Embrace change. You need to listen and be open to change. If not, you’ll stop growing, and you’ll have problems because the economy, market and technology changes every day. Be open to adjustment in your processes and your guidelines.
Years ago, I was invited to a seminar. The theme was ‘Open to Change.’ This person talked about the Swiss watchmakers. They had dominated all the watch industries in the world. At one of their conventions they have every year, they had an engineer come and talk to them about the Pulsar system.
They thought he was crazy. ‘Why are we going to change? We dominate the market. We don’t need to change.’ The Japanese got hold of this engineer, and that’s how the Pulsar watch business went to Japan, and that’s how (the Swiss) lost their leadership in the watch industry. They ignored a potential idea for change or improvement.
Take smart chances. Sometimes there are good temptations and there are good business opportunities that get away from what you do, and you fall in that trap, but it’s a learning experience. You say, ‘I shouldn’t have done that,’ but you learn that over the years.
But if you’re too rigid, then that limits your growth. Some of the biggest investors, some of the most successful entrepreneurs,they have taken chances, and they have been very successful, but it all depends on how you do it.
You have to be smart, but also, you have to be lucky.
Use criteria to make decisions. The first thing you learn is the theory the knowledge and that’s what you learn when you go to school. The second that you learn is the practice and practical knowledge. The third thing that is very hard to apply is criteria. That’s what helps you make decisions.
Some people don’t get to that point. They never develop the criteria. They have the knowledge, but they don’t have the practice, or they have the practice, but they don’t have the theory part. Criteria is a combination of both, but not everybody gets to the point where they have the proper criteria to make decisions.
Be careful that you’re not putting people in the wrong position where they can’t make the proper decisions they can’t do their best. We all have our limitations, and we need to know where to put ourselves where everybody gives their best.
Hire open people. Make sure they have a positive attitude and they’re open to learning they don’t have that attitude that they know everything. There’s no such thing as knowing everything. Even with the years I have of experience with this business, I know you learn something every day. People who act like they know everything, they are not the kind of people you want around your company.
Foster communication. Be involved with your operation. We need to be able to talk to our people so they don’t feel there are barriers to come talk to us if they have a problem, issue or an idea on how to improve. Don’t make them feel like there is a separation or distance between you and them or between the managers and the people.
Make them feel that they are important to your process and your system that they are being taken into consideration and not just being criticized or blackmailed because they come talk to you. I don’t want them to be reprimanded if they bring up issues.
Be very honest and always do what you say you’re going to do. Be open with your people. Always tell them the truth, good or bad, so they also tell you the truth, good or bad.
Empower employees. Give people responsibility, and you have to give them a good list of their responsibilities so they know what they need to do. Give them the authority to make decisions, but you have to be careful in knowing and realizing how much power to give them.
There are some people that need time to be able to get to that point. You have to sense people, and that’s why it’s important that you talk to them.
Have a good reporting system. You have to have meetings with people and know and ask how people are doing because as you grow, you can’t talk to everybody, but you can talk to your division managers. They are the ones that are going to tell you how people are doing, and you need to ask.
Remember, it’s important that they feel they are important to the system. That makes them do better when they feel they’re work is being recognized.
Understand how personal issues affect professional work. Ask [employees] about their families. Sometimes they have family problems, and that affects their production and the way they do business.
If they’re under a lot of pressure at home for whatever reason, don’t make them have to make an important decision because they’re probably going to make a mistake. That’s when you have to help them.
Coach people. Recognize when they do something good. When they make mistakes, instead of pointing fingers and trying to blame people, help solve the issues and work as a team to resolve the issues. They all have my mobile phone [number], and if there’s an issue, they can call me anytime, day or night, and I’ll help them, but we also need to sit down afterward and see why we had this issue and how we can avoid having the same problem.
That’s how they will learn to respect you and work more as a team. We all have problems, but it’s how you resolve problems that makes you different. When you use a positive attitude toward obstacles and problems, that helps resolve the issues more smoothly.
HOW TO REACH: Azteca-Omega Group, (214) 905-0612 or www.azteca-omega.com
Smart Business asked Audrey E. Mross, of the Dallas law firm of Munck Butrus, P.C., where the lines should be drawn.
What aspects of employee computer usage are most troubling to employers?
The most common worry is ‘cyberslackers’ whose workplace productivity has an inverse relationship to the amount of time they spend visiting Web sites and sending e-mails. Go to www.bored.com for an eye-opening list of ways to waste time on a computer, including virtual Bubble Wrap to pop. Less frequent but more serious offenses include transfer of trade secrets, violation of copyrights, trading in child porn and other illegal activities.
Can a firm prohibit all personal use of its computers?
In most cases, no. Selective enforcement of a ‘no nonbusiness use’ policy will set the company up for an unfair labor practice (ULP) charge under the National Labor Relations Act when the employer attempts to stop protected activity. For most companies, it’s not realistic to prohibit all personal use of e-mail.
What kinds of limits do make sense?
A good policy should expressly incorporate the company’s equal employment opportunity and harassment policies to make clear that images, voice and text, which are intimidating, offensive, profane or hostile based upon gender, race, color, national origin, religion, disability, age or any other protected status are off limits. The employer’s systems should not be used to conduct a personal business enterprise, to spam others, to threaten violence or to express views that could be seen as the view of the company.
The systems should be used in ways that are consistent with security measures, which may include prohibiting employees’ access to their personal ISPs (e.g., Yahoo, AOL) from employer-provided systems, where such access would thwart firewalls and similar protective measures. Excessive personal use that monopolizes bandwidth or affects employee productivity is another act that could result in corrective action, up to and including discharge from employment.
Can the company be held responsible for its employees’ bad acts?
Yes. The doctrine of respondeat superior (‘let the master answer’) is frequently used to hold employers responsible for the mis-deeds of employees while in the course and scope of their employment. Negligence theories are used in cases where the misconduct took place outside of the employees’ normal duties.
For example, where an employer had knowledge that a worker was receiving and sending nude and seminude images of his 10-year-old stepdaughter on his work-place computer in order to gain access to child porn sites, the court found negligence and stated that the company had a duty to further investigate and take prompt and effective action to stop the employee by terminating his employment, reporting him to law enforcement or both (Doe v. XYC Corp.). The court remanded on the issue of whether the child could prove harm from the transmitted photos, but the employer withdrew its petition and the parties settled.
Is there any privacy protection for employees using a company system?
This is an area where unrealistic expectations collide. Employers often think there is no privacy, since the equipment used is theirs. Employees often think that there is privacy, especially where they have a secret password to access the system.
A few years ago, the Texas Supreme Court found an employee did have a reasonable expectation of privacy where the employer provided lockers for storing personal items but allowed the employees to bring their own locks (and not provide the combination or a spare key to the employer). The analogy to company-provided computers and employee-provided passwords is not much of a stretch. Employers must advise employees, in writing, that there is no reasonable expectation of privacy in use of the employer’s systems and employers should have written consent. This is normally accomplished by having an electronic communications policy in the employee handbook and securing a signed acknowledgment from each employee. As additional proof of consent (which is an absolute defense to a claim of invasion of privacy), some employers add a ‘no privacy’ reminder to the log-on screen on computers so the consent refreshes on a daily basis. Employers should also ask and keep records of employee passwords to under-cut privacy arguments and for practical reasons, such as accessing needed information when the employee is absent or has quit.
AUDREY E. MROSS is a shareholder at Munck Butrus, P.C. leading the labor and employment group. She combines prior experience as a human resources professional with the current practice of law to provide preventive measures and practical solutions to employers. She authors a monthly e-newsletter, Legal Briefs for HR, which is available on request at firstname.lastname@example.org.
The most valuable asset to an attorney is time. If his or her law office is not adequate, either in space or efficiencies, billable hours are wasted.
That is when a knowledgeable and experienced real estate broker should enter the picture, according to Bo Estes, Senior Vice President, Office Services Group for Grubb & Ellis Company.
“If the location is obviously lacking and the senior partner does not hire outside brokerage services, he’s basically utilizing his own time to do something that a real estate professional specializing in tenant representation could do for him more effectively,” says Estes. “A tenant rep broker brings a wealth of knowledge to the table that can only enhance the whole lease process and add value to the decision that the firm finally makes.”
Smart Business talked to Estes about the factors that must be considered when locating or relocating a law firm.
What are the most common reasons why law firms seek your assistance?
Most of the time, it deals with a lease that is either expiring or nearing expiration or there is a need for expansion. In the case of an expansion, the law firm might be looking into growing an existing office or entering into a new market. In either case, they will need timely and accurate information in order to make good decisions. There are also times when the client wants to take advantage of an opportunistic market; for instance, when a current lease rate may be higher than what the market currently demands.
Do these occasions include both renegotiation of a lease and seeking a new lease?
Yes. In the Dallas market, it has been very common to approach an existing landlord and renegotiate a lease to cut costs. Landlords are eager to renegotiate because they want to add more value and stability to their building by securing tenants for a longer term.
What are some factors to consider when evaluating office space?
Over the past five years, a lot of law firms have taken a hard look at their space requirements including layout, building infrastructure and how the building is configured for technology. They typically decide that they need to right-size their space, or make it more functional and more efficient.
Because of changes in technology, law firms are also looking at fiber optic speeds, electrical requirements and accommodations that will allow for sufficient computer backup. To protect client information, the building must provide the necessary infrastructure for firms to install adequate technology backup for their servers.
What are some pitfalls that legal firms might fall into when looking for office space?
It is a big commitment when signing a 10-to 15-year lease. One of the most frequent pitfalls for a law firm is not leasing enough space for additional growth or not having options on future space negotiated into the lease. Another trap might be just the opposite: leasing too much space and not having the options to either reduce space or terminate the lease if, for some future reason, the firm shrinks.
What do real estate professionals have to know about clients to effectively serve them?
A broker has to have a clear understanding of the client without prying into any proprietary information. He or she will require a thorough understanding of the philosophy and goals of the partners and future plans. The questions a broker might ask include: What types of law do you practice? Which practices are in a growth mode, which are stagnant, which are dissipating? What locations what parts of town are priorities? Do you need to be near your client base? Do you want to be close to mass transit? What kind of image do you want to portray? Have you established a budget for your office space? Are you willing to write a check for improvements above and beyond what the landlord is going to offer in a tenant allowance?
What qualifications should a law firm look for in a real estate broker?
Experience counts and local market knowledge, as well as a familiarity with landlords and lenders, is critical. He or she must know what is going on in the Dallas area from the standpoint of where space is available, what kind of deals are being made, what kind of deals law firms in particular are securing, the various costs associated with being in certain buildings, as well as being aware of certain efficiencies.
Any law firm that is considering moving or opening a new location should take advantage of some of the outstanding real estate expertise in the brokerage community.
BO ESTES, Senior Vice President, Office Services Group, for Grubb & Ellis Company in Dallas. He solely represents tenants. Reach him at (972) 450-3326 or email@example.com.
Education: Bachelor of science degree, civil engineering, University of Texas at Arlington, 1978
What was your first job, and what did it teach you?
I worked in the oil field as a kid, as a welder’s helper. I was 13. It taught me the fundamentals of the pipeline industry. My father worked in the field and that was one of the blessings I had growing up in the oil field. He always saw to it that we had summer employment. It taught me a little bit about the pipeline business, the actual construction of pipelines, which is the business I’m in today. ... I look back at my childhood, and I would challenge you to find anyone who had a better childhood than mine as far as upbringing goes.
What’s the biggest business challenge you’ve faced, and how did you overcome it?
The energy business has cycles, and I’m confident it will remain this way forever. There is the cycle that occurred in the late 1980s and early 1990s, and it was an enormous challenge. The industry got away from the fundamentals. The pipeline business should be very fundamental, it should be just volume and margin. It really should be simple. We moved into this whole whiz-kid chapter in which the fundamentals left the industry, and it was more paper transactions. The oil patch was being run by Stanford-and Harvard-MBA types, and it was not a time I enjoyed.
What is your personal work philosophy?
There are two ways to lead, and that’s by intimidation, which is the most commonly used form of leadership, which is, ‘You do this or you get fired,’ or, ‘You do this or you won’t get a raise.’ It clearly works. It’s the most commonly used. The other style is leading by example. Every day, I try to lead by example. Sometimes it works, and sometimes it doesn’t.
What is the best business book you’ve read, and why did you like it?
I recently started a book called ‘Twilight in the Desert’ [by Matthew R. Simmons]. It’s about the decline of oil reserves in the Middle East and the impact it will have on the nation. It could be this cycle we’re seeing in the energy business is real, and I’m beginning to think it might be. I’ve not seen this trending of healthy commodity prices sustained in my career.
Randy Hardin often jokes that he started a business so he could wear shorts to work. But while there’s some truth to that, he mainly wanted to make Universal Power Group Inc., a supply chain management company, a place where people feel comfortable working and where they would want to stay. When people enjoy their work, they’re more productive, an approach that has yielded UPG 37 percent revenue growth over the last two years, ending 2006 with $92.6 million in annual revenue.
Smart Business spoke with this relaxed president and CEO about how flexibility helps retain people and grow companies.
Q: How do you find good people?
One way we’ve done it is through our existing people. Some people feel it’s not a good idea to mix friends and family and business, and we feel exactly the opposite.
If you’ve got good people, and they’ve got integrity, and they’re hardworking, then why wouldn’t you want to look at someone they’re related to if they have the same qualities?
Q: What qualities do you look for?
Honesty. People just throw that word around, but we want people to be honest even if it hurts. We have to be very honest with our customers, and even if that means we lose an order, that’s just how we need to be.
The other thing is we hope to treat people the way we’d want to be treated. That’s a key thing of employees, that you’ve got people around you who treat the business as if it were their own business.
Q: How do you gauge those characteristics?
It’s not the easiest thing in a short period of time. There’s lots of things that are an indicator about people’s character.
You can pick up on the way a person feels about his or her job or their future. Ask people, ‘Where do you see yourself in not only the job you’re in now, but where do you see yourself if we were to hire you?’ Ask questions about their ability to get along with other people, how they deal with adverse situations, how you deal with a situation where someone has said some things about you that were untrue.
Q: How can you tell if someone will fit with your team?
Look at where they came from. Were they there very long? What’s the reason for them leaving? It’s one thing for a person to leave because they want to better themselves either financially or position-wise, and it’s another that they’re leaving because they couldn’t get along with the people they were working with.
Do your homework, and find out why they’re leaving the company they’re with. Find out how well they worked with the team they were with.
Q: How do you retain and empower people?
The obvious one is through money. Everyone gets motivated by money. I also wanted a place where we weren’t so black and white. We have some single moms. Do they have X amount of personal and vacation time? Yes. But should we be flexible as managers and directors and as fathers and parents? Yeah.
Be a little understanding when that mother needs to get off because the day care says, ‘Come pick your kid up,’ and they have no family to help them. Or that single dad, or his wife works, too, say, ‘OK, the kid’s got a soccer game at 4 o’clock, and he’d like to go see him play because he’s always on the road.’
It’s little things like that where we don’t just want to be the people that talk about it. We want to say, ‘You know what? You don’t need to write that down as time off just go watch your kid play soccer.’
Q: How do you get the right people in the right positions?
You find that out by trial and error. Sometimes when you’re a young company and you’re growing, you reward people who helped you grow. In rewarding them, you’re actually not doing them a favor, and you’re not doing the company a favor. You put someone in a position of authority because they paid their dues, and then you find out they don’t have the skills for that job, so it hurts them, and it hurts you.
Q: How do you know when people aren’t working out?
You find out when things aren’t getting done, or you don’t see the performance in a certain area. Analyze it and say, ‘Why is this happening?’ Ninety percent of the time, it comes back to people.
If you’re seeing one particular person who never seems to hit their time line, bring that to their attention. Ask them, ‘What can help you meet these time lines? Do you not have enough resources? What is it that we’re doing or not doing that could help you meet these time lines, or is this something you feel we need to give to someone else?’
A lot of times, someone will say, ‘You know what? This is just over my head.’
HOW TO REACH: Universal Power Group Inc., (866) 892-1122 or www.upgi.com
In the world of technology and customer service, Fortune 500 companies are finding that customers still prefer to speak with a real person. After all, high touch always exceeds high tech when it comes to influencing customer satisfaction and retention. Not surprisingly, then, talented and engaged customer service associates are in high demand, from retail sales to tech support. Differentiation through customer service provides the greatest opportunity to impact ROI with customer retention and selling new products and services.
Top management in an organization must be aware of the pulse of the organization’s customers. Consequently, call center employees should be valued for their interaction with customers and encouraged to give management feedback on customer concerns.
Smart Business talked with Yvonne Abel, Division President of Delta Dallas Call Center Staffing, to gain some insight into the impact of customer service staffing today.
What are the skills required for customer service call center positions?
Call center positions require a blend of technical proficiency and interpersonal soft skills. Being detail-oriented with good written communication skills is also at the top of the list. Bilingual fluency, especially in Spanish, is a plus. And, since positions vary within call centers, each one has to be profiled to determine the skills required for that position. Some may require higher-level technical skills for providing tech support and analytical skills for problem solving the customer issues. In other positions, sales skills are required for upselling. These positions require people who can multitask while speaking on the phone and working on the computer.
How do search firms assess candidates’ skill levels?
To determine the skill level of candidates, it is important to use a multitiered interview process that includes a first step of prescreening the candidate for applicable experience and verbal communication skills. The second tier is evaluation of computer skills, such as MS Office, data entry and keyboarding, through a validated assessment program. Today’s assessments include customer service soft skills, such as call etiquette, inbound/outbound sales and problem solving. Once the candidate’s skill level is determined, behavioral assessments and interviews are the best predictors for on-the-job performance. Getting to know the candidate’s interests and experience is key to confirming he or she is the right person for the job.
How can search firms help companies find qualified candidates?
By far the biggest recruitment challenge is having resources to continuously attract applicants for call center positions. Many companies use a variety of methods; most do not understand recruitment and use the hit-or-miss process of working with job boards or advertising. These methods can generate a plethora of candidates. However, the time invested by hiring managers detracts from the company’s core functions and results in ‘filling a seat’ versus finding the most qualified and best candidate for the job.
Finding a business partner that specializes in staffing for call centers allows the hiring manager to interview only pre-screened, qualified candidates, resulting in a focus on the specific skills and experience needed to service customers. Treating the recruiting process as a core competency is a necessary step toward meeting and exceeding call center and organizational goals.
What can call centers do to retain employees?
In the call center environment, taking the time to recognize individuals and teams reinforces the performance desired, especially when it is done by a C-level executive.
Career-pathing shows employees that future opportunities await them. Without a clear path for the future, employees will look elsewhere for their next opportunity. Ongoing training is an investment that will provide ROI with enhanced customer satisfaction and retention. The key to employee retention is developing new skills faster so they can take on larger opportunities successfully.
How does all of this positively impact a company’s bottom line?
The enterprise call center can get new customers, keep existing customers and grow profitable customers. Research shows that far and away the biggest single factor for customer loss is poor customer service. Since it costs approximately five times more to attract new customers than to retain current ones, it is easy to see how important the customer service role is to a company.
Hiring and retaining the right people reduces training costs. Statistics show that it costs one-third of the annual salary to train a new employee. Retaining employees with knowledge about customers and products means they can be more creative in providing customer service that differentiates a company from its competitor, resulting in customer retention.
YVONNE ABEL, SPHR, is Division President of Delta Dallas Call Center Staffing. Reach her at firstname.lastname@example.org or (972) 788-2300.
Technology is a tool to support business, and like any tool, it must be used correctly to get the desired results.
“Businesses see technology as some sort of panacea to solve their problems, but it won’t,” says Michael J. Savoie, Ph.D., director of the Center for Information Technology & Management, The School of Management, The University of Texas at Dallas. “You can’t buy a hammer, place it on a job site and expect it to build a house. Someone has to know how to use the hammer to build the home.
“CEOs frequently lament that if they had better technology, they’d be a better company,” he continues. “But the realities are that 1) people program computers, and 2) you have to know what you want to accomplish before you identify the right technologies to help you get there.”
Smart Business spoke with Savoie to learn how companies that properly integrate technology into their business can gain a competitive advantage.
What are the four levels of information systems?
An information system is any system that is used to organize data, which is then disseminated to the appropriate people within an organization. Data is everything anything you can see, touch, feel tangible or intangible. The information system is anything that moves data from one point to another with common reference points.
Data and information are the first two levels of an information system. The second two levels are knowledge and wisdom. Knowledge meaning the information the system collects that is actually used, and wisdom meaning knowing how and when to use the information. Most organizations operate within the first two levels but really need the second two to succeed.
How can companies move from collecting data and information to actually using it effectively?
Five factors must be present. You have to have the right data, in the right place, at the right time, with the right people, in the right format.
The right data involves having the right team determine what information the system needs in the first place in order to help you run your business effectively. The right place means your people can access the information wherever they are, especially while in the field making decisions. The right time means you want real-time data on operations of your business on a daily basis so you can make decisions for the company today, tomorrow, this week. The right people means that those who need the information receive it and those who don’t, don’t. This is also a security issue you need to ensure that only the people who are supposed to be seeing the information are indeed the only ones who have access to it. The right format means that the information is organized in a way that is easy to extract knowledge from, rather than, for example, pages of numbers where knowledge is buried like a needle in a haystack.
What can companies do to improve?
Identify the underlying needs you are trying to meet waves versus trends. Understand how these needs interact. Look for solutions that meet these needs. Look for technology that supports these solutions. To do this, assemble a working group of people who will address the company’s technology needs on a continual basis. The team should be cross-functional, representing the vertical and horizontal layers of the company. Teams should move through a ‘process ladder’ consisting of the following steps: Identify the business’ processes current and desired; analyze needs and identify the gaps; implement a strategy to address the needs and gaps; identify applications that support the strategy; identify hardware necessary to support the applications.
Before investing in any software or hardware, work the steps. Map out the flow of information in your organization. Then take the map and determine what you want to build, deciding on formats based on what you need. This helps you define what software to buy. Then and only then decide on the hardware. Do not let hardware dictate. Don’t buy a system and then try to force fit your company to it.
Finally, appoint someone in the organization responsible for ensuring that the business processes of the company are integrated with the technology, and that the business processes not the technology are driving the decisions. In some companies, this is the CEO, the CIO, or the CFO.
MICHAEL J. SAVOIE, Ph.D., is director of the Center for Information Technology & Management, The School of Management, The University of Texas at Dallas. Reach him at (972) 883-4755 or email@example.com.
The Texas Legislature has reformed its tax structure to supplement property taxes with business taxes to fund its education system. One component is a new business tax called the taxable margin tax. Consequently, businesses operating in Texas may be liable for substantially different tax bills when they make payments in May 2008.
Before the margin tax was introduced, Texas business owners were liable for a franchise tax, which was relatively easy to avoid by using loopholes. Some Texas businesses did not pay any taxes at all under its provisions. The legislature eliminated some of these loopholes with the margin tax.
Smart Business spoke with Patrick O’Shea of Grant Thornton LLP to learn about the Texas margin tax, how it will affect business owners and how they can comply with it.
What is the gist of the margin tax?
The margin tax essentially replaces the franchise tax. It is a tax on taxable margin, which is generally gross revenue less the greater of cost of goods, compensation or 30 percent of gross revenue. Being a tax on margin, even companies with net operating losses will likely be liable for some amount of margin tax.
How is the margin tax calculated?
The margin tax is based on a percentage of ‘taxable margin.’ It is the lower of total revenue minus cost of goods, total revenue minus employee compensation and benefits, or 70 percent of total revenue. The taxable margin is then apportioned by the percentage of the entity’s business done in Texas. This percentage is calculated by dividing gross receipts from business done in Texas by gross receipts from business done everywhere. The margin tax rate of 0.5 percent for taxable entities engaged primarily in retail or wholesale trade, or 1 percent for all other taxable entities, is then applied to the apportioned taxable margin.
Service businesses are not eligible to use the cost of goods sold method. In fact, service providers that were generally exempt under the franchise tax because of the way they were organized are expected to be impacted detrimentally by the new tax.
Does the margin tax apply to all Texas business entities?
Even if they are not taxed under federal income tax laws, they may not be exempt from paying the margin tax. In addition, the tax is computed and reported on a combined group basis, which is a significant change. Entities with gross receipts of $300,000 or less (inflation adjusted every two years), estates, escrows, nonprofits, insurance companies and passive entities are exempt. Sole proprietorships and general partnerships that only have human beings or the estates of human beings as their partners are not taxed under the margin tax law, either.
What does the combined reporting requirement mean to business owners?
First, this is an entirely new concept in Texas. Related entities that are unitary businesses with greater than 80 percent direct or indirect ownership (legislation passed to change to 50 percent, but not yet law) must compute and report the margin tax as if it were one taxpayer. This will now include unitary companies that did not file Texas franchise tax returns due to a lack of nexus in the state. Essentially, combined reports are very similar to the consolidated returns filed for federal income tax purposes. Even if affiliated companies do not experience increases in their tax liabilities to the state, they will certainly have greater compliance complexity.
When should companies start taking steps to deal with this new tax?
Hopefully they already have. Although the tax is effective Jan. 1, 2008, it is based on the activity of companies as early as June 1, 2006. That means all taxpayers are already in the years on which the tax will be based, and there is not one specific solution to minimize their margin taxes. There is a transition provision regarding the effective date that was passed in the current legislative session (currently under consideration by the governor) that may allow entities not previously subject to the old franchise tax to terminate prior to July 1, 2007 and, at least, avoid the margin tax through that date.
Can financial services advisers help businesses deal with the margin tax?
They can help business owners understand the margin tax impact to them and comply with its changes and clarifications, such as the combined changes. They can also assist with the proposed transition rule currently being contemplated and the wind up of structures that are no longer necessary to minimize the old franchise tax. And, they can start helping them prepare for and minimize the future ramifications, such as the audits on the tax, which will start four years down the road and will likely be messy.
PATRICK O’SHEA is tax partner State and Local Tax Practice, with Grant Thornton LLP. Reach him at (214) 561-2356 or firstname.lastname@example.org.
Kip Tindell, co-chairman, CEO and one of the founders of The
Container Store Inc., wanted to build a strong team of great people
that could help grow his store of home and office organization
products into a national chain of stores dedicated to helping consumers organize their lives. Since the store’s founding in 1978,
he’s done that, and he’s proud of what the company has achieved.
But Tindell says the success has come as a result of one key focus:
quality. He wants his stores located in the very best locations for
his potential customers, even if that means waiting for the right
location. More important, he only wants the best employees, even
if it means spending more — a lot more — than the industry average to get them.
“The most difficult and frustrating and rewarding and wonderful
part of any business is the people aspect of it,” Tindell says. “I’m a
big advocate of the fact that you can’t achieve uncommon results
unless you are surrounding yourself with people who are awesome. If you’re going to have a golf team, why not have Tiger
Woods on it?”
The $550 million Dallas-based retailer has 39 locations and 3,500
employees, and has never shuttered a store. The company has
grown at a steady pace of 15 to 20 percent annually.
Tindell’s commitment to quality calls for careful analysis and a lot
of patience, regardless of whether it’s real estate or people. For
Tindell, rushing would lead to a dilution of the company’s quality,
and that, in turn, would put the entire company in jeopardy.
Great customers make great employees
The Container Store’s success starts with knowing its customers,
and knowing them well. By simply collecting phone numbers of
customers at the checkout point, the store knows who shops,
what they buy, where they live and even their average income.
Tindell says The Container Store’s strongest customers have a
household income of $100,000 and up, are highly educated and
highly likely to be female.
And here’s what’s interesting: Tindell sees those people as great
potential employees. Tindell says if they like shopping at the store,
they’ll love working at it, and he’s been proven right, time and
To capture those potential employees, The Container Store’s
staff members have little cards on hand that they are free to hand
out any time they meet someone whom they believe would be a
great employee. The card invites the recipient to apply for a job at
the store, and this doesn’t just happen when a store has openings,
The Container Store invites anyone to apply at any time and
begins training new employees before others leave so the company’s always ready when a vacancy occurs. Not that it happens
much: Annually, the retailer’s turnover is in the single digits. The
company hires about 6 percent of those who apply.
“We always have backups,” Tindell says. “We are very big on succession planning. I run across a lot of great retailers and business-people that I’ve admired over the years that, as they became older,
they didn’t have any succession planning, no one chosen to replace
themselves or their top people.”
Almost two decades ago, Tindell adopted the one-equals-three
philosophy, where one great person is the equivalent of three good
ones. Instead of staffing a store to the max, Tindell’s philosophy is
to hire only the very best people.
“If you really believe that, you can afford to put your money
where your mouth is,” Tindell says. “It takes a lot of bravery to pay
50 to 100 percent above industry average, but it works because
everybody wins. The employee wins because she is getting 50 to
100 percent more money than someone else might pay her, and the
company wins because it is getting three times the productivity for
only 50 to 100 percent more pay, and the customer wins because
they are getting this really great person who is thrilled about their
compensation and loves to come to work every day.”
Employees aren’t paid on commission, because that tends to
encourage them to sell more than a customer needs. Instead, they
are trained to help customers solve problems.
A good example is a customer who wants something to organize
his or her shoes. The employee is trained to ask deeper, more probing questions of the customer about that person’s entire closet. If
his or her shoes are disorganized, chances are, so is that person’s
closet, and The Container Store sells a variety of products that can
help tame that troubling, disorganized beast.
Ultimately, the store will sell more products by helping customers solve problems rather than just meeting the immediate
need that brought that person to the store, and Tindell says the
customer is happier in the long run.
Part of what keeps employees working for The Container Store
is the company’s level of investment in them. It spends about 240
hours training employees before they start work, and continues
the training as they continue to work so that they are always up to
date on the latest products.
“You can’t lose them once you do that,” Tindell says. “Once you
have that kind of investment in an employee, you need to have a
very, very low turnover rate, which we do.”
That’s at least in part because of a few great perks. Besides its
higher-than-average pay, employees receive a 40 percent discount
on products. Because many of them are already storage aficionados, that’s a really nice perk, and it encourages them to continue to
get to know new merchandise as it comes in. Tindell says the more
merchandise they know, the more products they can demonstrate
and the more customers will buy.
For a new store, Tindell has a very deliberate process to staff it.
The company opens up a nice office near the store that’s set up as
if it is a location of The Container Store. Applicants get the look
and feel of how the store will operate.
Before their group interview, applicants are given a homework
assignment: Find a product on the company’s Web site or in its
store that they like and give a presentation on how the product
works and its major features. Applicants are interviewed in
groups, and product demonstrations take up most of the initial
interview time. That shows how potential employees sell and
how they interact with others.
“They get a good flavor in this group interview for the quirky
culture of The Container Store,” Tindell says. “People leave the
interview and go home and say, ‘Oh my God, I hope I get this
job.’ It’s a thrilling process.”
After the first cuts are made from the group interviews, the
company’s representatives from its home office and retail locations personally interview potential associates in several oneon-one interviews.
“We start months in advance,” Tindell says. “We hire our
employees a couple of months before the store opens so that
they are fully trained. They participate in the set-up of the
store. Most retailers hire employees a day or two before the
store opens because they don’t want to pay them for the previous month or two. We hire them as early as possible.”
Group interviews continue year-round, even though stores
might not have openings, to ensure every store has enough
employees whenever they are needed.
Tindell says one key change has helped the company redefine
how it thinks about recruiting: Recruiting is under marketing
at the company; The Container Store has no human resources
“We just wanted to break the mold on that whole concept,”
Tindell says. “The people who are in charge of recruiting for
the company understand that it’s not their job to go out and
recruit great people for The Container Store. It’s their job to
make sure that the rest of us are constantly recruiting great
people to work for The Container Store. A key part of everyone’s job is to find other great people to come and work for
The Container Store.”
The recruiting card is a handy tool for doing that, even if it
means giving them out at a family gathering.
“We are happy to have friends, cousins, relatives,” Tindell
says. “People know which of their cousins are great and which
are not. ... It takes a little bit of boldness to recruit a soccer
mom at a soccer game. We are huge on the concept of our customers make our best employees.
“Employees get recruited right off the sales floor. We really
want our employees to be people our customers can relate to.”
Part of what keeps The Container Store strong is knowing its limits. Similar to his philosophy on employees, Tindell says he’d
rather have one great location than three good ones. He concentrates on finding the very best retail locations for stores, which, as
it happens, are in plaza-style, outdoor shopping centers that allow
the stores to be on one level.
Customers are buying large, bulky items, in many cases, and
wouldn’t want to carry them around a mall.
“There is a limit of how fast we can grow,” Tindell says. “We are
not limited by capital. Money has never been our limiting factor.
Our limiting factor has always been the people aspect of things. We
have learned we can grow at 15 to 20 percent a year. It’s right for
us. We take the best real estate development locations we can
Currently, The Container Store has some 29 markets it is examining, and the company waits patiently for the right space in those
markets. And until it taps out the U.S. market, Tindell won’t consider international markets, as he says that’s a whole other type of
market. He says there are more than 100 cities he’d like to locate
in, and as he sees it, that means The Container Store has decades
of potential growth ahead of it without ever sacrificing its quality.
“It’s the most exciting period in our history,” Tindell says. “We are
in this adolescent stage. Even though we’ve been in business since
1978, everything just keeps getting better. Now, everybody wants
us in their shopping center.
“That wasn’t always the case. Now, everyone seems to want
to work for us. The average person we hire is better and better
and better. The products we are able to develop with manufacturers are getting better. ... It’s so much fun and so exciting
because it just keeps snowballing. We are really hitting our
stride right now.”
HOW TO REACH: The Container Store Inc., www.containerstore.com
Lead by example. You have to show people. People follow leaders that are actually doing something.
During the summer, I like having Friday afternoon off to go play golf, so I made a new rule that everybody gets Friday afternoon off. If I left every Friday at noon, I would expect everybody else to do it.
If you want people here at 8 o’clock, you’ve got to be here at 8 o’clock. You want people to work over the weekend, you’ve got to be willing to work over the weekend.
Don’t just tell people to do it. The people that come up here and work on the weekends, if they didn’t see me up here, by about the third weekend they’d go, ‘Well, if it’s not that important to him, why’s it important to blow my weekend?’ Be willing to do it yourself. If you’re not, then you’re just not the leader.
Empower people. I hire smart people and count on them to get the job done. I have what I call the big-boy and big-girl rule. Everybody’s a big boy and big girl when they come to work here.
I hired an executive vice president, and I said, ‘We’ve got a meeting in San Francisco, and he started in ‘What flight are you on? When are you leaving? Who’s going to pick you up? Where do we go when we get there?’ I said, ‘No, no, no, big boy. The meeting is at 3 o’clock in San Francisco. Here’s the address. I assume you can get there.’ Everybody’s a big boy [or] big girl. They can figure it out.
It gives them a freedom to get it done. They feel like they’re in control. Nobody’s dictating to them how to get it done. Just say, ‘Here’s what we need to accomplish,’ and you show them the mountain and hope they get to the top through their own devices.
If I have to go do it, why did I hire them? If I really have to do it, then we have to talk about splitting your salary with me. That gets their attention.
Lead people away from micromanaging. Back off don’t micromanage. Let people do the job you hired them to do.
Everyone here is an intelligent person. If they weren’t, we wouldn’t have hired them, and if they’re not intelligent enough to get the job done, we don’t need them anyway.
We have some people that still are dead set on micromanaging and making sure everybody knows exactly every step they need to do to accomplish a goal. Forget it. Keep working on them because people who are micromanagers, it’s in their DNA.
It’s not something you cure overnight by any stretch. It’s just how they are, so keep reminding them to back off. We don’t do training on micromanaging. You can’t train them. It’s just a style. Hope they pick it up by watching.
Define the vision. Be very clear, concise and specific. You cannot be vague. The vision itself is, by the very nature, vague, but then you have to take the next step.
What does that mean, and what do we have to accomplish to achieve the vision? You have to be extremely specific.
Let them ask as many questions as they want to. I try not to speak to them too long without, ‘Stop me anytime if you have a question, you don’t understand or there’s something that’s not very clear.’
Overcome cultural barriers in international business. The challenge is communicating enough, communicating the right message and in the right form.
When you communicate, don’t make references that people around the whole world have no idea what you’re speaking of. You can’t use references like, ‘We want to get the ball over the goal.’ They don’t quite get that in Beijing. I started talking to people face to face, and they’d look at me like I was from Mars. It gave me a little hint that they don’t have a clue what I’m talking about.
It also changes your jokes. Every time I went to Europe, the employees would say, ‘OK, you’re not in the U.S. anymore. We don’t think the way Americans do.’
You just have to force yourself. When you get to a new country, go along with them. I always have them take me out to dinner and give me a tour. Just keep a smile on your face, and go look at churches. I’ve seen a lot of churches especially old churches.
Own your ideas. I started a company called 800-FLOWERS years ago. I got the phone number, went out and raised a bunch of money.
The guys that I raised the money from decided I was too young to be the CEO. They told me I had to go hire a CEO, so we did. I brought this guy in, and he immediately ran the company into the ground.
If it’s your dream, your vision, you can’t pass that on to somebody else. You cannot translate that. You have to go with your own gut. The guy who cares most about it is the guy whose idea it is, so when somebody comes to me in the company and says, ‘Here’s an idea for a new product,’ I turn around and say, ‘Perfect idea it’s yours. You go make it happen’ because nobody cares more than the person that has the vision and the idea.
You cannot go hire emotion. You can’t hire drive. If it’s your vision, your idea, you have to go do it.
HOW TO REACH: Pegasus Solutions Inc., (214) 234-4000 or www.pegs.com