During a merger and acquisition (M&A), both the buyer’s and seller’s retirement plans have ramifications on the deal and its aftermath.
“Make sure you get the right people involved in advance of any acquisition, whether you’re a buyer or seller,” says Don Dalessandro, QPA, QKA, Vice President of Finance at Tegrit Group. “It can be difficult because some people are not privy to this information, but if the CEO, CFO and others doing the deal don’t understand the plan, they should involve somebody that does before it comes back to haunt them.”
Smart Business spoke with Dalessandro about handling retirement plans in an M&A.
Why involve a plan administrator early in the M&A process?
A plan administrator can help with the financial and fiduciary due diligence, laying out the costs and liabilities associated with both retirement plans and how they match up. For example, if your company provides a 4 percent match, but the seller only gives a 1 percent match, you may need to calculate the extra cost of bringing newly acquired employees into the plan.
Retirement plans also have notification requirements. If a buyer or seller plans to merge or terminate a plan, it must follow Employee Retirement Income Security Act (ERISA) regulations. Examples are 30-day participant notifications prior to certain plan changes or a ‘blackout’ period where participant access to plan features may be curtailed. Also, if you terminate a plan, all participants must be 100 percent vested in all plan accounts, which could be an additional cost.
As a buyer, what else should be considered?
Think about whether it’s going to be a stock or asset purchase. If it’s a stock purchase and you absorb the selling company’s plan, you take on many of the risks and liabilities from previous years. In many cases, the buyer may request that the seller terminate its plan prior to the sale. This takes time and coordination, and may adversely impact participants’ retirement goals — as much of the plan participants’ money may be spent or used for other purposes.
With an asset purchase, even though you are not taking on liabilities, you still must consider the companies’ cultures and how to best integrate by comparing plan provisions, such as eligibility, matching contributions, vesting, etc. Whether you merge plans or not, you will likely change certain provisions of your plan as your company is growing and changing as a result of the acquisition.
You will want to understand who the decision-makers are, such as trustees, plan administrator, custodian, record keeper and others who may be making fiduciary decisions. Making a change to the decision-makers may require committee resolutions and amendments, which may be beneficial prior to the acquisition.
How should due diligence be conducted?
As a buyer, make sure the seller has administrated the plan according to ERISA regulations. Ask for prior Form 5500s. Companies with 100 or more plan participants are generally required to have audited financial information as part of the Form 5500 filing. Also, ensure that timely contributions have been made. There is appropriate fiduciary liability bonding, and an investment or retirement committee with meetings and written minutes. The company should be following proper procedures and policies, and all documents are in compliance and signed.
A possible deal breaker is an underfunded defined benefit plan, which promises to pay certain monthly benefits. If the liabilities are too high, it becomes difficult to terminate the plan. Additionally, it may require that you continue to fund and contribute to the plan, which can be expensive going forward.
After the sale, what’s critical to know?
In addition to following ERISA, if you maintain two separate plans by the last day of the plan year following the year in which the two companies merged, a coverage test runs on both.
If the plans have different matching structures, eligibility rules or provisions, they must meet the ‘benefits, rights and features’ test as a single entity. This ensures you don’t discriminate in favor of highly compensated employees. Many people forget, and then two years later realize they never did the testing. Like many of these decisions, it takes careful planning.
Don Dalessandro, QPA, QKA, is Vice President, Finance at Tegrit Group. Reach him at (330) 983-0527 or email@example.com.
Insights Retirement Planning Services is brought to you by Tegrit Group
More and more business professionals are exploring the do-it-yourself (DIY) model when it comes to their telephone communications. In many cases, however, a hosted model — where a Voice over Internet Protocol (VoIP) provider manages your system at a data center location — might make the most sense.
Having a hosted solution may free your business from bearing the responsibility of installing, maintaining and repairing telephony software. In the long run, this could add up to large savings.
When searching for a VoIP provider, Alex Desberg, sales and marketing director at Ohio.net, says you must make sure you are able to find the proper fit.
“It’s important to find a company that works the way that you want to work,” he says. “If service and support is important to you, find a VoIP provider that will support your needs and expectations.”
Smart Business spoke with Desberg about VoIP, the flexibility of a supported, DIY model and the benefits of a hosted model.
How can a good VoIP provider help with the transition to a cloud-based telephone system?
There has been a shift in the VoIP industry toward implementing open-source voice applications. The supported, DIY VoIP approach has gained traction because it can save money by limiting the amount of outsourcing while working with an experienced provider. For example, IT consultants and VoIP companies frequently install solutions such as Asterisk, an open-source telephony software system, and then the company manages the applications internally. However, this DIY approach can present challenges when it’s not well supported by your dial tone provider.
In order to fully realize the benefits of new technologies, it’s best to combine the new software environment with a VoIP provider that is well versed in hosting, hardware and integration to the traditional world of telephony. If the telephone is your primary way to communicate with your customers, it is too important of a matter to leave to chance.
How much control can a company have over the VoIP system?
There are three options. The first is a hosted model where the VoIP provider handles all of the changes, including managing the software. This is a service-based model, so if the business needs support, it can contact the VoIP provider that helps provide solutions to any problems that may be encountered.
With new cloud-based systems, some companies prefer to support their own changes. The supported DIY or Virtual PBX solution provides a stable environment to host the software-based phone system. This would be ideal for a business with capable IT personnel, where executives want to keep control of their technology reins but still have a fall back for technical support.
The final option is to have the end-user handle everything, from setup to tech support in a secure environment with dial tone and trunking available. Essentially, the business may bring its existing software-based phone system into a data center that is focused on VoIP services.
What is the advantage of divvying up responsibility when it comes to phone systems?
In the traditional telephone world, every time a phone system breaks down or there is a need for an upgrade, a call is made to an outside consultant who specializes in that specific phone system.
It stands to reason that the same might ring true in the cloud-based world if you dive in unprepared. Working with an experienced VoIP provider will help future proof your telecommunications by distributing responsibility and having a good support structure. In fact, a solid VoIP provider will have built-in redundancy to protect against downtime.
With a traditional or even VoIP premise-based model, if a system goes down, you’re down until it gets fixed. With a virtual — or host-based model — the system simply doesn’t go down because there is redundancy already in place.
Alex Desberg is sales and marketing director at Ohio.net. Reach him at firstname.lastname@example.org.
Insights Telecommunications is brought to you by Ohio.net
Statistics from the National Council on Compensation Insurance show that 38 to 50 percent of all workers’ compensation claims are related to the use of alcohol or drugs in the workplace. According to the U.S. Small Business Association, on average, employees with inappropriate substance use cost their employers $7,000 annually. Many Ohio businesses are turning to the Bureau of Workers’ Compensation’s (BWC) Drug Free Safety Program (DFSP) for assistance to address this issue and reduce their annual premium.
“A well-designed DFSP will help an employer deter substance use on the job, create a safer workplace and impact the bottom line by providing a discount to the employer’s premium,” says Cassy Taylor, senior risk services analyst at CompManagement, Inc.
Smart Business spoke with Taylor about the main components of Ohio’s DFSP.
What discount levels are available and when are enrollment deadlines?
DFSP offers basic and advanced discount levels that provide a 4 and 7 percent discount, respectively. Public employers wishing to participate may start their program Jan. 1 of each year. However, private employers have the opportunity to begin on either Jan. 1 or July 1. Applications for programs beginning Jan. 1 are due to the BWC by the last business day of October while those starting July 1 must submit their applications by the last business day of April.
What components does a DFSP require?
Basic and advanced levels of DFSP require:
- Annual reporting.
- Annual online safety assessment.
- Accident analysis training for supervisors.
- Use of online accident analysis on the BWC website for each accident/claim.
- A written policy in place.
- A minimum of one hour annual employee training.
- A minimum of two hours first year and one hour refresher supervisor training.
- Pre-employment, post-accident, reasonable suspicion and return to duty follow-up drug/alcohol testing.
- A cut off level of .04 blood alcohol content.
- Zero tolerance (basic level only).
- List of referrals for employee assistance.
In addition, the advanced level program also requires 15 percent random drug and alcohol testing, a second chance agreement for employees, a substance assessment for employee assistance and an annual safety action plan.
How does Ohio’s rebuttable presumption law factor in?
The rebuttable presumption law puts the burden on employees to prove that alcohol or drugs found in their system were not the proximate cause of a workplace injury. It also allows employers to ask for a disallowance of a workers’ compensation claim for an employee who tests positive on a qualifying chemical test. The law also is applied if an injured employee refuses a test. For a workers’ compensation claim to be allowed the injured employee must prove that being intoxicated by alcohol or under the influence of any controlled substance not prescribed by the employee’s physician was not a factor in the accident that caused the injury. Employers must post a written notice provided by the BWC to alert employees that they may not be eligible for workers’ compensation benefits if they are injured while intoxicated or under the influence of a controlled substance.
What impact would the DFSP have on a midsize company’s premium?
Assuming the eligibility and program participation requirements are met, a midsize service company could expect the following in annual premium savings by implementing the advanced level program, assuming the employer is participating in no other alternative rating programs:
- Payroll — $3,990,000.
- Individual discount — 16 percent.
- Individual premium — $14,683.
- 7 percent advanced level DFSP discount — $700*.
*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 DFSP such as Group Rating, Destination Excellence, Small Deductible, and Safety Council to name a few. Always have your third-party administrator conduct a feasibility study to evaluate the best savings options available for your organization.
Cassy Taylor is senior risk services analyst at CompManagement, Inc. Reach her at (800) 825-6755, ext. 65434 or email@example.com.
Insights Workers’ Compensation is brought to you by CompManagement, Inc.
Mobile devices have improved the flexibility of the workforce, but also have introduced serious concerns for employers.
“The wall between work and personal time is gone, which creates costly liabilities for employers. If your company is sued, it is a lot easier to defend that action when you can demonstrate you thought about the risks and tried to mitigate them,” says Kailee M. Goold, an associate at Kegler, Brown, Hill & Ritter.
Smart Business spoke to Goold about the risks of working on mobile devices and ways to limit the potential liability for employers.
What are the risks associated with mobile devices and data security?
There are two potential areas of liability: data security and employee behavior. Unfortunately, there is no one-size-fits-all policy or agreement that will provide a solution. Because you cannot eliminate all liability, you have to develop a policy that fits your regulatory environment, risk tolerance and trust assessment.
Identifying important data is a critical concern. Protected health information and financial information are the most regulated data, and the law requires companies handling this data to protect against security breaches. On the other hand, some data can be essential to your business but not regulated by law. For example, your company’s success may hinge on your trade secrets or customer information.
Regardless of the data you work with, you need to consider questions like: Do independent contractors have access to your system? What happens when a cloud-connected device is lost? Does the loss of data make your company liable to third parties?
What should companies know about mobile devices and employee behavior?
As far as behavioral issues, three costly liabilities are worth highlighting. First, consider if you are in compliance with wage and hour laws. Are employees working from mobile devices outside of work hours? Does this off-the-clock work push the employees over 40 hours a week? What seems like a small problem can quickly escalate into a wall-to-wall audit by the Department of Labor and a million-dollar lawsuit.
The second serious behavioral risk is distracted driving. If an employee is using a mobile device for work purposes and causes an accident, the company will be on the hook for all of the resulting damage. This is no small matter: verdicts and settlements have been running in the $15 million to $25 million range. Carefully drafted policies can only help your defense.
Third, you should think about the harm a terminated employee can inflict. For example, when an employee separates from your company, can they take your sensitive data and work for a competitor? If you do not have adequate safeguards in place, you will likely have to sue the former employee, as well as the new employer, to stop the bleeding. This loss of data may also make you liable to third parties if they had rights in the data.
As with most employee behavior issues, proper policies and monitoring can avoid headaches and expensive litigation.
Does it matter if the device is employee-owned or supplied by the employer?
The bottom line is that the use of mobile devices at work is a risk no matter if the company owns the device or you employ a bring your own device (BYOD) policy. So you have to figure the best way for your company to manage these risks.
The advantage of a company-issued device is control. You own the software and data being transmitted, like a computer or phone at a desk. Company-issued devices mean employees have fewer privacy rights and it is easier to wipe data. The drawback is monitoring. You have to consider everything: Are they buying expensive apps? Are they using the phone for unlawful purposes while working? Can you enforce these policies in a nondiscriminatory manner?
If you choose the BYOD route, handbooks and agreements must reduce employees’ expectation of privacy in their device. You will need access to and knowledge of what they are doing with work-related data. However, your access should only be for legitimate purposes, such as the installation of security software and wiping sensitive information.
Kailee M. Gooldis an associate at Kegler, Brown, Hill & Ritter. Reach her at (614) 462-5479 or firstname.lastname@example.org.
Insights Legal Affairs is brought to you by Kegler, Brown, Hill & Ritter
The U.S. Department of Labor (DOL) has increased its compliance enforcement efforts and is expected to conduct more benefit plan audits to determine if the companies that sponsor them are meeting those requirements.
“This is an area of focus for the DOL. A lot of time was spent preparing fee disclosure regulations, and follow up is likely to ensure plan sponsors are using that information. An increase in audits hasn’t been announced, but more auditors are being added to the ranks,” says Andrea McLane, manager, Benefit Plan Services, at Rea & Associates.
Smart Business spoke with McLane about what the DOL expects of plan sponsors and how to meet those expectations.
Do fee disclosure regulations cover all benefit plans?
The primary area of concern is with retirement plans since so many accumulated assets and safeguards are needed to ensure the plans provide income to employees when they retire. The DOL is also looking at welfare plans to make sure those with 100 participants or more are filing Form 5500s.
But the emphasis in the fee disclosure regulations is on fiduciary or other compliance issues regarding retirement plans. The regulations were meant to simplify the explanation of fees so that plan sponsors, with assistance from consultants, can better understand fee structures and evaluate when services were necessary and fees were reasonable.
What can plan sponsors do to document that plan fees are reasonable?
There are two approaches that can be taken to help you meet fiduciary responsibilities:
- Request for proposal (RFP).
You can issue an RFP every three to five years and compare the responses to current provider costs to determine whether fees are competitive. However, it’s difficult for the average plan sponsor to review RFPs because there’s no format for disclosures, making an apples-to-apples comparison challenging.
It’s much easier for plan sponsors to benchmark their fees. You can do this using data from your current service provider only. This method isn’t objective and is of a lower quality. It also may not meet fiduciary responsibilities when it comes to the process of choosing a provider. The best solution is to find a good, independent benchmarking service. While not a requirement, the DOL set an expectation that plan sponsors will benchmark and at least check the reasonableness of their fees.
An investment policy statement (IPS) can help you select and monitor plan investments. An IPS isn’t required, but it’s tough to monitor investments without one. It will also help ease DOL anxiety concerning the level of governance provided. Many investment advisers supply an IPS as part of their services.
Is a benchmarking report enough to satisfy plan sponsor fiduciary responsibilities?
It goes a long way, particularly regarding record keeping fees, but you still have to make sure you have proper oversight and aren’t relying too much on provider assurances. Most high-profile cases the DOL has undertaken have dealt with fees at the fund level. For example, Wal-Mart wasn’t using the best possible share class of funds in its plan — it was using retail-class funds. In this case, the retail giant relied on its trusted advisers too much and didn’t ask enough questions. An independent benchmarking report would have identified that fund fees were too high for a plan of such magnitude, giving Wal-Mart the opportunity to make changes.
Demonstrating that you have a process in place to monitor the investment decision-making of your plan should suffice. The DOL will not second-guess the success, or lack thereof, of the investment decisions within the plan. But it can identify when there is no documented process to monitor service providers, preventing you from meeting your fiduciary responsibility. Without documentation, the DOL will conclude de facto that the fees are unreasonable and the plan is not compliant, resulting in enforcement actions and penalties. It also leaves you open to participant lawsuits for breach of fiduciary duty.
Andrea McLane is manager, Benefit Plan Services at Rea & Associates. Reach her at (614) 889-8725 or email@example.com.
Stay up to date on burning business issues at www.DearDrebit.com.
Insights Accounting is brought to you by Rea & Associates
By Roy Lipski
No matter how large or small, no matter its business focus, sooner or later every company is going to need to raise funds. The Oxford Catalysts Group — a science and technology-based company formed by the 2008 merger of the U.K.-based catalyst development company Oxford Catalysts Ltd. and Velocys Inc., a company based in Plain City, Ohio, that specializes in microchannel reactors — is no exception.
With a successful $45.5 million fundraising campaign to support further development and commercialization of smaller-scale gas-to-liquids plants completed, the experience has taught us a lot about how to capture the interest and attention of potential investors.
But although technology is the name of our game, whatever your business focus and funding needs, there are lessons you can learn from such an experience. After all, the process of raising fund is as much a science as an art.
Here are my top tips:
Before you start: consider what you want to aim for and whom you want to attract
You need to develop a good portfolio of investors. Aim for a mix of large and small investors. You also need to think about the types of investors you are seeking. There are two main kinds.
Financial investors are the ones looking for a financial investment. Strategic investors generally have a financial reason and a business reason for wanting your company to succeed. They may be, for example, your customers or potential customers.
And before you start any fundraising program, you need to consider how much money you will aim to raise. There’s a fine line between enough and too much. In my experience the right amount of money is always a little bit more than you think you needed.
Making the pitch: know your audience
Before you make your pitch carefully consider:
■ The background of the people to whom you are talking. Do they have expertise in your sector? Or are they generalists looking to make a good investment?
■ How much time have they got.
Then design your presentation accordingly.
When making your pitch, pay attention to your audience members and observe their reactions. Are they taking in your points? Or do they seem to find them boring or uninteresting? To make the best impression you need to be able to judge what goes down best for each audience on the fly — and be prepared to change your presentation style and content as you go along.
I always go into a presentation with a huge range of different PowerPoint slides and presentation styles to call on so I can adjust my presentation to best interest a particular audience.
After effects: the waiting game
It generally takes time for investors to consider your propositions and decide whether to invest. But sitting back and doing nothing while waiting for investment decisions to be made is never a good idea.
After you’ve made your pitch, be open and welcoming to potential investors who come back for more information, and invite them to ask further questions. Make sure your potential investors understand your vision and strategy, as well as your delivery program and expectations.
Also, work to nurture both existing and potential investors. Set up a communications program in order to build up trust and credibility, and to keep everyone informed about the company’s activities.
And finally, never raise money when you need it — always do it before.
Roy Lipski is CEO of Oxford Catalysts Group who helped found Oxford Catalysts Ltd in 2005, led it through an IPO and subsequent acquisition of Oxford Catalysts Group’s sister company, Velocys Inc., and raised more than $130 million from institutional investors. For more information, visit www.velocys.com.
Ameet Patel bet big on simplicity and transparency at Hollywood Casino Columbus, and the gamble is paying offWritten by Dennis Seeds
When the Hollywood Casino Columbus beckoned Ameet Patel a year ago, he knew there was something different about the opportunity.
After 23 years in the casino business, Patel was looking for a personal challenge. An accounting and auditing major in college, he earned his master’s degree from what is now Philadelphia University and started as an accountant at the Sands Hotel and Casino in Atlantic City right after graduation. Next came stints at casinos all over the country, but it was the Columbus venue that piqued his interest.
“It was to not only create and open another casino, which is what I have done before, but I finally had a chance to say, ‘Now is my chance to establish a legacy and a legacy that stays.’”
Patel had a vision of a casino operating on core values that he defined, that were grown organically, locally and uniquely within central Ohio, along with the employee base.
“What should our core values be in central Ohio?” he says. “That to me was the most interesting and intriguing but also the most challenging part. We were just not building a brick-and-mortar site. It was literally what should be our hiring practices, what should be our culture, and as a result, what should our core values be, and how do we make sure that everybody embraces that.”
Since opening last October, Hollywood Casino Columbus, one of Penn National Gaming Inc.’s 21 casinos and the city’s first, has worked hard at being the new kid on the block who wants to make friends with the neighbors. While it’s been in heated competition with Scioto Downs for market share, the casino, through July, has seen a respectable $190 million since opening.
Here’s how Patel has drawn up core values, put them into practice and built a fresh culture at Hollywood Casino Columbus.
Make your foundation
When Patel first arrived in Columbus, the casino was in its infancy — and he quickly realized he had to draw from his experience and craft a new culture, one that he had always wanted to build. The task would be to initiate the steps along the way and keep to his script to ensure the casino would develop optimally.
It was Business 101 — make your business plan carefully and then execute it accordingly. And Patel believed that if you supported the ideals of simplicity and transparency, the odds would be in your favor.
Patel decided to take the simplicity route in sculpting his model employee, of which he would hire 1,400. He knew that many prospective employees would be unfamiliar with the operation of a casino. But as long as they could offer the correct answers to a few questions, it didn’t matter.
“Do you have customer service orientation?” Patel says. “Can you handle 10,000 people a day walking through the doors? Can you function under that environment? If you can bring that, don’t worry about the unknowns because we can teach you the unknowns.”
Patel knew the core values he wanted and he posed them in the form of questions.
“Can you have fun?” he says. “Can you be a good host? Can you be a good neighbor in the community? Can you always be capable of doing the right thing when given choices?
And can you always see ways to improve, particularly financially?
“If you can say yes to these five things — perfect,” Patel says. “That’s what we are looking for at all levels of the organization.”
When those commitments come naturally, you are primed to experience the benefits of a great company culture.
“We have thousands of people working here who go back to their host communities and talk about what a fun culture it is to be here,” he says.
“The most repeated comment I hear from visitors is there is something unique about this property where people are just so warm and friendly.
“Well, that didn’t happen overnight, and it didn’t happen by accident,” Patel says. “It starts from establishing core values, then recruiting for those core values and then executing on those core values. And that is the end result, where people say, ‘Well, this is really unique,’ because when being a good host is part of your core culture and core values, by gosh, the delivery is a lot more than people saying, ‘Oh, just come on. We’ll be nice to you.”
Patel also stresses that core values could drive even your bottom line in ways you had not considered.
“Put it in simplistic words — can you see ways to improve everything that you do? Today you are coming here just washing dishes. But if you have a suggestion on how we can expedite this and make the dishes cleaner, or reduce the workload, now you have contributed to the bottom line already.”
Simplify, and reap your rewards
Using simplistic principles to guide you when you are searching for highly suitable employees will most often bring dividends, but what it may bring to your management team can be another feather in your cap.
“Over the years, I found the best way to simplify things for management teams was to always ask people when they give a complex report to ask for a CliffsNotes version,” Patel says. “When they come back with a 10-page report on numerics, I would ask, ‘What would be a one-page summary?’
“When you force that kind of thought process throughout the organization, people start saying, ‘OK, before I talk to my leader, I know the question is going to come up — What does this mean in one page? What does this mean in two sentences?’”
Common wisdom holds that it takes more time to write a short composition than a long one, and people may shy away from wanting to do a short summary.
“That is always the first reaction that I receive from everybody I have asked summaries from,” Patel says. “And over time, I know a lot of the leaders developed in our company have told me otherwise. That is, the biggest benefit of them being pushed to write summaries or give a one-page or two-sentence viewpoint was that it allows them to think about what they are doing.
“If I asked for a report, and I say, ‘Give me an income statement,’ that is great, people would spend time developing that income statement, and, ‘OK, here’s everything. Now the problem is yours.’ The critical thinking stops there.”
But if you continue to regularly write summaries, it keeps your critical thinking in top form.
“Before you go there you know you will be answering what this all means in one sentence,” he says. “Is the income statement good or bad? Why or why not? And if it is good, do you understand where it is coming from?
“So critical thinking develops for the long run, which I think is a real, real key to success when you get into leadership positions.”
Create a transparent operation
Another important tool is to establish transparency as a priority.
“The more transparent we were — I think that has paid off huge dividends,” Patel says. “There was a tremendous amount of community involvement with tours taken by people, social groups and charitable organizations, to let them know before construction, during construction and post-construction that this is one of the real, real unique success stories in almost the entire country.”
Patel had to defuse the perception naysayers held that a glitzy Las Vegas was coming to Columbus, since that was not the case.
“We are very, very mindful of the host community in which we operate,” he says. He found it useful in his effort to be transparent to remind people how a casino has parallels to other businesses.
“I just reference that this is exactly the same regulation that a bank goes through in monetary terms and action — then people relate to that,” he says.
“I am a firm believer in providing known industry references to simplify your message to the public.”
Beyond the glitz and glamour, it really comes down to a normal business. For example, investors put up their money and expect a rate of return.
“To that return, you just have to develop a business model that is a socially responsible business model. If you keep your shareholders happy, keep your employee base happy, keep your community involvement transparent and abide by the regulations, now you are creating a business model that is sustainable over decades,” Patel says.
“We spent a tremendous amount of time educating everyone including a number of employees here. When you hire 90 percent of the employees from the local community, your employees don’t know what it means to work for a casino which is a large corporation and a public entity.”
How to reach: Hollywood Casino Columbus,
(614) 308-3333 or
Set your foundation first — obviously.
Simplify, and reap your rewards.
Focus on transparency in all area.
The Patel File:
Name: Ameet Patel
Company: Hollywood Casino Columbus
Title: Vice president and general manager
Born: Tanzania, Africa
Education: I got my first college degree in accounting and auditing in India. I came to the U.S. in 1987 and received a master’s degree from the Philadelphia College of Textiles and Science, now Philadelphia University.
What was your first job? My first job getting a paycheck was at the Philadelphia College of Textiles and Science. I started tutoring undergraduate students in statistics and economics. They were my two major areas in business, and it was a real rough road because I was new, I had a heavy accent, and students more often went with somebody who had gone to Temple University, or had graduated from a local high school.
When you say you are a tutor from Tanzania, who speaks Swahili, and can tutor you in economics not too many students were willing to sign up. So my first paycheck was literally $8 after working 2½ hours at a time. To this day, I saved that pay stub; it has been one of my biggest motivators because that taught me what I had to do, not necessarily what the world had to do but what I had to do in order to succeed in life; that is, to work harder than an average American.
Who do you admire most in business? Warren Buffett. By far. One of my biggest motivators has been him. I’ve learned a lot about him by just observing him, reading about him and watching him on YouTube videos. When he does any public speaking, I learn so much about simplicity and making people understand what we do. He is someone I have admired and closely followed literally my entire career.
What is the best business advice you ever received? Always simplify things so you understand and so everyone around you understands. When you do that, it's incredible how many people become not only supporters but also followers of what you do because people have some real complex perceptions of what you do. Sometimes people see you are a general manager, so you must be busy, you do so many complex things, it is a $400 million operation, and I would say it is really not. This is really exactly what we do. That is the best business advice I have ever received. It is very easy to make things complicated. Nine out of 10 times people go out of the way to make things complicated.
What is your definition of business success? To make sure that you are running a socially responsible business model that is sustainable for decades because it creates an employment base. It is really when you relate the human life element to a business — that to me is your ultimate business success. Can you provide a sustainable living to people who are working with you — vendors, people in business who are contracting with you as well — can you provide a long-term sustainable source of living and income? That to me is the biggest part of what I call business success. A lot of businesses become reckless. They go in and out, and it becomes a flash in the pan. A lot of people depend on you. So when you look at thousands of lives depending on a business model, you have to take that as the very core by which you define business success.
Say the word “innovation,” and immediately you think about business legends like Steve Jobs and Jeff Bezos, as well as the companies they created – Apple and Amazon. Too often, however, we focus on the people who have been tabbed as innovators and the companies that develop those breakthrough products, services and solutions, such as Apple’s iPod and iTunes, or Amazon’s marketplace and unique ecosystem.
True innovation goes much deeper than a single leader’s vision. It is an all-encompassing philosophy that permeates an organization and defines its purpose for being. For me, at least, I prefer to think about innovation in its broadest terms, extending its definition to include corporate cultures and innovative management styles. Think about how Facebook and Microsoft are run, and how at both organizations employees are a key factor in the idea creation, or ideation, process.
Now, think about the breakthrough products that eventually went bust. Hopefully, you don’t have a basement full of Beanie Babies, boxes of Silly Bandz, or a home library filled with laser discs. It is more common to land on a singular breakthrough product that temporarily revolutionizes your industry rather than develop a product through a process that’s repeatable or scalable. And, just as true, no matter how innovative and creative your management team’s style may be, without the proper processes in place to push ideas through a system that takes them from mind to market, you’ll eventually have trouble keeping the lights on.
It all comes down to developing a culture imbued with innovation at its core. But this also requires having a servant culture in place where every person who works for the organization thinks about the customer first.
Consider San Francisco-based Kimpton Hotels, where employees strive to create “Kimpton Moments” by going above and beyond with guests and delivering memorable experiences.
Kimpton overcomes the inherent limitations for creating new innovative products that being a boutique hotel chain includes by approaching innovation through its employee interaction – and then rewarding employees for their creativity. For example, when team members put in the extra hours to ensure world-class service delivery, the hotel chain has sent flowers and gift baskets to their loved ones. And when they create an innovative service experience, the company rewards staff members with such things as spa days, extra paid time off and other goodies.
And then there’s the Boston Consulting Group, a management consulting firm that’s known for developing innovative business processes and systems for its high-end clientele. Part of BCG’s internal process is a focus on team members maintaining a healthy work-life balance. When individuals are caught working too many long weeks, the company’s management team issues a “red zone report” to flag the overwork.
Talk about innovation! And no product, service or solution was developed, marketed or sold.
And finally, few organizations are more innovative than DreamWorks Animation. But beyond plugging out groundbreaking animated movies, the studio’s culture embraces empowerment and innovation. Employees are given stipends to personalize their workstations so that they create whatever inspirational atmosphere they need to succeed. And, as the story goes, after completing Madagascar 3, the crew presented a Banana Splats party, where artists showed the outtakes.
Not only are these three companies known for being innovative in their respective industry spaces, they also share the honor of being members of Fortune’s 2013 “Great Places to Work” list.
So how do you take the first steps toward transformation or put those initial building blocks in place to begin the journey? There’s no magic formula, but there are some common traits – and they revolve around empowerment and establishing a culture that cares.
- Are open-minded and ask “What if?”
- Teach team members how to see what is not there and identify opportunities in the marketplace to take advantage of those gaps.
- Develop cultures where innovation thrives through open and honest communication.
- Flatten the organizational structure and recognize that innovation can come from anyone and anywhere.
- Make innovation, itself, a cyclical and continuous process.
Stop and take an internal assessment of your organization, your team and of yourself. If you can’t check a box next to each of these five traits, stop and ask yourself why. Then begin your own journey to greatness.
Sir Tim Berners-Lee recalls a time when computer users around the world were quite nervous about the power of Netscape.
“A lot of people thought, ‘Oh, wow, a clingy and controlling Web company. What do we do about it?’” says Berners-Lee, director of the World Wide Web Consortium (W3C) and inventor of the World Wide Web. “Then they weren’t worried about Netscape anymore. They were worried about Microsoft, and they worried about Microsoft for a long time. Then they woke up one day and said, ‘Wait, the browser is not the issue. It’s the search engines.’”
Today, it’s the social network that has people worried, says Berners-Lee. But whichever medium is in society’s crosshairs, he says the fear is very similar in each case.
“When you have a monopoly, it slows innovation,” Berners-Lee says. “It reduces competition, and it’s generally not good for the market. One of the most important things about the Web is it being an open platform. The ’Net is a neutral medium. I can connect and you can connect, and we can talk. That is really important to an open market and democracy.”
One of Berners-Lee’s primary missions with the W3C is to ensure the Web is being used to its full potential. But it is also to make sure it remains an independent entity so that everyone who wants to has the opportunity to tap into that potential.
“If you can start tweaking what people say or you can start intercepting their communications, it’s very powerful,” Berners-Lee says. “It’s the sort of power that if you give it to a corrupt government, you can give them the ability to stay in power forever. It’s healthy for us to not put the Internet directly under the control of the government, but to have a set of multi-secular organizations at arm’s length from government acting responsibly and taking many views.”
Still plenty of room to grow
Berners-Lee helped launch the World Wide Web Foundation in 2009 to bring the power of the Web to more people.
“Maybe now 25 or 30 percent of the world uses the Web,” Berners-Lee says. “That’s still a massive gap and a massive number of languages where there still isn’t a lot on the Web. There’s a lot of culture that isn’t represented and a lot of countries where they haven’t the backbone for a good Internet base.”
The foundation has designed and produced the Web Index, the world’s first multi-dimensional measure of the world’s growth, utility and impact on people and nations. It covers 61 developed and developing countries, incorporating indicators that assess the political, economic and social impact of the Web in that country.
“The higher level of the Web Index is looking at impact,” Berners-Lee says. “Is it really affecting the way people do politics? Is it really affecting the way you do education? Is it affecting health?”
The recent turmoil in Egypt was a wake-up call to many who are connected to the Internet, but have started to take its power for granted.
“They thought the Internet was like the air, that it would always be there,” Berners-Lee says. “And people started asking the question, ‘Who could turn off my Internet?’”
Fortunately, there are countless efforts underway from those in the technology industry not to restrict access, but to take the Web to even greater heights.
“The art is designing it to work with all kinds of devices because different customer segments are going to use different devices in different countries,” Berners-Lee says. “If you’re designing something new on the Web, you need to make sure it works on all devices.”
How to reach: World Wide Web Consortium, www.w3.org
The greatest challenge of opportunity is said to be the ability to take the next step and understand what it will take to maximize that opportunity and achieve growth. Amy Rosen knows the importance of that comprehension.
“The skill set of an entrepreneur involves understanding how to create a business,” says Rosen, president and CEO for the Network for Teaching Entrepreneurship (NFTE).
Andres Cardona, who grew up in a rough neighborhood in Miami, is one of the best examples of this entrepreneurial spirit.
“He was on the verge of dropping out of school because his mom had lost her job, and he had to help contribute to the household,” Rosen says.
Fortunately, Cardona had become involved with NFTE. His natural leadership skills, along with the knowledge he was gaining from NFTE, empowered him to do something that would not only help his family, but also other youngsters in Miami.
Cardona founded the Elite Basketball Academy, an organization that would help kids hone both their basketball and leadership skills. He began with one kid and was making 70 cents an hour. Now, he’s a CEO with more than 150 kids, a staff of employees and he’s making money. He’s enrolled at Florida International University studying finance while he runs his business and supports his mom.
“I’m sure it will be the first of many businesses he runs,” Rosen says. “This is just a kid who needed to have his eyes opened to opportunity and learn some basics about business.”
A great place to start
The mission of NFTE is to work with young people from low-income communities, such as Cardona, and engage them in a different vision of opportunity and success.
“It’s basically an entrepreneurship class where they actually go through the whole business-creation process,” Rosen says. “At the end, which really gets to our mission, we want kids to actually connect school with opportunity so they stay in school. Kids start learning how to multiply fractions because they are figuring out their personal return on investments in their new company. We want them to start much earlier thinking about their future.”
Rosen points to Cardona as an example of a youngster with a great gift. But in too many cases, with too many young people, those gifts go unrealized and the child becomes an adult with nowhere to go.
“We want them to have a vision of success and whether they become entrepreneurs and create their own businesses or bring to their jobs and their employers an entrepreneurial mindset. That’s going to give them a much better chance at success,” Rosen says.
The work being done by NFTE fits like a glove with EY’s mission to drive entrepreneurialism in the business sector.
“Our cultures are so aligned around entrepreneurialism in general and we are all running competitions and promoting the notion that we need more entrepreneurs to solve problems,” Rosen says. “Now we have partners on every single one of our boards worldwide. They don’t have to be asked to do it. They really like doing it.”
Cardona was featured at the recent EY World Entrepreneur of the Year Award program in Monte Carlo. Other budding young leaders who have risen through NFTE also have been honored by EY.
“In every city where we have an operation, they feature our winning entrepreneurs,” Rosen says. “So the kids get an opportunity to network and see what success looks like and to go to the kinds of places they’ve never been and participate that way. And they get a sense of recognition for their work.”
Rosen says there’s nothing better than working with young people to prepare them for what lies ahead.
“If you’re going to give back, why not work with kids who need it the most and actually teach them and help them to be entrepreneurs,” Rosen says. “That’s what is going to grow our economy and create stability.”
How to reach: Network for Teaching Entrepreneurship, (212) 232-3333 or www.nfte.com