the whole manufacturing universe, an auditor can add value by discussing those issues with the owner.
There’s also a cost to getting a deficient audit. If a firm doesn’t catch some bad financial reporting, it will come back to haunt you.
Are there benefits derived from switching auditors?
If your auditor is not doing the job — not looking at key areas, responding to your needs or is tardy in providing service — you should change even if you have a commitment.
But change in itself does not bring any benefit; it’s more a result of not thinking through goals for the auditor selection process. What are you trying to accomplish with the audit? Audits have become very commoditized; some companies just solicit bids regularly and go for the lowest cost. The only thing they value is getting that opinion letter. You can get too focused on cost and miss out on added value.
What should you look for when choosing an auditor?
Find someone who knows your industry and can make a commitment to the timing and staffing levels needed so the audit isn’t obtrusive. Do some due diligence — find out if they have similar clients and talk to references.
Many companies have audits because a bank or funder requires it, and they want to get through the audit with the least amount of pain. But auditors should also add value.
Mark Van Benschoten is a principal at Rea & Associates. Reach him at (614) 889-8725 or firstname.lastname@example.org.
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