Morgan Lewis Jr.
Patricia Kennedy-Scott hears the same question every year from business owners. Kennedy-Scott, Kaiser Permanente's new Ohio Region president and a 25-year veteran of the health care and insurance industry, wants to open the discussion to more than just that ominous question. After all, what good is saving a few bucks when your employees hate the service?
That's why Kennedy-Scott wants to spread the word about the benefits of preventative care. As she points out, if you can prevent your employees from getting sick, it will save your company in the long-run.
"It's beyond the dollars," she says. "You have to look at the value equation, and the value equation does require a look at outcomes. It really does require a look at long-term benefits and health improvement status, it really does look at preventative care."
Kennedy-Scott, who is the first African-American, female president for the Ohio Region, started her career as a junior high school teacher outside Detroit. She taught as she earned her law degree, then began her health care career in the Michigan Attorney General's Office working with the Department of Public Health. From there, she joined Harper-Grace Hospitals in Detroit, and eventually was appointed vice president and chief operating officer of Michigan Hospital and Medical Center.
In 1993, she served on President Clinton's Healthcare Reform Review Committee. Most recently, Kennedy-Scott was vice president of Group Health of Puget Sound Network Services Division in Seattle, where she managed provider network relationships and was accountable for more than 200,000 members throughout Washington and Northern Idaho.
SBN Magazine sat down with Kennedy-Scott to talk about the health care issues facing Northeast Ohio and how health insurance providers can work better with their business customers.
You've had broad health care experience in both the public and private sectors. How do you think that will help you in this position?
I'm sure you've heard the old adage, 'You don't know how it feels until you've walked a mile in my shoes.' Having been in both the public and private side, I have a sense of how it is to work as a regulator, trying to do good, legitimate, appropriate work, and how to help businesspeople understand that and incorporate that into their business world.
I appreciate the work that the people in the public sector do and I appreciate the difficulty that is involved sometimes in doing that work. So, I've walked a mile in their shoes, and I think that that allows me to bring a sense of their values and their public agenda to our table.
What new ideas are you bringing to Kaiser Permanente?
There is no magic bullet for health care. Let's be real clear about that. The trends are as they are, and the external business arena is as it is, and so I'm not bringing any magic bullet.
If I'm bringing something new to the table, it's really a thorough examination of how can we at Kaiser Permanente incorporate some of the ideas that exist outside of Kaiser Permanente into our way of doing business, without jeopardizing the values that we bring to the table around preventative care, coordinated care and evidence-based care.
What are the health care issues facing Northeast Ohio?
My last stop was in Seattle, so this area is very, very different. When you're dealing with an economy that is very Boeing-based, Microsoft-based, high-tech environment, that has one of the lowest unemployment rates in the country, one of the highest education levels, it's just a different type of community.
The market was pretty settled in terms of who was there and what they were doing. I don't want to suggest that the market was divided up, but there were a handful of long-term traditional players who came to Seattle and stayed. Some of the big national firms came through, but didn't stay. I think that the folks in Seattle were, and continue to be, very health-conscious and very sensitive to value vs. who has the lowest price.
This market is very different and the challenges are around the industrial base. You could be talking to somebody in politics or banking and they would say the same thing. The volatility of the market is based on changes happening in the manufacturing and the industrial base, and quite frankly, this area just isn't growing.
We have to figure out ways to bring some growth to the region, because ultimately that's good for Kaiser Permanente and it's good for the region.
If there's no growth, how will you generate new customers?
Kaiser Permanente has to be where the growth is occurring. In Cuyahoga County, growth is pretty flat. But if you look at Medina or Twinsburg, even though those areas don't have huge populations, Medina had a 25 percent population growth. The Twinsburg area had similar growth.
Kaiser Permanente has to be where the growth is because health care is essentially a local endeavor. We all want to go to doctors in our neighborhood and pharmacies in our neighborhood, except when we have something really awful. Then we're willing to go anywhere. Given that health care is essentially a local endeavor, if we want to grow, we need to grow in those communities where there is an opportunity.
Beyond that, even in areas where there is pretty flat growth, we have a tremendous opportunity to experience growth through product redesign. One of the keys is to focus on and develop products which have broader appeal in the HMO market, and we haven't tried that before.
We're not interested in selling things because we can sell them. We're interested in selling things that support our values and that are value-added to our present and future members.
So, product development will be very important, being in areas where there's geographic growth is important and telling our story is important. I have worked for organizations like Kaiser Permanente for most of my career. I worked at Group Health of Puget-Sound, which I describe as Kaiser's twin separated at birth.
Even though they have emerged over the last 50 years in different community, at the end of the day, they're similar organizations and they have similar values around coordinated care, evidence-based medicine and preventative care. As we develop new products, those are values we have to infuse.
Finally, we at Kaiser Permanente don't talk enough about ourselves. Kaiser Permanente overall is a $21 billion enterprise across the country. We have 8.5 million enrollees. When people think of Kaiser Permanente, they think it's (just) an HMO.
What I want to do over the next several years is to tell the story of Kaiser Permanente, so when people see the name, they'll start to think of our population-based medicine approach, they'll start to think of our preventative care, they'll start to talk about that we provide care along the entire continuum.
Traditionally, there's been a strained relationship between HMOs and business owners. How will you work to improve that relationship?
Let me tell you a story. I had client in Seattle who called me and said, 'Pat, I want you to know that I'm canceling Group Health.' I said, 'Oh, let's talk about it.' He said, 'No, I don't want to talk about it until I can find an insurance plan that makes sense. I've looked all around the community, and there's no health plan that makes sense.'
The good news was he wasn't dumping us to go somewhere else, but the bad news was, as an industry, we had let a small business owner down because we're designing products that he doesn't need and don't make sense to him.
One of the things I'd like to do is to design products and have offerings that do make sense. The way you do that is to not only look to a user perspective, but a purchaser perspective. In health care, we have two levels of purchasers.
We have the first purchase, which we call 'getting on the shelf,' so we have to get on the shelf before it's even offered to the next level, to the user. As an industry, we've focused a lot on what makes sense to that second purchaser, and that's important. We have to sell things that people believe add value to their lives. But it also has to make sense and fit in the revenue envelope and the value envelope of employers.
Health care, it is what it is, and there are answers out there that Kaiser Permanente is seeking to find in terms of using technology to reduce the cost of health care. We're working constantly in Washington to keep the health care agenda on the radar of legislators. We're looking for proven ways of treating certain diseases.
We're doing all of the right things in order to have a dialogue with an employer around, 'What is it that makes sense to you, and how can we package it?' The numbers show the rapid inflation around pharmaceuticals, around new technologies, and if you don't have the latest, the consumer response is they don't believe they are getting what they deserve.
We're fortunate that we're not in the hospital business, so we don't have to respond to that on an on-going basis, and we have a great relationship with the Cleveland Clinic, which provides our hospital care.
The answer is that it's not just up to the insurance industry or the health care industry to find the answer. It's a partnership between our colleagues in the business industry and the recognition that inflation is as it is, and we have to figure out how we use the dollars that we have in the most efficient and effective way.
What can business owners do to work better with their health insurance provider?
The discussion should be more than about, 'What is it going to cost me this year?' Looking at outcomes, looking at customer satisfaction, those are important elements around a purchase decision. That is an important part of the dialogue.
With large employers, that is part of the discussion. With smaller employers, it's not usually part of the discussion because their core is so small.
Some employers say, 'I want to pay for it today, I don't want to worry about the benefit that it's going to create in 50 years because I'm not going to have these employees working for me anyway.' I would submit to you that the days of people changing jobs every three to five years are over.
I believe that the baby boomers who are now in our 50s are no longer interested in spending the next 10 years changing jobs every three to five years. We're interested in staying. So, an investment in my health status today is a good investment for Kaiser Permanente or for whatever employer you happen to be with.
It's beyond the dollars. You have to look at the value equation, and the value equation does require a look at outcomes. It really does require a look at long-term benefits and health improvement status. It really does look at preventative care.
Just the number of preventable illnesses is astonishing if patients are given the right education, the right exposure. And a simple one is flu shots, and we give them away because it's an investment in prevention.
If you look at hospitalization rates in January and February, and you look at the rate among the elderly and people with chronic diseases, it's very easy to justify giving away those shots. You pay for the shot and have the expenses associated, but what you are doing is preventing hospitalization, flu, pneumonia and other respiratory-based diseases, which are expensive diseases to take care of. How to reach: Kaiser Permanente, www.kp.org
Echo Brown, 18, won the grant through a youth smoking prevention program from the Lorillard Tobacco Co. to produce a video showing teens the health hazards of smoking. But Brown didn't submit the grant proposal by herself. She is a student in the Cleveland Clinic/John Hay High School Education Partnership, which offers students at this inner-city Cleveland school a four-year medical/biological curriculum track to pursue a career in the health care field.
The partnership, in its 13th year, is one of the Clinic's most successful community service projects, says Rosalind Strickland, director of community relations for the Clinic.
"The program exposes the students to all types of health careers," she says. "It gives them an opportunity to go behind the scenes and get hands-on experience and then hopefully to go on and become a health care professional."
The program introduces students to careers beyond that of a traditional physician. Other health professions like radiology, lab medicine, ophthalmology, surgical technician and biomedical research are also explored. Instruction includes both in-class work and internships where students help Clinic staff with patient care, research and administrative tasks.
The partnership was named one of two "Learning Models in the Country That Work" in 2000 by the public broadcasting TV station in Boston.
Brown, who worked on a genetic research cloning project at the Clinic during the summer, graduated in June. Even with the program's rigorous college prep curriculum, the honor student earned a 4.6-grade-point-average, which got her a full academic scholarship to Dartmouth College. Many other program alumni have gone on to higher education and returned to the Clinic to work, Strickland says.
"Community projects like this are tied to our mission," Strickland says. "Our mission is about the business of what we do -- which is health care." How to reach: The Cleveland Clinic, (216) 445-6600
Witness the tornado that devastated parts of Ohio in November and left thousands without power. It's in those crisis situations that FirstEnergy not only helps restore the power, but also works with the Red Cross to provide shelter and services to people whose homes were destroyed.
"The American Red Cross is a natural partner," says Mary Beth Carroll, FirstEnergy vice president of community involvement and president of the FirstEnergy Foundation. "If there is a disaster, people need their electricity service restored fast, but they also need other services, so it makes sense that we would work together."
With more than 4.3 million customers, FirstEnergy knows about energy efficiency. That's why working with Habitat For Humanity International to build energy efficient homes for low-income residents makes sense for the utility company.
This year, it gave $3.4 million for the construction of 54 homes in its Ohio service area, with strict requirements so that the houses were energy efficient to keep utility bills low.
"A good number of those houses have also had employees help out with the building," Carroll says. "Employee involvement is crucial with any kind of community projects we do."
FirstEnergy supports more than 2,000 organizations in its three-state service area and donated more than $6.4 million last year in funds and services. But the demand for its charitable help is much larger than the $2 billion company can provide.
So how does it choose which organizations to support? It starts with the employees.
"If there's a grassroots effort and we have 100 people who want to support this organization or take part in this event, we should be supporting them," Carroll says. "People who are in leadership roles here at FirstEnergy, we need to be there, too. Both are equally important."
One part of community service that is seldom talked about -- but always considered -- is how it supports the business interests of the company. Carroll says the two concerns fall together naturally.
"I would suggest anything we do in terms of our community involvement is going to be parallel to the business interests," Carroll says. "If there are projects and programs that are good for any of our local economies or the regional economy, it's good for us. We certainly would be supporting capital campaigns, other projects of that type that are good for more than our company, but would be also beneficial to us." How to reach: FirstEnergy Corp., (330) 761-4112
The bipartisan measure outlined several steps to help nurses, doctors and health care workers avoid the 600,000 to 800,000 annual needlestick injuries which pass bloodborne pathogens like the HIV virus and hepatitis B and C to its victims.
One way to avoid these injuries, the bill says, is to enforce the use of safety syringes, which have retractable or covered needles. The largest maker of these, and all other types of syringes, is $3.7 billion medical supply company Becton, Dickinson & Co. Becton, Dickinson was thrilled by the passage of the legislation and lauds it on its Web site, but there's a line in this bill that it refuses to talk about.
That line reads, "(Needlestick prevention plans should) document annually consideration and implementation of appropriate commercially available and effective safer medical devices designed to eliminate or minimize occupational exposure."
Such a device is commercially available and is undergoing the final phases of FDA clinical testing. Such a device exists that destroys and seals a syringe needle, rendering it virtually harmless, and it would save hospitals $500 million annually, according to the U.S. General Accounting Office.
The Occupational Health and Safety Administration (OSHA), the watchdog of worker safety, however, won't openly endorse these devices. Why? Perhaps it's because of the sketchy track record of previous needle destruction devices. Several calls made to OSHA over the course of a month were not returned.
That brings us to Joe Adkins, president of Broadview Heights-based Safeguard Medical Devices Inc. and creator of the Disintegrator, a new syringe needle destruction device. Adkins, who has a three-employee operation, is fighting a multibillion-dollar company and one of the largest divisions of the U.S. government to get his product in America's 5,000 hospitals and 100,000 health clinics and medical offices.
And he's starting to win.
Joe Adkins, a tall, lean man with swept-back red hair and a deep smoker's voice, jams his unprotected hand into a two-foot-deep box full of syringes.
"I'd say there are maybe 2,000 syringes in here," says Adkins, vigorously working his hand through the pile. "They're all destroyed, so they're not going to stick you."
Adkins clearly has confidence in his product. The Disintegrator, which he spent two years developing, destroys any size syringe needle using electrical current. The device is about the size of a box of kitchen matches and burns the needle down to the nub, sealing it, so no fluid can escape. The process takes less than three seconds, and all it requires is the press of a button.
The idea came from Adkins' mother-in-law and sister-in-law, both nurses. In 1998, when the Needlestick Prevention Act was introduced into Congress, there was a lot of publicity because hundreds of thousands of health care workers are stuck each year, resulting in more than 1,000 serious infections.
Adkins' mother-in-law told him, "You're an engineer; you would think you would be able to come up with something to solve this problem."
So Adkins did.
He looked at what had been done in the past. He saw that previous needle destruction devices burned the needle by short-circuiting the battery, which required the user to feed the needle into the device incrementally. The devices also required an immense amount of power, so batteries didn't last long.
The Disintegrator uses an air arc, similar to a welder's arc, or a metal cutting arc. That arc jumps a 3/16th inch gap to an electrode that comes over and strikes the needle, creating a momentary controlled short circuit.
The electrode is set at an angle so that the closest point is at the bottom of the needle. As the needle melts, that closest point of the electrode rises, and the arc follows that tip of that needle all the way up to the nub.
Although Adkins' device works much more efficiently than previous products on the market, it is being written off as just another clumsy needle destruction device. One of those groups dismissing the product is OSHA.
"I do understand OSHA's position," Adkins admits. "The needle destruction units that they have seen to date are really not adequate. They were very large, they are very heavy, and they really can't be used."
To help overcome this prejudice, Adkins called on Rep. Steven LaTourette (R-OH), to alter the Needlestick Prevention Act to include language about using devices other than safety syringes. Since the law was passed, there has been little progress in getting other devices approved by OSHA.
"Some of the field operatives for OSHA feel differently, and they're trying to get some sort of across-the-board clarification for these people that this is an acceptable device," says Terry McNaughton, a legislative aide for LaTourette. "We're trying to get a trickle-down effect going."
While OSHA stalls on its ruling on needle destruction devices, the tax dollars spent on safety syringes continue to add up. The most common type of safety syringe in hospitals costs 20 cents more than a standard syringe. It will cost an average 100-bed hospital an extra $12,500 a year for the safety needles, Adkins says.
To put a needle destruction device at each bed would cost the same amount, but it would only be a one-time cost. The only additional cost is a battery replacement after three or four years.
On top of the added base cost, safety syringes need to be overfilled because they waste more medication due to the complex mechanism inside. These syringes also require extra training for nurses and health care workers. And add to that the cost of a higher medical waste bill due to the heavier weight and size of the safety syringes.
"In reality, they could be looking at $1.5 billion a year, easily," Adkins says. "If it's costing the medical profession that, guess who's paying for it? You and me."
Helping Adkins endure the battle with OSHA is his investors, South Coast Holdings, which is affiliated with Akron-based law firm Roetzel & Andress.
"The fact that he had been working at this for two years, and he was nearly through the FDA process, was remarkable," says Terry Smith, executive vice president of South Coast. "A lot of products don't get as far as he did. We're not typically start-up investors, but we just felt this idea was phenomenal."
The professional model of the Disintegrator is where Adkins hopes to make his fortune, but in the meantime, he has to pay for the two years of research and development.
In March of this year, he received FDA approval of the Disintegrator consumer model for the diabetic market. But it looked like it would take him another two years to get it on the shelves of pharmacy and retail chains.
Enter Perfecta Products, makers of Zim's Crack Crème. The company discovered the Disintegrator and offered to co-market it along with its foot cream designed for diabetics. Zim's Crack Crème is in 41,000 retail stores including CVS, Walgreen's and Wal-Mart.
"They feel they can put some serious numbers behind this thing," Adkins says. "By having the way in to that many retailers is a benefit that they can offer that would take me two or three years to try to duplicate."
The Disintegrator is retailing for $99.95, about the same price as the blood glucose meters diabetics use to test their blood sugar. The glucose meters are covered by Medicare and diabetics are allowed to purchase one a year, even though the meters last five to 10 years. Once again, Adkins is faced with an uphill battle to convince a government agency that his device is just as valuable to diabetics as a glucose meter, and therefore should be covered.
"The trouble we're running into right now in Washington is the climate," Adkins says. "It's a deficit climate, which means that any new programs must be offset by cuts in existing programs, which gets to be a little difficult to do."
On a grassroots level, Adkins is lobbying the 100 chapter presidents of American Association of Diabetes Educators. They each received a free unit and literature in hopes that they will recommend the devices to their 8,500 educators on a regional level.
"A newly diagnosed diabetic, he's got enough problems," Adkins says. "His whole life just changed. The last thing he needs to worry about is what to do with these things (needles). Here's an answer. Spend the $99, and he doesn't have to worry about that now."
With headlines dominated by war and terrorism, the drive to prevent health care workers from accidental needlesticks doesn't get much ink in the papers or attention by lawmakers, and whatever happens on Election Day is unlikely to change that. But despite all this, the Safeguard team is committed to keep fighting.
"We're definitely optimistic," Smith says. "That's the fun part of it. It's a challenge. And the feedback from people who have used them, from the trials, is phenomenally positive."
Adkins takes a decidedly more adversarial approach.
"When I get this thing ready to go, there is no way OSHA's going to prevent me from marketing it, not when Congress said I could," Adkins says. "I know it seems like an open-and-shut case -- you would think."
How to reach: Safeguard Medical Devices Inc., (440) 717-9860 or www.safeguardmd.com
You can't avoid them; they're everywhere.
Liquid crystal displays, commonly known as LCDs, are those flat digital screens in computers, cell phones, PDAs, watches and microwave ovens.
LCDs are lighter and thinner than traditional displays with cathode ray tubes, but they've always been manufactured out of glass, which increases the expense and the weight. And glass shatters; plastic doesn't.
Gary Freeman noticed this problem when working for Zoll Medical, a manufacturer of pacemakers and defibrillators. Freeman thought if the LCD displays on ambulance defibrillators could be converted to plastic, it would greatly increase the durability of the devices.
Meanwhile, Freeman's brother, David, was a real estate developer who had a client in Florida designing a Smart Card with a built-in LCD, but he couldn't find a flexible plastic that would work as well as glass.
The brothers set out to create a material that would serve both markets, but what they found was their technology had the potential to tap a $22 billion market in everything from cell phones to, one day, computer and television screens.
"They ended up finding that the center of technology for LCDs was here at Kent State," says Paul J. Fischer, CEO of Twinsburg-based Viztec Inc., the company the brothers formed. "Gary started doing research and development and really made some breakthroughs in this area, which was the genesis of the company."
At Kent State, the brothers developed Viztec's patented Plastic Pixel technology. The manufacturing process uses two sheets of very thin flexible plastic that are combined to make a display that is 1/15th the thickness of conventional glass displays, but with better screen clarity and contrast.
Despite the difference in the materials, Viztec's displays can be manufactured using existing equipment.
"They can be drop-in replacements for traditional glass displays," Fischer says.
The brothers formed Viztec four years ago, but the last 12 months have been the busiest. In May, Fischer was hired as CEO, while Gary Freeman stayed on as chief technology officer and David Freeman remained as vice president and general counsel.
Also in May, Viztec received a $1 million Ohio Technology Action Fund grant from the state, which it will use to further develop its unique manufacturing process. How to reach: Viztec Inc., (330) 487-1526
It's Thursday at 3 p.m., and a major wireless company decides to drop its monthly rate to $19. The company wants to splash this price break in Saturday newspapers across the country, but the deadline for ads is 5 p.m. -- in two hours.
What used to be a logistical nightmare for advertisers is now no problem, says Philip Alexander, president of Web-based marketing firm BrandMuscle Inc.
"We can build and send 400 ads in about an hour and a half," Alexander says. "That used to take four days."
Alexander's brainchild, BrandMuscle's Web application, allows clients to design print, billboard, radio and other advertising step by step using templates and inserting different images and copy to localize it for their market.
The goal of BrandMuscle's application, designed by marketing and advertising veterans, is to keep a client's message and campaign consistent throughout the country, Alexander says. For example, if auto dealers in northern states want to advertise sport utility vehicles, and southern dealers want to push convertibles, all the ads can have a consistent recognizable message and imagery.
That allows companies not only to better control the message, but to measure its success.
"In the past, there would always be a fight between the local dealers and corporate," Alexander says. "The dealers would say, 'This is the ad that works best for me,' and corporate would say, 'That isn't what we want to advertise, so we're not going to help fund it.' This system offers much more flexibility."
The main challenge behind the BrandMuscle application was to create a standard interface that could be used on any computer operating system.
"Most advertising is created on Macintoshes," Alexander says. "We've taken an Oracle database and the creative concepts that a Mac has, and we've a built a complete electronic advertising management system. In the past, there was no such thing."
BrandMuscle's clients include BMW, MINI USA, AT&T Wireless, Saks Department Store Group, Hallmark and Nestle. The firm closed $5 million in second-round financing last year, with projections to turn a profit by year-end, Alexander says. How to reach: BrandMuscle, (216) 464-4342 or www.brandmuscle.com
"It isn't the weather that sends people out of Northeast Ohio," Perry exclaims. "Where we hurt is our business community competitiveness. We should become the model in the United States in saying Northeast Ohio understands how to develop terrific places to work, that's how they're attracting talent to the region and keeping it."
But that doesn't appear to be the case. Perry has just reviewed the results of the 2002 Workplace Practices Survey the ERC performs every year in partnership with SBN Magazine. The survey looks at human resources issues including wages, benefits, screening, information disclosure and hiring. This year's response was the largest in the survey's three-year history, with the 243 respondents more than doubling last year's return.
Companies from small tool and die shops to publicly traded corporations with more than a $1 billion in revenue responded to the ERC/SBN Workplace Practices survey. The average respondent had 185 employees and annual sales of $62 million, double the size of last year's average company. The bulk of this year's respondents, 124, were manufacturers, but 43 other industries also participated, including distribution, nonprofit and retail.
Even with a much larger sample, the results mirror last year's numbers. The similar results are surprising in light of the economic changes between August 2001 and 2002, but disappointing, Perry says, because many Northeast Ohio employers still say they're battling the same problem: Attracting and retaining qualified employees.
"There is some irony in these results," Perry says. "The irony is we put retention at the top, but as organizations in Northeast Ohio, we're not doing all we can in terms of some basic meat-and-potatoes practices to help retain people."
The ERC/SBN Workplace Practices Survey is voluntarily filled out by employers and ERC members, so not all the same companies respond each year. The questions, however, remain the same. Although unscientific, the survey still points to trends in Northeast Ohio workplaces.
"You've got to have a leader in there that sees the big picture and how developing a much better workplace is going to correlate into increased sales, reduced expenses and yielding enhanced profitability," Perry says. "And not all leaders in Northeast Ohio get it. The sooner that they make change to become a great organization, the sooner they're going to be able to effectively compete in this global economy and more effectively compete in Northeast Ohio."
A key to retention is communication with employees, but only half of respondents indicated that people in the organization know its mission statement. Only 62 percent review financial information quarterly and more than 25 percent don't distribute job descriptions.
"Organizations who intend to retain high-caliber employees need to overcommunicate," Perry says. "You do that by ensuring that you know what the mission of the company is, that they understand where the company stands from a financial perspective, that they have written job descriptions."
Along with attracting and retaining good employees, employers say they're struggling increasing revenue and profits, according to the survey. Many respondents expressed concern about encroaching foreign competition and containing benefit costs.
One manufacturer which has figured out how to keep employee morale high while improving productivity is Fairlawn-based Bioproducts Inc. The 75-year-old pet food flavor and vitamin manufacturer cut its voluntary turnover rate in half, from 18 percent in 1998 to 9 percent last year. The company also had no layoffs last year and reduced its recruitment costs by 40 percent.
"It starts at the top with the CEO, and the values that he brings to the organization that trickle down through the organization," says Robert Adamov, Bioproducts vice president--human resources. "We make our share of mistakes, but you'll see people walking into each other people's office and apologizing when they blow it."
Adamov says part of Bioproducts' employee satisfaction secret is its incentive plan, which includes informal performance bonuses from a thank you note or free lunch to more extravagant perks like airline tickets or company-sponsored trips. There are also standard formal incentives like promotions and pay raises based on seniority.
It's not just extra cash and gifts that help boost employee satisfaction and performance. After an employee survey showed a demand for skill and executive development, Bioproducts launched its CareerBuilder and LeaderBuilder programs. CareerBuilder is a Web-based system to help employees form their career goals and chart what they need to do to get there. Adamov says it also enhances communication between supervisors and employees, and contributes to reducing employee turnover. (See a demonstration at www.cdteam.com. Click on the "Development Works" logo.)
LeaderBuilder is a management development program culled from the expertise of the University of Michigan, Northwestern University and M.I.T.
"Employees who want the organization to succeed will consistently go the extra mile to help the organization achieve its goals," Adamov says. "(Bioproducts) is very good at sharing the wealth with all of its employees."
In a recession year, Bioproducts reached 94 percent of its profit goal, even when all employees were awarded bonuses. How to reach: Employers Resource Council, (216) 696-3636
Here are 11 things to consider when narrowing your search.
Company size and location. How many full-time consultants does the firm have and how long has it been in business? The size of the firm determines the average size of the projects it may take on.
Very small firms (10 employees or fewer) will do projects that average $10,000 to $20,000 and often, $5,000 or less. Small firms (10 to 30 employees) are commonly in the $10,000 to $50,000 range in size of projects.
Medium-sized regional firms (30 to 100 employees) are generally in the $25,000 to $300,000 range for an average project, and large firms (e.g. Razorfish, Sapient, Scient, Big-5) look for projects in the millions of dollars. Choosing a firm in which the consultants must travel to your location typically adds another 15 to 20 percent of expense to the project.
Responsiveness and accessibility. Are the firm's consultants and managers responsive and working with a high sense of urgency? Because decisions and circumstances will move and change quickly, it is beneficial to find a firm that can grow and move in Internet time.
Find a firm that is hungry for your business, is accessible and provides high attention and service every step of the way.
Project methodology and process. Ask to see examples of templates, documented methodology for system requirements, test plans, content inventory and design questionnaires. Ask the firm to walk through its project management process and methodology.
What are the deliverables at each stage of the project? The explanation should be crisp and clear. Does the firm have a project management extranet? The better firms do. If it does, its project managers should be able to quickly go into more detail than you care to see.
Business understanding. You will want to find a firm that will use technology and the Internet to help your business increase revenue, decrease costs, increase customer service or create some new killer application.
Don't use a firm that just builds Web sites. Look for ones that have done their homework on your business and industry. They should be asking good, challenging business questions about customers, competitors, internal processes, business goals, strategy, growth opportunities and threats.
Competency and skill. All e-business firms have some mix of strategy, technology and creative talent. An easy way to determine where its real strengths lie are to ask it to break down its consultants (in terms of numbers and percentages) by discipline.
Also consider the origin of the firm's founders and senior leaders and how each migrated into e-business. The majority of firms have roots in either technology or creative/advertising. Most are best in one of the three disciplines and good enough in the other two.
Understanding your most critical need will help you find the right fit. Since e-business and the Internet are rapidly becoming more integrated into firms' systems and the systems between organizations in a supply web, strong system integration experience is becoming an absolutely critical component to most Internet initiatives.
Most creative focused firms have a disadvantage when it comes to deep systems integration or business to business integration.
Industry focus. Is the firm business-to-business or business-to-consumer focused? How much of its work is concentrated in different industries? Ideally, find a firm that has deep industry or process experience. This will help eliminate wild goose chases and increase ramp-up time by leveraging past experience.
If you have specific, complex process requirements (financial leasing calculations), you may need to search the country for the right firm or package.
Custom vs. COTS partnerships. What percentage of the firm's work is custom vs. Commercial Off The Shelf (COTS) software packages? Ideally, find a firm that can be objective and recommend the best solution -- not just the solution that it specializes in or the one that is determined by its software partnerships.
Senior management's savvy & digital strategy. Can consultants from the firm hold their own with your senior managers? Now that e-business is reaching deeper and more strategically within businesses, find a firm that can work with your senior management team to determine a prioritized roadmap of e-business investments.
Do the firm's consultants understand online marketplace concepts and best practices? Can its account managers discuss your business issues and think strategically?
Fees and approach. Once a firm has listened to your needs or read through your requirements, how does it estimate the work and what its approach will be? Do the consultants understand your short- and long-term needs? There are many ways to solve the same problem with varying approaches.
You should think of this as an iterative discovery process. Many times, assumptions are made that cause estimated fees to vary widely. Review the proposals in detail to understand the approach, deliverables and assumptions.
References and prior work. Before committing to a firm, check at least two to three references and look at examples of its work. Because firms and their work evolve quickly, also look at work in progress to view its latest, most up-to-date concepts. Check references as a final part of due diligence -- after you think you have selected the firm.
Ownership. Who owns the work product -- the firm or you? Many consulting firms require that they retain ownership of the code and work products and offer an unlimited license. Some may not care. In either case, be sure to review your objectives with your legal counsel and clearly define your business reasons for why you want to retain ownership.
Also, ownership of code and work products may be relatively meaningless if strict development standards and documentation are not provided as well. Scrutinize the development process, system design documentation, coding standards and testing approach to ensure that what you want ownership of is worth owning. Leonard W. Pagon Jr. is president & CEO of NewMedia Inc, a professional services firm that provides middle-market organizations and Fortune 1000 divisions with the business and technical leadership needed to leverage the Internet and other emerging technologies. He can be reached at (216) 518.7900.
He may not be as well known as Ralph Lauren or Tommy Hilfiger, but chances are you've seen one of his products around somebody's neck or hanging in your closet.
Keith Schwartz manufactures and distributes silk neckties, leather belts and women's scarves under the Keith Daniels label, which sells in supermarkets and drug and discount store chains across the country.
Schwartz, who started his career in pharmaceutical and suntan lotion sales, launched the Keith Daniels label after buying $2,000 worth of department store closeout ties in 1991. While those same ties were selling for $30 in the department store, Schwartz sold them for $5 at chains like Drug Emporium and Osco Drug Stores with his label affixed.
Today, Schwartz's neckties are sold in more than 2,000 stores, worn in three million homes and reap $2 million in annual sales for his company, OTP sales. And, he took out his first loan a scant four years ago.
Keith Daniels accessories and OTP sales were born from bleak times. Schwartz had resigned from his sales position with Chattem Pharmaceuticals nine years ago after hitting a promotional wall. The number of pharmaceutical buyers was dwindling due to consolidation under the drug store megachains.
"I remember things were slow at the time," he says. "I actually opened up a weekend flea market booth. We would sell cigarettes and salvage groceries -- it kept cash coming in. I remember I was talking to one of my former buyers and asked her, 'I'm looking to grow my company, is there is something you've been looking for you haven't been able to find?' She said, 'We could use a men's gift item for Christmas.' Because if you think about it, how many drug stores have gift items for men? Not many."
Schwartz had seen an ad for a department store closeout sale on neckties and decided they would be the perfect gift item. The ties sold extremely well, but weren't the quality of product that Schwartz demands today out of his accessories.
"They were the ugliest ties you've ever seen," Schwartz says with a laugh. "We retailed them at the store for two for $10. We put 200 to 240 ties per store. They were all gone in two weeks. They got there Dec. 15 and they were gone by Jan. 5. They were fashion ties, but 100 percent polyester and ugly."
After several years of buying closeouts, Schwartz found his company's growth was limited by what department stores had to offer. He also was too often disappointed with the quality of products available
And, despite his low prices, Schwartz says he's never been one to skimp on quality to keep costs down, which he believes is one reason his company has grown so fast in such a competitive industry.
"With close-outs, you're limited," Schwartz says. "I was trying to bring consistency to my company. A company can't grow without consistency -- consistent quality, consistent brand, consistent price. I had to be able to better target what our customers were buying."
So in 1997, Schwartz decided to manufacture his own ties overseas. But production didn't start until mid-1998 due to some major challenges.
Homework pays off
The first lesson Schwartz learned: Do your research before you spend dollar one.
"What a nightmare," Schwartz says about his early days of importing. "I actually found a great trading company over the Internet. The prices were unreal, great prices. By the time I show up -- after investing multiple thousands of dollars -- the prices changed. There was about a 30 to 45 percent increase in costs."
It was a reminder to Schwartz that business is about more than buying and selling products.
"I learned more because I had never done this before," he says. "I learned about quotas, duty, taxes. You can double the cost of a tie by adding a quota. We spent over a week negotiating with a factory, trying to figure out what components to use to make a tie that would still meet the same quality.
"In the end, we never got down again to the original prices, and to this day, I'm probably about 25 percent higher than my original quotes."
Schwartz estimates setting up his own production cost him about $50,000 to reach a level where he produces consistent quality accessories. Per production run, the entire process takes 12 to 16 weeks from the last order. Shipping takes four weeks, with four to five weeks in production and two to four weeks between federal customs clearance and moving product samples between countries.
Work that supply chain
Maintaining and retaining quality suppliers to manufacture the ties and other accessories is a daily battle , requiring careful and thorough negotiations. Schwartz says one of his early shipments of 30,000 neckties from China arrived with an overwhelming odor of dead fish.
Most people would have sent them back. But for Schwartz, that wasn't an option. There were no refunds on the order.
"You're talking really strong, dead-fish-sitting-for-two-weeks odor," Schwartz said. "You'll actually find stuff on the shelf that has that same odor. Silk sweaters sometimes have it. Some people call it a new product smell. I call it really disgusting.
"We found a new supplier in a different part of the country that finishes the product the same way we finish it in other countries."
When in Rome ...
Understanding cultural differences, especially in Asian and Far East countries like China and Korea, is especially important for conducting business overseas, as Schwartz learned during a negotiation session.
He had been speaking English to a translator, thinking that the Chinese factory owner on the other side of the table didn't understand what he was saying because he also used a translator and didn't react to anything Schwartz said in English. After negotiations had concluded, Schwartz overheard the man converse in fluent English with another person. Flabbergasted, he confronted the man.
"I said to him, 'So you speak fluent English?' He said, 'Yes, absolutely.' It just blew me away," Schwartz says. "I asked him, 'Why didn't you say anything?' 'Because it wouldn't be appropriate for me to speak to you directly, you have an agent. He speaks for you.' Cultural differences."
Despite the challenges and bureaucracy of importing, Schwartz says it's still much cheaper than trying to manufacture his budget accessories in the States. With his prices and quality standards, he doubts he could afford local production.
"There's no way to grow a large company without being a good importer, at least in this area," he says. "It would cost me $4 more to manufacture a tie here than it costs to manufacture a tie overseas -- per tie."
But Schwartz is determined to stay focused on growth.
"You have to understand, price isn't everything, you've got to demand quality," he says. "It's a consistent, ongoing challenge, and it doesn't stop the day you think you've got it right. But if you don't do it, you don't have a company." How to reach: OTP Sales, (216) 797-9933
Morgan Lewis Jr. (email@example.com) is a reporter at SBN.
From building houses to building Web sites, this year's nominees for the Medical Mutual of Ohio 2000 Pillar Award for Community Service feature a wide array of philanthropic efforts.
These companies, representing the eight-county region of Northeast Ohio, are dedicated to making their communities better places to live. Winners will be announced next month in SBN and honored at a banquet on Dec. 7, 2000.
Astro Model Development Corp., Mike Watts Jr.
Astro fosters community involvement by offering tours of its high-tech facility for educators and students to provide a broader understanding of skills needed to be successful in business and life.
Barnes Wendling CPAs Inc., Jeffrey D. Neuman, president and director
The accounting firm volunteers accounting services to numerous organizations, including the Malachi House, the Society for the Blind and the Cleveland Opera.
BruceAir Co., Bruce Bene, president
The industrial air compressor firm contributes funds to the Salvation Army and City Mission.
Cleveland Financial Group, Larry Kronick, CEO
The financial planning and investment company promotes a free choice system for employee volunteerism and financial contributions. Of Cleveland Financial Group's 100 employees, 66 participate.
Cleveland Live, Eliza Wing, CEO
Cleveland's online guide to local news and events helped more than 2,300 nonprofit organizations build free Web sites with Cleveland Live's Community Connection program.
Cooperative Resource Services Ltd., Edward J. Davidson, CEO
The employee relocation assistance service firm contributes time and financial resources to charitable and cultural organizations. Its CRS REACHOUT program rewards employees for volunteerism with time off and other incentives.
Diversified Concepts, Tracee McAfee-Gates, president
Diversified Concepts, a marketing services company, provides subcontracting work to Goodwill Industries, which allows Goodwill to train individuals with special needs.
Dix & Eaton, Scott Chaikin, CEO
Employees volunteer for more than 100 social service, civic, cultural and educational organizations, including Cleveland Healthcare for the Homeless and Bellflower Center for Abused Children.
Fairchild Chevrolet, Bob Fairchild, owner
The dealership donates funds and volunteer time to "H20," Help To Others, which is Lakewood's youth volunteer program. Fairchild helps the Lakewood Toy Lending Library and Lakewood City Schools.
Family Heritage Life Insurance Co., Howard Lewis, CEO
Family Heritage focuses on fighting the battle against cancer and cancer-related diseases. Since 1989, it has raised more than $400,000.
Hergenroeder Orthopedic Clinics, Dr. Patrick Hergenroeder, president
Dr. Hergenroeder, an orthopedic surgeon specializing in sports medicine, donates 500 footballs a year and other autographed memorabilia to underfunded athletic organizations.
Hershman Architects, Jerry Herschman, president
Among other contributions, the architectural firm designed an architectural education program for the Cleveland School for the Arts to create interest in the field of architecture among young people.
International Center For Environmental Arts, David Jakupca, executive director
ICEA promotes awareness of environmental and humanitarian issues by using touring art exhibits and interactive displays.
James J. Roop Co., Jim Roop, president
The public relations and graphic design firm's employees annually donate about $40,000 worth of services to organizations such as Care Alliance and Urban Community School.
Jenniffer & Co., Jennifer R.S. Pealer and Joseph Sullens, owners
Employees of the beauty salon volunteer time and services for the American Cancer Society's wig replacement program, which helps those who have lost their hair due to illness and treatment.
Kinetico Inc., Keith R. Tompkins, president
Officers and employees of the water processing equipment manufacturer donated $2 million toward the construction of the Geauga YMCA at Heather Hill.
Ladies & Gentlemen Salon & Day Spa, Nancy and Edward Brown, owners
The salon and its employees have a long tradition of community service, especially through the Lake Metro Parks, supporting Earth Day events and charities.
Main Street Gourmet, Steven L. Marks and Harvey S. Nelson, co-CEOs
The Cuyahoga Falls-based frozen bakery products manufacturer founded the "Muffins for Mammograms" program in partnership with the Akron General Women's Health and Cancer Center. It raises money for women who cannot afford mammograms.
Meister Publishing Co., Gary T. Fitzgerald, president
The communications company formed the Team Meister Outreach Committee to help organize fund-raisers for local charities and volunteer for community improvement events.
The MinuteMen Group, Jay Lucarelli, CEO
The temporary staffing firm helps the homeless by giving away more than 500 turkeys for its annual Thanksgiving Turkey Giveaway. It also sponsors events for the Hunger Network of Greater Cleveland.
National Association of Letter Carriers, Dan Rupp, president, Branch 40, Richard Clark, U.S. Postmaster Cleveland
Cleveland letter carriers' one-day annual food drive collects more than 400,000 pounds of food for the city's food banks and shelters -- the largest one-day drive in the city of Cleveland.
Parma Community General Hospital, Thomas Selden, CEO
Parma Community General Hospital founded the Parma Health Ministry in 1995, which includes a free clinic to provide medical care to needy families in the Parma and North Royalton School districts.
Pasco Inc., Peter A. Spitalieri, president
The Hudson-based information processing company founded Corporate Charity Program to devote financial and time resources to one charity in Northeast Ohio, preferably in Summit or Portage counties.
Rysar Properties Inc., Ken Lurie, president
By developing partnerships with many of the city's Community Development Corporations, Rysar Properties has helped revitalize some of Cleveland's neglected urban areas.
Things Remembered, Suzanne Sutter, president
The personalized gift store chain has donated $2 from every seasonal ornament sold at its stores to Make-A-Wish Foundation. In the three years of the program, Things Remembered has raised more than $250,000.
UNB Corp., Roger L. Mann, CEO
The Canton-based financial services holding company provides financial support, sponsorships and contributions to hundreds of local organizations.
Western Reserve Brewing, Gavin Smith, CEO, and Andrew Craze, president/brewmaster
The brewing company donates gift packages to silent auctions to help charitable and cultural organizations raise money.
Yopko Communications, Betty Weibel, president
Hiram-based Yopko Communications volunteers its services to the Chagrin Valley Hunter Jumper Classic and helps secure new sponsors for the event.