“The problem in Tampa right now is that unemployment is down to 1.8 percent,” says Brent Short, managing director for Spherion Professional Services Group. “Two years ago, you could place an ad on Monster.com and get 300 resumes in the first six hours. Now you get six resumes in the first three days.
“What that means is that companies have to change what they’ve been doing to attract people and change what they need to do to get those people in the door. They can’t wait three weeks any more.”
Smart Business talked with Short about the current labor shortage along Florida’s Gulf Coast and how corporate managers can cope with it.
Why is there such a demand for skilled or knowledgeable employees, given the economy?
The economy here is beginning to pick up again. One, we are seeing expansion. Two, we’re seeing companies invest in technology, which is huge. Three, we’re seeing companies refill positions that have been left vacant for a while. And four, some companies are even expanding the number of people they have.
We are probably going to see brisk hiring until around Thanksgiving. Overall, we’re in a 10-year cycle where we’re good to go.
Given the statistics, can companies still be particular and demanding in their quest for qualified employees?
Maybe 50 percent of the unemployed are unemployed because they simply don’t want to work. But the other thing is that candidates may not be exactly what organizations are looking for.
I’m encouraging companies to be a little more open-minded in their hiring practices. Sometimes it’s worth it to try and fit a square peg into a round hole, if maybe the edges are worn off a little. For instance, if you’re looking for a senior accountant and a prospect has done great staff-level work, you might be able to mold that person if you invest in training.
Is temp-to-perm a viable alternative, even for jobs in middle and upper management?
I tell companies that if they’re looking for temp-to-perm hires, they’re only looking at 2 percent of the workforce. So I’m extremely cautious with temp-to-perm recommendations.
One company was having a hard time finding the ‘perfect person’ for its opening, so I was asked to find a temp to fill the shoes while the company continued to look for a permanent replacement. That temp is about to go permanent now. That’s a great thing, and I love it when it works out.
But none of this is easy. Unemployment is so low that there are more and more counter-offers coming from original employers that can throw a wrench into our plans. It’s almost getting to be a bidding war on good employees in this market.
How long can a company expect to take to find a viable candidate for a middle- to upper-level opening?
A three-round interview process just won’t work here in the Tampa area.
Finding a qualified employee on any level can take a long time, depending on the company’s HR process. In some cases, longer, drawn-out processes whether they’re HR-driven or driven by the hiring manager have started to muddy the waters. Why? Because the demand for qualified people is so high that some companies will actually offer a good candidate a job during the interview. Those are the companies that are successful in their hiring.
I think that companies should expect the placement firm to do the job you’re paying them for. The placement firm should be sending you qualified people to interview and if they’re not, you should find another firm.
If unemployment levels in Tampa are so low, where are you finding candidates to place?
First of all, bringing people in from other geographical areas might be a great idea, but most companies here are not offering relocation packages. And if they are, the packages are not substantial enough to get the people to move here.
We are also not seeing people job hop. So we are actively sourcing individuals who are currently employed at other organizations.
We also emphasize on training up. Even though we don’t provide training at the degreed level, we do test to evaluate a candidate’s skills and find out where he or she would fit. What we’re seeing is a lot of candidates take the tests, then go out and get training on their own so they fit in better places. They come back, they retake the test.
A large part of our mission is to uncover all the things that could be obstacles to getting a job and help the candidates overcome those obstacles.
BRENT SHORT is managing director for Spherion Professional Services Group. Reach him at (813) 864-1111 or email@example.com.
Attorneys that specialize in wealth transfer planning can help make the transition a smooth one by seeing to it that the right people take over the operations.
“There are a lot of fancy titles for what we do, but a wealth transfer planner is actually nothing more than a wealth plumber,” says Attorney Bruce Gordon, a founding partner of the Tampa Office of Shumaker, Loop & Kendrick, LLP and Co-Chair of its Trust and Estates Department. “We fix the leaks and make the money flow in the right direction without any backups or breakdowns often caused by taxes, creditors and family disputes.”
Smart Business talked to Gordon about the importance of having a strong business succession plan in place before retirement.
Why is a succession plan so important?
A good planner follows the cash flow at a family owned and operated business and watches where the money goes within the family. Let’s say the founder sells the business and now the family has cash. The founder’s son was involved in the business and suddenly there is a grandson. We hope that future generations inherit loads of the good DNA and the spark to take the money and the opportunity on to the next level, but this is not always the case. That money is either redeployed, parked or lost, and good planning can make all the difference.
What happens when a business founder is ready to retire?
That’s the biggest issue. I need to find some common ground upon which the client’s family can land, both for tax and non-tax issues. They have to make some tough decisions, such as who will lead the family business into the next generation or what kind of formula will let everyone get involved without holding up the natural progression of the business.
How does the family decide who will take over?
The typical guy (or gal more and more these days) who started his own business is a hard-charging, Type A personality; a control freak, you might even call him a micro-manager, but he does not see this as a problem nor does he care what anyone else thinks. He knows how to win.
Planning for the next generation is tricky and depends on how much time there is between the first and last born. The first born is generally a lot like his dad because he comes along while the family is still struggling financially or in the early stages of growth. He also usually gets more of dad’s attention. The last born, typically, is a bit softer because everything has been given to him, he gets less attention, has more competition within the family and things are just more comfortable. Often this child is happier, but less competitive. This is a huge generalization, but has some truth in most families.
So now the founder is looking at a range of possibilities and it is often a hard decision to make. It’s obviously much easier if there is only one heir. If there are two girls and one boy, tradition says the boy is the heir apparent, no matter where in succession he is born, but this trend is changing these days as well.
Is family the biggest issue?
It’s always the big one. We need to know about and special situations with children or parents and if the client has a stable marriage or is headed for a late-in-life divorce with a new wife in the wings. If you have a wealthy client in his 60s that is going to marry a younger woman, the kids get scared because mom isn’t in control anymore. Suddenly the new wife has the marital status, at least on paper, and stands to inherit a lot of the property. A prenuptial agreement could then become a big deal and a huge part of the succession plan. We often need to pull marital trusts out of our estate planning toolbox as well with the hope of satisfying both the surviving spouse and the children.
When is the best time to create a succession plan?
Start early; no later than age 50 and finalize the plan between 65 and 75 years of age. If not, you might lose the planning window. A lot of it depends on getting it done before there is a debilitating illness or age gets in the way. If a client nears 80 and beyond it is likely that he has waited too long. Plan like death could happen tomorrow.
Bruce Gordon is a partner resident in the Tampa Office of Shumaker, Loop & Kendrick LLP. He can be reached at (813) 229-7600 or firstname.lastname@example.org.
Wayne Huizenga is an entrepreneur and company builder who has found success on a grand scale. He led six companies to be listed on the New York Stock Exchange, with three of them achieving Fortune 500 status, was the first person to ever own three major sports franchises at one time, propelled unknown companies to become household names and was recently named the 2005 Ernst & Young World Entrepreneur Of The Year.
Despite the fortune he has amassed, the soon-to-be 68-year-old billionaire says it’s about the excitement of building something, not about the money.
“I don’t do this for money,” says Huizenga, who chairs Ft. Lauderdale-based Huizenga Holdings and owns the National Football League Miami Dolphins franchise. “It’s the challenge, it’s the excitement and it’s the ability to put something together to let other people make money. All the jobs that we’ve created, all the companies that we’ve created — a lot of people have made a lot of money.”
Huizenga has found success by recognizing opportunities, moving quickly to take advantage of them and putting the right people in charge.
While still in his 20s, Huizenga convinced the owner of a garbage hauling service to sell him a truck. Huizenga parlayed that one garbage truck and the score of accounts that came with it into Waste Management Inc. and grew it into the largest waste management company in the country in less than 10 years.
With Waste Management, “We made small acquisitions in different states around the United States,” Huizenga says. “It was just easier, faster and cheaper to go in and buy out a guy who was already established in a market, even if he was very small. Then we’d hire a bunch of salespeople to go out and do the internal growth.
“The plan was always to have internal growth, but in order to get internal growth growing quickly, it’s sometimes easier to go ... into a certain market and buy out a guy who had three or four trucks, and then you’d say, ‘OK, let’s grow this business now.’”
During one nine-month period in the early 1970s, Waste Management bought 133 companies. By 1981, it was the largest waste disposal company in the world. Blockbuster Inc., on the other hand, was built mostly from scratch because at the time, there were no chains to buy. When Huizenga and his investors bought into the company in 1987, Blockbuster had 19 stores with $7 million in revenue. When he sold to Viacom in 1994, it was a $4 billion enterprise with more than 3,700 stores in 11 countries.
Looking for a new endeavor, Huizenga recognized the opportunity to provide better service and better offerings than the mom-and-pop video stores were providing, but it meant acting quickly to seize the best locations to make customer access easy and to maximize visibility.
“In a Blockbuster video store, there is nothing proprietary,” Huizenga says. “Anybody can go open a video store anywhere, any time. If you want to have the best locations in a given market, you want to move quickly to tie up those locations. You don’t want a competitor to take the best location. The reason for moving quickly is to tie up the locations.”
Huizenga also created AutoNation, the first nationwide auto dealers. He developed a one-price strategy, hired management with the expertise to run the company and grew it to be the largest auto dealership in the nation, now with more than 400 franchises in 24 states.
He also formed the company Extended Stay America with an associate. In its first year, it opened 62 locations. The idea was to provide a no-frills service for people who needed to stay more than a few nights at a hotel. The rooms came with a complete kitchen, but properties have minimal lobby space and sheets are only changed twice a week to cut costs. When it was sold in 2004, Extended Stay America had almost 500 hotels in 42 states.
“Extended Stay America was fun because (we were) starting a new concept,” Huizenga says. “There were no extended stay hotels; there wasn’t anything like what we were doing. A lot of people were skeptical. We had to convince Wall Street that this was the way to go. That was a different challenge.”
Building a team
Huizenga says that he could never have achieved such success without the right managers. “The most important factor is people,” Huizenga says. “We hear it said all the time. It’s said so much that it goes in one ear and out the other. But really, people are the name of the game. That’s really the secret.”
It’s so critical that Huizenga repeatedly employs trusted veterans in new ventures. George Johnson, a franchisee and later president of Blockbuster Video, became a partner in Extended Stay America. Another Blockbuster veteran, Steve Berrard, heads Huizenga Holdings latest venture, Swisher. “If you make a mistake, you probably won’t know you made a mistake for a year, a year-and-a-half,” he says. “Then you have to quickly correct that mistake. Now you’re behind the eight ball because you’ve lost a year-and-half. Then you have to change culture and all that kind of stuff again.”
So Huizenga is very careful about who he brings into a company.
“Everybody I hire is smarter than I am,” Huizenga says. “A lot of people don’t want to hire people that are smarter than they are. I know there are a lot of things I’m not capable of doing, but that doesn’t stop me from hiring the right person who can get it done. “So, I’ve never been frightened by hiring people who are more intelligent than I am, that are smarter than I am. There’s a difference between being intelligent and being smart. People have to have both.”
And, of course, there are the requisite people skills.
“Leadership is the key,” he says. “You don’t have to know anything about the business. We’ve been in a lot of businesses that we’ve never been in before. (We) still built them up, and then you’ve got to hire the right people — like Mike Jackson (chairman and CEO of AutoNation) to come in. I could not do what Mike Jackson does. He knows more about the car business than I do.
“The best thing I could do was hire Mike Jackson.”
Jackson was an auto industry veteran and a great fit to lead AutoNation with his experience as managing partner of a group that ran 11 car dealerships before being named president and CEO of Mercedes-Benz USA. He had the hands-on management experience at the franchise level, plus the big-picture auto industry corporate experience necessary to run a public company.
Huizenga has always gravitated toward service-oriented businesses with rental incomes. There are a lot of upfront costs for things such as garbage trucks and Dumpsters, but no one is going to run out of garbage any time soon.
“We like recurring revenue,” Huizenga says. “Before we look at the company, we look at the industry to see how big the industry is, how big could we be in that industry, if we were the first or second or third largest in that industry, what could or would our revenue be. That’s really how we start to determine whether we want to be in that industry or not.
“Then we’ll take a look at the company and see how many companies we can start with.” It wasn’t always easy to get everyone to buy in to that concept. Even the sophisticated investment community didn’t understand the Blockbuster idea; Wall Street kept insisting it was a retail concept.
“When you go in a store and buy a shirt, then that shirt has to be replaced on the shelf,” Huizenga says. “It’s a white shirt with a certain length sleeve and a certain collar size. You’ve got to keep the inventory just right. In the Blockbuster business, you rented the video, and two days later the guy brought it back — and you rented it again. It doesn’t take long to figure out how many times you have to rent it before you got your money back.
“All these retail guys that followed Blockbuster, they couldn’t figure that out at all. It was a whole new model that they had to come up with. We had to work with them to convince them of the model. Once they caught on, then it was good for us. Our stock went up 4,100 percent in seven years. Everybody made a lot of money in Blockbuster — all the employees, all the shareholders made a ton of money.”
His current company, Huizenga Holdings, is using the same formula for success that he’s always used. He’s looking for small companies that can be grown into industry giants.
“We’re doing entrepreneurial things,” Huizenga says of Huizenga Holdings. “We’re buying all kinds of things; most of them are private companies so we don’t have to talk about them. One of the companies we just bought is a company called Swisher. They’re based in Charlotte. It’s back to the rental thing again.
“If you go into a bathroom in any business or restaurant, there are toilet paper holders, towel holders, air fresheners, soap dispensers — we install those and rent those. Once a week, we come and service them.”
And once he builds that business, he may get out of that, as well. Huizenga tends to move on once most of the growing is done.
“It’s not the maintaining,” he says, “it’s the starting; it’s the building; it’s the growing. My wife calls it the chase. You just love the action; you love being in there making things happen, especially when people say it won’t work. When people think it won’t work, there’re more opportunities.”
Where there is the potential for exponential growth, you’ll probably find Huizenga right in the middle of it, trying to figure out how to take the company to the next level and looking for the right manager who can move quickly to get the job done.
“I like the challenge of building and growing and putting the organization together, putting the right people in,” he says. “To me, leadership is about finding the right people and convincing them they should jump on and follow the dream and make it happen. That’s the fun part for me.
“I’ve been very, very lucky to be able to find the right people along the way. You can’t do it by yourself.”
HOW TO REACH: Huizenga Holdings, (954) 627-5000
In many cases, these powerful drugs can be overprescribed, especially when taking into account their highly addictive nature. In addition, frequently other prescription drugs are needed to address the side effects caused by longer term use, all while more effective alternative treatments may be available.
Combine the overutilization of these drugs with the high prices associated with some of them and the result is very high total drug costs. In most cases, however, the costs associated with an insurance payer’s workers’ compensation prescription drug costs are derived from a small group of claimants, whereby an average of less than 10 percent of claimants receiving drugs drive upwards of 70 percent of the total prescription spend.
“Workers’ compensation drug treatments need to be closely monitored to ensure that the claimant is getting the most effective and appropriate therapy for the right injury,” says Todd Pisciotti, the vice president of sales and marketing for Healthesystems.
Smart Business spoke with Pisciotti about the impact narcotics have in workers’ compensation and the challenges accompanying this prescribing pattern.
What does a typical prescription treatment pattern look like when treating or managing pain for an injured worker?
Depending on the severity, most workers’ compensation injury-related drug treatments are generally short-term a worker hurts his back, he is treated by a physician and receives a prescription medication to ease the immediate pain, which coincides with other medical therapy. Ideally, the injury improves and the prescription is no longer necessary. However, the more complex injuries can turn into long-term claims and chronic pain cases. Often drug therapy side effects arise from the extended use of certain medications like trouble sleeping, acid reflux, etc. In many instances, other drugs can be prescribed to alleviate these conditions. However, over time this type of issue can escalate, turning into an ongoing drug treatment program involving multiple prescriptions, many times from different physicians, which may not necessarily be a good long-term solution for the injured worker or for the insurance payer.
What types of problems exist and where do they usually begin?
When prescription narcotics are involved, especially powerful and addictive opioids like Oxycontin, problems may exist from the beginning. A general practitioner, who may not usually treat severe acute injuries, may prescribe a narcotic right away, based upon limited knowledge of pain treatment regimens. Perhaps a lesser potent drug would have worked, but if the general practitioner wasn’t familiar with treating pain or didn’t know enough about the particular condition, the treatment could immediately start down the wrong path.
In cases where the treatment is appropriate for the injury, problems can still exist when the drugs start being used for the wrong reasons. Maybe the symptoms or pain have gone away, but the drug continues to be taken for the euphoric effects. Or perhaps, the drug is being diverted and sold on the street. This is why physicians, claims professionals and pharmacy benefit management (PBM) companies need to keep a close eye on treatments from the start. In most cases a pharmacist who dispenses the actual drug doesn’t have all the information available to look at a prescription and say, ‘it doesn’t look like you should have this,’ but the PBM should be monitoring all the prescription treatment data and alerting the claims professionals when it’s necessary.
How do prescribing patterns differ in acute cases versus chronic conditions?
Acute treatments are often ‘one-and-done’ a quick treatment that’s wrapped up in under 45 days. Chronic treatments are for longer-term conditions, the worst of which can be lifetime. The challenge is identifying characteristics or patterns in acute cases to make sure prescribing doesn’t escalate when it shouldn’t. Sometimes drugs used to treat chronic conditions are prescribed for acute conditions, or are prescribed for off-label use. A good example is the drug Actiq, which is a powerful drug for treating break-through pain in cancer patients. Some physicians began prescribing it for other pain-related treatments outside of cancer. This is highly problematic because the strength and addictive nature of this drug is likely far beyond what is appropriate compared to the alternatives, in addition to the cost, which can exceed more than $2,000 per prescription.
Are the pharmaceutical companies doing anything about narcotics abuse?
Pharmaceutical companies have been actively involved in trying to develop new formulations of pain treatment drugs in order to control abuse. New abuse-deterrent formulations are being created that should render a drug useless if someone tries to boil it, crush it or break it up (in order to then abuse the drug). This is great, but it still doesn’t address issues such as overdose or addiction when the drug is taken in its normal state. Not only that, ‘street chemists’ are pretty intuitive, and it may not take them long to find ways around the abuse-deterrent formulations.
Are there any ways to resolve these issues?
The key to managing the narcotic dilemma is education making sure the right treatment is being used for the right condition, and that the patient is on the right treatment path. There isn’t a ‘one size fits all’ methodology. PBMs need to watch treatments as they occur and help educate doctors and patients about better alternatives, where available. Being proactive is the way to manage problematic drugs in workers’ compensation cases.
Todd Pisciotti is the vice president of sales and marketing for Healthesystems. Reach him at email@example.com or (813) 769-5284.
But Steve Rector has another take on the subject: “Poor communication is the root of all evil,” he says. “That’s the theory with me.”
The president and CEO of Regional Medical Center Bayonet Point has a lot at stake when it comes to communication. He oversees a staff of 1,000 people, employed in a variety of departments and disciplines. If communication breaks down on his watch, the results can be far-reaching and difficult to correct.
“Effective communication has been the most consistent challenge across the whole organization,” Rector says. “How do you not break that chain of communication; how do you keep it flowing from the bottom up and top down, horizontally and vertically? It has been a huge challenge to ensure that we keep communicating effectively each and every day.”
Rector has met the challenge by acknowledging the various ways a large group of employees will seek and absorb information, and then working with his leadership team to construct varying avenues through which management can disseminate information.
“You start to learn that people will learn and absorb things in different ways,” he says. “Not everybody learns the same way. Some people are visual learners, some are auditory, some have to touch the message and have it in their hands in paper form. So it’s communicating all the time, in various media so that it’s constant repetition. That’s how to start to make it effective, and make sure it’s a two-way street.”
But there are always ways to communicate more, and that is the ongoing task for Rector and his management team, in an effort to keep everyone throughout RMC Bayonet Point engaged and motivated to carry out the center’s health care mission.
Keep the signal strong
Communicating over multiple levels of an organization can result in a loss of signal strength. The message starts out loud and clear from your office, but by the time it reaches the people on the bottom rungs of the company — the employees who are likely interacting with your customers — it has lost a lot of power and might have been distorted as it has passed from mouth to ear or screen to eye.
Rector combats the loss of signal strength by turning his people into signal repeaters.
He and his leadership team work to stimulate feedback from different departments and levels of RMC Bayonet Point. Rector aims to create the dialogue so communication becomes interactive, as opposed to allowing employees to passively receive messages.
The way Rector creates dialogue is through his willingness to admit he doesn’t have all the answers within the organization, and looking to others to provide suggestions and ideas concerning a wide range of issues.
As the leader of your organization, a person who is by definition an authority on the business, you might find it difficult to admit that you don’t know the answer to something. But demonstrating your fallibility can help remove the apprehension that many employees feel about approaching upper management.
“I’m going to be wrong a hundred times this week, so no idea from anyone in the organization is going to be too far-fetched or crazy,” Rector says. “‘Let’s come up with ideas and play this out.’ You have to encourage those types of open discussions because people have to get to know you. Otherwise there will be people out there who feel like they don’t know you well enough to have that type of open conversation with you.”
You have to be willing to set the tone for open dialogue with your work force. You and your leadership team need to demonstrate your desire for open discussion from the top tiers of the company, and do it frequently.
“Everyone on our leadership team has that personality where we don’t think we have all the answers, and we engage everyone in discussion to make sure we are going in the right direction. We realize that it’s an intrinsic trait of leaders that we always want to have the answers. But oftentimes we don’t, or we may think we do until someone points us in the right direction. That’s why everyone on our leadership team knows it’s important to be willing to say, ‘I don’t know that answer; let me go research it. Can you help me with it?’”
To facilitate an ongoing dialogue between employees and management, you need to have leaders on your management team who are willing and able to communicate. That means you need to choose wisely when you recruit and hire the people who will become the future leaders of your company.
Rector calls it “hiring tough.” When you hire tough, you refuse to settle for a warm body to fill a position. You are willing to struggle with a shorthanded staff in the short term to reap the benefits of a good hire and a more cohesive team in the longer term.
“You might be overwhelmed with work, but you do not settle for a person who might get the work done but doesn’t share the same intrinsic values,” Rector says. “I never want someone who is going to come in here and be a yes-man. If I were to come into a meeting and tell everyone that I wanted to paint the hospital pink, I don’t want everyone standing around me and telling me that’s a great idea. I want people to tell me, ‘You might want to think that over first.’
“That’s why you want to have a good hiring process, to make sure that you understand who you’re hiring and that they share some of the same values that you do. Maybe they don’t have all of the same ideas or thought processes but the consistent values are there.”
In the hiring process, Rector and his staff formulate questions geared toward finding out about a candidate’s set of personal values. They want a candidate who brings an adequate skill set to the table, but they want to find the cultural match first. Skills can, to an extent, be taught by an employer. Personal values can’t.
“We have a pretty specific interview process that engages a candidate in questions that aren’t just work-related but reveal a lot of their values set,” Rector says. “It’s lasted as long as I’ve been here, and it’s a process that works very well for us.”
Rector and his staff also employ peer interviewing sessions, in which management-level candidates speak with their prospective peers and subordinates. A candidate for a director position is interviewed by other directors but could also be interviewed by the people who will report to that position.
“Candidates are probably going through five or six individual and five or six group interviews over the course of a few days,” Rector says.
You need a cultural match when you look for hires, because you need people who are willing to make your organization’s mission personal. You might not deal in saving lives the way Rector’s organization does, but the need to have your employees internalize and live your message is still there.
Rector doesn’t want his managers and employees to memorize the mission statement at RMC Bayonet Point. He wants them to believe in it. If, as an employee, you can parrot the organization’s mission and core values back to a manager, it should be because you’re living the mission and values each day, not so that you can placate your bosses.
“We can create a set of rehearsed core values that look important, but our core values are exactly what they are, and our team members have to embrace them,” Rector says. “So we have to keep things very simple along those lines. One of the questions I always ask people is, ‘How do you know good care when you see it?’ And you have to ask yourself, ‘Am I treating this patient the same way I’d be treating them if they were my own family?’ If that’s the standard we’re using for treating people, we’re probably going to do a really good job of delivering care.”
Value your employees
As the leader of your company, one of your jobs is to continually make sure that the puzzle pieces of your organization fit together. You do that by showing people in every area and department of your organization how their daily tasks help the organization meet its overarching goals and mission.
At RMC Bayonet Point, showing employees that they matter means showing them how their work improves the experience of the patients who are seeking treatment at the facility.
Arming employees with that knowledge can mean the difference between an adequate customer experience and a great experience that makes customers loyal to your service, product or brand.
“When people come to our organization, they expect us to help them get well,” Rector says. “So if we do everything perfect and help them get well, we’ve met their expectations. But how do we exceed their expectations? It’s typically those small things around the periphery of their care. Did we notice that someone was cold and, without asking them, went and got a blanket? Did we set up someone’s dinner tray the right way? Did we help them prepare their food the way they want it? Do we offer a simple smile and introduction to a patient when we walk into a room? Those little things turn a hospital stay from a clinical success, which is a good stay, to an exceptional stay. We need to focus on those little things.”
Focusing on those little things comes back to the principles of good communication and reinforcing the foundational building blocks of the culture. That means relying on good top to bottom communication that maintains a strong signal from your desk all the way to the bottom of the organizational ladder.
If making your mission personal helps to engage the employees who interact with your customers, your managers and directors need a way to make their jobs personal, as well.
“We want all of our director-level people to become CEOs in a sense,” Rector says. “Each of our directors have big business units with lots of employees. If our units were separate businesses, they’d still be among the largest in the community. So we ask them to become CEOs. I always ask them what they would do differently if their income was dependent on what was left over at the end of the day, then take that view as an entrepreneur. ‘What would you do, how would you retain customers, how do you measure their satisfaction, and what might you do differently the next time?’
“It’s not as hard to do if you have engaged management that is able to move ideas across an organization and facilitate communication with employees. That ability to communicate, facilitate and share best practices is really the mark of a great leadership team.”
How to reach: Regional Medical Center Bayonet Point, (727) 819-2929 or www.rmchealth.com
For more than two decades, employee stock ownership plans (ESOPs) have served as an effective succession planning tool and a powerful employee benefit while simultaneously providing significant tax advantages and cost-effective financing to the sponsoring company. ESOPs also permit employees to benefit from the success of the business, which can increase commitment to company strategy, productivity and profitability.
Smart Business learned more from Hugh Reynolds, a partner with Crowe Horwath LLP, about how business owners can take advantage of the benefits of ESOPs.
What is an ESOP?
An ESOP is a tax-qualified retirement plan similar to more traditional defined contribution retirement plans and subject to most of the laws and regulations that govern such plans. However, an ESOP has some very unique features. For instance, an ESOP must invest primarily in employer stock and it can borrow money to purchase employer stock. It also has significant additional tax advantages that can make it the ideal vehicle for transitioning ownership for many companies.
In its simplest form, how does an ESOP work?
Essentially, an ESOP borrows money, which it uses to purchase all or a portion of the stock of one or more shareholders. The company then makes contributions to the ESOP, which are used to make the payments on its loan. Unlike with the traditional loan structure where only interest is deductible, the contributions to the ESOP are fully tax deductible. As a result, the company not only gets a deduction for the interest it pays but also on the principal payments.
However, that is not the primary tax benefit available. If the company is an S corporation, the income attributable to the stock owned by the ESOP is not subject to income taxes. Consequently, if the company is 100 percent ESOP-owned, it no longer pays any income taxes. An ESOP is much more tax-efficient as a succession tool than a more typical management buyout structure often used by companies.
What is the win for the company?
There is an increased probability of management continuity, significant cash flows available to finance the transaction through tax and other savings, and research shows that ESOP companies are more profitable than comparable non-ESOP companies.
Because the balances in employees’ ESOP accounts are primarily invested in the stock of the sponsoring employer, participating employees become beneficial owners of the company. If the company’s value increases, participating employees stand to directly gain through the resulting growth of their ESOP accounts. The more substantial an ownership stake the ESOP provides employees, the more motivated they may be to improve company performance.
What is the win for the employees?
ESOPs offer employees retirement benefits and an ownership stake in the company for which they work. Additionally, an ESOP rewards employees who have promoted the employer’s success, and it can be structured to allow management to have effective control of the company, and possibly actual control over time, without risking their own capital. Also, tax savings significantly increase the long-term value of the stock.
What is the win for the selling shareholder?
ESOPs also offer a ready market to shareholders even in those cases in which a non-ESOP buyer may not exist at the time or when the owner only wishes to sell a portion of his or her stock. ESOPs can pay up to the fair market value of the shares, as determined by a qualified independent appraiser. For some industries, it can be difficult to get a fair price for the company based on its financial performance. An ESOP can help unlock this value for the selling shareholder(s). Thus, ESOPs give owners maximum flexibility over the size of the transaction, the timing of the sale and the price of the shares.
When selling to an ESOP, the selling shareholder(s) can preserve the company’s legacy and, with proper structuring, the selling shareholder(s) can retain effective control of the company even if the ESOP holds a majority of the stock.
Why have you not heard about ESOPs before from your advisers?
To achieve any or all of these benefits, companies and selling shareholders must carefully structure the ESOP transaction. After the transaction, the company must make sure that the ongoing operation of the ESOP adheres to the requirements of the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 (ERISA).
The challenge is that many tax and other business advisers don’t have the ESOP experience needed to properly advise companies through the requirements. It is important to have experienced professionals guide you through an ESOP alternative.
Under U.S. Treasury rules issued in 2005, we must inform you that any advice in this communication to you was not intended or written to be used, and cannot be used, to avoid any government penalties that may be imposed on a taxpayer.
Hugh Reynolds is a partner with Crowe Horwath LLP. Reach him at (954) 202-8616 or firstname.lastname@example.org.
The often-quoted term, “content is king” could be translated for today’s marketplace as, “Content is central to your survival and, if done right, to your success.”
“The factors that drive buying behavior today rely on content,” says Kevin Hourigan, the president and CEO of Web design, Web development and Internet marketing agency Bayshore Solutions. “A strong content strategy will be the distinguishing factor in companies that succeed in 2011 and beyond.”
Without it, adds Hourigan, your target audience will find another source for getting educated on the products or services you provide and, eventually, buy from them.
Smart Business spoke with Hourigan about how to develop and deploy the online content that will make and keep your business ‘king.’
What exactly is content?
Content is often mistakenly thought of as the words on website pages, brochures, articles, reports or white papers. Such a definition is dangerously short-sighted. In today’s marketplace, online content is anything presented to a visitor that shapes their impression of your business. This includes traditional written content (website messaging, case studies, blogs, articles, testimonials, marketing and e-mail campaigns) as well as visual content (videos, images and maps) and aural content (soundtracks, podcasts and audio clips). Equally important is the layout and design in which that content is presented.
A critical element of content is its syndication. Posting to your website is just the beginning. Distribute your content beyond your Web pages in as many variations, formats and places as are relevant to your prospective customers. Content syndication should include social media groups that feature reviews, helpful advice, interaction and problem solving engagement; video and photo sites such as YouTube, Flicker and Slideshare; bookmarking sites and other sharing portals.
What is so important about content?
When buyers realize a need and begin their research phase, the first place they go is online. An increasing amount of business-to-consumer buyers start and end their research, supplier identification and purchase processes online via eCommerce. Business-to-business buyers tend to engage personally with their ‘set of finalists’ in purchase considerations, but that set of finalists is most often whittled down online. You need to convince buyers that you are the obvious choice without ever having a personal conversation. The way to win their hearts, minds and trust is by delivering your content to them whenever they are searching for, thinking about, or debating your product or service.
Search engines deliver relevant results to searchers (your prospective customers). Search Engine Optimization (SEO) rankings and success pivots on content and its freshness, relevance and syndication. Therefore, the distribution and refreshment of your optimized content in as many avenues as is relevant and feasible will help your business come up again and again in front of your prospects at the best time possible: when they are looking for the products and services you sell.
This content approach will allow you to reach your prospects in the manner they prefer and relate to best. Some prefer video. Others detailed reports and articles. Even others prefer shorter, less formal blogs. Some are avid podcast and audio listeners. Many check you out in their peer circles online and read review websites, and some just want to easily find a phone number to call you.
Strategically offering your content everywhere that is relevant to your audience yields great SEO benefits through search results visibility, favorable rankings and link popularity. Your properly crafted and presented content positions your business as ‘always on’ and available to educate potential customers and bring them through their buying processes.
Where do I start?
Start with what you already have and build upon it. You can create and deliver fresh online content in many ways:
- Optimize press releases and distribute both on your site and in online PR avenues.
- Create articles and slideshows (PowerPoints) from your product or service FAQs and/or a glossary of terms relevant to your product, business or industry. Help your customer understand and cut through the jargon.
- Suggest how-to’s and checklists for solving a customer’s pain, problem or need related to your service or product.
- Compile short and on-point case studies, success stories and client testimonials.
- Start a corporate blog. Rotate authors among your key employees each week.
- Make short (two minutes maximum) videos of the topics, articles and blog entries above. You can accomplish this with a basic video camera and editing programs.
- Record those topics, articles and blog entries as podcasts or audio clips.
Matching ongoing content opportunities with your strategy and audience relevance will guide your best choices and initiatives.
How do I put it all together?
Do the homework to discover where your customers go online in relation to your product or service. What associated forums, social networks and subject matter sites can you add value to by contributing your content? Where do you encounter your competition (and mentions of them) online?
Evaluate each content opportunity alongside your strategy to build leads and sales. Ensure that your content is aligned with the influence or outcome you expect. Identify how you will track and measure it. Make sure it provides a link back to your website, offering a call to action or a way to make contact with you. Then share it liberally.
Content is not a ‘set it and forget it’ thing. It is an ongoing process that works best with testing, refinement and refreshment. Great content marketing is also the surest way in today’s marketplace to bring your brand to your prospects’ awareness, and turn clicks into customers.
For a snapshot of Bayshore Solutions’ Web marketing methodology, visit www.BayshoreSolutions.com/method.
Kevin Hourigan is the president and CEO of Bayshore Solutions. Reach him at (877) 535-4578 or www.BayshoreSolutions.com.
David Pollack barely had enough time to get his business cards printed when he learned that he would need to get them changed. The chief operating officer at Molina Healthcare of Florida was now the president.
His predecessor was moving on to lead a sister company in Texas, leaving Pollack with a company that was full of both energy and inexperience. Molina Healthcare of Florida had launched a month before Pollack was named COO.
Then, in July 2009, a mere four months later, he was the man leading one of the newest divisions of the 2,800-employee Molina Healthcare Inc.
“We had a lot of people in first-time leadership roles as director-level people in the company,” Pollack says. “We were going through a natural evolution of starting up and going through the go-live part of the company. We had our first member and had our first product out in the field. We were going from that transition to starting to grow and starting to figure out where we were going to go next.”
Pollack had executive-level experience, so he wasn’t too concerned about his ability to map out a workable growth plan to expand the company and build partnerships with hospitals in South Florida. But he first needed to find out what he had within his leadership team. He had to know what skills his team brought to the table and whether those skills would be helpful in the 121-employee company’s effort to achieve its growth goals.
“We really tried to understand where our operational weaknesses were and how we could shore those up pretty quickly,” Pollack says. “When you’re stepping into a new role, the first thing you really have to do is understand the people you’re working with and how you’re going to be working with them.”See what your people can do
Pollack knew he needed to work effectively with hospitals and providers in South Florida if his company was to expand its presence in the region. At the same time, he had a young company with leaders who didn’t have a wealth of experience to fall back on.
But Pollack chose not to make any assumptions about the skills his people did or did not have. He would be ready to provide help and guidance if it was needed, but he would resist the urge to act as if he was the company savior.
“Just because you’re in a supervisory role doesn’t mean you have to micromanage or that you have to be involved in every single decision they are making,” Pollack says. “They were doing their job before you became their supervisor and they’re going to continue to do their job. As you learn what they are doing in a more detailed way, you can begin to coach them on things you want them to prioritize or do a little bit differently. But to me, you can’t go in there immediately and say, ‘I’m your supervisor and things are going to change.’ That heavy-handedness doesn’t work.”
If you go in with an open mind, you may find out that your employees already have a sense of how things could be done better.
“Usually an individual has ideas about what they want to change, what they would like to do differently and what they want to do better,” Pollack says. “So you can begin to bring that out by asking questions rather than directing immediately. My experience has been that most people really do want to do things more efficiently. … You can at least begin the conversation with those ideas and evaluate what they are thinking. Some of them may be great. Some of them may not be so good. But you can at least have an open dialogue about those ideas without feeling like it’s coming from the top down.”
Pollack recalled a prior experience with a woman who had been his peer for a long period of time. Then Pollack was promoted, and suddenly, he was her boss.
It offered him an enduring lesson on how to be an effective manager of people and why you shouldn’t make assumptions about what your people do or don’t know.
“I didn’t make her change just because she was now reporting to me,” Pollack says. “What we did do was really have an open discussion about priorities and about where she was spending her time, where she would like to be spending her time and how I thought she could better spend her time and the resources she needed to better her department.”
Pollack didn’t have a lot of time to get to know people at Molina before he became president. But that just meant he had to work even harder to build the important relationships that encourage people to open up about what they need to do their jobs better.
“People see how you treat people, how you react to people and how you handle adversity,” Pollack says. “To me, the leader has to be the calmest one in the group. People see that and they say, ‘Hey, this is something we have to resolve,’ rather than choosing to hide it for their own benefit.”
In order make it safe for people to bring concerns out in the open, you need to be the one out there asking the questions and showing them that it’s OK.
“You have to get out of your office,” Pollack says. “You have to talk to people. You can’t just talk to the people who you have your direct reporting relationships with. I’m not talking to them to put them on the spot or to grill them. You really just want to understand.”Make a priority list
Pollack found that he had a lot of talent at his disposal. What the company needed now was a road map to lay out how best to use that talent to help build those strong and valuable relationships with hospitals and providers in the region.
“There’s a long workflow with how we interact with our providers,” Pollack says. “We had processes set up, but again, as you go live, those things change. It really was identifying those priorities and taking steps to make sure that we handled that workflow better. It’s really setting out where you want the company to be in 90 days, six months and a year. It’s understanding what priorities have to be set in order to do that and how the different departments and directors within the company fit into that puzzle.”
Contracts with hospitals and providers were a priority, but it wasn’t No. 1. Some time had to pass before it could be addressed. But Pollack needed a clearer sense of what were the top priorities and which ones could wait.
“We kept trying to decide when the right time was,” Pollack says. “When did we have enough data? When did we have enough membership? When did we have our operational processes under control to know we were administering the contract correctly?”
Pollack decided to begin the process of getting things in order by making his own priority list.
“That really becomes the starting point of where to go,” Pollack says. “People like to know that there’s a plan and there’s a vision for the company. The president of the company should be the one to be leading it. I also think it’s important as a president or leader to know enough about what’s happening at the individual department levels to set those priorities appropriately. They’ve got to be based on reality.”
Pollack got his dose of reality from the conversations he had with his people to assess their skill levels. Now it was time to turn that feedback into specific priorities that would address the company’s larger performance goals.
“When you start to break it down into the different levels, you’ve got financial stability, you’ve got growth, you’ve got compliance and you’ve got customer service,” Pollack says. “Any priority that you set really has to fit into one of those underlying tenets for any company. What I always try to do is, I try to break things down to their lowest level. You can generally get started at the lower level. You may say, ‘Well, I want to grow 10 percent this year.’ What does that mean? How am I going to do that?”
Each priority needs a reason as to why it’s a priority and it needs action items that will help you accomplish the goal.
“So you may say, ‘I’m not growing, because my customer service problems are keeping me from growing,’” Pollack says. “OK, now you’re starting to get into customer service. ‘Well, why is customer service keeping you from growing?’ You keep breaking it down and that’s a good way to get started.”
Pollack put his list together and shared it with his senior leaders and asked them for their input on what he had come up with.
“So we’ll take that initial list and either expand it, collapse it or change it based on some of that input. It’s important for the leader to take that first look and say, ‘This is where I think we need to go.’ I would involve other people once I’ve gotten through my initial thoughts.”
The key to making a priority list work is that you find a way to keep it front and center in your workday and make sure it’s a constant in your daily routine.
“It’s just got to be easy to use,” Pollack says. “It can’t be complicated, and it can’t take a lot of time to develop or change. It’s in a prominent position on the left part of my desk. It’s in a different colored folder, the only one I have of that color. When I’m sitting at my desk, you can’t miss it.”Make it happen
our people need to know what’s expected of them to help your company meet its goals. Molina uses scorecards, a method that Pollack was only too happy to bring to his division in South Florida.
“Everybody is on the same page with expectations,” Pollack says. “‘Here’s how your performance is going to be measured. Here’s what we think is important for you to be doing.’ Part of the process in developing the scorecards is the communication between, in our terms, we call it the player and the coach.”
Everyone in the company, including Pollack, has a scorecard that tracks three to five metrics for which that individual is responsible.
“You don’t actually do the scorecards until the player has suggested the scorecard that they feel reflects how they contribute to the organization and the coach has signed off and said, ‘Yes, we agree with that,’” Pollack says. “This is about finding out where your weaknesses are and working incrementally to improve them. You use it as a counseling tool and a coaching tool, because there should be incremental improvement. It’s not about finding a way to fire somebody. It’s about making sure the expectations are set correctly and that people understand what they should be doing.”
Pollack uses the scorecarding method to make sure that everyone understands what needs to be done in the effort to build strong relationships with hospitals and providers. Ideas are first discussed with people he has gotten to know and then put on a priority list to make sure they are addressed.
They then are funneled out to people’s scorecards to make sure those goals are accomplished.
“It’s having agreement that, ‘Here’s the tasks that are going to be done and here are the time frames they are going to be done in,’” Pollack says. “You can look at it and say, ‘We’re doing what we should be doing.’”
Eventually, the hospital contract renegotiations rose to the top of the list. Data had been gathered, relationships had been built, and Pollack and his team felt like they were ready to embark on accomplishing this objective.
“You have to understand the data,” Pollack says. “What are the pricing points? What are the operational points that are required to work with the hospital? We’re just on the cusp of finalizing those renegotiations on a successful basis. It really is a lot of communication and face-to-face discussions that this is the right time to go forward.”
Pollack’s company generated $102.2 million in 2009 revenue, and he feels confident that things are on the right track to keep growing.
“There’s really no magic,” Pollack says. “Treat people the way you want to be treated.”
How to reach: Molina Healthcare of Florida, (866) 422-2541 or www.molinahealthcare.com
The term “disaster recovery” and its association with the cloud is used so much these days that it has become somewhat of a cliché. Floridians usually think of hurricanes; in California, its earthquakes; in the mid-west, the deadly tornado. But if you stop and think about it, the vast majority of disasters are really everyday events. Servers crash, buildings burn, power goes out. It happens.
Everyday disasters are the biggest reason why it is vital to have a comprehensive disaster recovery plan one that covers the everyday contingencies. If you properly prepare, you can keep business up and running with little to no loss. However, if you’re unprepared, you could lose time, money and business something no company can afford, especially in these uncertain times.
Smart Business spoke with Mark Swanson, the CEO of Telovations Inc., about how cloud-based communications can assist with your disaster recovery plans.
Why do you make the point that everyday disasters are more important to prepare for?
I am not saying to ignore preparation for the big things, but you need to be ready for the more likely disasters. Disasters are measured in terms of potential loss and the likelihood of an event. Everyone in our town thinks of hurricanes, so when there’s a seminar the planning is all around coping with a disastrous event. But if you look at the facts, there has not been a hurricane to hit Tampa since 1921. What you see are things like fires, highway crashes or a back hoe through the telephone lines. Also, if there is a big disaster, everyone is going to know it; there will be others (like the government, hopefully) to aid you and your customers will probably be more forgiving. However, if you tell them you are out for a week because your server blew up, you aren’t going to be given much slack.
Since there are so many possibilities, how can you plan for everything?
That’s the paradox, you can’t. The disaster that happens will not happen the way you thought it would. The key is making sure your lines of communication are understood and stay open. Once something happens, you will need to adjust your plan. In today’s highly technological world, a business can’t afford to be without phone, e-mail and/or Internet for even a few hours. Having all your communications capabilities phone, e-mail, conferencing, fax, etc. in the cloud provides what we call ‘disaster redirect,’ which is the built-in ability to redirect from the premise to the cloud. Backup servers are nice, but if you want to be truly covered, you should consider cloud-based communications.
Can you give an example?
Let me give you a true story from this past summer. We get a lot of thunderstorms in Florida and every summer we get a couple power flickers. But not that day.
As I prepared for a 2 p.m. phone call with a good business prospect, there was a brief flickering of the overhead fluorescent lights. I clicked to my Outlook Calendar and it happened again. I noticed my second monitor flash off and on a reminder that I should plug it into my UPS. I looked out the window to check for the ominous black clouds that warn of the almost-daily afternoon thunderstorms we experience in Florida this time of year. Skies were, however, sunny and blue.
Just as I opened my calendar to find the phone number to call, the lights flickered for the last time. Atop the eight-story building, a massive air conditioner unit seized up, shorting 220 volts of power and sending a surge to the main circuit panel. In the power room, the main breaker fried, causing a shower of sparks to cascade to the floor. The building was eerily quiet, dark and powerless.
Of course my calendar with the phone number I was about to dial was open on my second monitor, the one not connected to my UPS. I was already a minute or so late for the call as I fumbled to move the calendar from my blank monitor to my notebook PC. After several tries, I caught the menu bar with my mouse and was able to see the number. I clicked to dial the number and went into sales mode as if nothing had happened. During my conversation, the power went on and off again and again. When I finished the conversation a half-hour later, the power died for the last time. In fact, it did not come back until the next day.
Situations like this are why preparing for a disaster is so important. You never know what is going to happen, and disaster comes in all shapes and sizes. We had not rehearsed this scenario specifically, but I was glad our communications were in the cloud.
How did cloud-based communications help you with disaster recovery?
In general, cloud-based communications provide customers with the ability to reroute calls, dynamically set up remote office capability and manage their phone systems from a browser. This, combined with power and network redundancy, allows you to continue communicating even in the event of no power at all.
When our building lost power, the on-site batteries gave us time to move equipment around, tap into local wireless routers and decide which employees should work from home. Since all of our network equipment and servers are located in secure data centers, all our systems continued to operate as if nothing happened. Even when our on-site batteries ran down, our staff was able to work from home where they had access to the network monitoring and ticketing systems to continue business as usual. Our phones were diverted to employees’ mobile phones or home office phones, depending upon how they configured their individual profiles.
Other than getting a little extra exercise from walking down the stairs, it was just another day for our employees. But most importantly, not one of our customers ever noticed that we experienced and survived a disaster.
With cloud-based communications, you can continue with business as usual no matter what occurs. How would your business be affected if your building lost power for the entire day? Would it be business as usual? <<
Mark Swanson is the CEO of Telovations Inc. Reach him at email@example.com.
There are so many stereotypes about attorneys. Some of them are true, of course, but most of them are not.
Some attorneys are, for instance, sharp dressers, every bit the models for the top designers that you might expect, with perfect hair and a packed brain to match, but not all attorneys look like they belong on the cast of some courtroom drama that moves through its story arc each week in 44 minutes flat.
Some attorneys are fast and slick and out to make a quick dollar or a quick couple of thousand dollars but not many.
And, yes, some attorneys are blindingly intelligent and able to rattle off laws, statutes, regulations and court cases long since decided as if it were their job because, well, it is.
Your attorney is not a heart surgeon, a rocket scientist or a neurophysicist. He or she might as well be, though, to handle the level of work and degree of difficulty required during the last couple of years. After all, you have probably rarely called your attorney for something casual during these strapped economic times. Calls always seem to be reserved for something expensive and stressful that has to be handled correctly.
“Clients aren’t going to necessarily tell us what they think is wrong unless we ask them,” says Carl Schuster, president and managing director, Ruden McClosky. “If we ask them, they’ll generally tell us.”
You might be in the midst of not passing along important information to your attorney perhaps not for the first time right now, right as you read this sentence. A majority of attorneys say this is an opportune time to think, then think again, about your business strategy and to examine the economic landscape, because there are opportunities available right now, even in slower industries, that will not be available for long. If you can afford to, this is the time to move. And if you have a good attorney on your team of advisers no stereotypes here you already have about as good an ally as possible to help steer you forward.Remember the past
The last couple of years have provided you with a new set of challenges. Perhaps you needed to lay off a percentage of your employees, close a branch of your business or just do more every day with an already overworked, if not smaller, staff. Odds are your attorney was with you during many of those moments because even if you didn’t work more with your attorney in order to save legal fees, you probably called and talked more often.
That is, at least, what many attorneys are saying.
“The problems have been more severe and there’s been more need for preventative legal work,” says Bowman Brown, partner, and chairman of the executive committee and the financial services practice group, Shutts & Bowen LLP. “Certainly, we’ve been busier in the last couple of years than we’ve ever been, and we’ve had much, much busier years in the last couple of years. This year will be a record year with the way things are going in terms of activity.”
The amount of work and communication required of some attorneys will also likely increase through the rest of 2010 and during the early months of 2011.
“If we turn the corner and things start to get better, I expect there to be a lot more transactional activity, a lot of merger and acquisition activity, a lot of businesses rebuilding or getting back on a growth track,” Brown says. “I think that will create an increase in activity.”
Until then, the existing bump in bankruptcy, commercial litigation and corporate reorganization sure signs of an economy that has seen better days, months and years will likely continue.
And valuations are still historically low though not as far in the cellar as they were during much of 2009 which means now is still a good time to examine and consider estate and succession planning. What will your business do after you’re out of the top spot? Who will own the business? Who will be in charge? And were you able to take advantage of a down market to pass it along at a better rate?
There are plenty of other things you should consider with your attorney before the economy starts to bump up a little more.Look ahead and plan
Did you manage to obtain any sort of credit during the last two years? If so, congratulations. That is quite an accomplishment. If not, no worries, because not many other companies did either. That said, some good news for the coming year is that credit is expected to be more available in 2011 than it has been in several years.
More credit is just one of the major points of interest for attorneys during the next six to 12 months. Because of those increased lines of credit, much of the next year will likely include a focus on mergers and acquisitions. Some attorneys say that M&A activity increased during the first half of 2010 before slowing some during the last four months, but no matter your city or region though Miami and the rest of South Florida are expected to lag behind much of the rest of the nation M&A activity will likely be prevalent by the time the calendar turns.
“Admittedly, there isn’t as much merger and acquisition activity going on now as there was before,” Schuster says. “I think the problem is businesses very often wait too long until they decide it’s time to sell or it’s time to merge. Very often, you see businesses closing down because they’re too deep into it already and they can’t get out, and no one at that point is interested in buying them or merging with them because it’s suffered such a big blow that it’s too late to do anything about it.”
Alternative fee structures and arrangements or at least discussions about them are also expected to increase in 2011. Some firms have provided them for years as an option, others have added them only during the last couple of years as clients asked for them, but there does seem to be a split between clients who are more open to alternative fee structures and those who hold tight to the hourly rate.
Even if you have no interest in alternative fee structures and will renew your proverbial subscription to the hourly rate, at least starting a conversation with your attorney or legal team about some other option might not be a bad idea, especially with the economy and cash flow still in flux.Ensure your value
How can you be certain that you will receive as much value as possible from your partnership with your attorney? Communication, of course the seemingly simple center of every conversation and great relationship remains the top priority. If you do not talk regularly with your attorney or if you rarely, if ever, ask questions or send recent documents and forms, you need to communicate more.
Most attorneys say they like to talk with clients at least once per month, just a casual meeting for breakfast, lunch or coffee to sit down and talk about you and your company, especially if they work with you more as an adviser than as an auditor though every relationship is different.
“You can really build good relationships in two ways,” says Andrew C. Hall, founding and managing partner, Hall, Lamb and Hall P.A. “The first way is to have effective communications. Companies should tell their lawyer not only what the problem is but also where they’d like to end up if they could.
“I need to know as much information as I can when I’m advising. I need to know the things that you don’t want to tell me. [Those are] the things that I probably need to know the most. You need to break down your fear barriers and tell your lawyer all the bad news right up front. The sooner you tell them, the less exp ensive the process is and the better the advice is, the better the performance is. Get the bad information out front, get the realistic goals set as quickly as you can and then communicate effectively with each other.”
And if you’re not pleased with the quality or the nature of the relationship you have with your attorney, for any of a number of reasons, the time to consider a move might be now. Rates are historically low, and this is perhaps the best buyer’s market of any of our lifetimes.
“But a business should only change firms if it’s dissatisfied with the services being offered by its present law firm,” Schuster says. “I don’t think there would be any other reason to change. There may be certain situations where a firm’s rates are just so high in this economy that a business can’t afford them, and that’s one thing. But if rates really haven’t changed very much, the only reason to change would be that a business is dissatisfied with the services rendered.”
You might want to consider a change if you have just outgrown your firm and need a firm with a larger regional, national or international footprint.
You might also consider asking your attorney about any changes in rules and regulations for 2011 and beyond. Asking whether the firm offers any corporate education that you and your employees might be able to put to use would also be a good idea. And asking for a review of your corporate structure, especially for possible inefficiencies, would not be a bad use of time or money. What are your employees earning? What are your executives earning? What else are you paying for? And is it really worth the cost?
“Lawyers should do what we do best, which is not only give legal advice but also give strong recommendations as to how to implement that advice,” Hall says. “We tend to give neutral statements of law and let clients struggle with the decision that should follow from it on the basis that that is a business decision. I think our clients want a little more from us than that. They want the benefits of our years of experience, if we have them, in terms of what solution works best in practical terms.”
Because in a world and an industry filled with so much change during the last couple of years, something needs to stay the same.