When a new business venture is undertaken, so many important tasks need to be completed, which could potentially push trademarking the new company moniker to the side.
Joshua Tropper, partner with Gambrell & Stolz LLP Attorneys at Law in Atlanta, urges business owners not to hesitate. For many legal reasons, he says, a new business should apply for registration of its name as soon as it’s selected.
Smart Business spoke with Tropper about why a new business should go about trademarking its name and what steps it should take to do so.
Should a new business selecting a name trademark that name immediately?
A new business should apply for registration of its name as soon as the name is selected, unless it doesn’t intend to use the name in its marketing. Many private investment funds and holding companies, for instance, never use their corporate names as trademarks, and companies often have subsidiaries whose names are never used as trademarks. A company that doesn’t register its trademark will still have legally protected rights in its trademark, but those rights will generally be limited to the specific geographic area in which it actually uses the mark. Federal registration, on the other hand, has the effect of nationwide use of a trademark retroactive to the date the application was filed. Federal registration also creates a statutory presumption of ownership and validity of the mark, and that presumption normally becomes incontestable five years after registration.
The mere act of applying for federal registration can have the useful effect of alerting others not to choose confusingly similar trademarks for their own businesses, which can save a lot of money and aggravation for everyone involved. The flip side of the deterrent effect is that, if you do a trademark search as part of the process of applying for federal registration as soon as you select a name, you’re more likely to discover that someone else out there is already using the name you chose. If that happens, you know that you should probably pick a different name before you invest too much in promoting a name that’s likely to get you into trouble.
How does a company go about pursuing a trademark?
The application form, along with a lot of helpful information, is available online at www.uspto.gov/teas/eTEASpageA.htm. It’s not necessary to have a lawyer, although experience with the process and appreciation for some of the peculiar subtleties of trademark law can make a big difference. The initial filing fee is between $275 and $375, depending mostly on how routine the application is. If everything can be put into place electronically, it makes it a lot easier for the Trademark Office to examine the application, and that reduces the cost.
If an application is filed before the applicant has started actually using the trademark, there will have to be an extra step later on when the applicant provides proof that it has started using the mark, and there’s an additional $100 filing fee.
Five or six months after the application is filed, an examiner in the Trademark Office reviews the application and notifies the applicant of any problems or questions. After any issues are resolved, the application is published and there’s a 30-day opportunity for anyone else in the world to object. If there’s no objection, a formal certificate of registration will be issued. If things go smoothly, the whole process takes about a year.
How does a trademark protect a company?
The purpose of trademark law is to protect the public by helping to ensure that any goods or services that are marketed under a trademark actually come from the owner of that mark or from someone authorized by the owner. Everything in trademark law ultimately boils down to a ‘likelihood of confusion.’ It’s perfectly legal to use exactly the same trademark to sell accounting services in Macon that someone else is using to sell pizza in Walla Walla because confusion is unlikely. However, the more similar the goods or services are, the more different the trademarks have to be to prevent confusion and vice versa.
In addition to the deterrent effect of a trademark search, once a trademark is registered, the Trademark Office will not register confusingly similar trademarks for other applicants. Also, Customs & Border Protection can block importation of infringing goods and the federal courts can order others to stop selling infringing goods or services.
Are there any other things a new company should trademark besides its name?
Anything that can serve to identify the source of goods or services can be registered. Slogans and logo designs are the most common examples of trademarks that aren’t just business names, but it’s also possible to register colors, sounds and even scents if the examiner can be persuaded that they really do indicate the source of the products or services.
What legal action can a company take if someone violates its trademark?
The standard legal action is a suit in federal court, which can order the infringing party to stop making or selling the offensive goods or services, reimburse for any lost profits or disgorge its own profits, reimburse the trademark owner for its attorneys’ fees and even to destroy any inventory of infringing products. International enforcement is also possible.
JOSHUA TROPPER is a partner with Gambrell & Stolz LLP Attorneys at Law in Atlanta. Reach him at (404) 223-2210 or firstname.lastname@example.org.
Business leaders often get the credit when a company is successful, but they know that much of that credit is due to their employees.
Such a precious resource must be handled with care, says Robin Cheramie, Ph.D., assistant professor of the Michael J. Coles College of Business in the Department of Management and Entrepreneurship at Kennesaw State University. Constant supervision of the implementation of training and goal-setting within a company’s work force is crucial, she says, in making both the company and its employees happy and productive.
Smart Business spoke with Cheramie about what strategies companies can take to make sure its employees are constantly growing and helping the company achieve success.
What feedback-seeking behaviors among their employees should employers be on the look out for? How should they handle them?
Many employees want to know how they’re performing on the job and will seek this information from supervisors and/or co-workers. Managers should provide continuous feedback throughout the year; however, if an employee actively seeks feedback, then the manager should respond in a timely, constructive manner. If not, employees may choose to avoid seeking feedback when they really need assistance. Annual performance reviews should be a platform for discussing administrative issues with employees and for outlining future developmental plans. This information shouldn’t be surprising to employees, as they should be receiving feedback on a more frequent basis.
How important is training to the work environment?
Continuous development and learning for employees is critical. In order for companies to remain competitive in organizational performance and the recruitment of talented employees, they must be committed to developing the knowledge, skills and abilities of all employees. Organizations can train employees with their own HR staff or they can choose to hire outside consultants to develop particular skills. It isn’t as important how employees are trained as it is that they continue to develop their skills.
Once organizations commit to long-term training strategies, they should evaluate the effectiveness of these training programs. In particular, managers need to make sure that employees are using the newly trained skills when they return to the daily work routine. Training can be expensive, and managers need to ensure that they’re receiving a return on their investment with higher skill levels.
How important is individual accountability in a company?
Very important because employee performance drives successful organizations. Therefore, employees need to have a clear picture of their task expectations, and managers need to enforce these expectations. Managers and employees should be working together to set specific and challenging goals. If an employee has the necessary abilities to perform a particular job and receives constructive progress reports, then he or she can be held accountable.
What are the steps a company can take to ensure the development of leaders?
A succession plan is important for executives as well as middle managers within any company. Organizations should identify and groom potential leaders by developing individual career plans in annual performance reviews.
Once employees and managers agree upon potential career paths within the organization, then leadership training should begin for these employees. An effective leader is someone who can influence others toward a particular goal. Therefore, this person must develop skills in conflict management, negotiation, motivation and persuasion. Coaching and mentoring programs can be an effective method for grooming employees for upper management by allowing junior employees to learn from an influential leader.
What are the overall factors to achieving healthy employee morale?
Employee morale can be influenced by multiple facets such as satisfaction with the job, organization, supervisor, co-workers, pay, benefits, etc.
Organizations should make every attempt to attract and match the right employees for each job and the right employees for the culture of the organization as well. A smooth transition from candidate to new employee is critical. New employees can become dissatisfied quickly during the first few months with an organization if proper care isn’t made to help with this transition. Managers can do this by setting realistic, clear job expectations and providing frequent feedback. An organizational culture that promotes quality programs for developing employees through strategic hiring, training, compensating and evaluating employees can create high performance and committed employees for the organization.
ROBIN CHERAMIE, Ph.D., is an assistant professor of the Michael J. Coles College of Business in the Department of Management and Entrepreneurship at Kennesaw State University. Reach her at (770) 423-6097.
Terry Phillips, vice president of Robert Half International in Akron, Ohio, says employers in particular are looking for accounting and finance professionals with a broad range of abilities, including strong strategic decision-making, communication and technology skills.
Smart Business spoke with Phillips about why these five positions are hot right now and what sort of skills companies should be seeking in the prospects geared to fill those positions.
What are the top growth positions in the accounting and finance positions for 2007?
The top growth positions are internal auditor, compliance executive, financial analyst, staff accountant and external auditor. Internal auditors, particularly those who possess the CIA, are being hired to help improve internal controls and meet the compliance mandates of such regulations as Sarbanes-Oxley. Compliance executives with U.S. Securities and Exchange Commission reporting experience are needed to help companies meet ongoing corporate governance requirements. Firms are hiring financial analysts to assist with budgeting and forecasting activities and to identify how their organizations can become more profitable. Accountants who are CPAs and have at least three years of experience, including in public accounting, are needed for projects ranging from maintaining general ledger accounts and preparing financial statements to developing budgets. And rising client demand for audit services has fueled the demand for external auditors among public accounting firms. CPAs who possess three to seven years of experience are particularly valued.
What sorts of skills are employers seeking in these accounting and finance professionals?
Employers are looking for accounting and finance professionals with a broad range of abilities, including strong strategic decision-making, communication and technology skills. Professionals can distinguish themselves by earning industry-recognized designations, such as the certified public accountant (CPA) and certified internal auditor (CIA). These accreditations can have financial rewards as well. According to our company’s 2007 Salary Guide, professionals with industry-recognized certifications can earn starting salaries up to 10 percent above the market average.
Is the great demand for the internal auditor and compliance executive positions a direct result of the heavier corporate governance?
As I stated before, compliance executives with U.S. Securities and Exchange Commission reporting experience are needed to help companies meet ongoing corporate governance requirements, while internal auditors, particularly those who possess the certified internal auditor (CIA) certification, are being hired to help improve internal controls and meet the compliance mandates of such regulations as Sarbanes-Oxley.
What advice do you have for job seekers?
Understand which skill sets are in demand and highlight your strengths in these areas in your resume and during job interviews. Also take steps, such as pursuing additional coursework and relevant certifications, to enhance your expertise in these areas. Candidates should target firms where they’d like to work rather than waiting for want ads to appear. Many companies may be filling positions they haven’t yet advertised. Also, vary your search. If you’re spending the bulk of your job-search time online, try to attend some industry events and schedule informational interviews in an effort to expand your network. Show you know the value of a dollar hiring managers like to see concrete examples of how people have saved time and money and enhanced productivity in previous positions.
TERRY PHILLIPS is vice president of Robert Half International in Akron. Robert Half is a specialized staffing firm headquartered in Menlo Park, California. Reach Phillips at (330) 253-8367.
Nobody knows that better than Rollie Massimino, director of basketball operations for the men’s and women’s teams at Northwood University in West Palm Beach, Fla. Massimino is best known for leading the Villanova Wildcats to an NCAA championship in 1985, despite entering the tournament as an eighth seed. He holds a career record of 515-391, which ranks him 57th all-time in wins among coaches with at least 10 years of experience at the NCAA division I level.
Smart Business spoke with Massimino about what business leaders can learn from how successful basketball coaches operate and how they can position their companies to pile up victories.
What are some parallels between coaching a basketball team and running a company?
It’s about winning and about having a goal that you try to accomplish that everyone is accountable for. For a goal to be accountable to the entire program, you need good people, and that’s all part of the ingredients of winning. Also, you must make sure you can accept failure at times because you don’t always win. The way you handle failure is just as important as the way you handle winning.
What could a CEO or company president learn from watching a good basketball coach lead a team?
First of all, I think a good basketball coach would make a good CEO, and vice versa. Why? Because there are so many of the same details involved in coaching and running a business.
When I try to develop a basketball team, I look for people who are loyal, have a solid work ethic and want to be the best they can be. Without these qualities, it’s difficult to be successful in this kind of business because, quite frankly, basketball is a business. It takes a very special kind of person who has no clock but has the desire to work as hard as he or she can to be the best he or she can be.
It would seem basketball coaches need to be masterful motivators. What could CEOs learn from them about motivating their employees?
The most important thing I tell my kids is that they develop a philosophy for that particular season to be the best they can be and understand the different roles they’ll need to play. And isn’t it amazing what you can accomplish if no one takes the credit?
About seven or eight years ago, a group of CEOs got together to try to decide what it takes to make employees happy and enjoy what they’re doing. And guess what? It wasn’t additional days off or an increase in insurance coverage or more money in their paycheck. It was two simple words: caring and sharing.
Different people coach different ways. The teams I coach take on the identity of a family. Everything we do is family-oriented, and I always tell my players I spend more time with them than with my own family. There’s one captain of the ship, then we analyze and make sure we care and share and understand that, ‘You work for me, I work for you.’
They say it’s not all about winning but how you play the game. Do you agree?
Yes, because with me, it’s all about the journey, not the destination. Winning is an attitude, and you have to develop an attitude. You also have to develop goals and find ways to motivate your people.
Would you rather have talented players or hardworking players? Or a combination of both?
I want both. I want the best and most talented players, but I also want players with confident attitudes that carry over and help them accomplish their goals.
How do you personally handle the tremendous amount of stress that occurs while coaching a game?
First of all, coaches, like CEOs, feel stress on a daily basis, not just during a game. I handle it with the idea that I’m going to prepare myself every morning I get up and try to put myself in a position to win. I don’t always win, but I at least want something to happen that particular day that’s positive.
ROLLIE MASSIMINO is director of basketball operations for the men’s and women’s teams at Northwood University in West Palm Beach, Fla.
Fear not, says Dr. Harry Lasher, director of the Career Growth MBA, Master of Accounting and WebMBA programs of the Michael J. Coles College of Business at Kennesaw State University. The key is finding a program with the proper quality, innovatively focusing on the challenges and opportunities in our international world of business and accreditation that fits your own individual needs.
Smart Business spoke with Lasher about how to distinguish good MBA programs from bad and the numerous reasons that MBA programs are worthwhile.
Why does it seem more important than ever for business people to continue their education?
In the past, firms were willing to pay a premium for an employee to earn an MBA because that person could theoretically perform at a higher level and make greater contributions. An MBA, however, is merely a piece of paper if the individual cannot perform.
Today, people are beginning to realize that they can enhance their marketability and increase the number of options they have. The temporary nature of the work setting, the complexity of decision-making, the problem-solving and the speed of everything has ratcheted up. People are looking for ways to be more effective in the work setting.
Business organizations value innovation, change and speed in our global competitive environment. We may be getting to a point where the MBA in the work setting is going to become as much of an expectation as the undergraduate degree was in business. But firms aren’t necessarily willing to pay as great a premium for an MBA these days, so it really falls back to the individual being able to perform at a higher level. This is especially true for the individual pursuing a part-time MBA while continuing to develop a career.
How do you differentiate one MBA program from another?
Almost every program is regionally accredited, meaning that it has to meet some basic quality standards. One differentiating factor is the Association to Advance Collegiate Schools of Business (AACSB), the premier international accreditation agency of business programs. There are probably 3,500 colleges of business or business programs in the U.S., some online, some that offer full-time and part-time MBA programs the growth is in the part-time market but probably not more than 450 are accredited with AACSB. If I were looking, that’s the one quality assurance I would really lean on.
Another factor is the rankings we see in print. However, some excellent schools refuse to participate in the rankings and some ranked schools are suspect. There are multiple criteria used and it’s like comparing apples and oranges.
Another way to differentiate MBA programs is to talk with alumni, members of the business community, and people currently involved in a program to get their opinions related to quality of courses, relevancy of faculty and quality of other students.
What sort of MBA programs are becoming the most popular?
Part-time programs are growing in popularity, to the point where some full-time programs are reducing class sizes. Part-time programs are becoming popular because people can keep their jobs and continue performing in their organization, which is a wonderful place to apply what you’re learning.
We’re witnessing a ‘de-jobbing’ of America where jobs are being replaced with the concept of work. A person needs to deal with different flows of information and the complexity and speed of decisions, demonstrate leadership, proactively engage in innovation and change, and demonstrate additional skills and success behaviors. All those are additional reasons why I believe part-time MBA programs are growing.
Businesses for the most part are not enamored with online MBA programs. Only 4 percent indicate that they see it as equivalent in terms of quality to corporate and university-based programs. But you can enroll in some corporate and univeristy programs that have a mixed delivery of face-to-face and online formats. There are also hybrid courses where a faculty member meets with a class for two to three sessions, students work on projects, usually in teams, where they apply what they learned, then come back three to four weeks later, discuss results with everyone in the learning community and then engage in additional projects.
This is all facilitated with technology such as Vista or Blackboard electronic classrooms, and intranets within business organizations. This is very appealing to people who are involved with a lot of business travel, because they can connect to the Internet and work with others while at different locations.
DR. HARRY LASHER is director of the Career Growth MBA, Master of Accounting and WebMBA progams in the Michael J. Coles College of Business at Kennesaw State University. Reach him at (770) 423-6041 or email@example.com.
Executive education is crucial to staying on the front end of the business world today. Scenarios have unfolded over the past decade that have changed the rules and the laws.
For some, traditional advanced-degree educational programs are often not the answer, says Larry Bell, managing director of the executive education programs at Coles College of Kennesaw State University. Busy business professionals need courses that are more flexible to register for and attend, and nondegree programs are the answer.
Smart Business spoke with Bell about what these nondegree programs can offer and how professionals can take advantage of them to stay on the cutting edge of the business world.
How important is it for business executives today to further their education?
The business world is changing quickly, and to remain competitive executives must find efficient ways to keep ahead of the curve. As an example, our EMBA curriculum in 2000 had less than 10 classroom hours dedicated to the subject of ‘ethics in business.’ Similarly, since the law hadn’t been enacted, there was no understanding of things like the Sarbanes-Oxley Act and other devices used by regulators and law-makers to address some of the scandals that erupted in the early part of this decade. Seven years later each unit in the MBA program addresses the ethical implications of the subject.
Executives need to stay on the front end of these topics, and often a traditional advanced degree educational program is not immediate enough to be the best answer. Certificate-type and noncredit executive education programs are increasingly complementing degree programs to fill the gap between real-world learning in the workplace and the academic classroom environment.
What’s the difference between degree and nondegree-type programs?
When you’re discussing degree programs, you’re talking about a series of related courses that result in the student achieving an academic degree. Generally, MBA programs and the business schools/colleges that house them are accredited by international accreditation organizations, such as the AACSB. There are generally four forms of delivery: full time, part time, Web-based and executive MBA, which is the fastest-growing format for delivery in the U.S. At times, these formats are combined to better serve the students.
Students apply for admission to the graduate business schools and meet entrance requirements, which may include a review of undergraduate transcripts, a GMAT test and a faculty interview prior to being accepted in that business school. In all these traditional programs, there’s a faculty assigned and a curriculum. Also, students have a syllabus and study in classrooms or using distance-learning techniques like the Web. Grading schemes may differ from program to program, but in general students receive A- through F-type grades, with graduate work requiring an A or B for the student to remain in good standing. Standard tuition or premium tuitions may apply.
Nondegree and certificate-type programs are more flexible for many executives in that they can be offered in a more expedited fashion and don’t generally have admission requirements as stringent as a degree program’s. In fact, the delivering organization may not be directly associated with an accredited college.
Certificate programs also have a more focused curriculum, perhaps addressing several related topics over several days. They’re generally priced at market rates, and range in price from several hundred dollars to thousands of dollars. These programs are often taught at ‘destination’ universities, conference centers or resorts that can dramatically increase the cost of attending.
What sort of nondegree programs exist?
There’s one I recently developed and implemented with Dr. Mike Salvador and Dean Tim Mescon for a Fortune 10-type global firm for their inside professional sales center in the Atlanta area. The firm had two challenges it wanted to address and asked if higher education might be able to help. The first challenge related to wanting to ‘up-scope’ the capabilities of its professional inside sales teams, enabling them to better converse with C-level executives to whom they were marketing complex solutions over the phone. Additionally, the firm wanted to simultaneously address the age-old challenge of associate loyalty and ‘churn’ in the marketplace.
Our solution was what we call a ‘Masters Certificate,’ which utilizes traditional graduate level-type courseware (like financial and managerial accounting, marketing management, supply chain and human capital investment) in conjunction with some customization. Additionally, for associates who enjoy the experience and want to continue their adult learning experience in a degree-seeking mode, we built a bridge for those achieving the certificate to apply for formal admission to the business school and complete their MBA in our Career Growth (part-time) program.
LARRY BELL is managing director of the executive education programs at Coles College of Kennesaw State University. Reach him at (770) 420-4622.
No matter what other skills you have, communication skills rank the highest among employers seeking quality employees. That goes for accounting and finance professionals as well, according to a recent survey by Accountemps.
The reason for this, says Terry Phillips, vice president of Robert Half International in Akron, is that managers realize the wide-reaching impact of communication and the dozens of interactions employees have each day with other people.
Smart Business spoke with Phillips about what people can do to improve their communication skills
Why are communication skills more important than ever before?
Managers realize the wide-reaching impact of communication. Every day, people have dozens, if not hundreds, of interactions with colleagues, managers, customers, investors and others.
How high do communications skills rank among employers when hiring for management positions?
They rank quite high, actually. Managers rely on soft skills every day in their interactions with staff, senior management and clients, so proficiency in all types of communication is essential to success. Since senior-level responsibilities include motivating and retaining employees, strong ‘people’ skills are as vital as financial expertise.
What can employers do to sharpen their employees’ communication skills?
Employers can take a number of steps to help improve their staff’s communication and other soft skills. Some things other companies in our area have done are: developing a mentor program, providing tuition reimbursement for employees taking courses in business writing and public speaking, and encouraging staff to volunteer for team leadership roles. Each of these is an excellent way to help employees become more effective communicators.
What can business professionals themselves do to sharpen their skills?
Like any other skill set, soft skills can be learned, practiced and improved upon.
Those willing to improve on these skills should observe others, taking a close look at people in their organization who present their thoughts well at meetings and can write detailed yet brief e-mail messages. They should also invite constructive criticism, informing trusted coworkers of their desire to improve and asking for suggestions to act upon. They should seek opportunities to improve.
There are a number of courses individuals can take to heighten listening, negotiation and public speaking abilities. Also, the capacity to perform under pressure, make good decisions in a time crunch and project a professional image can be enhanced with practice.
Another thing they should do is give attention to the details, making it a habit to double-check all of their e-mails for accuracy and clarity. A clean, error-free e-mail speaks volumes about your attention to detail.
Being an active listener is also important. The savviest communicators do more listening than speaking. They pay attention and look directly at the person speaking. Instead of thinking about their response, they focus on what’s being said. They’re also aware of their body language. Poor posture, drumming fingers and tapping feet can break the connection between them and the speaker. They also avoid distractions, refraining from using their computer while talking on the phone.
You’re guaranteed to tune out a portion of the conversation if you’re engaged in another activity. They take thorough notes, bringing a pen and paper to every meeting they attend but not letting their note-taking interfere with the flow of conversation. They don’t interrupt, realizing the temptation to break into the conversation but always letting the speaker finish. Interrupting runs the risk of short-circuiting specific information or ideas.
Finally, they ask questions. Agreeing with everything you hear doesn’t mean you’re a good listener. Active listening means asking questions to clarify salient points.
TERRY PHILLIPS is vice president of Robert Half International in Akron. Robert Half is a specialized staffing firm headquartered in Menlo Park, Calif. Reach Phillips at (330) 253-8367.
Rob Seiger, chair of the Immigration Practice Group of White and Williams LLP, says more and more companies are choosing to outsource their immigration function in order to avoid potential business disruption due to delays in the immigration process.
Smart Business spoke with Seiger about immigration and how companies can go about navigating the immigration process in the current immigration environment.
How has the current business climate affected the practice of immigration counsel?
Businesses are now increasingly going global. As a result, we’re seeing a lot more cross-border movement from our clients.
As a general case, we may have a global client who wishes to bring over a foreign national executive for a series of U.S. business meetings, which results in the need for a business visa. Down the road, that client might decide that he or she needs this executive on more of a full-time basis, so these initial business meetings eventually turn into a need for an executive transfer. If you’re a foreign national and you need to be here for more than just tourism or a quick business meeting, you need some form of work visa. In fact, companies may have a corporate policy where their executives who are developing their careers abroad must do a period of time in a company’s U.S. office. Our firm assists with the required immigration process for companies to bring their foreign national executives to the U.S.
With the increase in international transactions that require their executives to be strategically placed around the world, we’re seeing more companies decide two years into a transferred executive’s stay that they want to keep him here in the U.S. permanently, so they offer to sponsor him for a ‘green card.’
Is it more challenging to get these executives to the U.S. today?
It’s a lot more challenging. Prior to 9/11, many companies generally handled the immigration function inhouse, leaving it up to their human resources department. After 9/11, the U.S. government raised the scrutiny of visa applications to higher levels as a result of new security procedures that were put in place. Today we’re seeing more and more companies engage counsel to handle their immigration cases because they are now seeing more negative visa applications outcomes from even routine cases.
Companies understand that a foreign executive transferring into the U.S. office often affects some business unit of that company and, if the visa application fails, it affects the bottom line. So immigration has become a very specialized area, and companies have realized they prefer to go out and seek counsel who can fight for them.
How does the immigration process work now?
Before 9/11, after a visa application was approved, the notice of approval was sent to the foreign national in his home country. The foreign national would mail his passport to an embassy, it would be stamped with a visa, and then the foreign national would jump on a plane to the U.S.
Now, the Department of State requires that they need to interview everyone applying for a visa to come to the U.S. Every foreign national applicant for a visa has be personally interviewed by a State Department Consular Officer before a visa can be issued. That officer has independent discretion as to whether or not to issue the visa requested, based on how he feels the interview is going. It can significantly delay the visa process. Also, every embassy has its own unique procedures and protocols, meaning that each embassy presents its own challenges. That’s another area where a law firm specializing in immigration practice can help. A law firm that has developed relationships with these embassies abroad and can potentially assist with this process will minimize the risk of visa denial.
What kinds of risks does a company take by not handling workers’ documentation properly?
The enforcement arm of immigration is called the Bureau of Immigration and Customs Enforcement (ICE). Until recently, the enforcement efforts of ICE concentrated on arresting illegal aliens and pursuing administrative penalties for employers who had paperwork violations. Now, they’ve modified their policy on enforcement and are starting to pursue the employers themselves. ICE is conducting industry-specific enforcement actions where agents are not only going after illegal employees but also the executives and managers who are hiring them.
ROB SEIGER is chair of the Immigration Practice Group at White and Williams LLP. Reach him at (215) 864-7021.
The Enron and WorldCom debacles opened everyone’s eyes to the fact that greed and mismanagement can lead to negative consequences in large companies. The result was the Sarbanes-Oxley Act (SOX) of 2002.
However, SOX has mostly had a negative effect on corporations, according to James Strain, shareholder/director, chair of the Business Law Practice Group of Sommer Barnard PC.
Smart Business spoke with Strain about how much SOX has cost publicly held corporations and whether reexamining it would be worthwhile.
Has the act accomplished the legislative justifications for its passage?
The stated legislative justifications for the passage of SOX were to address systemic and structural weaknesses affecting the capital markets, ultimately for the purpose of protecting investors by improving the reliability and accuracy of corporate disclosures made pursuant to the securities laws. It’s fair to say that SOX has increased corporate awareness of public disclosure responsibility, and has largely decoupled the rendering of auditing and other services offered by accounting firms. Whether it has had any hand in restoring investor confidence, however, is far more problematic.
Was SOX necessary to accomplish the asserted justifications?
As passed, SOX contained some good features and many bad features. It’s often thought of as a statute fraught with unintended consequences. The Securities and Exchange Commission (SEC) had enough authority before SOX to have caught and punished those who engaged in securities fraud. The rules imposed on lawyers (‘up the ladder’ reporting of securities fraud, withdrawal from an engagement, etc.) had been required by the SEC since 1980.
The incentives changed with the passage of SOX. There was a perception that lower-level employees of publicly held corporations could ‘blow the whistle’ on securities fraud with impunity and that CEOs could go to jail for signing off on bad financial statements. Independence of board members on audit and other committees and independence of auditing firms became a mandate, because of both SOX and the self-regulatory organizations, such as the New York Stock Exchange and NASDAQ, imposing their wills. What changed for lawyers was sweeping state law breaches of fiduciary duty in with securities fraud.
As important as SOX was in these changes, the rise of percentage of investments made by institutional investors and the fact that they’ve ceded many duties to organizations such as Institutional Shareholder Services has had an equally important, if not greater, effect on corporate governance and responsibility. This trend is unrelated to the passage of SOX.
What has compliance with SOX cost publicly held corporations?
In 2004, Foley & Lardner found that, for publicly held companies with revenues under $1 billion, the average continuing annual costs of being public more than doubled from $1.3 to $2.9 million. Of the 115 companies responding to the survey, 21 percent were considering going private, 6 percent were considering selling and 7 percent were considering merging, all because of the cost of SOX compliance.
In a Ph.D. dissertation by Ivy Xiying Zhang (Economic Consequences of the Sarbanes-Oxley Act of 2002), the author concludes ‘the loss in market value around the most significant SOX rulemaking events amounts to $1.4 trillion, which likely reflects direct compliance costs, indirect costs and expected costs of future anti-business legislation.’
Have the costs of compliance hurt the country in unintended ways?
It seems clear to me that the country has been hurt by SOX. The loss of market value of securities aside, many believe that capital market innovation, long a strength of the American economy, is being driven to foreign countries since the costs of compliance are sufficiently less and their markets are sufficiently global.
Also, the mandated independence has created more of a combative relationship between executives of publicly held companies and their directors. Directors are more worried about personal liability and asserting their independence than they are about making sure the corporation is headed in the right direction. CEOs are spending more time kowtowing to their boards’ desires than strategically planning for the long-term. This trend will undoubtedly hurt the competitiveness of U.S. companies and their ability to prosper.
Has SOX been worth its cost to the country or should it be revisited?
It may be too soon to say there’s an irreversible move away from U. S. capital markets towards global markets elsewhere, but that trend should be a concern. It seems to me that a more thoughtful approach to SOX and an examination of the consequences to date would be good for the country and for the economy.
JAMES STRAIN is shareholder/director, chair of the Business Law Practice Group of Sommer Barnard PC. Reach him at (317) 713-3460.
Today, many companies are focusing on cultivating close relationships with their clients to enable them to offer a “total solution” approach.
Some smart banks are following this lead, and this includes the area of credit line management. A bank’s close relationship with a client is key to its ability to respond appropriately, such as increasing a line of credit at an opportune time, says John Sassaris, vice president of MB Financial Bank.
Smart Business spoke with Sassaris about what a working capital line of credit is and what a company should look for in a lender offering such a product.
What is your definition of a working capital line of credit?
It’s a vehicle that allows a company to fund its short-term cash flow needs. Cash flow needs arise during the course of operations, and oftentimes an entity’s receivable collections do not match up well with the demand for cash. That is when a revolving or working capital line of credit is used to help bridge this gap. Over time, as companies achieve profits and retain those profits within their balance sheet, the need to draw on a line of credit for working capital diminishes. The company, in essence, is generating its own working capital based on these long-term actions. However, it is still prudent to maintain a line of credit as it can be used to handle seasonal cash flow issues and take advantage of buying opportunities.
How does credit line management differ today than in the past?
I think, generally speaking, companies use their lines of credit in the same manner they always have. However, today, the global economy dictates a different cash flow cycle. Whereas 25 years ago, manufacturing was generally confined to domestic operations, today, most products are manufactured overseas. This has created a kind of extended cash flow cycle as often-times you are paying for product while it is still in transit. Maintaining an appropriate level of credit is important, as oftentimes you are dealing with the unexpected. Further compounding this issue is that these supplier relationships are often new, and domestic entities are likely not granted much of a credit line from the overseas manufacturers. This eliminates what is essentially the cheapest form of financing for clients, as they do not have the ability to take advantage of terms from their suppliers. That is why communication between the company and the bank is critical, so that you can address these types of issues before they become problems.
What happens if you have too much credit and use too little or vice versa?
From the bank’s perspective, if we commit too high a number and it is not being used, it is actually costing us money. So we attempt to meet the customer’s request, while taking the actual anticipated use into consideration. Ultimately, we review the matter annually, and after the relationship has seasoned, we can determine the appropriate level.
On the flip side, from our clients’ standpoint, I think the line should always have room to accommodate unexpected events within their daily operations. Essentially, it goes back to managing the cash flow cycle and anticipating the unexpected. If a receivable doesn’t get collected or if a machine goes down, you need flexibility on your line to allow you to react quickly to such matters.
How does a bank determine how much credit to give a company?
For new relationships, we rely heavily on the expectations that the prospect has for the future and how those relate to its past performance. Once it is a seasoned relationship, we really look to the historical movement on the line of credit and the corresponding cash flow cycle. If there is a history of payments and draws on the line, it generally means that the company is using the line appropriately. We may increase or decrease the line depending on the client’s future need.
JOHN SASSARIS is vice president of MB Financial Bank. Reach him at (847) 653-1848 or firstname.lastname@example.org.