“The charity should be efficient,” says Wade McMullen, partner at Vicenti, Lloyd & Stutzman LLP. “You don’t want your donations to go toward inefficient operations.”
Smart Business spoke with McMullen about how to decide which charities to give to, how to evaluate your contributions and what types of tax implications should be considered.
What criterion should a donor use when deciding which charities to give to?
First, the donor should look at how the charity spends the money that it receives. In terms of a percentage that is spent on the charitable purpose of the organization, it should be 60 percent or greater. You should look at how much money it’s spending for fundraising and how much it’s getting contributed for those fundraising expenses. The other criteria would be looking at that particular organization and seeing if it has large asset reserves or if it is using the money that is being donated. It shouldn’t have more than three to five years worth of operating expenses as reserves.
How do the financial statements of a nonprofit differ from a for-profit enterprise?
It used to be really different than a for-profit enterprise. The financial statements were not organized in such a way that they could be comparable from one to the other. Then in the mid-1990s, the way financial reporting was done changed, and they became more uniform. The biggest difference is that the for-profit financial statements don’t have anything to do with donor-imposed restrictions and they don’t show things on a functional basis (programs, management and general, and fundraising). They show things on a natural classification basis, which includes items like salaries, rent, etc. Some nonprofits also give information about natural classifications as they specifically relate to the functional categories.
How can a donor determine how much of a nonprofit organization’s budget is used for programs that fulfill their mission?
There are three ways to look at that. One, look at its Web site and get information on its budget and the different type of programs that it has. A more concrete way would be to look at its audited financial statements which show how much is spent on programs, how much is spent on management in general and how much is spent on fundraising. The third way would be looking at its federal informational tax return, which is Form 990. That not only gives information about expenses, but also lists who the key officers, directors and employees are and how much money they make.
How should a donor follow-up and evaluate their charitable donations?
One way of doing that is contacting the organizations and asking for reports. If you give a large donation, you can stipulate that you would like to have a report prepared and sent back to you about how the organization spent your money. Big foundations or donors will often ask for that type of information to verify that the entity has spent their money on what they had planned on spending it on.
Another way is to utilize the philanthropic infrastructure that supports donors. There are now organizations that help donors monitor their giving, how it is being spent and even helps them make decisions on which charities to give to.
There are also Web-based services like GuideStar.org and Give.org that give advice on screening.
What are some of the tax implications that should be taken into consideration when donating to charities?
From a business standpoint, there are limitations on the deductibility of charitable gifts. Usually, it’s limited to 10 percent of taxable income so that is a consideration for corporations when they give charitable donations. There is a good chance that, if you’re giving significant amounts to charities, you might be limited on how much you can deduct in one year. You can, however, carry those deductions forward on the corporation’s tax return for up to five years, but after five years you lose the deduction.
Because of the limitations that corporations have on their charitable deductions, we encourage them - whenever they possibly can to make those donations on a personal level rather than on a corporate level so that they can get the full deduction for the tax return. For individual donors, it is important that the organization you’re giving to is a 501(c) organization that is exempt from taxes. Also, you should be asking for acknowledgement letters of your donations so that you can deduct them on your personal tax returns.
WADE McMULLEN is a partner at Vicenti, Lloyd & Stutzman LLP. Reach him at firstname.lastname@example.org.
To turn the tide, it is important for companies to institute fraud prevention programs that combine thorough auditing procedures with open avenues of communication for employees who suspect foul play.
“People who know that someone’s watching have to think a little harder about committing a fraud than when it’s wide open and there are no deterrents in place,” says Karin Heckman Nelson, a partner at Vicenti, Lloyd & Stutzman LLP accountants. “If you know that nobody is going to do anything, it gives you an opportunity which is one of the things that you need in order to commit a fraud.”
Smart Business spoke with Nelson about the average financial loss of a company that has been defrauded, the types of collateral damage that can be sustained, and how to best implement fraud controls.
Why is fraud becoming so prevalent?
It’s hard to know if it’s becoming more prevalent or if today’s environment is actually encouraging more reporting of fraud. There has been increased attention to fraud with the recent large, publicized fraud cases. Also, the Sarbanes-Oxley Act has placed more emphasis on corporate governance and regulations. These factors may lead to more actual reporting of fraud rather than fraud going undetected.
What types of companies are most at risk, and what types of fraud are most common?
Organizations that process large amounts of cash are at greatest risk. Those would include financial institutions and retailers. However, there is risk in all companies and across all sectors, including governmental entities and nonprofit organizations.
As far as types of frauds, you have cash skimming where a lot of cash is handled and a person deposits some of it and keeps a portion for their own pocket. There are payroll schemes, which involve setting up fictitious employees and then having checks written in that person’s name, which are then deposited in the perpetrator’s account. It’s also possible to set up fake companies like Enron did. There are all kinds of possibilities.
What is the typical financial loss for a company that has been defrauded?
According to the 2004 Report to the Nation on Occupational Fraud and Abuse by the Association of Certified Fraud Examiners, the median loss to small businesses was $98,000. The typical organization loses six percent of its annual revenue to occupational fraud.
In addition to economic losses, what types of collateral damage can a business incur?
There are other less tangible losses, which can include damage to a company’s reputation both with the public and with its employees. Fraud can also lead to reduced employee morale and open the doors to more deception: if an employee sees somebody else getting away with something they may say ‘Oh, that was easy,’ and try it themselves.
How can businesses implement fraud controls to protect their assets?
One of the most effective ways to limit fraud losses is to have an anonymous reporting mechanism such as a fraud hotline. The surveys have found that the most common way for fraud to be discovered is through tips. Employees are less willing to steal if they know that controls are in place to protect against theft. It’s important to have strong internal controls set up that both would deter someone and detect if a fraud has occurred. Internal and external audits can also be an important tool.
If a company suspects that fraud has occurred, what steps should it take to stem the situation?
First, it needs to investigate the allegation. The company can either assign captive employees or find someone outside the organization. If the claim is then substantiated, the company needs to take appropriate action such as termination and prosecution. These actions are important because they demonstrate that the company is not tolerant of fraud - which can discourage the next employee from taking such actions.
KARIN HECKMAN NELSON is a partner at accounting firm Vicenti, Lloyd & Stutzman LLP. Reach her at (626) 857-7300 or email@example.com.
“Your staff is a resource, and they will make or break you,” says Gail Cowan, director of human resources at Sander A. Kessler & Associates Inc. “My goal is to make sure that my organization has the right employees, with the right skill set, in the right places, at the right time.”
Hiring smart and then training effectively, she notes, will reduce turnover and costs while increasing productivity. This applies to the blue-collar environment as well, where sound practices can ultimately lead to reduced workers’ compensation losses.
Smart Business spoke with Cowan about successful hiring strategies, how to effectively develop employees and how to keep them once they are trained.
What are some best practices for locating and hiring employees that fit an organization’s needs?
For most companies, having a good referral system is important. The reason this works well is that you have people who are happy with your company, happy with the environment, they know the culture, they know the business, and they’re referring someone who will fit in well. We have one in place where employees receive a generous bonus if they refer someone that we hire. When interviewing, I look for computer proficiency, which is absolutely key in today’s business environment, and interpersonal skills.
How can effective communication about job expectations help increase retention?
Effective communication is absolutely key. People need to know what is expected of them; not only their job duties, but what type of culture they will be joining and what type of schedule are required. You have to be fair with people and let them know if the job will require more than the standard hours. If a person has the tendency to be an 8-to-5 kind of individual, then they’re not going to fit in that job. When I interview, I give them an idea of the culture, the expectation of the job and expectation of the personalities that they’ll be interacting with.
How can employees be trained and developed to reach their full potential?
There are three types of basic training that occur: business literacy, technical knowledge and computer proficiency.
Training should be easily accessible for the employee, so that they can attend the training as well as maintain their jobs. You have to set a career path for individuals, so that they know how to build the training in a direction that will take them to the next job where they will have more responsibility and, hopefully, more money. You can also train people by enriching their job. This means adding responsibility and giving them projects to work on, so they’re stretching outside of their usual mundane tasks.
What steps can a business take to decrease the likelihood of losing a key employee to a competitor?
You need to make sure that the salaries and benefit packages are competitive and that there is a work/life balance. In addition, you should provide challenging work. When individuals are engaged in what they’re doing, feel empowered with what they’re doing, and feel that they are making a contribution to the organization’s ultimate success, they’re not going to leave you.
It is also important that employees have good relationships with their manager. That’s the number one reason why people leave a job. When there is a good rapport with their manager and the manager is encouraging and mentoring them, they won’t leave. If the employee is a manager, then it’s up to senior management to make sure that they keep that manager motivated.
What types of reward and recognition programs are most effective for keeping morale high?
There are two types: one that is frequently given and one that is reserved for achieving a long-term goal.
We use spot bonuses which are immediate rewards that can be given at any time. Each manager has a budget that they oversee and they can recognize a job well done and give someone a pat on the back with a $50 spot bonus.
For recognizing long-term achievements, we give out an annual award called the Kirsch Kup, which is named after one of our partners. The criterion for this award is based on our mission, vision and values, with managers nominating individuals who have been with the company for at least one year. The winner receives $5,000 in cash, reserved parking, and their name is engraved on a trophy that sits in our lobby. It’s very meaningful and not given lightly.
GAIL COWAN is the director of human resources at Sander A. Kessler & Associates Inc., a property and casualty insurance and employee benefits firm. Reach her at 310-309-2200 or firstname.lastname@example.org.
“Sometimes a letter of intent actually can be a contract. It really depends on the binding nature of the letter of intent,” points out Marshall Horowitz, partner in Alschuler Grossman Stein & Kahan LLP’s Transactional Department.
Smart Business spoke with Horowitz about how letters of intent should be used, when they should be made binding, and what type of legal disputes can arise if not done properly.
What is the basic principle behind a letter of intent?
A letter of intent is a way for businesspeople to gauge a level of interest in a project or transaction without having to go through the whole process of entering into a long-form contractual agreement. It can be an effective and cost-efficient way to determine the level of interest that parties have in a transaction. It also has the benefit of being able to focus the parties’ expectations about a deal, set up the key terms, make sure the parties are on the same page, and identify potential road blocks.
How does a letter of intent differ from a contract?
The pragmatic distinction is that a letter of intent is usually more of an outline of a potential business deal. The parties lay out the basic principles behind a deal and highlight some of the main points, but don’t describe in writing all of the details. In a contract, you want your i’s dotted and your t’s crossed.
The other distinction is that contracts with definitive documentation would almost always be binding, whereas only certain provisions are usually intended to be binding in letters of intent.
What are some of the business functions of a letter of intent?
Often, the business function of a letter of intent is for the businesspeople to avoid some of the costs and expenses of negotiating long-form documents. Sometimes, you will put confidentiality provisions in a letter of intent.
Although I would recommend that there is a separate disclosure agreement especially if there is sensitive technology that might be discussed. Also, you can lay out timelines, major objectives and make sure that people understand the due diligence process.
How should a business negotiate a letter of intent?
The sooner they can bring their lawyers in, the better. At the end of the day, lawyers can look at potential pitfalls in a letter of intent that businesspeople might or might not be thinking about. For example, breakup-fee clauses are often put into letters of intent. These can sometimes be very significant sums, so you want to make sure that type of provision is done right.
Should businesses make their letter of intent binding?
If the parties actually intend to be bound, then certainly they should make it binding. However, normally, businesses only want some of the provisions to be binding. They really look at a letter of intent as more of a document that lays out the basic interest in doing some sort of transaction or working together on a project, but they know that they really need to do the detailed negotiation later on.
For example, the acquirer of a business knows that it might need to do a lot of due diligence before it finalizes the price and finalizes whether it wants to do a deal, but it wants to indicate its interest in doing the deal. In that case, the acquirer would only want certain provisions of a letter of intent to be binding.
What are some of the common legal disputes that arise from letters of intent?
The most common legal dispute is whether or not a letter of intent is binding. There is a well-known case, the Texaco/Pennzoil case, where I believe a jury awarded $9 billion to one of the parties over a letter of intent that the other party thought was not binding.
A typical dispute that might arise is if a business is looking to get some financing. They enter into a letter of intent and think it should be binding, but the financier never thought it was binding. The party receiving the financing is relying on the agreement, and they go ahead and take certain actions, stating that they had a binding letter of intent. This points out the need to have a well-drafted letter of intent that makes very clear which provisions, if any, are binding and which provisions, if any, are not binding.
MARSHALL HOROWITZ is a partner in Alschuler Grossman Stein & Kahan LLP’s Transactional Department. Reach him at (310) 255-9019.
Daniel S. Shea, managing director of W.Y. Campbell & Co., a subsidiary of Comerica Inc., says that banks have also played a role in the active market, given their willingness to fund deals.
Smart Business spoke with Shea about the current climate for selling businesses, the types of buyers who are driving the market and how valuations should be handled.
What’s the current environment like for selling a business?
It’s one of the best markets since the late ‘90s. Buyers are aggressive because they have cash and feel good about the economy, while banks are helping by providing acquisition debt. At the same time, sellers see what a good time it is to sell, given the activity levels of buyers and historically high prices. It’s a liquid market, which isn’t always the case.
Toward the end of 2005 and on into 2006, it appears that the growth in the number of deals has started to level off. We don’t believe that transaction volumes are going to go down, we just see them leveling.
What types of buyers are driving the market?
The strategic buyer has been more active in recent periods and is looking to benefit from the synergies that can accompany a purchase, such as with a target’s customers, products, channels and geographic locations. Both public and private acquirers are aggressively seeking growth through acquisition to complement internal growth initiatives.
There are also private equity firms that go out and raise capital for the purpose of buying and holding companies. They look to grow sales and profits before selling anywhere from one to seven years down the road for a nice return. According to Private Equity Intelligence, through September 2005, private equity capital fundraising surpassed the level achieved in all of 2004, so there is a tremendous amount of capital waiting to be invested.
When contemplating selling or acquiring a business, what should a CEO or business owner consider?
If they’re a seller, they need to be mindful of making a market for their business. Most middle-market companies are privately held so the process is not as easy as selling stock on the open market. With private companies, there is no established market for the business; you have to make the market.
Hire someone who can prepare and provide the appropriate information in a compelling manner under confidentiality agreements to qualified prospective buyers and then assist in establishing a price, a structure, and terms and conditions acceptable to both parties. Sellers want multiple buyers bidding for their business to ensure they can drive a good deal too many lose value (and time) by engaging in what we call one-off transactions.
Buyers, both strategic and financial, need to make sure the perceived benefits of the acquisition are for real. Strategic buyers in particular need to have a realistic integration plan and a realistic forecast of expectations for the combined entity, because studies show that the majority of transactions fail to meet objectives. The way to fix this problem is to set realistic objectives and then don’t overpay you can pay at most for the value the acquisition creates and, ideally, less would be better.
How should the valuation be handled?
The market will decide the eventual price, but it behooves sellers to have a good idea of the likely outcome before initiating the sale process. Realistic expectations are critical, or a lot of time and money will be wasted.
Sellers should have their investment banker develop an estimate prior to engagement. This estimate should triangulate the results of a variety of valuation techniques including guideline public company and recent transaction analyses.
We rely on discounted cash flow analysis as well, because this technique provides for more granularity. It is where you take a look at the expected future cash flows of the business and value the business based on what those cash flows are worth today.
People talk about multiples of various accounting measures such as sales or earnings to arrive at initial value estimates or as rules of thumb, but discounted cash flow analysis is the predominant technique employed for estimating value at a more thoughtful level.
DANIEL S. SHEA is a managing director of W.Y. Campbell & Co., a subsidiary of Comerica Inc., and head of the firm’s Southern California office. His responsibilities include relationship management and client representation in sell-side, buy-side and private placement transactions. Reach Shea at email@example.com or (310) 297-2894.
Daniel S. Shea
W.Y. Campbell & Co.
“Generally, a mid-sized business is going to have a closely-held ownership: either one entrepreneur, a partnership or a small group of people,” explains Morgan Rector, regional manager of wealth and institutional management at Comerica Bank. “There tends to be a higher level of dependence in terms of where these individuals see their net worth and income coming from than in a public company.”
Smart Business spoke with Rector about investment strategies.
What are some of the most important factors that a CEO or business owner should consider when they plan their investment strategies?
First, you want to make sure that you’re working with an institution that you’re comfortable with and is a good fit for your company. If you’re a mid-sized company or larger, you don’t want to work with a financial institution that is so small that they don’t have the breadth, the products or the services that meet your needs.
Secondly, you want to be able to sit down with somebody, like your investment advisor or banker, who understands all of the different products and services and how they fit the specific needs of your company. Start a dialogue with your financial institution, which should discover the specific needs and risk characteristics of the business, and match up an investment strategy that fits with those needs and characteristics.
What are some common mistakes that businesses make in their wealth management strategies?
It’s not unusual to see executives or business owners have strategies that are way too conservative with respect to the needs of the company or themselves. If they’re looking at a longer time horizon, or if they need to grow their asset base, they can integrate investment in stocks and asset classes, other than high-quality fixed income, into an overall investment strategy. What we tend to see are companies that can accommodate more risk and really need more in order to accomplish their financial goals.
When investing in global markets, how can a business best strike a balance between risk and return?
You can get a better understanding by modeling historical results and seeing how the international financial market, and investments in those markets, track with local markets. This way, you might find that by layering in some exposure to international markets, you might create more diversity in your investment portfolio, lower the risk and potentially increase the return.
Do you recommend one entity to keep tabs on investment opportunities, administrate trusts and oversee tax issues?
From a convenience and a trust standpoint, that may serve you. It is important to find an entity that is solid financially and one where you don’t have the risk of potential financial issues. With one entity, you get the convenience of packaging all these things together so you’re getting communication all at the same time and all in one statement. On top of that, it’s easier for that entity to integrate all of the different things you’re doing so that there is an interrelationship. I’m a proponent of that, but it depends. If it is a smaller entity, maybe one that hasn’t been around that long, you might look to create some diversity so if there is a problem it won’t drag down the whole financial picture.
What type of questions should one ask when looking for an institutional management partner?
Some of the key questions are: “How long have you been in business? What’s your financial backing? How strong are you? What has your performance been in the past?”
Beyond those, it’s really seeing the type of questions that the financial advisor asks you. If you go into someplace and they quickly say, “We can do it. Just tell us what you want and we’ll give it to you,” then you’re probably in the wrong place. But if you go into someplace and they say, “Let me ask you a lot of questions so I understand what you’re about, what you’re looking for, what your risk tolerance is, and what your time horizon is,” that’s going to give you an indication that you’re in the right place. Because you’re in a place where your financial advisor is customizing something to meet your specific financial needs and is not just giving you off-the-shelf products.
MORGAN RECTOR is regional manager of wealth and institutional management at Comerica Bank. Reach him at (310) 281-2471 or firstname.lastname@example.org.
Lance Gordon, DBA and assistant professor at Woodbury University, predicts that as technology progresses, it will become even harder to reach fragmented audiences. “Consumers are going to be media independent,” he says. “They’re going to be wired and receiving media messages that they have total control over.”
Smart Business spoke with Gordon about how to maximize marketing budgets, the changes he expects in niche marketing and the importance of adapting to these changes.
How should business owners define the right niche market for their businesses?
First you must develop a strategic platform for the company get control of how you’re going to manage strategic thinking and how you’re going to spend your money on marketing. You can’t identify niche as a term and make it stand alone as a concept when it comes to developing strategy. You have to have other terms working and blending with that concept. One of those, of course, would be positioning.
What are some of the obstacles that a company faces when positioning its brand?
One of the important things that business owners need to realize is that everything is in flux, everything changes. Markets are in perpetual motion and target audiences are continually migrating and driven by trends. You have to change with the times.
When targeting a niche audience, how can a business best maximize its marketing budget?
Opportunities abound in this area. When I define niche to my students, I say niche is the better-than factor. What that means is ‘What are you doing better than your media competitors?’ You don’t have to go and spend an awful lot of money, just take advantage of the consumers that do visit your establishment and make sure that they are getting your promotional materials.
Also, there are wonderful new opportunities that have come along in Internet advertising. A company called SpotRunner offers television commercials to small and mid-sized businesses for $500 to $2,000. These are prepackaged television commercials you simply drop your logo and marketing message into a spot that has already been created. You can pretty much cherry pick where you want to be in the market. It has the potential for taking off when you consider that there are (more than) 10 million local businesses in the United States.
What other trends do you see in niche marketing over the next few years?
It’s wide open. You have a whole Game Boy population that has never read a newspaper in their life and these people are going to grow up and become media-savvy adults. It’s considered a disgrace, if when the phone rings, you have to jump up off the couch and run to get the landline. You have to start looking at product placement and making your product available where people are on the Internet.
The other thing that is going to happen is that after an entire generation of millennials gets to the point where they’ve had encroachment into their personal lives by identity theft, they’re going to become super-resistant to marketing messages. It will become more and more difficult to reach them.
How does niche marketing translate globally?
I had an interesting experience where I addressed about 35 Chinese businessman who were all entrepreneurs. I did a presentation to them, through an interpreter, about how they should be thinking about marketing and the new global economy.
I warned them that the core concepts that their sons and daughters were going to be getting at most major universities and colleges are concepts that are no long applicable to the present-day world. They are going to have to pretty much reinvent it themselves.
Some of the research that I’ve done shows that the Internet era doesn’t really start until the year 2010. What happens in the future with broadband will so incredibly change the media arena that the entire area of marketing is in flux.
New emerging economies that are starting from scratch are probably going to have the competitive advantage in the near term unless people who have the willingness and ability to do research start getting smart and really understanding what sort of change is out there and letting their students benefit from that.
Lance Gordon, DBA, is an assistant professor at Woodbury University. Reach him at (818) 252-5153 or Lansing.Gordon@woodbury.edu.
“In this day and age, most communication is being handled through e-mail,” says Hormazd Dalal, president of Castellan Inc. “I would say that 80 percent of business communication is now handled by e-mail. Basically, you cut yourself off if your e-mail system goes down.”
Smart Business spoke with Dalal about what type of e-mail system is best for businesses and what type of e-mail recovery solutions businesses should have in place.
What different e-mail systems are available?
Corporations and small businesses typically set up their own mail server. This means that the mailboxes are stored on that server and it is stored locally in the business. Having their own server makes it easy for them to collaborate between one user and another. It also enables them to backup their mail, and for confidentiality issues, keep it onsite.
The typical home user subscribes to a POP (point of protocol) service where the mailbox is housed somewhere on the Internet on a server. This is not advisable for businesses because it means that mail is scattered all over the company.
Last, there are big companies like Microsoft, Yahoo and Google who offer Web-based mail that you can access through the (Internet), but the mail is stored on their servers. Microsoft has Hotmail, Google has Gmail and Yahoo has their own mail system.
For businesses, which system is best and why?
The best system for businesses is to have your own mail server. Out of the business systems, the best seller is Microsoft Exchange, and hands down, it has the largest market share. The reason for this is because users access their mail via Outlook, which is the No. 1 mail client in the world.
There are also other products made by Oracle, and specifically, Novell, which makes a product called GroupWise, and IBM, which makes Lotus Notes. These are the main business systems, and having your own mail server is best.
How should viruses and spam be handled?
For business users one must protect the server at the gateway where mail comes into it. There are many products that filter messages before they even get to the user’s mailbox. Spam is something that is new, but there are many products out there that analyze and tag spam before it gets to the user’s mailbox. The user then has the ability to manage it by using the native features of the e-mail system.
What e-mail recovery solution should a business have in place?
You should be backing up your mail server and the information store. There are several ways of backing up. Typically you backup the entire information store. The problem with this is that if you just need to recover one or two messages, you run into the issue of having to restore the entire database.
One way around this is to implement what we call brick-level backups, which backup each individual mailbox separately. The other way is that most new mail systems have retention policies on them. So if you hit the delete key, you can set a retention that ensures that the e-mail is not actually deleted out of the server for 90 days. This way any mail that has been deleted manually within the past 90 days can still be recovered.
How do you see e-mail systems evolving over the next several years?
The new tools that are being implemented make it very easy for users to access their e-mail from remote devices. Currently, most corporate users can access their mail from any computer in the world. Many people can even have access from their PDAs and cell phones. Things will be evolving where you will be able to access your entire mailbox through a small little device that you hold in your hand. You will probably be able to do it through your car very soon.
In the future, I think viruses will automatically be protected (against), spam will be automatically filtered and mail will be available on numerous devices. You will be able to check e-mail in your car, on your cell phone, on your PDA and, last but not least, from any computer anywhere.
Hormazd Dalal is president of Castellan Inc. Reach him at (818) 789-0088, ext. 202 or email@example.com.
“If you don’t have the right person in the right position, you can’t do your job or meet your objectives,” says Dr. Ken Nielsen, the president of Woodbury University. “If I don’t have the right person teaching architecture, then we won’t be able to deliver the product to our client, the student.”
Smart Business spoke with Nielsen about what attributes to look for when making a hire, how to keep valuable employees in the fold and where to assign a company’s best employees.
What is the most important characteristic to look for when making a hiring decision?
Attitude is the single most important characteristic that you look at with any employee. If they have the attitude that matches the mission and goals of your institution and what you’re trying to achieve, the success will likely come.
In our case, I am very clear that one of the attitudes we have at Woodbury is that this is a family-oriented university. If you don’t have the attitude that you can be warm and fuzzy and get your arms around the student and say, ‘I’m going to help you in every way possible to have success,’ then you won’t fit in this organization.
There are also some other things that I look at when hiring employees. I look for a history of successes. Were they the class president in their third-grade class? Did they sell more newspapers then the other kid? Did they earn their way to camp by selling candy?
If you look at small success patterns, it’s something that you follow throughout their life. If they’ve been successful in the past, they’ll be successful in the future.
Once you’ve identified the right people for your organization, how do you identify which positions they should be in?
In our role at the university, we try to identify the right people, but we have very specific positions that they’re going into. For instance, if I’m hiring a vice president for finance, then I’m looking for a finance person. We won’t take just anybody and then try and fit them into our slots. We look for those specific skills that an employee might have.
I would say for a CEO of an organization the most important responsibility is to hire the right people. Then after hiring the right people, the vision needs to be set for the institution, and goals and objectives set for the employee. And then you get out of the way and let them do their job.
Once you have a good fit, what are some ways to keep a valued employee on board with the company?
You need to pay them the right salary and you need to increase that salary as their responsibilities or their experience expand with the organization. You need to have a system of goals and objectives that you set annually and that you review monthly. This feedback is very important and they need to know where they are and what their status is.
There are other rewards that you can give people, by verbal recognition and by other kinds of recognition within the organization, so that they know that they are being successful. On the other hand, if a person is not doing well, during the monthly progress reviews you need to be clear with what you expect and what you want.
Is it important to mix one-on-one communication with group communication?
Absolutely. In my case, I have a weekly staff meeting with my six direct reports and then I also meet individually with them once a week. Communication is an ongoing process and it has to go both ways. You have to be open to hear from your direct reports their objectives, their ideas and things that they think need to be changed. Certainly the CEO still needs to make the decision, but they need a lot of input.
Where should a CEO or business owner put their best people?
You put your best people on the biggest problems or the biggest opportunities. For instance, we recently went after a bond to finance some buildings. I put our best finance person in charge of that responsibility to help us through that process. Whether it’s an opportunity or a problem, you want to get the best people to solve that issue.
Ken Nielsen is president of Woodbury University. Reach him at firstname.lastname@example.org.
Many people seeking respite from chronic pain have discovered the healing powers of Eastern medicine. Complementary procedures, used in conjunction with Western techniques, can help patients find relief. Treatments include acupuncture, therapeutic massage, tai chi exercises, herbal medicine and alterations to medication intake.
Dr. Ka-Kit Hui, director of the UCLA Center for East-West Medicine, believes that integrating traditional Chinese medicine alongside modern Western medicine can help to improve the health care system.
“The low-tech, low-cost, high-touch, self-help model will hopefully allow us to provide solutions to some of the problems we have in terms of our health care system,” he says.
Smart Business spoke with Hui about the differences between Eastern medicine and Western medicine, why complementary medicine has become so popular and how businesses can benefit from this approach.
What are the differences between the practices of Eastern medicine and Western medicine?
In Western medicine, we use the reductionist approach to try and locate where the organs, cells and molecules are in trouble. In general, other approaches look at the whole system, it’s more holistic. It’s more hands-on, more qualitative and it focuses more on body, mind and spirit.
People who use these methods tend to be health conscious, or they are desperate, because Western medicine hasn’t been able to help them and they’re searching for ways to complement what Western medicine cannot do.
How have you integrated the theories and practices of both Eastern and Western medicine to achieve positive results in patient care?
The two systems are complementary. The Chinese approach looks at the macro aspect and Western medicine looks at the details. Oftentimes, we are only successful in Western medicine to zero in on the certain things that we can actually do.
But other times, we don’t know why (patients are) not well. And that’s where Eastern medicine comes into play. It works without knowing all the details. It works by rebalancing the system and reestablishing the flow by using the body’s own mechanisms.
In a sense, we use Western medicine to make sure that we are not missing anything, particularly life-threatening problems. But there’s a role for both.
It’s like a flip shade pair of glasses: each lens looks at the system very differently. By using Western medicine to look at the trees, branches and roots, and by using Chinese medicine to look at the forest, we have a much more comprehensive view.
You founded the Center for East-West Medicine in 1993. What challenges did you face in getting funding for your vision?
At first I didn’t have any funding. In 1993, people thought this was all quackery. It was very tough. I actually donated my own money.
When I saw patients and gave talks, anything in excess of what I got paid, I would chip in to help build the program. I believed it would be very helpful for patients and for society in general.
What do you believe are some of the reasons that complementary medicine has become so widely embraced?
Everyone wants to stay well and seek solutions to problems where Western medicine has not been successful. Also, the worldview that complementary medicine focuses on resonates with a lot of people. They want more time with practitioners, they want doctors to be more hands-on and look at them as a person, and they like natural healing.
Very few people are rejecting the use of Western medicine; they use it in combination. Patients really like doctors to be able to provide a comprehensive approach and we aim to provide an integrated model.
How can businesses benefit from this approach to medicine?
A lot of people have health problems related to their lifestyles. When they are stressed, they do things that are unhealthy like eat too much, smoke, drink and use medication.
When you have pain, and you just take pain pills, you’re masking the problem. It’s important to pay attention to how much pain is going on: back pain, headaches and overuse of people’s arms on their computers. We think of health problems like heart disease as separate, but it’s all related.
We need to look at the social environment, the natural environment, look at peoples’ lifestyles and then create an overall plan to see how to improve the whole system. I believe that if this approach is done right, we can have a much more productive work force.
Also, it will handle some of the high costs of health care that we are experiencing 40 (percent) to 50 percent of our GDP, or $1.6 trillion. If we, as a society, redistribute the way that we spend our health care dollars, we will have a much better health care system and a much better society.
Dr. Ka-Kit Hui is director of the UCLA Center for East-West Medicine. For more information on the Center, visit www.cewm.med.ucla.edu.