Detroit (1202)

In business, as in life, there are times when demands for my time, energy and resources can be overwhelming. Business can be up or down, and a leader is constantly bombarded for decisions, meeting requests and information.

I believe Stephen Covey’s Time Management Matrix can help prioritize the most important and urgent tasks. I love this quote by Covey: “I am not a product of my circumstances. I am a product of my decisions.”

By embracing Covey’s message, I learned how to be selective with my choices.

Important and non-urgent actions take discipline, and include long-term planning and re-evaluating strategic goals, which are true measures of our success: growing revenue, profits and selling franchises to help people achieve the American dream of business ownership.

I still refer to Covey’s matrix, and over time, have developed my own nine principles to conquer an overwhelming workload:

1. Ask what would happen if a task does not get done, and be brutally honest. 

The answer will often surprise you.

2. If your To Do list has too much on it, consider what can be postponed for the next 90 days, six months or year.

Learning how to speak Spanish and driving down Route 66 are on the list of things I would like to do, but not on the list of what I have to do.

3. Calendar items blocked out for multiple days should be scrupulously reviewed. Upcoming trips, vacations and meetings requiring travel should probably be rescheduled, alleviating some of the stress you are feeling.

4. Perhaps most of the items on your list are critically important and can’t be postponed. Look at them with a fresh perspective. It sometimes feels like only you can accomplish certain tasks, but you have built a great team. Utilize their talents, trust them to follow through and communicate their progress.

5. Call on outside resources to get through an exceptionally hectic phase. Think about what role would help you get to the finish line. Whether it is a life coach, consultant, personal assistant or temporary, executive-level individual, use the network you have built to mobilize support.

6. Some projects are extremely important but are not the most exciting. If there is any way to make the work more fun, you will enjoy it more and have a better outcome.

7. If you are doing everything you can and it still seems you may miss the deadline, stop and ask yourself if the deadline was even realistic.

If it can be delayed and will still work, then make the decision to change it.

8. Get support and commitment from your team and your family. Your spouse can be incredibly helpful by simply supporting your schedule as you work through a challenging time in the office.

9. Finally, the most powerful tool is to just say ‘no’ to any new tasks or calendar invitations until you are “caught up.”

David McKinnon is the co-founder and chairman of Ann Arbor, Mich.-based Service Brands International, an umbrella organization that oversees home services brands, including Molly Maid, Mr. Handyman and ProTect Painters. Email him at davidm@servicebrands.com

A growing business may think a national or large regional bank would best serve their business needs, but in reality, it is easy to get lost in the shuffle. As big banks tend to cater to big business, community banks offer many advantages as a dedicated business partner.

A local bank is knowledgeable about the community in which a business operates and can make quicker decisions from a local perspective instead of relying on decision-makers in another city or state. Business owners many times are able to talk directly to the head of lending or the president about their business.  

“When considering where to bank, look no further than around the corner. Community banks only thrive when their customers and communities do the same, so taking care of their customers and looking out for the best interest of their community is inherent in the way community banks conduct business,” says Gene Lovell, CEO and president of First State Bank.

Smart Business spoke with Lovell about why community banks might be the best place for your corporate and personal banking.

Why are community banks important?

A community bank understands firsthand that businesses are the backbone of a local economy. If a community bank is to succeed, local businesses must do the same. Local bankers take time to listen and understand a business owner’s vision because small businesses are the bank’s mainstay.

Large banks are not tethered to the places they operate. Too many times, the deposits that national banks collect from local residents and institutions leave the state to be invested in distant communities, countries, or on Wall Street, far removed from local account holders’ interests.

By banking with a community bank, money is put to work in the surrounding area in the form of loans to residents and business owners. In addition, by banking locally, consumers and businesses ultimately invest in their hometown by stimulating the economy and creating growth.

How else are community banks different from national banks?

The ownership of the bank — and board of directors — is generally made up of individuals who live and work in the communities they serve. They are business leaders who are deeply ingrained in the community and are more likely to serve on other local boards, attend community functions and know area business leaders.

Their local knowledge of the market area provides a significant advantage for the bank and its customers. Because they are so involved locally, they can spot needs and talk to clients before they even walk into the bank. At the same time, business owners have better access to management. Bank decision-makers make personal visits and really get to know their customers. Staff doesn’t rotate to other locations or departments; when you walk in, you see the same people with whom you have already established a relationship.

Community banks also tend to heavily participate in U.S. Small Business Administration loan programs.

How else do community banks help small businesses?

The largest 20 banks account for 57 percent of all bank assets, but only 18 percent of their commercial loans went to small businesses, according to the Federal Deposit Insurance Corporation. While small and midsize banks, which together account for 22 percent of all bank assets, lent 56 and 33 percent, respectively, to small businesses. In addition, smaller institutions continued to lend to small businesses at a steady rate during the recession, when big banks abandoned the market.

What makes a community bank a better place to do business?

The majority of community banks remain among the most financially sound in the country, because of conservative management practices. Where the federal government was quick to bail out ‘too big to fail’ banks during the economic crisis, most community banks were left to fend for themselves and came through the crisis as stronger banks. Most community banks were loyal and continued to lend to customers when many big banks did not. The community bank can be a safe haven from impersonal bank practices.

Eugene Lovell is president and CEO at First State Bank. Reach him at (586) 775-5000 or glovell@thefsb.com.

Insights Banking & Finance is brought to you by First State Bank

Monday, 30 September 2013 20:00

Ah!thentic Ambition

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Jack Butorac thought he had retired from the food industry in 2000, but a small Toledo, Ohio-based pizzeria was calling his name.

Monday, 30 September 2013 20:00

World Entrepreneur of the Year: Overcoming Challenges

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Monte Carlo has seen a lot of risk takers in its day, but not many have been like those who attended the recent EY World Entrepreneur Of The Year conference. These risk takers may use the term “gamble” every now and then, but they more often use their willingness to take a risk as a way to overcome the challenges of running a business.

The collection of the world’s most accomplished entrepreneurs at the conference were innovators, futurists, turnaround specialists and problem solvers.

From this highly qualified group of leaders comes some quality insights into rising above the challenges that could have blocked the success they envisioned for themselves and their companies. ●

 

“We have a phrase: ‘Market leaders need to meet market innovators.’ It’s a ‘two-fer’ because the innovators often need to have partnerships with the market leaders in order to really scale their companies. That could be as simple as a distribution agreement. It could be joint R&D. It could be capital. It could be a variety of things that form a partnership.

Likewise, if you think of firms like Procter & Gamble that have had edicts from the top that half of their innovation will come from outside the ivory tower, then those are the kinds of opportunities that we hope to be able to continue to bring.

Go and find those innovators … and likewise for the innovators, make sure your reach out and look for strategic partnerships that help your business grow.”

Bryan Pearce, Americas Director, Entrepreneur Of The Year and Venture Capital Advisory Group, EY

 

“Cost pressures are always high. What we need to make sure we do is continue to innovate our audit services and all our services to make sure we make maximum use of technology. We also need to make sure we take advantage of both time zone arbitrage and cost arbitrage where talent zones are present.”

Jim Turley, retired global chairman and CEO, EY

 

“The drive to always want to get better and do more is what keeps me going. It’s hard for me to turn it off and say, ‘That’s great.’ I’m always thinking about tomorrow. You can’t take things for granted in our business.”

Corey Shapoff, president and founder, SME Entertainment Group

 

“When you have a monopoly, it slows innovation. It reduces competition and is generally not good for the market. Once you have an open Internet with no government operating on top of it, then I’m very optimistic about humanity when it comes to producing things.”

Sir Timothy Berners-Lee, inventor of the World Wide Web

 

“As a startup you go to the specialty stores first. That’s how you start and you grow and once you reach a certain level, then you go to the big retailers.

I didn’t want to do that. I wanted to go to the big retailers and be in the regular dairy isle. That was a crazy idea and nobody thought that would go, but at least we tried. When we tried, we convinced one retailer in New York. The result from that was we were able to expand to a couple of other retailers. After the second or third customer that we had success with for our yogurt, I knew it wasn’t going to be about selling, it was about making enough.”

Hamdi Ulukaya, founder, president and CEO, Chobani Inc., Entrepreneur Of The Year 2012 United States, 2013 World Entrepreneur Of The Year

 

“In our country, our main challenges are new regulations and new financial reforms that we have to comply with. We are getting together for meetings inside the bank in different areas to study each one of the reforms.

Also at the Association of Banking Industry in Mexico, we have an association of the 44 authorized banks where we get together in different commissions to make sure that we can modify some of the new policies that are going to come out later this year.”

Lorenzo Barrera Segovia, founder and CEO, Banco BASE, Entrepreneur Of The Year 2012 Mexico

 

“One of the main challenges is how to train the talent we have in Latin America. Latin America has 600 million people and 1 million IT workers. The next step is to train more people and convince people to adopt technology as a career. If you provide the proper entrepreneurial environment to that, maybe the next Google or Facebook can come from Latin America.”

Martin Migoya, CEO, Globant, Entrepreneur Of The Year 2012 Argentina

 

“One of the biggest challenges the industry faces is trying to figure out what the impact of the natural gas/shale gas revolution is going to have on us. Suddenly there is cheap natural gas, which is going to be more challenging for renewable projects to compete with. Rather than looking at it as an either-or world, you have to look at how the two technologies can work together.”

Jim Davis, president, Chevron Energy Solutions

 

“Zonamerica is a different kind of company, a business and technology park. But in general, we have a financial sector, we have 60 banks, a wealth of private funds, we have call centers, cell services and headquarters for companies that want to develop business in the region. The problem is all these companies require very qualified personnel. Our core purpose is to attract the best human resources to produce or offer the product. So we created a database and we have, at this moment, more than 24,000 people registered. Then these companies, according to the needs they have, can see and select the personnel they want. And then we also have schools to teach skills to prepare people for these kinds of employment.”

Orlando Dovat, founder and CEO, Zonamerica, Entrepreneur Of The Year 2012 Uruguay

 

“Zonamerica is a different kind of company, a business and technology park. But in general, we have a financial sector, we have 60 banks, a wealth of private funds, we have call centers, cell services and headquarters for companies that want to develop business in the region. The problem is all these companies require very qualified personnel. Our core purpose is to attract the best human resources to produce or offer the product. So we created a database and we have, at this moment, more than 24,000 people registered. Then these companies, according to the needs they have, can see and select the personnel they want. And then we also have schools to teach skills to prepare people for these kinds of employment.”

Orlando Dovat, founder and CEO, Zonamerica, Entrepreneur Of The Year 2012 Uruguay

 

“Probably the most difficult cost control challenge is managing staff salary software. There is a specific reason for that within our company — we are going through a system conversion, so when we acquire practices, they each have their different practice management software. Some are fully computerized; some are not computerized at all. We at one point had 18 different systems within our company. We have converted all of our 107 locations onto one platform this year, so with training and obviously the unknowns that occur with changing people's worlds by changing their operational platform, that's our biggest challenge this year. Having said that, that will allow us to create a line of central efficiencies in the coming years.”

Dr. Alan Ulsifer, CEO, president and chair, FYidoctors, Entrepreneur Of The Year 2012 Canada

 

Monday, 30 September 2013 08:00

Understanding your ‘natural instincts’

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The animal kingdom has long been instrumental in teaching children about appropriate behavior.

A rabbit named Peter educated us on the importance of conflict resolution. For better or worse, Curious George was habitually inquisitive and, in separate incidents, three bears and three pigs taught us the importance of home security.

But despite a literary reputation as “big” and “bad,” according to Jack Hanna, “A wolf will feed the sick, the old and the young first.”

That’s a pretty impressive character trait for a creature so often maligned by the human race. Over the years, however, we’ve learned to expect Hanna to set the record straight on an important part of our world that most of us will never experience firsthand.

 

Following the footsteps of a legend

Inspired by wildlife pioneer Marlin Perkins, Hanna parlayed a fascination with animals and a position leading the Columbus Zoo into a television empire spanning 30 years. He’s had countless TV appearances on popular shows such as “Good Morning America” and “The Late Show with David Letterman.” In addition, he currently helms two television programs, “Jack Hanna’s Wild Countdown” and “Jack Hanna’s Into the Wild.”

Not surprisingly, Hanna’s high regard for the animal population is also reflected in his view of the public’s acceptance of the animal kingdom: “Most people who say they don’t like animals don’t like people much either.”

Phil Beuth, former president of “Good Morning America,” observes, “With Jack, what you see is what you get — he’s a genuine gentleman.”

Hanna has set a simple benchmark for appropriate professional behavior, “I operate by The Golden Rule — do unto others as you would have them do unto you.”

Of course, humans are animals too — complete with instincts, genetic predispositions, unique skill sets and laws to keep us from acting like predatory animals. Yet, prey we do — leveraged buyouts, hostile takeovers, foreclosures, etc.

 

Comparing workforces of nature

When asked about lessons human worker bees can glean from the animal kingdom, Hanna enthusiastically says, “Just look at ants and termites. They each have specific jobs to do.” By performing specific tasks every day, these creatures work solely to serve the greater good — ostensibly without complaining.

Animals = 1 Humans = 0

Hanna also points to an innate respect in the wild that does not always translate into the land of the bipeds: “The animal world does not waste food and animals do not abuse their own children. For example, gorillas may fight but they still work together.”

Working through issues to achieve top performance is apparently part of the natural order of things. It’s about survival. As the concept of business survival has never been more prominent, shouldn’t cooperation receive equal billing?

Animals = 2 Humans = 0

Though Hanna also marvels at the mysteries behind the instinctual and highly effective way animals communicate, many in the office marvel at some people’s overwhelming lack of communication skills.

Animals = 3 Humans = 0

Specifically, according to Hanna, “The elephant is one of the most intelligent creatures on the planet.”

So yes, it seems that without the benefit of an iPhone, Twitter or Outlook, an elephant truly never forgets.

Time to hire me an elephant. The Laws of Nature win every time. ●

 

Speaker, writer and professional storyteller Randall Kenneth Jones is the creator of RediscoverCourtesy.org and the president of MindZoo, a marketing communications firm in Naples, Fla. For more information, visit randallkennethjones.com.

Twitter: @randallkjones

Facebook: https://www.facebook.com/mindzoo

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A marketing epidemic, to put it mildly, has been impacting most businesses — and it’s time to think about keeping your message simple if you haven’t already done so.

The roots of this epidemic can be traced back to two events.

First, during the economic fall of 2008, as businesses looked for ways to preserve revenue streams, companies hunkered down and focused on sales to preserve existing customers. Many cutoff or significantly reduced marketing budgets, and others shifted to digital media as a “low-cost alternative.”

The second event was the rapid spread of social media and the skyrocketing use of smartphones and tablets, which provide instant access to relationships, information and communication.

The social media craze and businesses’ desire to market on the cheap led companies to flood the marketing channels with content. Sales sheets, photos, videos, web pages — companies were suddenly all things to all people because they could push content to digital channels for “free.”

The problem — our marketing channels are now very noisy. As consumers of information, we respond to this noise with limited attention spans. The result — companies have sent confusing messages to the marketplace and people aren’t listening.

This current epidemic of marketing noise distributed across all channels leads to a common marketing need for all businesses — simplification.

 

Keeping it simple

So how do you achieve message simplification? It all ties back to the business. Here are seven steps to help get you started:

1. Identify three to four key business objectives for the next two years. Do you want regional growth or growth in a new industry? Do you want to sell more to existing customers?

2. Prioritize your objectives by placing dollars or number of opportunities next to them. This will help you focus on the most important areas.

3. Brainstorm a list of marketing tactics that can help you achieve each objective. Can you generate more leads from trade shows, your website, your existing customer list? What tactics do you need to adopt?

4. Write a succinct summary, or “elevator pitch.” This should be one to three sentences on how you benefit the people you are targeting in your objectives.

5. Compare your elevator pitch to your marketing tactics and existing materials. Review your website, brochures, email newsletter, social media accounts, videos, trade show collateral, etc. Notice how many “extra” things you say in an effort to cover all your bases.

6. Rework your message. Focus on the audiences for your key objectives. Identify the benefits for these audiences. Your marketing message should speak directly to these audiences so they can understand your value and usefulness to them.

7. Prioritize your marketing tactics. It’s tempting to be trendy and market on social media or through video, just remember to consider which tactics will best reach your audiences. You don’t need to be in every marketing channel, just the ones where your customers and prospects will hear you.

 

Finally, once you’ve simplified your message, stick to it! It is important so that people understand the benefits and value that you deliver. While it might seem repetitive to you, your audience will appreciate the clarity and with time, will remember what your business does best. ●

 

Kristy Amy is director of marketing strategy for SBN Interactive. Reach her at mailto:kamy@sbninteractive.com or (440) 250-7011.

Life has a way of presenting us with difficult circumstances. Sometimes it’s in our personal lives, and sometimes it’s in our business.

If the circumstance is severe enough, it can create a crisis, which can often cause a feeling of hopelessness. When things outside your control come at you in droves, it becomes difficult to cope with them. Entire organizations can be overwhelmed and pulled down by external circumstances, which if not dealt with promptly and correctly, can destroy the company.

The CEO’s role is to right the ship and rally everyone around a solution — and it most likely won’t be easy. People are always looking for the easy way out, but that path is rarely an option. When facing a difficult situation, you have to play the ball where it lies, which means the resources you have in people, dollars or equipment are all you may have to work with.

But challenges also present opportunities. Faced with a crisis, you and your leadership team will be forced to look at your assets in new ways. You’ll be required to take a careful look at your customer base, your market and your processes. This kind of in-depth evaluation may uncover not only a possible solution to your problem, but it may open your eyes to markets or applications you never considered before.

Take Netflix for example. The company was the king of DVD-by-mail, and had already knocked off the once mighty Blockbuster. With the increase in streaming video content, however, customers began moving away from DVDs, threatening Netflix’s main revenue channel. It reacted by creating not only streaming content, but also by creating its own unique content. Customers can stream video from many outlets, but it’s tough to beat Netflix’s reputation and ease of use.

Often, the resources you need are already at hand; they just need to be used in new ways. Netflix already had the capabilities; it just needed to apply them differently.

You may find that after assessing what you have, you have started to create a new path that leads away from the crisis.

At the beginning of a difficult time, you may not be able to see a way out, which can lead to despair. By starting with an initial step and continuing, however, you’ll soon see the light. Start by calling your bank or suppliers to ask for better terms or whatever it is you need, and then build from there.

No matter what you do, though, don’t compromise your integrity. Always do the right thing in the wrong circumstances, because depending on how severe your crisis is, your reputation might be the only thing you have to negotiate with.

If you work hard, do the right thing and stay positive, a solution will likely present itself. It may not always be in a form that you anticipated — you may need to change your products or your market — but if you keep an open mind and work with what you have, everything will work itself out. ●

Most weeks I get on a plane and attempt to have an out-of-body experience to deal with all the hassles of flying as I travel from point A to point B. When flying, I have a few simple rules. One, I almost never eat the food. Two, I attempt to talk to no one other than obligatory hellos. Three, I never argue with or say a cross word to flight attendants.

One other very important practice I follow on land, sea and especially in the air is that I constantly scan my surroundings for potential troubles and new ideas.

On a recent flight, upon boarding, I quietly and obediently proceeded to my assigned seat.

As I began to sit down, a gentleman asked if I would mind trading seats with him so that he could sit next to his wife. Like most seasoned travelers I try to accommodate reasonable requests. In this case it seemed a no-brainer to agree to move.

 

Notice the details

As I started to settle in and fasten my seat belt I noted that my new seatmate was very hot. No, it’s not what you’re thinking. I mean she seemed to be flushed and radiating heat, ostensibly from a high fever. I’m thinking, this is not good, plus it proves the age-old adage that no good deed goes unpunished.

In the next minute I had an epiphany, which happens frequently as I believe that many problems come disguised as opportunities.

I rang the call button and, when approached, asked the cabin attendant to please bring me two cloth napkins. I stated that the purpose was to construct a makeshift face mask by tying the two pieces together to prevent possibly contracting some dreaded disease.

I feared that my intentions could be misinterpreted if I were to don a mask without an explanation; this could cause a well-meaning passenger to drag me to the floor thinking I had nefarious motives.

The stewardess smiled, nodding approvingly of my plan. She then summoned all her co-attendants to my seat and proceeded to whisper what I was attempting. Otherwise, she explained, they, too, could misunderstand my appearance and cause me bodily harm.

As founder and CEO of Max-Wellness, a health and wellness retail and marketing chain, I’m always looking for that next special something to share with my team. Therefore, while burying my now masked face in a newspaper so as not to frighten or offend the sick seatmate, I began dictating a memo to my merchandise product group proudly asserting that I just had another “aha!” moment, for which I am well-known, among my colleagues. For full disclosure, however, I am sometimes known for being a bit “out there” on occasion — but no one bats a thousand.

 

Turn an idea into a product

This particular predicament gave me the idea to develop a product kit that we could sell to weary travelers in our stores and in airports. I suggested a handful of complementary products, including a mask, a disinfectant spray and, if all else fails, relief remedies. I also noted that it probably would be prudent to include a cigarette pack-type “Black Box” warning stating that the mask is not what some suspicious flyers might think, but instead it’s for prevention of disease only. I even proposed we market these kits directly to the airlines to dispense as an emergency prophylactic for passengers exposed to airborne (pun intended) pathogens.

 

Fleeting thoughts have value

A key role for business leaders is teaching a management team to use fleeting thoughts as a springboard, to pair common problems with sometimes-simple solutions.

Just because it is a simple fix, though, doesn’t mean the idea couldn’t be a lucrative breakthrough.

When something sparks an idea it needs to be taken to the next level before being pooh-poohed. Most likely the vast majority of these inspirations won’t see the light of day, but that’s OK. Just think — what if one transient idea translates into the next Post-it Notes, Kleenex or bottled water?

The next time you sit by a masked man on a plane, it most likely won’t be the Lone Ranger. Instead, you might be witnessing the incubation of the next best thing since sliced bread. ●

 

Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. “The Benevolent Dictator,” a book by Feuer that chronicles his step-by-step strategy to build business and create wealth, published by John Wiley & Sons, is now available. Reach him with comments at mfeuer@max-wellness.com.

Regardless of industry, geography or size, one thing is certain: Risks to organizations are changing, becoming more complex and are more interrelated than ever before.

“An organization’s ability to identify, assess and respond to the key risks that it faces is critical to its sustainability. The companies that excel in this area are the ones that will be able to react quickly to new challenges,” says Kevin Pastoor, managing director at Aon Risk Solutions

“The first step is identifying the top risks to your organization, and Aon’s Global Risk Management Survey is an excellent place to start.”

Smart Business spoke with Pastoor about the survey and some of the key findings of the fourth biennial Aon Global Risk Management Survey with more than 1,400 companies of all sizes, both public and private, from a broad section of geographies and industries, responding.

How have results changed compared to prior surveys?

This was the first year that political risk/uncertainties entered the list of the top 10 risks, coming in at No. 10 and projected to be No. 6 in three years. 

This indicates that companies, regardless of size, are becoming more global and are now exposed to things like physical damage to assets from political violence or, even worse, the kidnaping of employees. As global expansion continues, companies need to continually address their political and security risks.

A rather disturbing trend in the survey is that loss of income from the top 10 risks has increased from 28 percent in 2011 to 42 percent in 2013, yet organizations reported a decrease in readiness from 66 percent to 59 percent over that same time period. In addition, respondents who say they have tracked and managed all components of their total cost of risk have dropped from 39 to 33 percent.

What is the No. 1 business risk and why?

The No. 1 risk cited has been the same for the last three surveys and projected to remain the No. 1 risk three years from now — economic slowdown/slow recovery.

With issues like the continuing weakness in the eurozone, slowing growth forecasts in India and China, the continued uncertainties related to U.S. fiscal policy and elevated unemployment worldwide, it is no wonder that this continues to be the No. 1 concern.

Many organizations are only now starting to scratch the surface in terms of their understanding of the impact events in other parts of the world can have on them, even if they do not have global operations. Organizations need to look beyond daily operations and take a more holistic approach to examining risk in order to remain flexible and adapt to issues that can have a detrimental effect on the bottom line if not properly managed.

What else did the survey reveal?

The survey also revealed some interesting differences by region of the world. For example, computer crimes/hacking/viruses/malicious code is the eighth-rated risk by respondents in North America. However, in other parts of the world this was rated much lower — Asia Pacific, 37th; Europe, 19th; Latin America, 35th; and the Middle East and Africa, 19th. 

These types of attacks are becoming common in the U.S., with new reports almost weekly about data security breaches, so this is already high on U.S. companies’ radar screens. Now that we are seeing more worldwide breaches, such as the cyberattack on the European Commission, the ranking of this risk in other regions of the world should increase in future surveys.

By identifying their top risks, as well as comparing peer companies by industry, region and organizational size, companies can be off to a great start in terms of better understanding their own organizations — and knowing how to respond when these risks come up.

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

Insights Risk Management is brought to you by Aon Risk Services

 

 

 

If your employees have a company retirement plan, then you have a fiduciary responsibility to them. The days of ignoring this responsibility are over. Some of the settlements linked to charges of negligence or mismanagement can be painful for businesses big and small.

In 2010, a California Fortune 500 engineering firm settled $18.5 million with two employees after a class action case claimed it was making an insufficient effort to reduce 401(k) account fees.

The Department of Labor (DOL) recovered more than $117,000 in unremitted employer contributions and associated lost opportunity costs for two Wisconsin employee benefit plans with 25 active participants. The owner had to pay nearly $23,000 of that court judgment.

“With the increased responsibilities facing 401(k) plan fiduciaries, it is crucial that a sound administrative process is in place,” says Phil Ruggeri, an investment executive at Cetera Investment Services, located at First State Bank

Smart Business spoke with Ruggeri, who used material from MarketingLibrary.Net Inc., about recent changes to the fiduciary responsibilities.

What are some key issues with 401(k) fiduciary responsibility?

Fiduciaries are issuing a detailed breakdown of account fees and expenses to plan participants because of new DOL regulations. In addition, plan sponsors must give out investment instructions that follow strict DOL guidelines.

Every employer-sponsored retirement plan must name a fiduciary, but function also determines fiduciaries. Although someone may not be named as a fiduciary, if he or she participates in the management or administration of the plan or hires a service provider, the DOL considers those fiduciary functions.

In addition, the plan sponsor should document all investment processes, so it has proof that the plan is operating according to stated procedure. You need to follow a written summary plan description and investment policy statement. The investment policy statement defines the plan’s investment program and establishes formal standards for monitoring, benchmarking and assessing performance results of various investment options over time. It’s critical to have input from your registered investment adviser with this.

How should plan sponsors educate their participants?

To keep your retirement plan from being undervalued and underutilized, your company needs to have an effective employee education program. Employees must understand the investment options the plan presents, as well as the fees and risk associated with each one. Don’t give it the short shrift for legal reasons alone. 

You should regularly call in an investment professional to help explain the choices and the potential role the plan plays in an employee’s overall retirement savings effort.

What else is necessary to comply with your fiduciary obligations?

Most administrators of workplace retirement plans — those with 100 or more plan participants — are required by the IRS to annually file a Form 5500. This disclosure is then made available to the DOL and the Pension Benefit Guaranty Corporation.

You should carefully oversee your plan providers, as you don’t want the wrong kinds of investments creeping into the plan. Watch for changes in how the plan provider is compensated, changes in the fees that affect plan participants and anything else that seems unusual.

This is just the beginning of fiduciary responsibility. With so much to watch over in the typical employer-sponsored retirement plan, you certainly can miss details, which may lead to big headaches for your business. 

Don’t open the door to liability. Do the right thing, the smart thing: Turn to an experienced, professional adviser who can help play a fiduciary role and ensure you adequately fulfill your obligations.

Phil Ruggeri is an investment executive at Cetera Investment Services, located at First State Bank. Reach him at (586) 445-4769 or pruggeri@ceterais.com.

Securities and insurance products are offered by licensed agents of Cetera Investment Services located at First State Bank. Consult your legal or tax counsel for advice and information concerning your particular circumstances. Neither Cetera Investment Services nor any of its representatives can provide legal or tax advice. Securities products are not a deposit, not FDIC insured, not insured by any federal government agency, not bank guaranteed and may lose value.

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