Matt McClellan

In today’s global economy, protecting your company’s good name is more important than ever. You’ve worked hard for customers to create a positive association with your brand, so if someone is putting your trademark on an inferior product and selling it, you’ve got a major problem.

Not only have you lost that customer, you’ve also lost other potential customers who are turned off by your brand based on the negative comments that came from the person who bought the counterfeit product.

“It’s very important to police counterfeits because they cheapen the brand and create bad publicity,” says Luis Alcalde, of counsel with Kegler, Brown, Hill & Ritter’s IP, Litigation and International Business areas.

Smart Business spoke with Alcalde about how to protect your brand in the international marketplace.

Why is brand protection important?

A trademark or service mark owner has a legal obligation to take action against infringers. For example, when you file a trademark and you start using it to create an association with your products or services, someone else may start using the same trademark. If you know about it, but you don’t do anything about it, and later you decide to take legal action, you could have waived your rights.

Trademarks have to be renewed after so many years, so failure to police or challenge infringements can create problems when trying to enforce or renew a trademark. There are technical, legal reasons to police your trademark, primarily to argue that you haven’t waived your rights.

From a business perspective, the reason someone creates a trademark is to create an association in the minds of your consumers with your product or service. Over time, these associations become more valuable. Whenever you walk into a McDonald’s, you have certain expectations. Those expectations have been created over many years of associating the name with certain types of food and service. The only way to create that association is to put a lot of effort, time and money into making sure that your products or service lives up to the association you create.

What can happen when a company is not vigilant about brand protection?

Without any of the work the trademark owner has put into it, infringers place your trademark on their product and profit from it. In that sense, they are stealing your intellectual property. Beyond that, depending on the quality of the counterfeit, you may lose sales as well. In many places where counterfeit goods are sold, the vast majority of consumers know they are getting a fake. They never thought they were getting a real Rolex watch for that price, for instance.

The trademark owner who knows these cheap products are being made and sold may not be motivated to do much about it, because they are not losing a customer. Frankly, you have someone walking around advertising your product — not necessarily the way you want it advertised, because it may be poor quality, but it is still free advertising.

However, you still have to do some policing because of the legal aspect — so no one later claims you waived your rights. In that scenario, you may focus on the big infringers, like people selling a high-quality imitation that may cause you to lose real customers.

For instance, if a famous luxury brand is selling a handbag for $2,500 and someone is selling a high-quality counterfeit bag for $700 to $1000, that’s different. Someone who can pay $1,000 for a bag is a potential customer.

How can you address liability concerns?

The counterfeiting of some types of products, like automobile or airplane parts or products that are ingested like pharmaceuticals, could lead to injury or death. In addition to the loss of brand image and the loss of consumers, you have the problem that these counterfeits can kill. That creates liability issues. Your company may get sued because someone says they drank your product and got sick, or the brakes they bought failed. You, as the manufacturer, need to find out if the offending product is legitimately yours. Companies have to continue to embrace anti-counterfeit technologies like smart tags, holograms, molecular marking and other tracking tools that identify legitimate products.

What steps can you take to protect your brand?

First, you need to make sure your trademarks are up to date and filed in every jurisdiction where you are doing business or intend to do business in the near future. The second step is to police the areas where you notice that infringement is taking place or where you think your customers would be buying. Many companies have enforcement programs in place. They hire private investigators or law firms to hunt down infringers. When they find these people, they have a procedure in place to bust these people and prosecute them — civilly, criminally or both.

Also, police the Internet: eBay, Alibaba, all the large Internet vendors. If you notice unusual drops in sales in certain areas, it may be due to counterfeiting issues. Be vigilant to your business and consumers. When you see infringement, whether it’s on the Internet, the streets or with your own customers, find the source and take action.

Why is it necessary to be proactive when protecting your brand in the international marketplace?

The same legal issues of policing it and the same business issues apply internationally. There is no central trademark; just because you file in the U.S. doesn’t mean you’re protected anywhere else. Countries that are members of the Madrid Protocol allow filing with a single application in English. But many important and major countries or markets are not members of the Madrid Protocol. So, in many instances you have to file your trademark in the individual countries in which you want it protected.

Luis Alcalde is of counsel with Kegler, Brown, Hill & Ritter’s IP, Litigation and International Business areas. Reach him at (614) 462-5480 or lalcalde@keglerbrown.com.

The 2011 insurance market seems fraught with both potential land mines and great opportunities. Brian Andrews, senior property broker at Aon Risk Solutions’ Pittsburgh office, advises that although insurance companies did well in 2010, there are some factors that are making them cautious entering 2011.

“More than ever, quality data is a key to your renewal, whether it’s a property or excess casualty account,” says Andrews.

Smart Business spoke with Andrews and Al Tobin, managing principal at Aon Risk Solutions, about what to expect in 2011.

What does 2011 hold for property, casualty and liability markets?

In 2011, non-catastrophic general property risks, general liability, and excess casualty will be competitive. Most insurance companies don’t see a change in the marketplace coming from anywhere other than the catastrophe-prone property side of the business. That means earthquake, terrorism event, or significant wind storm event.

The financial results from insurance companies were decent for 2010 for two reasons.  First, there were no catastrophic property losses in the U.S., outside of the BP oil disaster — no big hurricanes or earthquakes. The second is that there were many reserve releases — the surplus an insurance company keeps in order to pay previously reported claims or Incurred But Not Reported (IBNR) claims.

Insurance companies are conservative; they must make sure they have funds set aside for unexpected or growing losses, predominantly caused by casualty-related losses. Last year, many insurance companies came to the conclusion that their loss reserves were higher than necessary. Their actuaries allowed them to release some of those reserves, which helped boost profits for 2010. This shifting of funds is not something the industry can expect to occur again in 2011, which is why some insurers are taking the position that they can’t continue with rate reductions.

Most property insurance policies are placed for a one-year term. For risks subject to natural catastrophe exposures, insurance companies review hurricane forecasts with great detail. If an active hurricane season is predicted, insurance companies tend to become cautious. If it is supposed to be a mild hurricane season, insurers can take an aggressive approach to write more business. The 2011 forecasts are for a very active U.S. hurricane season, which will cause some concern for many insurers.

For natural catastrophe-prone risks, there is an additional factor influencing 2011: new predictive loss modeling programs. Many insurers use a model called RMS, which is updated on a regular basis. It is anticipated that the 2011 RMS model will drive the loss expectancies of insurers’ risk portfolios up. The damage hurricanes do to coastal properties is generally severe, but the damage that hurricanes can do from significant winds further inland has not been fully considered in the past. The new RMS model increases the loss expectancies for hurricanes that penetrate deeper inland.

How will insurance companies react?

Insurance company senior executives will review the 2011 storm season forecasts. They will instruct their underwriters to be prudent in knowing the risks they insure and protecting insurance company surplus with the appropriate protective reinsurance programs. This will drive a conservative approach from insurers for 2011 from a catastrophic risk perspective specific to hurricanes. From the insurance company perspective, if the new RMS model increases loss expectancies from a Category 3 storm from $1 billion to $1.2 billion, how will it respond? Will it write less business? Will it increase prices?

Most likely one aspect of the answer is that it will be more selective in the risks written in catastrophe-prone areas. This drives the need to be able to provide good data, or you are going to pay more for your insurance in 2011.

What can companies do to make sure their data is accurate?

For natural catastrophe-prone facilities, you need to know your secondary construction characteristics — year built, type of roof, number of stories, etc. If you have 20 properties in your portfolio, in the past you may have had good construction information on your largest five facilities, but you may not have had detailed information on the smaller facilities. For 2011, you should gather the secondary construction characteristics for all of the catastrophe-prone facilities. This can be done by a one-time loss control engineer visit to facilities to accurately collect the data. If you don’t provide the information to the insurers, the RMS model will default to worst case characteristics, resulting in higher loss expectancies and higher premiums charged.

What steps should companies take to prepare for 2011 insurance renewals?

Make sure you understand the global insurance marketplace. There are more choices than ever for customers, so getting good advice from your broker is critical. Look for a broker or agent who uses peer group benchmarking. Perhaps you are buying unnecessarily high limits? The use of sound peer group benchmarking and catastrophe modeling loss expectancy results to make decisions that enable the insured to properly set the amount of insurance purchased is very important to risk managers in this market. Considering reducing limits is a decision that should not be taken lightly, however in this economy there is considerable pressure on risk managers to buy the most cost-effective insurance product without giving up important coverage. Still, don’t trade a few dollars for inadequate limits. Good data can help one make this decision.

Brian Andrews is a senior property broker for Aon Risk Solutions. Reach him at brian.andrews@aon.com or (412) 594-7511.

Al Tobin is managing principal and national property leader with Aon Risk Solutions. Reach him at alfred.tobin@aon.com.

When you are negotiating a contract for services or a lease of premises, and the contract requires you to add an entity as an additional named insured or an additional insured, you must determine and understand whether or not to give these privileges to the requesting entity.

While there is no limit to the number of named insureds you can have on an insurance policy, businesses should recognize that there must be a reasonably close relationship to those entities in terms of ownership, management and operations.

“You don’t want to readily add any entity as a named insured, as this could allow full rights and access to the policy coverage and limits, which may not be the intent,” says Phil Coyne, vice president with ECBM Insurance Brokers and Consultants.

Smart Business spoke with Coyne about how employers can solve the named insured puzzle.

What importance comes with being a named insured?

There are three levels of who is an insured; named insured, additional insured and insured. The named insured has two levels: the first named insured and all other additional named insureds. The policy language is very specific about rights and responsibilities of the first named insured. That entity has the right to make changes to the policy, request cancellation, receive cancellation or nonrenewal notices, add additional entities and receive a copy of the policy.

The first named insured has the responsibility of paying the premium, and failure of the first named insured to pay the premium or ensure that the premium has been paid can result in the policy being cancelled, jeopardizing coverage for the other named insureds.

How can the question of who is a named insured create problems?

Because named insureds have full access to policy coverage and limits, unintentionally adding entities as named insureds has the potential to reduce or jeopardize coverage for the original named insured.

Consider a lease of premises in which the lease requires the tenant to add the landlord as a named insured. If the lease is not amended and the landlord is added as a named insured then, at the time of an incident, the landlord would have full access to the tenant’s policy even though the tenant may not be responsible for the incident.

This can also be true if the lease requires the tenant to be listed as a named insured versus an additional insured.

If an entity is not careful or diligent with the adding of additional named insureds versus additional insured, it may be unintentionally providing coverage for operations of the entity that is requesting to be added under its policy, thus eroding coverage for the first named insured.

When entering into a contract that requires the adding of entities as additional named insureds, versus additional insureds, you need to understand the relationship between the parties and how these requests can affect your coverage. A business needs to understand its contract: who the entity is, its relationship in that contract and its relationship to the business.

My suggestion is to make sure the entity is added as ‘additional insured,’ not ‘additional named insured,’ unless the intent is to provide full coverage and access to the entity being added.

How are an insured, an additional insured and a named insured different?

A named insured has full access to a policy’s coverage and limits. An insured may be covered under the policy, but only to a certain extent.

The named insured can be an individual or a legal entity. If the entity is an individual, then that individual is covered, along with that individual’s spouse. If the named insured is a partnership or joint venture, the partners are included, along with spouses, but only to the extent of performing duties related to the insured’s business. If the named insured is a limited liability corporation, the members of the LLC and the manager of the LLC are included, but only to the extent of the insured’s business. If the named insured is any other organization, the executive officers, directors and officers are included to the extent of the insured’s operations. Stockholders are also included, but only to the extent of their liability as stockholders.

Lastly, if the named insured is a trust, trustees are included, but only to the extent of liability as trustees.

Some entities are just ‘insureds’ under the policy, and their coverage is limited. Under the definition of who is an insured is the entity acting as the named insured’s real estate manager.

How can employers ensure that they have properly identified the named insured?

First, understand which type of legal entity you are considered: an individual, corporation, joint venture, or LLC. Understand what entities make up that organization and their relationship to each other.

Review your organizational chart and named insured schedule with your broker to ensure proper understanding of the organization and named insureds and/or additional insureds and insureds and their relationships to each other to ensure the proper exposure is covered for each insured.

Whenever you have a multiple listing of named insureds, the insurance company wants to know who and what these entities are and their relationship to each other and the organization and its operations and exposure. They want this information so they have knowledge of and understand the exposure they are insuring.

A proper and thorough review of the various named insureds and their operations and relationships will allow your broker and the insurance company underwriters to have a better understanding of your operations and risk. Better understanding by the underwriters usually lends itself to better coverage (product) and better pricing.

Phil Coyne is a vice president with ECBM Insurance Brokers and Consultants. Reach him at (610) 668-7100 or pcoyne@ecbm.com.

Tuesday, 01 March 2011 15:41

How to enter into the global market

With today’s technology, it is not that difficult for a business to expand internationally. Through modern transportation, technology and, of course, the Internet, any business can sell its products or services anywhere in the world.

However, while it may be easy to do, it’s difficult to do well.

“Businesses need to understand the markets they are considering,” says Gonzalo Freixes, associate dean, Professional MBA Programs at the UCLA Anderson School of Management. “The foreign regulatory environment is very different in other countries than it is here. For example, labor laws are extremely different in most other countries than they are in the U.S.”

Companies also should research the logistics of doing business in that country, from supply chain distribution issues to the best marketing options, to financial reporting structures.

Smart Business spoke with Freixes about what companies should know about global business.

How can a business determine where it should expand?

If you are going to go global, you have to determine where it makes the most sense to go. To determine that, you have to do some actual feet-on-the-ground, field market research in that country. Go to the country, talk to people in that industry, talk to customers, suppliers, distributors. If you get a chance, talk to your potential competitors, because today’s competitor may be tomorrow’s strategic partner.

That preliminary field research is very important to determining what the marketplace is like. Is there a demand for the product or service you are selling? Is it a crowded competitive space? Is there a niche market you could enter as a way into the country? It also helps you get an idea of the regulatory framework to find out how difficult it is to do business in that country, in terms of setting up an entity there.

To do business in some Middle Eastern countries, you have to have a local partner in that country. That local partner must own a certain percent of your business; otherwise you won’t be allowed to do business there.

Most importantly, identify that there is a market there, and what your delivery strategy or mechanism will be for getting your product or service there.

 

Where should businesses start with their research?

Don’t rely entirely on the Internet. The Internet and written research in the public domain about a particular country or market is helpful in establishing a foundation of what to expect, but there is no substitute for actually picking up the phone or, more importantly, meeting people face to face. In so many other cultures, and in some degree our own, personal relationships and interactions are the biggest drivers toward being able to do business successfully.

In other words, get on the phone and get on a plane and go talk to people. Don’t be afraid to cold call. If you have people you know in that country, whether it is fellow alumni, former business colleagues, friends or classmates, leverage those contacts to help you learn about the country and the culture.

After identifying a market for expansion, what should a business’s next steps be?

Devise your strategy. Explore the various options. Do you want to go there directly and set up a subsidiary of some sort? That tends to be expensive. Do you want to partner with a reseller or agent? You need to talk to them to see what kind of deal you can set up or find a reputable local company to be your strategic partner in a joint venture.

Those are the three different models. You need to investigate in-country to determine which of the three would be most helpful. Local business experts will be able to give you pros and cons for each.

How can businesses avoid cultural faux pas?

There are major differences in both the business culture and the general culture of other countries, especially in terms of how business relationships are viewed. For example, in some cultures if you go to lunch or dinner with another business person, you don’t talk about business. Eating is the time to get to know each other. You talk about business when you get back to the office.

In some cultures, it is impolite to say ‘no.’ They have other ways of saying no without being impolite. You can find out some of the basics on the Internet. Most American consulates around the world have a commercial attaché. The foreign consulates can be a great source of information. Meet with the attaché and have them guide you on the do’s and don’ts of doing business in that culture.

In certain cultures, how you deal with a man or woman would be different. Do you shake hands or not?

What other advice would you give a company considering international expansion?

Do you homework on whether that is the best place to do business. A lot of people make the mistake of setting up shop somewhere because they hear it is a good market, but don’t find out first if their product is viable in that marketplace.

We do a lot of projects at UCLA Anderson where our students do the reverse — they advise foreign companies who are trying to enter the U.S. for the first time. One small company had developed technology that scans a passport and incorporates it into the system of hotels or casinos in Europe. However, they found out that in the U.S. no one has to present their passport when entering a hotel or casino. So what is a huge need in Europe doesn’t exist in the U.S. You have to make sure you are offering something of value that can be monetized.

Gonzalo Freixes is associate dean, Professional MBA Programs at the UCLA Anderson School of Management. Reach him at gonzalo.freixes@anderson.ucla.edu or (310) 794-6640.

After losing 1.14 million jobs — 37 percent of its work force — between 2007 and 2009, the U.S. temporary staffing industry began to grow again. This turning point, which some might think to be specific to the staffing industry, may be indicative of a greater turnaround in the economy as a whole, if history is to be believed.

“As we pull out of the recession, companies should keep an eye on the temporary personnel industry because it can be used as an early indicator of a turnaround, to some degree,” says Sally J. Nienhauser, a senior vice president and partner with Millennium Corporate Solutions. “While it may be too early to say that the temporary personnel industry data supports a turnaround in the economy, it certainly is one indicator and a precursor to increased overall employment.”

Smart Business talked more with Nienhauser about how temporary staffing affects the economy, and what it means for all employers.

How are temporary personnel providers handling the economy?

The temporary personnel providers are part of the broader ‘contingent work force.’ This contingent work force includes not just temporary personnel but also contract labor, independent contractors and other forms of alternative work force solutions.

Temporary staffing firms lost 37 percent of their work force during the years 2007 to 2009.

So it really is no exaggeration to claim that the recession devastated the temporary personnel industry. However, the temporary personnel industry historically is one of the first employment sectors to show significant growth when the economy begins to show signs of recovery.

The Bureau of Labor Statistics reported in July 2010 that U.S. staffing companies have added more new jobs than any other sector since the recovery began. The American Staffing Association index for January 2011 was up 13 percent over January 2010. In fact, during the second half of 2010, my clients in the temporary staffing sector showed an average payroll growth of 20 percent. Some of my clients’ payroll growth climbed as high as 30 percent.

Why are many businesses turning to temporary staffing for their hiring needs?

With the recession and the attendant downsizing at most firms, businesses are especially reticent to re-staff to 2006 levels. They are rightfully cautious, and do not want to add staff only to have to make cuts again in the event of another economic dip.

Most businesses are looking for flexibility to help them ride out any future bumps in the economy. Therefore, many employers are finding that they may use a temporary staffing company to fill open positions. In some occasions, companies may even audition potential full-time employees by leaving them on the temporary services payroll until they are certain that the employee can meet the demands of the position.

Employers enjoy the flexibility temporary workers provide in times of economic uncertainty. Of course, companies have always used temporary staffing firms or the contingent work force to staff for busy times of the year or special projects.

During the recession, many companies were forced to downsize employees at many different levels, and they are finding that as they begin to grow once again, they may need to fill top management spots. In some instances, these companies are filling some top management positions with employees from temporary staffing firms. Again, flexibility is a key for most companies in overcoming the recession.

What advantages are there to using temporary personnel?

The advantages can be significant — flexibility being the most important advantage. If a temporary employee is unable to fulfill all the duties of the position, the employer has no obligation to continue to employ that individual in the position.

In addition, there are significantly fewer administrative burdens, as the temporary employee service is the employer of record, and as such they are responsible for all state and federal employment taxes and workers’ compensation for the temporary employees. Overall, companies are seeing the value of a more blended work force with traditional employees and contingent employees giving companies more controlled costs.

Will an increase in the hiring of temporary employees lead to more employees being hired on a full-time basis?

I believe that it will, because cautious employers are using temporary services to ‘try out’ employees before hiring them on a full-time basis. As the economy improves, and the temporary employee proves to be a valuable resource, many employers will take them on as full-time employees.

What does this turnaround mean for other employers, and the greater economy?

In past recessions, the turnaround in the temporary employment business has consistently signaled a turnaround in the overall economy. Even though there are still significant issues affecting recovery, including housing, consumer spending and state and local government deficits, the temporary employment business has always been a precursor to recovery. I believe it’s an important indicator of a pending turnaround in the overall economy, and therefore a sign of optimism for employers.

Sally J. Nienhauser, ARM, is a senior vice president and partner with Millennium Corporate Solutions. Reach her at (949) 679-7107 or SNienhauser@mcsins.com.

Obesity is a costly epidemic, and many businesses are working to curtail it among their work force.

However, it’s not only obesity among their employees that is costing businesses; childhood obesity is a hidden factor that is increasing health care costs for employers and costing them in productivity. Overweight or obese children have more medical problems, and studies have shown that an employee who is caring for a sick child is less productive at work.

Reducing childhood obesity is also important for the future of the work force, says Jamie Curts, vice president of business development for Spectrum Health Systems.

“By 2030, it is estimated that up to 86 percent of Americans will be overweight and 51 percent will be obese,” says Curts. “The cost burden of treating this number of adults for obesity and its related illnesses has the potential to be catastrophic. Investing in childhood obesity today is an investment in America’s corporate future.”

Smart Business spoke with Curts about how childhood obesity affects employers and what they can do about it.

What is the current trend in childhood obesity?

It’s becoming more and more obvious that obesity is a serious health concern for children and adolescents. Results from the 2007-2008 National Health and Nutrition Examination Survey, using measured heights and weights, indicate that an estimated 17 percent of children and adolescents from the ages of 2 to 19 are obese.

This is a disturbing trend for several reasons, because while obese children and adolescents are at risk for health problems during their youth, they are also more likely to become obese as adults.

According to a study from the National Center for Chronic Disease Prevention and Health Promotion, 80 percent of children who were overweight between the ages of 10 and 15 were obese adults at age 25.

How does childhood obesity affect employer health care costs?

Approximately one-third of large employer beneficiaries are dependents under the age of 25, and children and adolescents are responsible for 15 percent of a typical large employer’s health care cost.

Because children and adolescents make up such a significant portion of a large employer’s beneficiaries, childhood obesity has become a major driver behind increased health care costs. In fact, the average claims costs for obese children are nearly twice as much as claims costs for non-obese children.

Overweight children experience far more medical problems and miss more days of school than leaner children. Having a sick child can result in increased work tardiness, early departures from work and absenteeism among parents who must provide transportation or care for their child. On average, school-age sick children can cost employees four days away from work each year. That number is even higher for preschool-age children. In addition, research has shown that parents who have a child in poor health do not perform as well at work as parents with healthy children, and they also experience more work interruptions.

What has the impact of childhood obesity been on health care costs so far?

With the increase in obesity from children to adults, employer costs have skyrocketed over the past several years. The annual health care cost of obesity in the U.S. has doubled in less than a decade and is estimated to now be as high as $147 billion a year.  According to the American Journal of Health Promotion, obesity is costing U.S. businesses more than $13 billion annually in health insurance claims, paid sick leave and disability, and life insurance.

The horizon isn’t looking any brighter. Estimates predict that up to 86 percent of Americans will be overweight by 2020 and 51 percent will be obese. Treating such a large number of adults for obesity and its related illnesses has the potential to create a catastrophic cost burden.

By investing in decreasing childhood obesity today, you are making an investment in America’s corporate future.

What can employers do to reduce childhood obesity?

Employers can play a critical role in fighting the childhood obesity epidemic by equipping parents with the information they need and providing that information when they need it. Employers can provide educational materials as appropriate to take the following helpful measures.

• Help employees develop healthy family lifestyles in the home.

• Educate employees about what to do if their child is overweight.

• Provide tools and information to optimize employee partnerships with health care providers.

• Refer parents to child care services and providers that meet nutrition and physical activity recommendations.

How can employers accomplish those things?

Companies that offer employee health benefits also commonly offer wellness programs. However, only about one-third to one-half of these firms provide health benefits for entire families, despite evidence that worksite interventions involving families can be more than twice as effective in promoting healthy eating as interventions targeting just the employee.

Employers are beginning to understand the need to take a more holistic approach to their employee wellness program.  Healthy children at home will lead to a decrease in health care expenditures, a decrease in absenteeism and increased presenteeism while physically at work.

Jamie Curts is vice president of business development for Spectrum Health Systems. Reach her at (317) 573-7600 or jcurts@spectrumhs.com.

Traveling and working abroad often comes with risks, and savvy employers recognize that having employees overseas heightens their corporate liability. By protecting employees against the risks of global travel, employers can manage risks to their business, finances and reputation.

“In today’s litigious society, corporate governance and duty of care are paramount to a company’s crisis management strategy,” says Justin Priestley, executive director for Aon Crisis Management. “Businesses need to react to incidents in a timely and consistent manner, protecting their people, assets, balance sheet and brand reputation.”

Smart Business spoke with Priestley and Kevin J. Pastoor, CPCU, managing director of Aon Risk Solutions, about how to keep your employees safe abroad.

How can businesses ensure that they are meeting their duty of care requirements?

There is a lot of complicated case law on this subject, but the issues are simple. There are three things businesses should consider, and by doing so, they will meet their duty of care.

The first step is actively trying to understand what the risks are for your people, and that means doing a formal assessment of risk. If you say you didn’t know about it, that’s not good enough. You could have tried to find out.

The second thing you need to do is come up with appropriate risk management measures that are matched to the risks you think exist. You need to demonstrate that the plan you are coming up with is appropriate for the risks your employees are facing.

Third, organizations should have a plan and discuss it. Talk about appropriate levels of insurance and how employees are going to get to the airport if there is a problem. Broadly speaking, those steps together provide organizations with a much better opportunity to demonstrate that they are meeting duty of care.

How can businesses ensure they are prepared for travel emergencies?

An adviser can match what it delivers to what it thinks are the main pillars of activity. So up front, it would provide information to travelers so they are aware of the risks in a particular area. An adviser can also provide some basic-level training for travelers.

Another thing a consultant can do, if people are traveling to an elevated risk location — somewhere like Mexico or India — is conduct an independent risk assessment of that proposed journey. It can be done quite quickly; it’s not some long, laborious process. It provides the concerned organization with a third-party independent review for a journey before it is booked, which backs them up in their assessment.

What type of training and education should employers provide for traveling employees?

There are two types of training. E-learning allows organizations to show that people have done the training. We also do an elevated risk course, which is instructor-led.

That course tends to be more specific to a particular client. Another option is an elevated risk course, in which the threats and risks are determined for where someone is going, and then travelers are trained to understand them. For instance, if you are in Central America, kidnapping is one of the major risks, and this is how it happens.

Then a consultant can offer advice on situational awareness. Many people understand what to look for and how to notice if something suspicious is happening. There is some really basic advice on risk mitigation strategies, like not wearing your Rolex watch if you’re traveling in more interesting parts of the world.

It’s important to focus on sensible, pragmatic advice that businesspeople need to understand.

What innovative services can help business travelers?

Mobile technology enables a traveler to see a country’s risk information on the go. Putting that information in people’s pockets is actually quite useful.

It doesn’t produce 20 pages of data on each country. It’s short, concise and condensed. Most people don’t want to read for 30 minutes to understand an issue. They want to read it in two minutes.

Second, there is a nice travel management system for risk managers or corporate security that enables them to know at the push of a button where their people are on a day-to-day basis and what the risk exposure is for those people.

Aon WorldAware, our online country information service, grades risks by looking at what is going on in that country, the capability of the terrorist organizations and their modus operandi. It gives ratings of 1 through 5, on a daily, weekly, or monthly basis, and they can print a report showing how many people they have in low-risk countries, or Level 4 or 5 countries, how many incidents they have had and where those incidents occurred.

It is an independent assessment. A partner has people constantly reviewing every country. There are 10 factors, including terrorism, civil disobedience, kidnap and ransom, street crime. All 10 factors for every country are assessed and scored 1 through 5.

Countries rated 1 through 3 are appropriate for routine business travel. For countries 4 and 5, you have to consider the risks a bit more. To put that into context, Level 5 countries like Iraq, Somalia, or Afghanistan have extreme risks.

The system monitors what happens in the world on a daily basis, and the countries are updated as the risk profile changes. So the Netherlands was last changed in mid-December, but for Egypt, we’ve changed the site on a daily basis for the last three weeks.

Justin Priestley is executive director for Aon Crisis Management. Reach him at +44 (0)20 7882 0478 or justin.priestley@aon.co.uk.

Kevin J. Pastoor, CPCU, is managing director of Aon Risk Solutions. Reach him at (248) 936-5346 or kevin.pastoor@aon.com.

Tuesday, 01 March 2011 11:17

How to survive Ohio’s budget crisis

The Ohio legislature is facing an unprecedented budgetary challenge, and businesses throughout Ohio are concerned about how the lawmakers plan to fill the hole.

The biennial operating budget must be passed by July 1, and businesses worry that a structural deficit of between $6 billion to $10 billion could mean tax increases.

“There is an old adage in the statehouse that if you aren’t at the table, then you most assuredly will be on the menu,” says Steve Tugend, a director and chair of the government and legislative affairs practice for Kegler, Brown, Hill & Ritter. “It’s very important that businesses stay engaged in the processes and debates of their elected officials.”

Smart Business spoke with Tugend about how to build relationships with elected officials in order to survive the budget crisis.

How will the state’s pending budget crisis affect businesses?

If you have a business that pays a lot of fees to the state government, you are going to see some additional exposure in the area of fees. If you are currently doing business with the state, you can expect your client agency or department to have less money than it previously had to buy your goods or services. If you’re in a business that performs services that might be outsourced from the public sector to the private sector because of favorable costs, there might be an opportunity to enhance your top line.

How can businesses stay aware of potential opportunities?

First and foremost, watch the debate carefully once the budget is introduced. The budget is set to be introduced by the governor on or before March 15. As the governor tries to tackle the budget crisis, he has been encouraged to review the government’s back-office functions, like accounting, legal services, fleet management and print shops, in order to look for areas that might be more efficiently done in the private sector than by state employees. If your business is in those areas, you may have an opportunity to compete for state business where previously no such opportunity existed.

 

What conversations should be happening between businesses and government?

Businesses should provide a legislator with a general description of the goods or services they provide and ask the legislator to help them schedule meetings with the appropriate individuals within the administration who might be interested in purchasing services.

How can businesses get in touch with the right people in the government?

First of all, they need to identify their public officials by visiting the Ohio General Assembly’s website. Then, simply start having those conversations with elected officials. Elected officials want to make sure businesses in their district do well, so they will connect those businesses with opportunities to do business with the state.

Why is it important for a company to have a government relations strategy?

When legislators are involved in cutting deals and forging compromises, the final result is often harmful to businesses. It’s important for businesses to follow what government is doing. Some compromises move so quickly that you can’t keep up with them, but most move far more deliberately and provide points for businesses to get involved.

How can a business develop its own government relations strategy?

Every business should make an assessment of its current and potential interaction with government. Before you have a government affairs strategy, you have to know what government-caused costs you have, such as taxes, regulatory roadblocks, or fees.

You have to know not only how much business you are currently doing with the federal, state and local levels of government, but also identify how much business could be done. Perhaps you have some products and services you’ve not marketed to government agencies, and perhaps there is an opportunity there. Once you have assessed that, then you put together your strategy.

Regarding costs, at the least you need to be educating public policy leaders and elected officials about your costs. They may not be aware of the ramifications of their policies on your business. You may find an opportunity to reduce your costs. What is more likely, however, is if legislators are aware of the costs you are already paying to the government, they are less likely to increase those costs.

Then you need to assess how you can sit down and have a conversation with public policy leaders. Sometimes that means your executives simply need to meet with elected officials. If there are issues that require a more prolonged interaction, then you probably need to assign government affairs responsibilities to a member of your staff.

That’s a very conservative step. Another idea is to hire someone full time to handle government relations responsibilities. An in-between alternative is to find an external professional who can advocate for you in front of public officials.

How can a business determine what type of representation is necessary?

When it comes to just updating public officials on how your company is doing and the cost government causes to your company, that can be done by executives within your company. But if you discover pending legislation that creates a significant threat or a significant opportunity for your business, then it may be wise to devote additional resources to an internal or external advocate in government.

 

Steve Tugend is a director and chair of the government and legislative affairs practice for Kegler, Brown, Hill & Ritter. Reach him at (614) 462-5424 or stugend@keglerbrown.com.

Whether it’s volunteering for a social services organization or serving on the board of directors of a favorite charity, people have different ways of giving back. Businesses should encourage community involvement because it benefits everyone from the employee to the employer to the individuals being helped.

“As a company, we recognize we have a social responsibility to help the communities we serve,” says Sue Zazon, the president and CEO of FirstMerit Bank’s Columbus region. “We feel it is a priority to give back to Columbus and the surrounding communities and make them better places to live and raise a family.  We are all living and raising our families here too.”

Smart Business spoke with Zazon about how businesses can get involved in their communities.

How can a company help busy employees find time for community service work?

First off, don’t tell people to volunteer; ask them to volunteer. If you are really committed to community involvement, people will volunteer. Community service is a part of FirstMerit’s culture. If an employee wants to be a part of that culture, then show them what you would like to see from them.

Honestly, community involvement can take whatever form an employee chooses. It’s not a cut-and-dried checklist, so encourage employees to find something they are really passionate about, and allow them to commit themselves to community involvement during work hours. If they are going to take time away from their families and time away from the office, then it should be for something they are passionate about.

If simply asking doesn’t work, how can a business encourage volunteering?

Do as much as you can to make it easy to volunteer. If you organize the community service effort and just ask for volunteers, employees will be more willing to pitch in than if they had to find a community service effort on their own. Having someone help organize activities for the company makes it easy for employees to volunteer.

Even in small businesses, there is usually someone who is passionate about community involvement. You can always ask your employees if they have any interest in helping organize community activities for our company. You may get a volunteer out of your work force who doesn’t mind heading that up for a year, or forever.

Even if you don’t have the resources to have a dedicated community relations person, you can have a volunteer in your business to do that for a set amount of time, and then rotate that responsibility.

How does a business’s community involvement benefit the employees?

First, it makes them feel good about working for the company. Most people want to work for an organization that cares about its friends and neighbors, not just the bottom line. And usually, your employees are those friends and neighbors, because you hire from within the communities you serve.

Community involvement also shows employees that the company cares about more than just the company itself. It helps boost morale and is great for team building. Employees often have a lot of fun working together toward a common goal. It creates a buzz around the office and it brings people together. Spending time away from the office as a group creates a closer working relationship between coworkers. Plus, you get to meet other like-minded, socially responsible people outside the workplace. That networking with other people and companies can be great for business. If you have people in a business development role meeting people from other companies, they are exposed to other opportunities.

Where can businesses find ideas on how to get involved in their community?

A great place to start is the local United Way. It touches so many different organizations in so many different ways. They are a great resource to find what organizations need help in your area and to provide contact information. Many times we have an employee that has experienced service from a community organization.  We have asked for employees to submit names of organizations based on their experiences and then chosen a few to support. This creates a very personal bond because the team is aware of how a colleague of theirs has received help or maybe even continues to received help.

Finally, look in the community section of the newspaper. You could probably open the newspaper on any given day and find a story about an organization that’s in need.

What are some of the ways FirstMerit is involved with its community?

In Columbus, we’ve supported many grassroots philanthropy efforts. Throughout the year we have Friday dress-down days with proceeds going to rotating charities based on employee suggestions.

During the past year the Columbus Region supported many organizations:

• Court Appointed Special Advocate Association, a nonprofit network supporting and promoting court appointed volunteer advocacy for abused and neglected children

• American Cancer Society Pan Ohio Hope Ride

• Spring for SIDS (Sudden Infant Death Syndrome)

• Salvation Army Angel Tree Toy Drive, which distributes donated toys to needy children and families in the Columbus area

• AnySoldier.com, which sends donated care packages to deployed Soldiers who are currently fighting for our country

In addition, employees of the Columbus Region participate in the annual Komen Race for the Cure Walk/Run, representing FirstMerit Bank. We also have a budget for individuals who are on boards of directors to support those organizations.

SUE ZAZON is the president and CEO of FirstMerit Bank’s Columbus region. Reach her at sue.zazon@firstmerit.com or (614) 545-2791.

Whether it’s volunteering for a social services organization or serving on the board of directors of a favorite charity, people have different ways of giving back. Businesses should encourage community involvement because it benefits everyone from the employee to the employer to the individuals being helped.

“As a company, we recognize we have a social responsibility to help the communities we serve,” says Sean Richardson, the president and CEO of FirstMerit Bank’s Cleveland region. “We benefit by being in those communities, so we feel a unique obligation to give back to those communities and make them better places to live and raise a family.”

Smart Business spoke with Richardson about how businesses can get involved in their communities.

How can a company help busy employees find time for community service work?

First off, don’t tell people to volunteer; ask them to volunteer. If you are really committed to community involvement, people will volunteer. Again, don’t tell them what to do — simply say that community service is a part of the company culture. If an employee wants to be a part of that culture, then show them what you would like to see from them.

Honestly, community involvement can take whatever form an employee chooses. It’s not a cut-and-dried checklist, so encourage employees to find something they are really passionate about, and allow them to commit themselves to community involvement during work hours. If they are going to take time away from their families and time away from the office, then it should be for something they are passionate about.

If simply asking doesn’t work, how can a business encourage volunteering?

Do as much as you can to make it easy to volunteer. If you organize the community service effort and just ask for volunteers, employees will be more willing to pitch in than if they had to find a community service effort on their own. Having someone help organize activities for the company makes it easy for employees to volunteer.

Even in small businesses, there is usually someone who is passionate about community involvement. You can always ask your employees if they have any interest in helping organize community activities for the company. You may get a volunteer out of your workforce who doesn’t mind heading that up for a year, or forever.

Even if you don’t have the resources to have a dedicated community relations person, you can have a volunteer in your business to do that for a set amount of time, and then rotate that responsibility.

How does a business’s community involvement benefit the employees?

First, it makes them feel good about working for the company. Most people want to work for an organization that cares about its friends and neighbors, not just the bottom line. And usually, your employees are those friends and neighbors, because you hire from within the communities you serve.

Community involvement also shows employees that the company cares about more than just the company itself. It helps boost morale and is great for team building. Employees often have a lot of fun working together toward a common goal. It creates a buzz around the office and it brings people together. Spending time away from the office as a group creates a closer working relationship between coworkers. Plus, you get to meet other like-minded, socially responsible people outside the workplace. That networking with other people and companies can be great for business. If you have people in a business development role meeting people from other companies, they are exposed to other opportunities.

Where can businesses find ideas on how to get involved in their community?

In Cleveland, we are very fortunate to have Business Volunteers Unlimited (BVU). BVU was started by the business community to act as a liaison between the for-profit and the not-for-profit world.  BVU helps businesses pinpoint the right ‘match’ for their employees to get involved, either for board positions or for ‘Done in a Day’ types of projects for a group to do together.

What are some of the ways FirstMerit is involved with its community?

FirstMerit’s Cleveland Leadership team volunteers at social service and cultural institutions such as Cleveland Foodbank, St. Vincent Charity Hospital, Holden Arboretum and many others. We have a charitable giving committee that steers philanthropic dollars to organizations that support causes such as Transitional Housing, Cleveland Public Theater, Slavic Village and Hispanic Roundtable. In 2010 FirstMerit’s Cleveland Region gave more than $75,000 in philanthropy via this committee. We also are involved by lending money and providing banking services to many area not-for-profits such as Hospice of the Western Reserve, Boys and Girls Club, Cleveland Botanical Garden, Ursuline College and Playhouse Square Foundation. We are providing construction financing to the Uptown Development in University Circle that is in part driving the renaissance taking place in that vital cultural and academic hub for Cleveland. All of these dollars flow into the local community and help ensure a better quality of life and economic vitality for Cleveland.

Sean Richardson is the NorthCoast president and CEO of FirstMerit Bank. Reach him at Sean.Richardson@firstmerit.com or (216) 802-6565.