In a typical office building, utility costs make up about one-fifth of total operational costs. Energy costs in commercial buildings and industrial facilities are consistently rising due to increasing global energy demand, while federal, state and local agencies are mandating increased energy efficiency in new and existing buildings.
Smart Business spoke with Moh Heidari, director of the Energy Solutions Group with Alfa Tech, about how organizations can benefit from investing in energy efficiency in their facilities.
Why don’t companies invest more aggressively in energy efficiency?
It depends on multiple factors like project management methodologies, budget structures and decision-making practices. For example, value engineering is first cost-oriented versus life cycle cost analysis. There is little incentive for an energy efficiency feature to be embraced by a value engineering process if it results in a higher first cost. That is why we need to go beyond value engineering. Another reason is that budgets for construction and operations often come from two different groups. Therefore, there is a tendency for construction to take a ‘not my problem’ perspective on an energy savings measure if it would increase the construction cost. This also happens for existing facilities where the maintenance budget is separate from operating cost. So, when the maintenance team reduces utility costs by implementing energy savings measures, they may not directly get credit for it since the savings will be captured under the operating budget.
Another reason might be that energy costs are lower than costs like employees’ salaries. However, cutting energy costs directly contributes to increasing net profit.
What are the indicators of a good investment in energy systems?
While a retro-commissioning action and energy audit identifies energy saving measures with a simple payback period (SPP) of less than two years, SPP is not sufficient to decide whether a project should be implemented or not. An additional decision-making factor is return on investment (ROI). For example, a three-year simple payback period has around 33 percent ROI and a five-year payback has around 20 percent ROI, which are attractive ROI. In addition, considering the investment security of energy efficiency projects makes them even more attractive investments. Energy efficiency engineers use cost-benefit analysis and life-cycle cost analysis to identify the profitability and to show other advantages like reduction of business vulnerability to energy price fluctuations and increasing productivity.
Who is an energy efficiency engineer and why might an organization want one?
Energy is complex. Everyone thinks they have solutions, but how do you know if a solution is the right one? Companies may benefit from an independent consultant who does not have a conflict of interest and has the specialized training required to fully assess system interaction and integration issues and the overall energy benefit associated with a proposed energy efficiency project. For example, a condensing boiler must operate at condensing temperatures to deliver the highest efficiency. If a condensing boiler is installed in a system that cannot operate at condensing temperatures or installed in a system that could but it does not have the right control sequence to achieve condensing temperatures, then the intended savings will not be realized.
Because of these complexities, energy solutions for different types of facilities need multiple specialties. Energy engineering is an interdisciplinary field with selected expertise in mechanical, electrical, control, chemical and environmental engineering as well as economics and energy market.
What is retro-commissioning?
Existing building commissioning (EBCx), also known as retro-commissioning (RCx), is a detailed tune up using a systematic assessment process to evaluate buildings’ systems functionality, energy performance and energy cost savings opportunities to match the building operations to the owners’ and occupants’ current needs, reducing energy waste and obtaining cost savings. Energy audits, RCx and monitoring based continual commissioning (MBCCx) are the best tools to capture actions that can result in up to 30 percent and even sometimes higher energy cost reduction through retrofits. In energy savings, persistence is key. Without it, a system becomes out of tune and you just keep saving the same energy every couple of years instead of steadily raising the bar. Monitoring-based continual commissioning ensures that energy savings persist and grow over time. In this method, we continuously monitor the critical points of systems, measure their efficiency and address the problems that cause decreases in efficiency.
How do building owners and facility personnel benefit from investing in energy efficiency retrofits and upgrades?
First, they should realize the difference between saving energy and saving money. If you implement an energy savings measure but energy costs escalate, you save energy but may not save as much money. An uninformed owner or a tenant may be disappointed in the results of a project unless they realize where the energy costs would be if they had not implemented the project. It also means that energy savings projects that were not viable may become viable when energy becomes expensive enough.
In addition, as the relative value of energy shifts, the viability of some strategies may need to be reevaluated. For instance, a strategy that recovered energy via heat pump may not look as good as it once did if electric prices go up while gas prices fall.
Finally, persistent energy savings can pave the way for making renewable energy projects viable. The viability of a solar photovoltaic project may hinge on making the load served as efficient as possible. Increasing efficiency of HVAC systems reduce the first cost of an expensive renewable energy technology.
Moh Heidari is director of the Energy Solutions Group with Alfa Tech. Reach him at firstname.lastname@example.org or (415) 403-3091.
Insights Technology & Engineering is brought to you by Alfa Tech
If your business hasn’t recently evaluated its contract with your natural gas and electricity suppliers, now is the time to do so.
With the introduction of Marcellus Shale, coupled with natural gas from other sources, prices have dropped significantly, making it the ideal time to partner with an energy supplier that can help you navigate the market, says Terry Crupi, director of Natural Gas Marketing and Trading at PPL EnergyPlus.
“Falling wholesale prices are proving a boon to businesses, and if you haven’t recently evaluated your contracts, you may be paying more than you need to,” says Crupi.
Smart Business spoke with Crupi about how partnering with an energy supplier can benefit your business.
What has been the impact of Marcellus Shale gas development on natural gas prices?
The introduction of Marcellus Shale, and natural gas from other sources, has contributed to a significant drop in natural gas prices to levels we haven’t seen in more than a decade. The increase in available natural gas supply, coupled with the economic recession, has caused prices to tumble by about $2.50 cents per million BTUs over the last 12 months.
These low prices have saved Pennsylvania businesses about $1.4 billion in natural gas costs, and created an opportunity for businesses to lock in their natural gas price and to evaluate switching to natural gas to power systems and processes.
The drop in natural gas prices has also affected wholesale electricity prices because power plants that run on natural gas often set the price for electricity in the competitive wholesale market. In the last 12 months wholesale market prices for electricity have decreased by about $1 billion in savings in electricity costs for Pennsylvania consumers.
As we see an increase in the development of Marcellus Shale, other benefits will become evident, such as the creation of jobs in existing businesses and enticing new businesses to the state. Marcellus Shale gas provides many long-term benefits to consumers and taxpayers beyond just the direct price impact for this important energy resource.
How do natural gas prices affect electricity prices?
Natural gas is a leading indicator for electricity prices, so as the increase in supply of natural gas decreases its price, the prices for electricity are driven downward as well. We are also seeing that, as natural gas becomes more available with the development of Marcellus Shale, power plants that run on natural gas are becoming more competitive on a cost basis with power plants that run on coal.
Historically, coal has been the lowest-cost source of electricity generated with fossil fuels. As the cost equation changes, and coal-fired power plants are faced with managing the uncertainty of new natural gas supply and new environmental regulations, natural gas will continue to gain prominence as a power generation fuel.
In addition, plentiful amounts of natural gas — or any commodity — generally result in lower prices, which provides lower costs (savings) and helps businesses and consumers meet or improve their bottom line. Low energy prices present opportunities for businesses to expand, increase production, or, at a minimum, switch fuels. In fact, many large industrial customers are now considering or converting to natural gas supply.
In some cases, co-generation with natural gas-fired generators may help reduce costs and improve reliability. These are options smart businesses will want to explore in the current energy situation.
What is the long-term view of natural gas prices? Will they stay low?
Our experience in the natural gas market and our analysis of the trends lead us to believe that low, more stable natural gas prices will be with us for a few years. It’s important to keep in mind, however, that natural gas prices are cyclical. At some point, due to increased demand or reduced supply, natural gas prices will trend upward once again. This is why it’s so important for smart businesses to evaluate their energy usage and monitor energy markets.
Many customers do this on their own while others receive assistance from an energy partner or supplier that has the knowledge and experience to understand when conditions are changing and can advise businesses on the best ways to manage their energy costs — or more important, advise them on an energy strategy.
How can businesses take advantage of the current low energy prices?
Partnering with an energy supplier that understands the nature of energy prices, external effects from government regulations and industry trends such as Marcellus Shale will help your business take advantage of current market conditions while assisting you in navigating the market in the future. Businesses now should be evaluating their current contract with their natural gas and electricity suppliers and asking how they can benefit from today’s low energy prices.
There are also ways to optimize a business’s energy usage to gain even more savings. The retail energy market provides other products and services that help you more efficiently and effectively procure and use energy.
The key is to proactively find an energy partner that you are confident will help you successfully navigate the energy landscape.
Terry Crupi is director of Natural Gas Marketing and Trading for PPL EnergyPlus, a competitive gas supplier serving industrial and commercial customers in Pennsylvania, New Jersey, Maryland and Delaware. Reach him for wholesale and retail inquiries at PPLRetailGas@pplweb.com or (610) 774-2310.
Insights Energy is brought to you by PPL EnergyPlus
There is a time and a place to fight for an important principle. Yet, business litigation is rarely about principle. After all, you are in business to make a profit. Often this is something business owners need to remind themselves of.
Monte Mann, partner at Novack and Macey LLP, urges owners to think long and hard about the costs and distractions of business litigation, which can be severe.
“As a business litigator who makes a living in the courtroom, it may be surprising to learn that I also spend a great deal of time in the boardroom — working with clients on ways to avoid litigation well before it arises,” he says.
Smart Business spoke to Mann about the six items that come up most frequently when he is working with clients on avoiding litigation.
What are some common ways that litigation arises for a business?
Many companies find themselves in litigation with their own minority shareholders. Yet, surprisingly few shareholder agreements have ‘buy-sell’ provisions, which provide the company with the right to buy out a minority shareholder based on a stipulated price formula.
Disgruntled minority shareholders are a big source of litigation, and these buy-sell provisions can be used to remove the complaining shareholder and, consequently, eliminate the likelihood of litigation.
Partnership agreements may also include these useful provisions. Business owners should check their shareholder or partnership agreements to ensure that they have these buy-sell provisions. If their agreements lack provisions, they should make efforts to include them as soon as possible. It’s very difficult, if not impossible, to negotiate later when something goes wrong.
How can owners avoid employee-related litigation?
Your employees are another big source of potential litigation. You must have an employee handbook that sets forth policies on issues central to the employer-employee relationship, such as confidentiality, discrimination and harassment, employee absences, sick leave, vacation time, and other employer rights and employee benefits.
Policies should be simple and clear, and all managers should be intimately familiar with them. Moreover, these policies must be applied consistently. While it will not totally eliminate them, operating your business in a way that is consistent with your handbook will greatly reduce the likelihood of employee-initiated lawsuits.
What other practices and policies should be reviewed to help companies avoid litigation?
Terms and conditions of buying and selling should be an area of focus. Your purchase and sales order forms should be reviewed and revised by counsel periodically to ensure that your terms and conditions give you critical advantages if a dispute arises with a customer. At a minimum, the terms and conditions that you want to review include terms on payment, risk of loss and warranties.
In addition, requiring that the other side litigate all disputes in your jurisdiction (a ‘choice of forum’ provision) will likely reduce lawsuits against your company. Even better, require that all disputes be resolved in an expedited arbitration in your jurisdiction, with strict limits on pre-trial discovery. This should reduce: a) the number of claims against you; b) the costs of each claim; and c) the amount of time each claim will take until resolution.
Finally, if you have to pursue amounts owed to you, make sure that your forms allow you to recover your costs of collection, including, but not limited to, attorneys’ fees.
How else can a business ensure that it is protected?
Pay close attention to protecting intellectual property. You do not get the right to do business under a particular name just by incorporating or filing a name registration in your state. The only way to properly select and protect a name is through a trademark search and registration with the U.S. Patent and Trademark Office. This is not for the uninitiated. An outside search and legal review may cost less than $1,000.
Your company’s name is not likely its only valuable intellectual property. Patents protect those who invent or discover new processes, machines, manufacturing methods, or any new or useful improvement thereof. Trademarks protect words, names, symbols, sounds and even colors that distinguish goods and services from those manufactured or sold by others. Copyrights protect original works of authorship. Patents and trademarks are registered with the U.S. Patent and Trademark Office. Copyrights are registered with the U.S. Copyright Office. Consider the intellectual property your business uses and seek to register it as early as possible to avoid problems.
When should a business owner involve a litigator?
Don’t wait until you are sued, or you want to sue, to involve a business litigator. The time to do so is when you see trouble out on the distant horizon. An experienced business litigator can help you shape the dispute so that it is consistent with your contract terms and conditions — as well as the law — so that you are in a better position to prevail in court. After all, when a dispute arises, one of the best ways to avoid litigation is to convince the other side that you will likely prevail in court.
Monte Mann is a partner at Novack and Macey LLP. He is a business litigator who represents closely held corporations and partnerships in business disputes. Reach him at email@example.com or (312) 419-6900.
Insights Legal Affairs is brought to you by Novack and Macey LLP
Although there are federal laws that impact employees who are minors, most requirements and restrictions come from state laws, and each state has its own set of regulations that employers must follow when hiring minors, says Holly Dangler, human resources service manager at Sequent.
“Many employers are eager to hire minors to fill part-time and seasonal jobs because of their enthusiasm, energy and motivation,” says Dangler. “However, while there are many advantages to hiring minor employees, these advantages also come with challenges.”
Smart Business spoke with Dangler about what employers need to be aware of when hiring minors.
Before a minor employee begins work, what does an employer need to do to prepare?
There are several things an employer must do to prepare for the employment of a minor employee. First, be aware of what minors can and cannot do.
Ohio law specifically prohibits minors from performing certain job functions, and there are additional prohibited job functions for minors under the age of 16. Employers should verify the job for which the minor is being hired to ensure he or she is permitted to perform the job functions.
Those between the ages of 14 and 17 must also present a valid work permit prior to the start date. Work permits are usually obtained from the minor employee’s school. A work permit may not be required for minors 16 and 17 years of age if they are employed during summer vacation months; however, a signed statement consenting to the proposed employment is required from the minor’s parent or guardian.
The employer must also display, in a conspicuous location at the job site and frequented by minors, the Minor Labor Laws poster and a complete listing of all minor employees. The listing should contain, at minimum, a current list of minor employees’ names, ages, dates of birth and occupations.
Finally, minor employees must complete a minor wage agreement with the employer that confirms the rate of pay he or she will be paid, and the employee must provide proof of age in the form of a birth certificate, baptismal record or work permit.
Are there restrictions on the hours in which a minor employee may work?
Yes. Ohio law restricts the hours when minor employees may work. Those hours depend on the age of the employees, as there are different restrictions for those ages 14 and 15 and those ages 16 and 17.
Minors aged 14 or 15 are not permitted to work during school hours, more than 18 hours a week while school is in session or more than 40 hours a week when school is not in session. However, those prohibitions do not apply if employment is incidental to bona fide programs of vocational cooperative training, work-study, or other work-oriented programs with the purpose of educating students, and the program meets standards established by the State Board of Education.
Those aged 14 or 15 are prohibited from working before 7 a.m. and after 7 p.m. while school is in session. When school is not in session or during any school holiday that is five school days or more, they may work until 9 p.m.
Minors 16 or 17 years of age who are required to attend school are not permitted to work before 7 a.m. on any day that school is in session; however, the minor may start after 6 a.m. if he or she did not work after 8 p.m. the previous night. Those in this age group are also not permitted to work after 11 p.m. on any night preceding a day that school is in session. There are no limitations to the start and end times, nor are there any limitations in the number of hours per day or per week, when school is not in session.
What break periods are required under the law?
Although break periods are not required by Ohio law for most employees, there are requirements for minor employees. Minors working five consecutive hours or more must be granted an uninterrupted rest period of at least 30 minutes. However, the rest period does not need to be included in the computation of the number of hours worked by the minor.
What are the state requirements for compensation and record retention for a minor?
First, wages cannot be reduced for any minor without giving that person 24 hours written notice of the reduction. Employers also may not retain or withhold wages because of presumed negligence, failure to comply with rules, breakage of machinery, or alleged incompetence to produce any standard of merit. Payment for any and all wages must be received by the minor by the next regularly scheduled pay period.
For record retention, the worksite employer must maintain for at least two years time records showing the actual start and end time, and rest periods. Failure to comply with any of the requirements outlined by the State of Ohio could cost your organization up to $1,950 per incident.
Employing minor employees can provide many advantages to your organization. However, these advantages come with several responsibilities, and employers need to make sure that they are following the law.
For Kentucky businesses interested in learning more about these laws, contact Dangler at the e-mail address below.
Holly Dangler is a human resources service manager at Sequent. Reach her at firstname.lastname@example.org or (888) 456-362
Every employer that has Ohio state-funded workers’ compensation coverage has a Managed Care Organization (MCO) assigned to its policy. However, the medical focus of an MCO’s core function can make it difficult to truly grasp its role in the workers’ compensation system, and evaluate its effectiveness for the employers it serves. We are about to see a flurry of activity in the workers’ compensation service industry related to Ohio employers’ MCO selection, so it makes sense to take a step back to gather some insight into MCOs and how they operate, says Lance Watkins, vice president of client services at CompManagement Health Systems.
What is an MCO and what does it do?
MCOs originated in the Ohio workers’ compensation system in 1997 as a result of the Health Partnership Program (HPP). MCOs are responsible for helping injured employees return to work in a timely and safe manner. They coordinate key details relating to the First Report of Injury (FROI), manage and authorize medical treatment and pay medical bills, as well as organize return to work with the injured worker, employer and the treating medical providers. MCOs are paid directly by the Ohio Bureau of Workers’ Compensation (BWC) from a portion of the premiums paid by Ohio employers. They are paid based on the activity (FROIs, bills, active employers and active claims) and receive an incentive based on return-to-work metrics. No money exchanges hands between an MCO and its client companies, and no contract exists between the two.
What is open enrollment?
Open enrollment occurs biannually, falling on the even years, and provides employers with the opportunity to change MCOs if they choose to do so. Employers have the opportunity to either select an MCO or have one randomly assigned by the BWC. To stay with their current MCO, an employer does not need to do anything. Open enrollment is generally four weeks in length and typically occurs during the month of May. The 2012 open enrollment period is scheduled for April 30 through May 25.
What differentiates one MCO from another?
There are larger MCOs managing premiums upwards of a few hundred million dollars and smaller MCOs managing premiums in the tens of millions of dollars. There are provider-based MCOs and also those with partner companies that are large third party administrators working with several trade associations. All MCOs have the same responsibilities and the BWC produces a report card every year that focuses on three key factors:
* Degree of Disability Management (DoDM) — an efficiency metric of return-to-work;
* FROI Turnaround — measures the efficiency of an MCO in processing an initial injury; and
* FROI Timing — measures the overall processing of a FROI from the date of injury to the date the FROI is reported to BWC.
DoDM takes into consideration an injured worker’s current diagnoses, as well as the type of job duties that the injured worker performs. For example, an employee with a back injury who works in an office setting should have an earlier return-to-work expectation than an employee with a similar injury who is a construction worker. For comparison purposes, a higher DoDM score demonstrates a quicker relative return-to-work achieved by the MCO.
What factors should an employer take into consideration when selecting an MCO?
An employer might want to determine if the MCO it is considering has experience working with other employers in the field in which it operates. For example, a school district might want to look at an MCO that has many school districts among its clients. Industry experience can come into play when managing return-to-work expectations.
Performance should also be a key factor in selecting an MCO. DoDM is important, as the only published return-to-work measurement the BWC uses to analyze an MCO’s performance. Another key factor is whether an MCO can meet the employer’s individual needs. Is the MCO flexible enough to meet that employer’s expectations? Is it big enough to handle larger employers? Can it provide the personalized attention that the client may be requesting? Are the MCO’s reporting capabilities sophisticated enough to help an employer recognize trends that provide opportunities to improve its overall workers’ compensation experience?
What else should an employer ask when selecting an MCO?
BWC manages MCOs very closely and can penalize MCOs that fail to meet performance standards. One question that can be asked of an employer’s current or prospective MCO is whether they have been placed ‘at capacity’ during the past year or two. Capacity is a form of penalty that BWC will apply to an MCO for failing to meet specific contractual metrics. This penalty entails not being able to take on new clients during the period of time that the MCO remains at capacity. Financial penalties can also be applied against an MCO for missing certain performance metrics. Employers should request information on whether the MCO has had any financial penalties over the past few years.
Many MCOs like to take information from BWC and tweak it in a fashion that might tell a more flattering story. Some may call these MCO marketing myths. A common myth used by some MCOs involves the manipulation of return-to-work statistics to focus only on specific claim types, suggesting inflated success rates. Employers should be aware of these creative statistics and make certain that they fully assess an MCO’s capabilities before making the decision to stay with their current MCO or to select a new MCO.
Also, many trade associations partner with or endorse an MCO that they believe provides the best services for their members. Before making a selection, employers may want to reach out to their trade association and ask which MCO they would recommend.
Lance Watkins is vice president of client services at CompManagement Health Systems. He has 19 years of experience in the workers’ compensation industry. Reach him at (614) 526-2524 or email@example.com.
Insights Workers' Compensation is brought to you by CompManagement Health Systems
Smart Business spoke to Mark Strippy, Executive Director, Payroll Services at Heartland Payment Systems, about how employers can achieve cost savings through electronic payment options.
If you’re like a growing number of businesses, you may find yourself in an all-too-familiar situation. You want to streamline the payroll process and increase your bottom line by participating in an electronic payments program, but not everyone in your company has a bank account or is eligible for direct deposit and so you continue to pay the costs associated with check printing, processing and in some instances, delivery. You’re not alone. Right now there are approximately 10 million households in the United States that don’t have a bank account — we call them the unbanked.
But there is a solution. Paycards offer a viable payment option that allows employers to electronically pay unbanked workers much like they would pay those participating in direct deposit. And, employers can achieve similar cost savings.
How it works
The structure of paycards is actually very simple. An employer establishes a banking relationship with a financial institution. Employers can set up individual accounts for each employee, or a single aggregate account with sub-accounts for each employee. Funds are deposited into the account each pay period. Employees are given a paycard, which allows them to access their wages using an ATM or by using the cash-back feature available at many point-of-sale terminals throughout the United States. Depending on the type of paycard, purchases may also be made using a PIN or signature.
Types of paycards
Different types of paycards can be set up for your employees. The first type is branded cards, which may also be referred to as “signature” cards because they can be used with a PIN or a signature. These cards typically have the Visa/MasterCard branded logo on them and are issued by their respective partner banks. As such, they follow the bank’s process and fee schedule.
Another type of paycard is the vendor branded card. These cards are issued under specific vendor logos and are subject to the vendor’s processes and fee schedules. Unlike branded cards, all transactions on these cards are PIN verified.
The far-reaching benefits of paycards
In addition to the obvious “green” benefits associated with switching over to a completely electronic payroll system, there are also many more advantages to paycards that are enjoyed by companies and employees alike.
Benefits to employers
- Offers a cost-effective way to expand electronic pay to all employees, including unbanked workers
- Reduces costs associated with check printing, processing, delivery, account reconciliation and stop payment fees
- Increases the security and reliability of distributing wages even in the event of an office closure or natural disaster
- Ensures compliance with legal requirements regarding termination pay
- Uses standard ACH, so the hassles and costs associated with changing systems are not necessary
- Meets obligation to pay workers wages “without discount” as required many state wage and hour laws
Benefits to employees
- Requires no credit checks or bank accounts to participate
- Offers peace of mind knowing wages are safely, promptly and accurately deposited onto paycard
- Eliminates any check cashing, bank service charge or money order fees
- Allows cardholders to make purchases, pay bills by phone, online or mail or use cards to make withdrawals at ATMs 24/7
- Eliminates waiting for paychecks to arrive by mail, standing in long lines at the bank and special trips to pick up checks
How to start a paycard program at your company
- Choose a paycard program provider/vendor
- Choose the type of paycard you will offer
- Decide whether you want an individual account for each employee or an aggregate account with sub-accounts for each employee
- Put a plan in place for how and when it will roll out and how you will enroll employees. Make sure you have written policies and procedures and designated roles and responsibilities
- Get your employees excited and onboard by developing brochures, posters, etc.
- Launch your new paycard program
About Heartland Payment Systems
Heartland Payment Systems, Inc. (NYSE: HPY), the fifth largest payments processor in the United States, delivers credit/debit/prepaid card processing, gift marketing and loyalty programs, payroll and related business solutions to more than 250,000 business locations nationwide. A FORTUNE 1000 company, Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. The company is also a leader in the development of end-to-end encryption technology designed to protect cardholder data, rendering it useless to cybercriminals. For more detailed information, visit HeartlandPaymentSystems.com or follow the company on Twitter @HeartlandHPY and Facebook at facebook.com/HeartlandHPY.
Insights Banking & Finance is brought to you by Heartland Payment Systems
When trying to learn information about an individual, many companies turn to online background checks to uncover or confirm information. However, doing so could prove a mistake if this is the primary step taken to understand an individual’s background, as relied upon information may not be fully verified.
Hiring a licensed investigator can not only help ensure high-quality information is obtained, it can also facilitate the analysis of this information to provide a complete picture of an individual, says Theresa Mack, CPA, CFF, CAMS, CFCI, PI, a senior manager with Cendrowski Corporate Advisors.
“A simple background check may provide an incomplete picture of an individual and overlook critical information,” says Mack. “By hiring a licensed investigator to conduct background due diligence, you can ensure that no stone is left unturned.”
Smart Business spoke with Mack about how a licensed investigator can help your business uncover the information you need and put it in an appropriate context.
Why should a company hire a licensed investigator to conduct background due diligence activities rather than perform an online background check?
Most online or database-driven background checks are actually ‘record checks.’ In other words, data from records is compiled and the quality of source information is not thoroughly verified.
For some purposes, this cursory check of public records may be sufficient. However, depending on the information found, the nature of the background check, the check’s intended use and the access to confidential/proprietary information that a potential employee may have, a complete background due diligence investigation may be warranted.
A background due diligence investigation, as performed by licensed investigators, is far from a cursory background check. No single record or method of search is generally employed; instead, an investigator uses multiple resources to verify data accuracy and corroborate information. Thus, background due diligence investigations help reduce the risk of client reliance on false information.
What process is employed by investigators to perform background due diligence activities?
An investigator generally works on a six-step methodology: prepare, inquire, analyze, query, document and report. This methodology is highly applicable to background investigations.
An accurate and comprehensive investigation is based upon existing, determined and verified information. Leaving no rock unturned and making every conceivable effort to locate all possible information is generally the objective of an investigator.
Investigators will tailor their activities to suit the needs of their clients, which typically include attorneys, businesses and individuals. Client needs will define both the records checked by the investigator and the type of documents that can be released to the investigator and the client.
Where will an investigator begin his or her research?
An investigator often begins the research process by examining open source information. In this instance, open source refers to sources that are overt and publicly available, as opposed to covert or classified sources; it is not related to open-source software or public intelligence.
Open source information includes public documents that are created over a person’s lifetime, allowing the investigator to follow a paper trail leading to a complete history of the individuals being searched. These may include court filings, property tax documents, vehicle registrations and social media sources, among others.
Open source intelligence is a form of intelligence collection management that involves finding, selecting and acquiring information from publicly available sources and analyzing it to produce actionable intelligence.
How does an investigator evaluate source information?
Any record that is kept or provided is only as good as the chain of events involved in its creation. While doing online record checks simply provides information on an individual, investigators are often tasked with evaluating the veracity of the source data.
Record maintenance, storage and dissemination procedures can often impact the accuracy of information. Typos, misprints and mistakes introduced by human error can also affect the accuracy of records. These latter items are often seen on personal credit reports, criminal convictions and even civil litigation histories, which, although they are official records can nonetheless contain errors.
Processes for updating records can also have an impact on the accuracy of information, as records are only as accurate as their frequency of update. Some records are never updated and may provide stale data if a user is unaware of this underlying issue.
Finally, the method data that warehouses employ for acquiring information critically impacts information integrity. For instance, the provider may have purchased information from a secondary source. In such an instance, it is essential that the provider have accurate retrieval processes and is knowledgeable about handling special data items.
Each of these issues is evaluated by an investigator over the course of conducting background due diligence activities.
Theresa Mack,CPA, CFF, CAMS, CFCI, PI, is a senior manager with Cendrowski Corporate Advisors. Reach her at (866) 717-1607 or firstname.lastname@example.org.
Historically known as a country for low-cost manufacturing and a restricted currency, China now provides a wealth of opportunities for foreign businesses, says Alfred Ho, Vice President and Global Financial Institutions Manager at FirstMerit Bank.
However, any business that has ever ventured onto unfamiliar turf understands that turning opportunity into success comes with challenges. Overcoming barriers inherent in such a move requires foresight, planning and, notably, well-informed advisors who already know the terrain.
Ho explains that FirstMerit has dedicated itself to helping clients grasp the ins and outs of doing business in China. With an eye to the future, FirstMerit has been actively engaged in bolstering its credibility in China, staying abreast of the country’s rapidly changing market, and learning firsthand from its clients who have established long-term operations there.
As one of the first regional banks to have a renminbi, or yuan, (China’s currency) account with a large indigenous Chinese bank, FirstMerit’s International team has enjoyed a longstanding relationship with the country’s financial institutions and businesses.
To foster this relationship and lay the groundwork for new opportunities for its clients, FirstMerit Corporation Chairman, President and CEO Paul Greig and David Goodall, Executive Vice President of Commercial Banking, recently travelled to Beijing, Shanghai and Hong Kong, where they met with senior officials at various Chinese banks and worked to set up dialogues and relationships.
FirstMerit believes that having such infrastructure in place is crucial to paving the way for assisting its clients looking to expand into China.
FirstMerit executives also spent time visiting the Chinese operations of some of its clients, gathering insights that will ultimately smooth the process for others planning to do business in or with the second-largest economy after the United States. Ho, who worked with the Hong Kong government as a senior information officer for 10 years, shares some important things to consider:
Chinese workforce. Given China’s population of 1.3 billion, or nearly 20 percent of the world’s population, the labor force is abundant. However, employers in China are facing rising wages and keen competitions for skilled workers. Many find that it is getting more difficult to retain good workers who tend to have little loyalty and would leave on a dime, Ho explains.
However, employment laws recently became stricter in an attempt to eradicate unfair employment practices and to give workers more benefits and protection. Due to changing employment environment and demands from workers, wages have increased by as much as 20 percent or more in coastal regions.
Non-native workforce. A foreign company can bring its own employees to work and live in China with proper permits. Ho says that foreign companies should consider bringing employees who are open minded because the culture is much different than American culture. He advises an American living in China to have a basic understanding of the language and customs and be adventurous about various types of food, as food is a culture among Chinese and they are proud of their own local cuisine. One of the easiest ways to insult a Chinese person is to insult his or her food, he says, and it should be avoided.
Middle class difference. China’s middle class, which numbers approximately 300 million, differs from the American middle class, Ho explains. China’s middle class is growing exponentially because income is increasing substantially. Many middle-class families have become seemingly “rich” overnight, Ho explains, and as a result, they spend it readily.
They also typically do not have confidence in Chinese brands (remember the baby milk powder contamination scare?) and seek to achieve status through western brands. Many would pay a premium for western goods like Gucci purses and Apple products or General Motors or BMW automobiles as opposed to local brands, Ho says. These products both represent status and quality.
The growing middle class presents an excellent opportunity for U.S. businesses to sell to this population – as much if not more than selling to the entire United States, Ho explains.
Hong Kong vs. China. Know the history. Hong Kong was under British rule for approximately 150 years until China resumed control in 1997. Even though Hong Kong falls under Chinese rule, it still operates on a “one-country, two-systems” concept. While China is a communist country, Hong Kong remains primarily capitalistic and has its own currency and legal and judicial systems, Ho explains. However, Hong Kong is slowly becoming more like China, and in time, Ho says, it will be fully assimilated into the Chinese system.
At this point, while Hong Kong is now part of China, it currently operates quite differently. Many companies conduct business in mainland China but have their headquarters or family located in Hong Kong because it is more similar to the United States, Ho says.
Currency. Historically, the renminbi was restricted, although its value was pegged to the U.S. dollar. This has changed over the years and the renminbi is now pegged to a “basket of currencies” instead. In the past, the renminbi’s value has been a point of contention because many argued that the restrictions kept the renminbi’s value low, giving Chinese exporters an unfair advantage, Ho explains. However, in the last 18 months, China has relaxed the restrictions so that foreign entities, under limited and changing restrictions, can do business in the renminbi. Non-China entities are also now allowed to open a bank account in Chinese currency, thus somewhat mitigating the “unfair advantage,” he says.
Taxes. China no longer offers many tax incentives because it doesn’t see the need given the huge marketplace it offers, Ho says. Corporate income tax for both foreign and domestic companies is of the same percentage, unless the company falls under the “hi-tech” category which will have a more favorable tax rate. In addition, companies face other taxes in China, such as withholding tax, value-added tax, consumption tax, customs duty, etc. It’s recommended that companies considering doing business in China consult a tax professional who is knowledgeable about China taxes to truly understand how this will affect them.
These insights into doing business in China offer only a glimpse of what companies should know before taking any steps to enter the market. Companies need to have an understanding of what they want to accomplish, Ho explains. The process may take some time because many questions must be answered – Does your company want to set up a location in China or operate from the United States? Will your company buy the materials it needs to make its product in China or import them? Will you hire employees within China or bring existing key employees from the United States?
Ho says that the worst thing a company can do is enter the Chinese market and wait to make decisions until it arrives in the country.
U.S. companies should partner with a trusted advisor, such as a banking professional, to help them narrow their goals before entering the market. It might make sense, although not always, for a business to partner with a Chinese company to learn the ropes and ease into the market. In fact, this used to be the only way foreign companies could enter the country, but China now allows wholly foreign-owned enterprises.
Partnering with an advisor such as FirstMerit also allows a business to make trusted connections within the country. Ho knows the pitfalls of not doing so, citing a business that trusted the wrong person in China and ended up in an industrial park completely inappropriate for that company and lost business and eventually had to close the facility.
“We are always willing to advise and consult with our clients and prospects so we can deliver our expertise and experience to help them do business the right way,” Ho says. “We’ve spent time there and have real-world experience to help our customers.”
For more information on doing business in China, contact Alfred Ho at email@example.com or 330-996-8011.
FirstMerit International Services
- Export Business Support
- Confirmation of Foreign Bank Letters of Credit
- Cash Flow of Future Payments (B/A Financing)
- Import Business Support
- Letters of Credit
- Collection Processing
- B/A Finance
- Standby Letters of Credit to support export sales & import purchases
- Ex-Im Bank and SBA Working Capital Loan
- FirstMerit is a Delegated Lender
- Complete suite of foreign exchange transaction and hedging services
- Outbound and inbound global funds transfers in US dollars or any unrestricted currency
- Multi-currency account services in all major currencies
- Foreign cash business trips
- Foreign check processing
- Introduction to Foreign Banks
- Foreign Business Advisory
- FirstMerit is one of the only banks in the United States that has advisory services to assist in setting up foreign operations
Companies invest great amounts of time, effort and capital on building the right website to resonate with their target customers and convert those targets into leads for the business. “Building and marketing a great website that generates volumes of leads often comes with the next-level challenge of efficiently managing those leads to quickly convert to sales,” advises says Kevin Hourigan, president and CEO of Web design, Web development and online marketing agency, Bayshore Solutions.
Smart Business spoke with Hourigan about how to connect the right technologies to effectively manage your leads and close sales faster.
What are the critical elements I need to manage my lead to sale process?
Standing alone, a business website typically processes a new lead from a quote request or a contact form submission by sending an email alert to someone, and perhaps storing those form submissions in the administrative back end of the website. Unless a lot of detailed, accurate and disciplined manual documentation is maintained about each lead, the ability to track them through to the sale and see key metrics such as best performing lead sources, campaigns, etc. is lost. Critical business decisions could then be made based on faulty information and opinion. The technology exists today to eliminate this risk, at investment levels that accommodate most sizes of businesses.
In order to stay competitive in today’s business climate, intelligence needs to be exchanged between marketing and sales that streamlines the progress of leads through your sales funnel and enables more, better and faster closed sales. The way to enable this is by integrating your website with a Customer Relations Management (CRM) system and a Marketing Automation platform.
What does CRM and marketing automation do?
A CRM system is your repository of collected, and real-time information on all leads, customers and contacts related to your business. It acts as your marketing and sales process database and can categorize and segment your contacts on a wide variety of items for use in reporting, and grouping for specific action. CRM Systems can be proprietary and stored within a business’s IT infrastructure, or accessed via the ‘Cloud’ through a variety of providers. CRM can focus only on sales process aspects, or expand to cover end to end (marketing and lead gen through invoicing and collections) functions.
Each business applies customization to a CRM to serve their unique needs and procedures. In addition to housing your valuable prospect and client information and serving it up as needed, data from your CRM gives you objective insights to your marketing, sales and business performance.
Marketing automation grew out of campaign and email marketing beginnings, and has become the current standard of best practices. Today, enlisting just an email sending tool without using the advanced features of marketing automation is like driving blindfolded on a busy interstate: Your chances of getting to your destination (customer acquisition) without wrecking your brand integrity are extremely slim. The missing piece that marketing automation provides is the live, real time ‘sight’ into the ongoing actions of the target audiences interacting with your business.
Marketing automation allows you to communicate, evaluate and accelerate your leads through your sales funnel. Email (and even print) communications to your audiences with customized, relevant information, triggered from their ongoing behaviors are efficiently managed using marketing automation. This integration enables specific and more effective lead nurturing without requiring large amounts of time and staff that a stand-alone tool would.
Further, lead qualification and scoring is greatly enhanced with marketing automation’s ability to monitor your audiences’ ongoing interaction with your website. Specific characteristics and actions can be ‘scored’ to identify buying-stage and readiness for sales contact. Alerts and workflows can be triggered at any number of points in this progression. An immediate feedback stream of all this data to your CRM and to your marketing and sales team is a key benefit of marketing automation. They now know who is reading your messaging and can prioritize their responses based on the content you are sending that they are engaging with.
How does this integration help me sell better and faster?
In an integrated system, leads generated from your online properties are automatically fed into your CRM, with critical marketing data attached including: lead source, campaign info, keywords used, where the lead came from online, etc. Leads generated through outbound sales can also be entered directly into the CRM for a real-time and holistic view of your business’s sales pipeline. Live dashboards and reports on key performance indictors can be accessed immediately to assist sales management and communication.
The initially gathered data is augmented through your marketing automation platform with each lead’s specific ongoing engagement with your company including: web pages visited over time, emails received, opened and clicked on, articles and other content consumed, conversations and in-person touch points documented on the path of that lead becoming a customer. Post-sale relationship information is also kept including proposals presented, closed or lost – and why. This enables data-driven evaluation of sales initiatives, campaigns and tactics.
Consistent lead ‘scoring’ and tracking can trigger appropriate workflows and responses within your organization. Your sales reps can be alerted immediately of a lead’s sales conversation readiness in their specific area or product of interest. Sales can then intelligently focus on those ‘warmer’ leads, while marketing continues to nurture leads that are in earlier buy cycle stages and separate unqualified and non leads to maintain branding integrity, and save sales reps from activities that waste time and cause frustration.
An integrated lead management system of your website, CRM and marketing automation puts your sales team in position to connect with the right leads at the right time with the right information, thus closing sales faster, more easily and more often.
<< For a snapshot of Bayshore Solutions Web marketing methodology, visit: http://www.bayshoresolutions.com/about-bayshore-solutions/methodology.aspx
Kevin Hourigan is the president and CEO of Bayshore Solutions. Reach him at (877) 535-4578 or http://www.BayshoreSolutions.com.
Women-owned businesses are three-and-a-half times less likely to reach $1 million in annual revenue as businesses owned by men, according to an independent impact study released by Ernst & Young LLP, a professional services company.
The reason? Most women just don’t think big enough.
Here are five key points Ernst & Young recommends for scaling small companies into large ones:
- Think big and be bold
- Build a public profile
- Work on the business, rather than in it
- Establish key advisory networks
- Evaluate financing for expansion
To learn more, join us for “The POWER of Perseverance,” the 10th annual Perspectives: Women Who Excel Conference, presented by Anthem and sponsored by Smart Business, Cleveland Clinic and Colortone Staging & Rentals.
The April 13 event will feature a panel discussion with a dynamic group of leading women executives who will share their insights on what it takes to redefine and reinvigorate your leadership style in order to move a business forward.
Join us to discuss methods for promoting success for women-owned businesses in our region.