Monday, 22 July 2002 09:50

A retention key

Employers seeking ways besides financial compensation to reward their employees find that work/life programs enhance efforts to attract and retain top talent. While many business owners have believed this for years, it was mainly based on anecdotal evidence.

But a survey of performance-based work/life programs earlier this year by the American Compensation Association confirmed those beliefs, indicating that programs such as family care, flex time, financial, wellness and career counseling are highly valued by employees. More importantly for employers, they are low cost, valued-added alternatives to expensive financial-based rewards.

The survey, which elicited responses from 1,256 employers nationwide, revealed the following:

  • 18 percent use some work/life programs to reward employee performance.

  • 43 percent do not use work/life programs, but say they will in the future.

  • 24 percent of those that use work/life programs link those programs to improvements in employee satisfaction in the workplace.

  • 48 percent use nonmonetary compensation to reward performance. Of this group, 41 percent plan to add work/life programs to their compensation packages.

Published in Cleveland
Monday, 22 July 2002 09:49

Tasting his own medicine

Local public relations veteran Robert Aiello may face his biggest marketing challenge ever in his 35 years in P.R., and he’s not even in the business anymore.

This former senior vice president and associate director of Ketchum Public Relations in Pittsburgh has jumped head-first into marketing his own mystery novel. The novel, called “The Deceivers,” was published this past September by Creative Arts Book Co., of Berkeley, Calif.

The book is one of three in a series he wrote about a branch of magic called mentalism. Like the book’s main character, Aiello says he too has had a lifelong interest in mentalism and has been a member of the International Brotherhood of Magicians for 18 years. All three novels, set in Pittsburgh, are said to reveal one or more methods used by phony psychics.

But at this point, mentalism won’t get him greater sales. That’s where his years as a P.R. executive come in handy.

“Writing suspense novels might be my greatest challenge ever,” he says. “I’m drawing on my PR experience by marketing myself to promote the book. Now I have to practice what I’ve preached to clients all those years.”

And then he has to sell some books.

Daniel Bates

Published in Pittsburgh
Monday, 22 July 2002 09:49

More bang, maybe some bucks

Think your business plan is pretty good? Here’s a way to find out, learn something and maybe win some serious money, as much as $50,000 if your plan passes muster.

But the money’s not all that EnterPrize, a business plan competition, offers area entrepreneurs. Organizers say participants will get the benefit of advice and coaching from successful business people, as well as valuable exposure to funding sources that may help them get their ventures off the ground or onto the fast-growth track.

The competition promises to generate viable business ideas, increase access to capital and grow the region’s entrepreneurial leaders by identifying and encouraging investment in new businesses,” says Sean McDonald, chairman of the Pittsburgh Technology Council, an EnterPrize sponsor.

EnterPrize was created through the partnership of local universities, businesses and development organizations. The goal is to invigorate Pittsburgh’s economy by bringing together ideas, capital, talent and business expertise to create growth companies. All told, $145,000 in prize money will go to entrepreneurs who assemble the best plans.

The competition, which runs from October until April, is spearheaded by Carnegie Mellon and Duquesne universities, the University of Pittsburgh, Innovation Works, McKesson HBOC Automated Healthcare, McKinsey & Co. and the Pittsburgh Technology Council. Participants plan to make the competition, which is similar to others sponsored by McKinsey & Co. in other cities, an annual event.

Events in other cities have been responsible for helping start-up ventures get off the ground and grab the attention of investors, even for companies that don’t win money prizes.

Organizers of EnterPrize expect that as many as 20 companies will receive venture capital or angel funding as a result of the competition. The trend in in successive years in competitions sponsored by McKinsey in other cities is that the mix among participants tends to shift from students to professionals.

The competition is intended to spur the creation and development of growth companies, defined as companies that aspire to generate revenue in the tens of millions of dollars in a short time frame. Existing companies may also enter, provided they are incorporated within the 13 counties specified, have annual revenue of $1 million or less, employ fewer than 20 people and have raised less than $500,000 in capital.

While the competition is not limited to technology businesses, the sponsors expect that most growth companies will come out of the technology sector. A gas station, the sponsors explain, is not a growth company, but if you have an innovative plan to open alternative fuel supply stations across Southwestern Pennsylvania, you may be a good candidate.

EnterPrize is advertising to get the word out, and sending brochures to university alumni and trade organizations. Speakers are being dispatched to schools and entrepreneurial groups at local colleges and universities.

The competition will be staged in three phases and structured as a learning process, complete with seminars, workshops and networking events. The phases will guide participants through the business planning process by requiring them to complete a detailed outline of the plan in the first phase, a draft business plan in the second and a refined plan in the third phase.

Prizes will be awarded at each level, and all companies that decide to continue through the entire process may do so.

“We have found that the competition process serves to educate participants and stimulate new business activity, regardless of who wins the contest,” says Christopher Leech, a partner at McKinsey.

For more information about the competition, visit EnterPrize at www.enterprizepgh.org, e-mail McKinsey & Co. at biz_plan@mckinsey.com, phone (412) 804-3060 or fax (412) 804-2800.

Ray Marano (rmarano@sbnnet.com) is associate editor at SBN.

Published in Pittsburgh
Monday, 22 July 2002 09:49

Go, Katz, go

If there are any doubts that entrepreneurial education is a growth industry, they might be dispelled by the University of Pittsburgh Katz Graduate School of Business’ Small Business Development Center and its experience with the demand on its management training services.

During the first six months of this year, the SBDC reports that it trained 1,174 people at 18 seminars, workshops and conferences. That compares to 667 trained during the same period last year — an increase of 43 percent. The SBDC also provided 3,679 hours of management consulting to 586 entrepreneurs. Nearly 1,200 phone calls were fielded by the SBDC during the first half of the year.

Other highlights of the Katz SBDC’s performance in entrepreneurial assistance this year include:

  • A significant increase in start-up capital and expansion capital secured by SBDC client companies. Businesses landed $5.85 million in the first six months of the year, compared to $4.8 million during the same period in 1998.

  • The opening of 37 new businesses by SBDC clients during the same period.

Pitt’s SBDC offers one-on-one business management consulting services in Allegheny, Washington and Greene counties through offices in Oakland, Harmarville, Wexford, Waynesburg and Washington, Pa. How to reach: The Small Business Development Center at the University of Pittsburgh Katz Graduate School of Business, (412) 648-1544 or www.pitt.edu/~sbdc/.

Ray Marano

Published in Pittsburgh
Monday, 22 July 2002 09:49

Family tax alert

Hiring family members can qualify family business owners for special tax savings.

Indeed, hiring family is an excellent way to save money on federal income taxes. A spouse who works for a family business but is not covered by a qualified retirement plan can contribute up to $2,000, or 100 percent of earned income, to an IRA. For immediate benefit, the spouse’s salary can be deducted, which creates an extra $2,000 of tax-free income for the family.

The long-term benefit is that this money will accrue tax-free as long as it remains in the IRA. If you put it into a Roth IRA, it’s not tax deductible, but it will grow tax-free and distributions will never be taxed.

You also can save on taxes by hiring family members who are minors, since income earned by your minor children is taxed at their rate, usually 15 percent or less. Your business will also get a deduction for their salary.

To stay out of trouble with the IRS, keep detailed records. For the working spouse, records must show the spouse actually did the work for which he or she was paid. For the working children, records must show that they did the work, it was necessary for the business, and if they hadn’t done it, the family would have had to hire someone.

The other deduction family business owners can take is the spouse’s expenses on business trips. Normally you can’t deduct such expenses, but if you can prove the spouse is essential to the purpose of the trip, the expenses are an allowable deduction.

Consider these examples of when a spouse’s presence would be necessary:

1) The owner is traveling to another country and doesn’t know the language and customs, but the spouse does.

2) The spouse is the secretary on the trip and is familiar with the technical details.

3) The client has requested the spouse’s presence.

Business owners also have been allowed this deduction when they showed they had an illness such as diabetes and the spouse was trained as the nurse; they proved the spouse wasn’t enthusiastic about the trip; or they proved their spouses had not participated in any type of tourist activity.

If this spousal deduction weren’t allowed, however, you still could deduct what it would have cost to travel alone. You may not be permitted to deduct the cost of a double-occupancy room, but you could deduct the cost of a single room.

On top of spousal deductions, you can save taxes with a company car. Drive the car until it’s fully depreciated, then switch it over for personal use without tax liability. The car won’t become taxable until it’s sold.

Overall, when owning a business, you’ll find it extremely worthwhile for financial reasons to hire family members. Utilization of simple tax strategies can ensure the financial rewards.

Louis P. Stanasolovich is president of Legend Financial Advisors Inc., a fee-only North Hills registered investment advisory firm that provides asset management and comprehensive financial planning services to individuals and businesses. Its Web address is www.legend-financial.com.

Monday, 22 July 2002 09:49

Dealing with feelings

The headline on a recent newspaper article said that many people want to sock a co-worker. Coupled with what appears to be an escalation in workplace violence, I admit I wasn’t too surprised.

According to the research, one employee in six said that in the past year, they had wanted to punch a co-worker. The numbers were even higher for people under age 35, especially those working in clerical, office and sales positions.

The survey, conducted by the Gallup organization, included 750 workers over the age of 18.

In a similar survey conducted one year ago, 42 percent said they were often “at least a little angry” at work. This year the number increased to 49 percent — nearly half of those polled.

The Marlin Co., which publishes and markets motivational, educational and safety materials, commissioned the study. Said Frank Kenna, the company’s president: “This is a serious problem for people who manage any of these people. Their ability to recognize and deal with anger and potentially violent behavior is absolutely critical.”

I remembered an incident about a year ago at an assembly plant. Someone had scheduled a group of people to meet with me at a time that was apparently too close to the shift change. Only one employee showed up — and he was angry. The first words out of his mouth were, “You don’t want to talk to me, dude. I hate this (expletive deleted) place!” Then he added, “Sometimes I want to get my gun and blow my (expletive deleted) supervisor away.”

I figured that since we were both being paid for the time, I was going to get him to talk. During the entire interview, he never looked at me once, and I remained “dude.”

But in the next few minutes, he revealed some interesting information. He said his supervisor often cussed him out and treated him like dirt. “Just like my old man,” he said. “He croaked a few years ago. Good riddance.

“He used to beat on me all the time when I was a kid,” he continued. “No matter how I tried, that old (expletive deleted) never gave me any credit for anything. He said I was a waste of good spit!”

Thinking it might be a good time to change the subject, I asked what he would like to do if he didn’t have to work. His response was quick.

“Oh, me and my buddy are gonna take our motorcycles and go out West. We’re going live in Arizona, New Mexico. Man, we’ll just ride all day long!”

Since I was somewhat familiar with the area, we talked about that part of the country. His anger faded as he talked about some of the places he had seen on his last visit. He became a different person, a person you could easily learn to like.

As he left, he stuck out his hand. “Nice talking to you, dude,” he said. As he reached the door, he turned slowly and added, “You know, this ain’t such a bad place to work. I’ve seen worse.”

The research presented in the article pointed out that 64 percent of those surveyed said that at least part of their frustration was because their equipment frequently malfunctioned. These same people expressed dissatisfaction because they felt their co-workers wasted an average of 75 minutes a day on computer games, personal calls and e-mail.

My advice to you, as leaders and managers, is this: Get to know your people. Show them they are important to you and to the organization.

My own research has shown that more than 50 to 60 percent of your people don’t need direct supervision if their equipment is functioning properly and they have a steady work flow.

By investing a little of your time getting to know your people and eliminating the root causes of their dissatisfaction, you’ll make significant improvements in reducing stress and improving performance. At the same time, you will greatly enhance the value of the person.

William Armstrong, a management consultant for nearly 30 years, is president of Armstrong/Associates, a Pittsburgh-based consulting firm. Reach him at (412) 276-7396 or via e-mail at armassoc@fyi.net.

Published in Pittsburgh
Monday, 22 July 2002 09:49

Lost money

The Internet has made not only accessibility to information easier and faster, but accessibility to money as well. A Web site with increased traffic over the last few months, www.unclaimed.org, has links to most states’ departments of commerce, including the Ohio Department of Commerce.

Visitors to the site can immediately access information on any unclaimed funds in their or their family’s names, then click on a form to request those funds.

In Ohio, funds belonging to some 200,000 people are turned over to the state each year, according to the Ohio Department of Commerce.

Since 1968, businesses have been required to report any unclaimed funds on their books. The most common types include payroll or expense reimbursement checks, accounts receivable credits or checks, security deposits and pension account balances. The problem with this requirement, though, is that many companies have never actually filed the report, says Jeffrey Dimos, an accountant with Bruner Cox, with offices in Canton and Akron.

Historically, the state has not enforced this law, and generally has not pursued or penalized nonfilers. This year, however, The Ohio Department of Commerce has subcontracted to agencies and private organizations in order to expand its audit effort and enforce penalties for noncompliance.

Ohio businesses were required to file a report to the Ohio Department of Commerce Division of Unclaimed Funds by Nov. 1, whether or not they possess unclaimed funds. The department recently extended the deadline to Dec. 31. The only businesses exempt from reporting are some hospitals and government offices.

Even if you do not have unclaimed funds on your books, you are required to file. For accounts of $50 or more, a notice must be sent to the owner at his or her last know address before reporting to the state.

“Basically, it’s a chance for people to step forward without getting themselves into trouble,” says Bill Teets of the Department of Commerce. “The thought is that there are people out there who are fearful of repercussions.”

Businesses which meet the extended Dec. 31 deadline will be exempt from penalties and interest. The extension only applies to funds reportable to Ohio, not other states. The Ohio Department of Commerce is requiring that a written request for the extension be filed, but “if they don’t give us one [an extension request], they will still be free from penalties and interest,” one commerce department staff told SBN on the condition of anonymity.

Noncompliance penalties can add up to $500 per day, plus 2 percent of the balance of the unclaimed funds, says Dimos. But he adds that the increased stringency of the law will also make it easier for business to claim funds they might be owed.

How to reach: The Ohio Department of Commerce Division of Unclaimed Funds, (614) 466-4433; Bruner Cox (330), 376-0100

Connie Swenson (cswenson@sbnnet.com) is editor of SBN.

Published in Akron/Canton
Monday, 22 July 2002 09:49

What drives new products to market?

Technology isn’t the driving force we thought it to be when it comes to bringing new products to market.

In the 9th annual Grant Thornton Survey of American Manufacturers, 67 percent of mid-sized manufacturers (74 percent of larger companies) were prompted by their customers’ needs or demands. Other product drivers include competitive pressures, 16 percent; internal innovation, 9 percent; new technology, 6 percent; and not sure, 2 percent.

“As competitive pressures intensify, suppliers will have to find new ways to conceive and deliver innovative products faster, while maintaining quality and lowering product costs,” the study concluded.

And how long does it take for a mid-size manufacturer to bring a product to market?

Less than six months, 39 percent; six to 12 months, 42 percent; more than 12 months, 14 percent; and 5 percent gave no answer.

Published in Cleveland
Monday, 22 July 2002 09:49

Trust me, I’m with the Feds

The name Clarence Thomas will go down in the history books for a number of reasons: as the second black Supreme Court justice and first person to widely introduce the infamous Long Dong Silver to the nation’s cocktail party conversation.

But among his lesser-noted legacies, the Georgia native also presided over a huge backlog of cases while he served as chairman of the Equal Employment Opportunity Commission during the Bush Administration.

And now the EEOC, for years resource starved but more recently given a $37 million budget increase by Congress, is trying to whittle that pile of old cases down to a more manageable size. Once up to 112,000 cases, the backlog is expected to dip to 44,000 active cases, although 80,000 new charges a year continue to be filed with the agency.

EEOC chairwoman Ida Castro was in Cleveland recently to promote the use of mediation by businesses, which thus far have only warily embraced a local pilot project.

Under mediation, the agency cannot force a settlement of employment discrimination charges. Both the charging party and the company charged must agree to submit to the process and both must sign confidentiality agreements. Unlike cases in which the EEOC is investigating, the agency isn’t a party to mediations, but merely a facilitator. If no settlement is reached, the case reverts to the agency’s normal investigative track.

EEOC mediation has won high marks from parties that have tried it, Castro boasted. But the bottom line, and no doubt the real reason for her visit, is that “employers decline our offer to mediate 65 percent of the time,” even though 60 percent of the charges are settled in one day or less (the average session is one to five hours). Smaller employers, she added, reject mediation at an even higher rate, “even though they can benefit more” from removing such a major management distraction.

She was forced to acknowledged the obvious: The EEOC, which for 30 years has rightfully been seen by business as a tough, even ruthless beat cop watching over employment practices, hasn’t had much occasion to engender maximum trust among employers. But she said the agency has erected an “impenetrable firewall” between its mediations and its investigative unit.

All notes from mediations are destroyed, and cannot ever be used against a party if mediation fails and the case is sent back to agency investigators. She pitched mediation as a tool for management to be proactive.

“Find out what it means to take control of your own employment disputes,” she said. Perhaps most improbably, though, she repeatedly referred to the agency’s “customer service” capacity, language which must have an especially bizarre ring for any company on the receiving end of an EEOC investigation.

Underscoring the notion that business remains just as wary of EEOC mediation as it is of the agency, panelist Richard Chesnik, corporate director for human resources for Cleveland-based Brush-Wellman, immediately lit into the initiative when his turn at the microphone came. “I hope that this program is a systematic change in how the EEOC does business, as opposed to the backlog-buster du jour.”

Chesnik ticked off a number of methods the agency has used to cull its caseload in the past, including what he called agency “SWAT teams,” which were known to call companies out of the blue on six-year-old cases when periodically directed to winnow its backlogs.

Moments later, the first question from the floor was similarly hostile. “Why would an employer agree to mediate when they’re sure they didn’t do anything wrong?” one human resources staff member pointedly asked.

Castro, quickly shifting from her earlier conciliatory posture, went on the offensive. She cited egregious examples in which employees “were treated like dogs,” including one in which an employee was raped by a supervisor, then fired by upper management when she complained. “We’ve found too many bad actors that lie, and they hurt all of you. Those that fight us tooth and nail hurt all of you,” she said.

Furthermore, she noted, while business might feel the EEOC is hostile to its interests, she claimed to constantly run into the opposite attitude among charging parties: “That we’re in bed with companies, that we’re [thereby] useless.”

In the end, though, even corporate defense attorney Tom Barnard of Ulmer & Berne said there’s some utility to mediation, at least when both parties want to go that route. In his experience, he said, if both sides agree to mediation, they’ll typically settle the case.

But many clients will always be deadset on litigation, he says, either because opposing counsel hasn’t yet found damaging facts during the discovery phase or because the client is intent on setting a prophylactic precedent for future scofflaws.

“I’ve had clients go to trial for the stealing of a candy bar” to set a precedent in the grocery business, he said. Under those circumstances, “if they’re not interested in mediation, they won’t agree to it. And the EEOC’s wasting its time” in trying to talk them into it.

Mediation at a glance

Additional facts about EEOC mediation program in the Cleveland district, which covers all of Ohio:

  • Under a three-year-old pilot program, the EEOC’s Cleveland district has been offering to mediate cases brought before the agency. In the last 11 months, about 250 mediations have taken place.

  • The Cleveland district has four internal and 38 external mediators, triple the number available last year. Due to the recent increase in the agency’s budget, outside mediators, who had been serving on a pro bono basis, are now being paid.

  • The EEOC’s Cleveland district, along with counterparts in Chicago and New York, will soon enter a joint pilot program with the American Bar Association, under which lawyers will be provided pro bono to interested parties.

  • The Cleveland office, like other EEOC offices, has a liaison for small businesses interested in mediation.

For more information on EEOC mediation, contact the agency’s local mediation supervisor, Loretta Feller, at (216) 522-2001 or consult the agency’s Web site at www.eeoc.gov.

Monday, 22 July 2002 09:49

Stamp of approval

A sure sign that the Internet has officially changed every aspect of the economy is the U.S. Postal Service, that great bastion of regulations and conservatism, has agreed to sell postage online and allow you to print it out.

OK, it’s actually selling it to contractors, who then resell it to you, but it’s still letting you print it on your computer. This is the first new form of postage since the advent of the postage meter 80 years ago. Two providers were approved, Stamps.com and E-Stamp.com.

Here’s how it works for Stamps.com:

  • Download the software from the site.

  • Register.

  • Print your postage.

The service costs between $1.99 and $19.99 per month, depending on how much postage you use. The cost of the postage itself is not included. Users purchase a minimum of $10 in postage to place in their account via credit card. Postage can be printed at any time using an Internet connection. (E-Stamp uses a small device attached to your PC instead of an Internet connection to keep track of postage used.)

Postage can be printed for first class, priority and express mail.

“The digital revolution will change the postage industry forever,” says John Payne, CEO of Stamps.com. “By using the Internet to deliver postage, we have transformed a centuries-old product requiring proprietary machines into a simple service, available 24 hours a day from any PC.”

Business customers pay 10 percent of total postage used as the monthly fee, with a maximum fee of $19.99, regardless of usage. You are only charged the convenience fee when you actually use the postage in your account. There are no contracts, so service can be cancelled at any time.

The program is set up to work in conjunction with various word processing, office suites and address book programs, so mass mailings can be addressed and stamped in one step. The site also features automatic address correction and the addition of ZIP+4 codes to each letter.

Todd Shryock (tshryock@sbnnet.com) is SBN’s special reports editor.

Published in Cleveland