Houston (992)

Monday, 23 December 2013 07:15

Working Globally: Linda Toyota

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‘As the World Turns:’ We can be more productive together if we are aware of cultural nuances

When I look at Houston, the title of the long-running television show, “As the World Turns,” comes to mind. Houston is undergoing an ethnic and cultural transformation and at the same time its reputation continues to grow as a place where people can dream and succeed.

The city’s transformation into an international megalopolis has happened within the past few decades. The metropolitan region is now home to nearly 6 million people. This growth has been significant, but the nature of the growth is also of interest.

Between 2000 and 2010, Houston added more than 1 million people, which is more than any other metropolitan area in the U.S., according to the Kinder Institute for Urban Research at Rice University. Additionally, the Kinder Institute found that Houston has become the most racially/ethnically diverse metropolitan area in the country during this period. Thus, it is not only Houston’s size that has grown but its diversity as well.

The Asian-American segment is booming

One demographic that continues to grow in Houston is the Asian population. According to the Greater Houston Partnership, the Asian population in Houston has grown 70 percent between 2000 and 2010. This trend is not exclusive to Houston. Asian-Americans are the fastest growing multicultural segment in the country, increasing nearly 58 percent between 2000 and 2013, which is nearly five times faster than that of the general population, according to The Nielsen Co. report “Significant, Sophisticated and Savvy: the Asian American Consumer.”

As the president of the Asian Chamber of Commerce, I have the opportunity to interact with Houston’s Asian business community and Greater Houston’s business community. Both of these groups continue to have increased interaction with one another as Houston’s internationalism continues to rise. As such, this vantage point has allowed me to pinpoint the issue of cultural misunderstanding as a barrier to better collaboration and productivity for all.

Understanding the relationships

The pattern I perhaps see most is related to how misconceptions of cultural behaviors lead to misunderstanding and sometimes missed opportunities. The truth is that when working within a global context, we encounter individuals whose behaviors in business environments are markedly different than to what we are accustomed. Sometimes misinterpretations of these different behaviors act as a barrier to productivity, collaboration and innovation.

In his book, “The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies,” Scott E. Page, a professor of political science and economics at the University of Michigan, asks the essential question for a rapidly globalizing world: “How can we all be more productive together?”

Page says the answer is actually in environments with individuals from vastly different backgrounds and experiences. Our differences are what make us stronger. Other studies have shown that groups that include a range of perspectives and skill levels outperform like-minded experts.

In the global world today, we must all play an active role in breaking down barriers that prevent us from reaping the rewards of embracing diversity. One of the most common barriers we face are cultural ones. We may perceive the cultural social practices of one group to signify something completely different than intended because we understand it through our cultural lens. However, it is to our benefit to educate ourselves and look below the surface.

This can often be done by studying the practices of other countries or by joining diverse organizations. Often, we share the same values with those we interact and hope to collaborate with. We must not let misperceptions stand in the way of realizing the true potential of what can come of embracing diversity.

Linda Toyota is president of the Asian Chamber of Commerce of Houston. With more than 20 years experience in the nonprofit community, she has worked with a wide array of nonprofit organizations including the Holocaust Museum Houston, the Houston Technology Center, the Texas Heart Institute and the Houston Area Women’s Center. Contact her at ltoyota@asianchamber-hou.org.

Taking an innovative idea, developing it and bringing it to fruition through an incubator/accelerator has proven to be the magic combination for Houston’s Rebellion Photonics. And it may totally change how leaks and explosive accidents are monitored on rigs and at refineries.

The company recently took top honors for its Gas Cloud Imaging Camera in the inaugural Wall Street Journal StartUp of the Year competition of early stage companies. The 2013 winners of the competition were chosen from more than 24 startup companies and from more than 500 applications to participate in a 20-week competition. Company entrepreneurs were assessed on the basis of their firms’ scalability, long-term viability, originality and distinctiveness of their products and services, utility and ability to perform tasks the competition set for them.

“We build cameras that don’t just see colors — they actually identify chemicals,” says Allison Lami Sawyer, CEO and co-founder of Rebellion Photonics. “Instead of seeing red or yellow, the camera sees a methane leak on an oil rig, or it sees a cancer cell instead of a normal cell.”

The core technology was invented at Rice University in Houston and was originally created for biomedical research. Biologists wanted to see live chemical reactions, something they could not do with old technology.

“With old technology, it could take up to two minutes for a camera to take a single image” Sawyer says. “You usually kill the cell in two minutes, and you are definitely not seeing it in real time.

“Our breakthrough product is our Gas Cloud Imaging Camera, which is used for rig and refinery safety. Essentially, the Gas Cloud Imaging Camera identifies gas leaks before there is a hazardous leak or explosion. We take real-time video while our competition may scan each frame line-by-line, and take eight seconds to take one frame. We are imaging at 30 frames per second.”

Sawyer says since reactions happen quickly, leaks need to be detected in less than a tenth of a second.

“We can do that, but — this is incredibly important — you need very high sensitivity. We are often measuring chemicals at parts per million sensitivity. That’s what you need for real world, out of the lab, applications.

“We get a lot of questions about camera range; essentially, our camera can see as far and precise as the lens you put on it,” she says. “For example, if you put our camera under a microscope, it can see at nanoscale precision. When you put the camera in a drone plane and put a spy lens on, it can see for miles. Or you could put a regular Nikon lens on it, and you are just going to see across the room. And even more exciting, you could put it in a satellite with an 18-foot lens and you can see your car from outer space.”

While the development may change the safety process at rigs and refineries, if offers other important applications.

“That is really exciting because it means we can get into all these different applications,” Sawyer says. “We are hoping to make cancer research more successful; we are hoping to make rigs and refineries safer places to work. We hope to help the U.S. defense program. We really believe in the products we are making, and I get to hang out with really cool people all day. This is basically my dream job.”

Dr. Robert Kester co-founder, CTO and inventor of the product, says Rebellion Photonic’s award is exciting.

“The first week or so after we won, our phones were ringing off the hook,” he says. “Several of our big customers sent us congratulations, and what was really exciting was that they were talking about new applications for our camera.”

Working with an accelerator

Rebellion Photonics was founded in 2009 at the Houston Technology Center. As a client company of the center, Rebellion Photonics and Sawyer receive strategic business guidance and direction as well as the opportunity to meet with energy industry mentors and business advisers.
The Houston Technology Center is integrated within the Houston community, not just with other startups, but with corporate America, often serving as an important bridge between the two.

“HTC was incredibly helpful in getting our name out there, with the publicity, and then also introducing us to companies that we would never be able to get into the door on our own,” Sawyer says.

She says that with the publicity over the Wall Street Journal award, website traffic went from a few hundred visitors a month to more than 20,000 visitors in the month they won the competition.

“We are booked solid for product demos until the first quarter of 2014,” Sawyer says. “On the customer front, I really think this has pushed us forward at least six months, maybe even a year. So it has been pretty priceless.”

Rebellion Photonics has been a notable company since its inception. Sawyer and Kester first met at the Houston Technology Center as a consequence of its “Commercialize It” program. The Houston Technology Center’s Innovation Pipeline and Commercialize It programs work closely with major regional universities and institutions to identify and encourage the best innovations to go the last mile to commercialization, whether it’s breakthroughs in energy, new therapies for patients or disruptive materials for consumers and industry.

Rebellion Photonics has won several awards including: the first Goradia Innovation Prize at the Houston Technology Center’s Innovation Conference & Showcase in 2010; a Texas Emerging Technology Fund investment; runner-up in the 2010 Rice University Business Plan Competition; and with the support of the Houston Technology Center and Jones Partners, it won the international King of Thailand prize.

The Houston Technology Center’s acceleration program aids its clients in formulating a compelling business proposition in order to prepare them to generate revenue or raise capital. Its clients work with an acceleration director who guides them in developing and executing their business strategy to achieve their individual goals.  
The Houston Technology Center provides introductions to advisers, funders and customers through networking opportunities and events. Clients graduate with sustainable revenues, a credible team, a validated product and a compelling story.

Currently, the Houston Technology Center has 40 acceleration clients, as well as a growing number of incubation clients at its Johnson Space Center location.

How to reach: Rebellion Photonics, (713) 218-0101 or www.rebellionphotonics.com; Houston Technology Center, (713) 658-1750 or

Follow Rebellion Photonics on Twitter @RebellionPhoton

Clark David Baker, president and CEO of the YMCA Of Greater Houston, doesn’t have to dig deep to find an example of how the YMCA assists future business leaders in the region.

Benton Love, former president of Texas Commerce Bank, and Gerald Hines, founder and chairman of Hines, one of the world’s largest real estate companies, both share something in common besides success in their respective fields: Both at one point lived in housing provided through a Houston YMCA residential program.
“We’re a people organization,” Baker says. “Therefore, we don’t make widgets; we build people.”

The 37 YMCAs that comprise the organization that has been a part of Houston for 127 years serve 100,000 people weekly through its programs, which are lead by 6,000 full-time staff and 13,000 volunteers. Houston, however, is not the same city it was more than a century ago — in order to cater to this generation of residents, you have to understand them.

“Back in the day when I was coming along, we threw a couple of basketballs out in the gym and everybody just came and played. Everybody got along, everybody looked the same, everybody was lower-middle income,” Baker says. “You come to Houston, Texas, (today) and we’re the most diverse city in the country. We speak 23 languages here at our YMCA.”

While the community the YMCA serves has changed, the organization’s mission hasn’t.

“Our core values are the same. Our core programs are the same,” Baker says. “But in Houston you’ve got to be sitting on the edge of your chair because of this multicultural community — one size doesn’t fit all.”

Here’s a look at how the YMCA has evolved with the times, placing an emphasis on getting a diverse, qualified staff to serve a diverse population.

Building the leaders of tomorrow

The key to serving that diverse community is finding the right people for the job.

“One of the wisest men I know told me there are only two things that can get you in trouble: You’ll run out of money, or you’ll run out of talent,” Baker says. “Spend your time on the talent, and you’ll never run out of money. So we hire passionate young people who want to make a difference in the community.”

According to Baker, the YMCA’s professional-level jobs offer competitive pay, resulting in 20 to 40 applicants for each opening.

“We’re a great place to work,” he says. “We’re a great service to our community and people want to work for us. So we do not have a staffing shortage or a crisis in getting talent.”

Volunteers primarily come from the families of the children served by the YMCA. He says 73,000 kids played youth sports last year, all coached by volunteers.
While filling positions seems to come easily, developing the organization’s future leaders gets special attention.

“One of my jobs is to recruit, train and retain the best and the brightest people available. We have a serious commitment to training,” says Baker.

To that end, the YMCA makes a significant investment in preparing its staff to advance, as evidenced by the $3 million it earmarks for training out of its $115 million annual budget. It also has a 35,000-square-foot training center located in the center of its service area, which will train about 2,000 people this year, according to Baker.

The two-story YMCA Center for Leadership Development has conference and training rooms and a computer lab through which webinars and other online training programs are hosted for those who can’t be there in person. It also houses Springfield College, which assists the YMCA with leadership development.
“We grow our own leadership,” Baker says.

The YMCA also uses career mapping coupled with a personal development plan for all full-time staff that plots where the employee wants to get in the organization and helps him or her understand how to get there. Testing is conducted to see where employees excel, and gap analysis is used to see what skills the employee lacks. Each employee’s career development plan is reviewed every two to three years to track progress.

The YMCA also utilizes external quality measures to rate performance, such as the Net Promoter Score, which is used to gauge customer satisfaction. The staffers who run YMCA programs get measured regularly through the NPS, and from that each staffer’s gap analysis data is gathered.

Baker adds that the Houston YMCA has 10,000 donors who give annually to keep the organization’s work going. Satisfaction, then, can be measured by how many of those donors return to give the next year.

“And, thank heavens, we have about 90 percent of the people who give to us give annually for years and years and years,” Baker says.

But does all this training work?

“I would suggest that we have very low staff turnover. Our jobs are coveted. If we open a director’s job at one of our Ys, we have three or four of our staff who are qualified for that, and we’ll get them in front of a local board, which has a lot to do with who we hire,” Baker says.

Additionally, Baker says during his 57-year tenure he’s helped develop 23 staffers whom are now CEOs leading YMCAs around the country.

“You want to be known as a good person to work for. And I like to think I’m a good person to work for. I want them to come in and have a joyful experience; they’re all going to work hard. But I think your measure of success is who did you train and how well are they doing,” Baker says.

However, before a CEO can be placed, he or she has to be discovered.

“The simple answer is you want to find passionate people who believe in your mission,” Baker says.

He looks for people who “have a head for the business and a heart for the mission. There’s no mission without money, so you’ve got to be a good manager, you’ve got to know how to do a budget, you’ve got to know how to stay in a budget.”

Find value in a homegrown product

Baker himself is no stranger to the YMCA’s method of growing its own leaders. He’s been with the organization since he was 12 years old and was recognized by the director at the time as having a potential future with the YMCA.

“The joke is I went to the Y one day and just never went home,” Baker says. To keep the YMCA membership he received as a gift from a neighbor when he was 10 for a third year, he needed to work for it, so he started mowing the YMCA’s yard.

“At 12 years old, I could mow the grass with the best of them. I was a good edger with the old hand clippers. I used to pride myself on squaring the corners when I mowed. I got recognized by the (YMCA) director who told me if I took as much care with my job as I did with that yard, I had a future working there.

“So he gave me my first job. I was a gym attendant — I put the balls out and kept score at the games and kept order in the gym,” he says. “That’s how I started. So I literally started at the bottom and worked my way up.”

Baker stayed with the YMCA, working during his two years at Vincennes University.

He went on to Covenant College in Georgia, where he graduated with a bachelor’s degree in recreational management, before spending three years in the Army as a personnel specialist.

He says the Army gave him the chance to work with many different people from many different places.

“The Y and the Army are very similar in that regard. We’re a melting pot. We work with everyone. The end of our mission statement has two words, ‘For all.’ In Houston, Texas, that means the haves and have nots, both sides of our community.”

Baker was back in the U.S. in 1970 and was offered a job at the YMCA as youth director.

“And that was my first real job — you have a lot of jobs, but when they give you benefits and put your name on the letterhead you’re a real staff member then,” he says.

The job paid $5,500 a year with $100 a month to buy health insurance.

“The YMCA and the United States Army are the only places I’ve ever worked. I love the Y, and I love the job. You never made a lot of money but you always felt good about the money you made,” Baker says.

Telling the story

Before electricity, bug spray, air conditioning and the telephone appeared in Houston, there was a YMCA, according to Baker. And with its wide reach through all levels of class and culture and its aim of inclusion, the YMCA touches many Houston residents.

“Our business model is to charge those who can pay, and let those who can’t come in free. That’s a terrible business model, but it’s a wonderful human service model. We still deny no one service due to their inability to pay,” Baker says.

The Houston YMCA is a 4-Star Charity, according to Charity Navigator, which rates nonprofits based on financial health and their accountability and transparency. According to the site, among the more than 6,000 charities evaluated by Charity Navigator 30 percent obtained a four-star rating.

It seems many people recognize, utilize and appreciate what the YMCA brings to the Houston community. But making sure the story gets told and the brand’s strength is maintained takes work.

“Back in the day Santa Claus, Coca Cola and the YMCA were the three most recognized names in the world. Everyone you talk to loves the YMCA, but they don’t all know why,” Baker says. “My job and our marketing people’s job is to tell people why they need to love us.

“We’ve got the audience; we just have to tell the story. The best way to tell the story is to let them tell the story. So we believe in T-shirts, we believe in bumper stickers.”

The organization also has “mission moments,” which are stories told about what the YMCA means to somebody, what happened in someone’s life because of YMCA classes and programs.

The Houston YMCA has been telling its story since 1886 when the city had 12,000 people, and has managed to stay successful, much like its leader.
“It’s been a great career, a great opportunity,” Baker says. “It’s not a job. It’s a real ministry. You get up every day and you help people. It’s been good to me, and I hope I’ve been good to it.”

How to reach: YMCA of Greater Houston, (713) 659-5566 or www.ymcahouston.org


Foster homegrown leaders.
Utilize leadership development programs.
Measure progress to support personal growth.

The Clark Baker File

Education: Bachelor’s degree in organizational management from Covenant College in Lookout Mountain, Ga.

Born: Washington, Ind.

Hobbies: Baker is a pipe organist, which he says can be a difficult hobby to keep. In order to have access to the instrument he says, “You’ve got to become friends with pastors.”

Being friends with pastors also helps Baker with another hobby of his, attending estate sales and collecting antiques, particularly of the religious type. His best pick is two prie-dieux items from a church that closed in his hometown.

Baker is also a boater, owning a Carver 33 Mariner. “It’s old but it’s faithful, like me,” he says. “Boating is family and friends — you can always find somebody to go out with you.”

What’s one thing you’d love to talk about but never seem to get the chance? Probably my military service. People never ask what I did in the military. I was able to travel to 15 countries in Europe and abroad. For a little boy from Southern Indiana, those are big stories.

What’s your advice for burgeoning young leaders? Distinguish yourself in some way. Be known for something. There are too many people in the crowd; how are they going to know it’s you?

Who contributes most to your worldview? Malcolm Gladwell. He’s really an anthropologist helping us understand how we live today, why we do things we do today. I find since I work with people and since people are what I believe in I need to read books about people and their thoughts and their ways.

Facebook: www.facebook.com/YMCAHouston
Twitter: @YMCAHouston

Monday, 23 December 2013 01:42

Charitable Giving Front: Deena Carstens Munn

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Donate with a plan: Is charitable giving good for business, or just good business?

Companies big and small are seeking ways to give back to their communities. As they do, they’re marrying corporate objectives with community needs, resulting in a victory for businesses and charities alike.

The days of absently writing checks have passed and the era of strategic giving is upon us, which means more work for both parties.
For companies, it means having a well thought out strategic plan for community investment, which includes internal and external engagement. For charities, it means they must better understand each company, their philanthropic programs and business goals, and offer appropriate options for support.

For a company to create a sustainable strategic plan that supports its triple bottom line — people, planet and profits — it must first determine the types of contributions it may offer. A robust philanthropic program will typically offer a combination of non-cash or in-kind product, cash through foundation, or corporate grants and volunteerism.

Non-cash or in-kind product could include software, hardware, printing services, computers, airline tickets, books or corporate assets such as used tables and chairs. Cash is the top means of support offered to charities, which may fund events that in turn fund programs. But it’s advisable to review a full list of funding options to determine the best strategic fit.

As for volunteerism, there are many ways to engage employees, but here are a few:

Employee giving programs

Employees are often looking for ways to get involved. Offering them a structured program such as United Way, EarthShare or your own signature program through which they can engage a charity will empower generosity and engagement. Company matching goes a long way as well, but isn’t a must.
Day of giving

Create an occasion to come together as a group for a day of volunteering or a community project. It will show your employees and the community that you care, and you will find employees are happier because helping the community is the right thing to do. It’s a great team building opportunity, too.

Paid volunteer time-off

Offer employees one day off per year to support causes that are aligned with your business. It promotes goodwill and allows your company to work together with employees to make a difference. Skills-based volunteerism, or volunteerism that capitalizes on talents, business skills, experience or education, requires more thoughtful engagement and is the perfect intersection of business and community.    

The biggest challenge I see with corporate giving today is what I call “repeat philanthropy,” meaning companies will fund the same causes and organizations year after year. While repeat philanthropy is financially beneficial for charities, it also introduces risk when budgets, management or focus areas change.

Thoughtful planning will promote proper engagement on all levels and build sustainable programs to ensure long-term success. After all, corporate giving can help attract and retain employees, imbue employees with pride and let employees know that the company cares about not only building its profits, but about the community and the planet, which certainly makes charitable giving good for business as well as just good business.

Deena Carstens Munn earned a degree in sociology from the University of Florida. She has over 10 years of experience in corporate philanthropy and over 20 years of experience working with nonprofit charitable organizations. She is the founder of the Houston Philanthropic Society and also works for IHS as a senior sponsorship manager for CERAWeek. Munn has enjoyed volunteering for Hospice of North Central Florida, Texas Children’s Hospital, the Greater Houston Partnership (Energy Collaborative), Houston Technology Center, Christian Community Service Center (CCSC), P.A.W.S. Houston and The Nature Conservancy. For more information, visit www.houstonps.org.

To learn more about the Houston Philanthropic Society, like its Facebook page www.facebook.com/HoustonPhilanthropicSociety and follow on Twitter @HoustonPS.

Monday, 23 December 2013 01:24

Business Initiatives: John Allen

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Re-evaluate and refocus: These five resolutions for the New Year can help you tone up your business

It’s 2014 and time to think about those New Year’s resolutions that can help you shape up. No, not your waistline — your bottom line. For many businesses, the past few years have been anything but kind. If you’re lucky, your company is still relatively fit — it may just need to tone up. Other companies, however, are far from peak condition.

As a smart business owner, you know what you need to do to keep your company in shape, but like most of us, you need occasional reminders. The following tips are just that, simple reminders of what you need to do to get your business in tip-top shape and ensure your company is strong enough to bear the weight of whatever lies ahead in 2014.

1. Refocus on fundamentals — To identify growth opportunities, business owners often focus their energies externally. Don’t lose sight of hopeful prospects, but refocus some of your time and attention internally. Examine the core functions of your business operations to be sure the fundamentals are sound and the infrastructure is strong.

2. Repair what’s broken — If some aspect of your business isn’t working, it’s time to fix it. Managers are often so busy they don’t focus on functions that aren’t operating as efficiently or effectively as they should be. Take time to examine your processes, procedures and even people, and make changes where necessary.

3. Re-evaluate and retrench — In the same way a few extra pounds can make you feel sluggish, having your company grow beyond a level it can comfortably sustain will cause it to be out of shape and ineffective.
Are you operating outside of your wheelhouse? Have you expanded beyond your core business — and beyond your comfort zone? Just as it is easier to lose five pounds than 10, it is better to recognize issues early than wait and let the burden of added weight take a toll on your business’ long-term health.

4. Reduce waste and reinvest in your business — Reducing your waistline is one way to shape up, but may I also suggest reducing your “waste line.” Look around your company. Where can you reduce costs?
And while you’re at it, look for ways to reinvest in your business, especially infrastructure. Sometimes you need to spend money to save money. Investing in advanced technology or more automated processes can help you save money over time.
5. Re-engage and reward employees — It’s been a challenging few years. At one time or another your employees have probably worried about their jobs and their financial futures.  

Such distractions can lead to reduced productivity. Keep your employees engaged and productive. Communicate openly, honestly and often. Offer opportunities for professional development, such as a training seminar, a mentoring program or a challenging project. Reward key employees with new responsibilities or a new job title to recognize their hard work and keep them motivated.

Just like getting your body in shape takes willpower and resolve, getting your company in shape also takes discipline and determination. The process, however, can be energizing and exciting, and the results can ensure your company’s strength and long-term health. Get moving and have a great year.

John Allen is president and COO of G&A Partners, a Texas-based HR and Administrative Services company that manages human resources, benefits, payroll, accounting and risk management for growing businesses. For more information, visit www.gnapartners.com.

To learn more about G&A Partners, like its Facebook page, www.facebook.com/gnapartners, and follow on Twitter @GAPartners.

The communication between independent auditors and audit committee members of public companies will change in 2014 with Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 16.
The PCAOB’s standard is effective for audits of fiscal years beginning after Dec. 15, 2012.

“There’s an emphasis on two-way communication and the timeliness of communication,” says Dale Jensen, partner-in-charge of the Public Company Audit Practice at Weaver. “These requirements should only help the audit committee better understand the audit process and the results.”

Smart Business spoke with Jensen about PCAOB Auditing Standard No. 16’s implementation and how it changes auditor responsibilities.

How will communication between auditors and audit committees change?

Generally, the standard seeks to create more effective and timely two-way communication between the auditor and audit committee, including sharing what discussions have occurred between the auditor and management during the audit. It standardizes what is communicated and when.

Part of the standard addresses the appointment and retention of auditors — general information relevant to the planning of the audit. Committee members need to understand what auditors will discuss with management prior to the auditor retention. Many public companies won’t see a change here if they are following best practices. But some concepts have been expanded, such as requiring auditors to ask the committee if they are aware of any matters relevant to the audit, including knowledge of possible law violations.

The standard also discusses the audit’s results. Auditors already were disclosing many of the required items, such as significant and critical accounting estimates, and significant and unusual transactions. Now, the auditor must also communicate:

  • Difficult or contentious matters about which they consulted with management.
  • Matters that resulted in a going concern consideration, how the matter was alleviated, and the effects on the financial statements and audit opinion.
  • Any departures from the standard report.

The auditor also must share the results with the audit committee before issuing an opinion on the financial statements. This provides committee members with the opportunity to gain an understanding and address questions with the auditors prior to the issuance of the opinion and Form 10-K filings with the Securities and Exchange Commission.

Does the standard specify what type of communication is required?

Some things must be in writing, such as engaging an auditor, but, overall, communication can be written or verbal.

Auditors can communicate the required items solely in writing. However, verbal communication can help committee members truly understand the nuances of what’s being reported. For example, auditors may share audit results over a conference call or at an in-person meeting. This opens up the dialog and creates an opportunity for the audit committee to ask questions to gain a better understanding of the audit process, specific findings, etc. The key here is to allow adequate time for the auditors and audit committee members to have these discussions and to work through any issues or questions that arise.

How much impact will the standard have?

Overall, the impact of this standard will be positive because it’s enhancing two-way communication between auditors and audit committees about matters of importance to the audit and the financial statements. How much impact it has will really depend on the company, what its issues are and how information has typically been communicated to the audit committee in the past.

Dale Jensen, CPA, CFE, is partner-in-charge of the Public Company Audit Practice at Weaver. Reach him at (800) 332-7952 or dale.jensen@weaver.com.

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Most everyone is aware of the seismic changes occurring in the health care industry. While the implementation of the Affordable Care Act is garnering most of the attention, a fundamental shift is occurring in the health care real estate business.

Buoyed by a perfect storm — providers are receiving lower reimbursements, construction costs are rising, interest rates are slowly nudging up — hospitals and doctors are searching for ways to most effectively and efficiently treat patients as trends suggest there will be more health care services needed, but patients will make fewer facility visits. This requires a sea change in how health care real estate is realized.

Smart Business spoke with Beth Young, senior vice president of Colliers International, to learn more about where health care real estate is headed.

New Campus Structure

A growing trend is the popularity of off-campus medical office buildings (MOBs). More and more physician practices are moving from central hospitals to retail options in the suburbs. Freestanding emergency and urgent care centers are sprouting up. The competition is fierce. Some hospital systems are erecting emergency centers directly across from competing hospitals. Others are master leasing excess space in MOBs in order to establish a competitive recruiting advantage under the assumption that the best and brightest physicians will be drawn to systems with roomy, plush office space.

Green Movement

Physicians tend to be attracted to green buildings. A somewhat surprising trend, because of the high upfront costs, is the construction of 40,000-50,000 square foot Leadership in Energy & Environmental Design-certified MOBs. However, because of lower operating costs, green buildings are a smart long-term investment. Developers are quoting operating expenses for LEED-certified MOBs at $4-$5 per square foot per year, compared to $10-$14 in older, non-green buildings.

Repurposing Real Estate

In an industry driven by mergers and acquisitions, it is inevitable that there will soon be fewer, but larger hospitals. Systems with real estate leases spread across large cities are struggling to determine what to do with their properties. Obsolete or underperforming buildings may be sold or redeveloped. Options for repurposing include skilled nursing, hospice, post-acute and long-term care.

Multiple properties may be consolidated into a single building. A significant single-tenant trend is developing a large “destination” that will provide multiple specialties including emergency departments, ambulatory surgery centers, radiology, pediatrics, orthopedics, common waiting areas, snack areas or restaurants, and in some cases even workout facilities.

Construction Prospects

New construction opportunities will be limited, as fewer large hospitals will be built. Most new buildings will be small facilities situated near residential communities. In an effort to shield themselves from risk, many hospitals moving forward with off-campus projects are opting to partner with outside firms that bring clinical or other expertise to the table. Some systems face obstacles when erecting off-campus buildings. They want to be in residential areas, but find that land is expensive because of zoning issues. Further, they are concerned about the future use of a potentially obsolete property at the end of 10-15 year leases.

More for Less

Non-traded Real Estate Investment Trusts are raising $1 million dollars per day to invest in medical properties. However, there is scarce supply compared to the amount of money available for investments. Cap rates are expected to stay flat because of the large sum of money being invested. In such a climate, preferred yield is difficult to achieve. Some people are concerned that such conditions will create overpricing of health care properties. However, underwriting appears sound compared to recent history — investors are not jumping at deals just to acquire a health care property.

Market Conditions

It is expected there will be 50 to 100 basis points increases in the long term, but no changes short term. The markets are more competitive, so acquisitions are accelerated. A greater amount of debt is available and there is less structure. From the equity side, the further a project strays from basic MOBs the harder it is to obtain financing. Projects such as assisted living buildings present more challenges as such projects require more of a multi-family model. Lenders, for their part, say they generally prefer owner/operators to third-party developers.

Beth Young is senior vice president of Colliers International. Reach her at (713) 830-2166 or beth.young@colliers.com.

Houston is known for many things: rockets, energy, the Astrodome and Beyoncé. It is also one of the top-performing U.S. metropolitan areas as measured by nearly any business or economic indicator, making it a cost-effective and internationally competitive business environment.

Houston is the fourth largest city and fifth largest Metropolitan Statistical Area (MSA) in the nation. Between 2000 and 2010, the Houston MSA increased its population by an impressive 26.1 percent, from 4.7 million residents to 5.9 million. Demographers agree that population growth will remain strong into the foreseeable future as domestic and international migration trends favor Houston’s geographical, cultural and economic strengths.

Smart Business spoke with Lisa R. Bridges, Director of Market Research at Colliers International, to learn more about the strengths of Houston’s business environment.

Ideal Workforce

It’s not just quantity, but also quality of the workforce that attracts companies to Houston. Area residents are well-educated with the majority of the population over 25 years of age holding a high school diploma and residents with college/graduate educational studies outnumbering those with less than a high school education.

Educational prowess among Houston residents can be attributed to the area’s nationally recognized colleges and universities, as well as technical and trade schools, including Rice University, University of Houston, Texas Southern University, Houston Baptist University, Baylor College of Medicine, University of St. Thomas, San Jacinto College, and Houston Community College.

The high level of educational achievement translates to higher average income levels. The median household income in 2014 is projected to be $63,857 and the average household income level is pegged to be $85,409, both significantly over the national average.

Companies that do business in Houston not only have access to an educated workforce, but also a population able to spend money on their products and services. Houston’s employment sector has weathered the recession better than most major metro areas. The downturn was short-lived in the area and the Houston MSA began recovering jobs sooner than most.

Diversified Portfolio

Bolstered by above-average demographic trends and a strong base of diverse industries, Houston is well positioned to compete in today’s global markets. Long recognized as the energy capital of the world — with every major energy company represented locally — Houston now stands as a global example of economic diversity. The area is home to a thriving stable of industries including medical/biomedical technology, aeronautics, plastics manufacturing, electronics, software design, integrated power and global trade.

Houston’s strong economic base is a key factor in driving both domestic and international migration trends. In fact, Houston ranks third among U.S. cities with the most Fortune 500 companies with 23, trailing only New York and Chicago. Notably, Houston surpassed other major metros on the Fortune 500 list including Los Angeles, Dallas and Atlanta.

Houston has long been recognized as one of the most competitive U.S. cities for corporate relocation and expansion activity. Recently, Houston ranked No. 2 in the country for Site Selection Magazine’s Tier One New and Expanded Facilities for MSA’s with a population of more than 1 million. Chief Executive Magazine — for seven straight years — named Texas as the No. 1 state for Best Business, in which Houston’s energy industry played a huge role.

Favorable Business Climate

In addition to its diverse growth industries, and the skill and education of its workforce, a key factor underscoring Houston’s business appeal is that it is one of the least expensive major cities in which to conduct business. Significant benefits include the absence of state or city income taxes, no state property tax, as well as an exceptionally low cost of living index.

As a major transportation hub with two major airports, a world-renowned port, and superior rail and road infrastructure, Houston facilitates the interconnection of global business locations. Business alliances with major U.S. and international markets is further enhanced by the presence of 94 foreign consulate offices in Houston.

Houston’s ability to foster continued expansion in future-growth industries responsible for generating high quality, well-paid jobs across all business sectors has placed it in the top tier among U.S. cities. With its numerous business advantages, Houston is well positioned to successfully compete in today’s global marketplace.

Lisa R. Bridges is Director of Market Research at Colliers International. Reach her at (713) 830-2125 or lisa.bridges@colliers.com.

Most employees are far removed from the design and analysis of their compensation plans. Behind the scenes, the employer is investing time and resources in designing the plans that attract, retain and motivate top talent.

While every company plans compensation packages differently, there are some core strategies that can be applied to attain success in recruitment and retention.

You can plan big with these five strategies to building a successful employee compensation plan:

1. Communication is key.

Good intentions behind the design of a compensation plan do not necessarily deliver the intended results. Communication is the driver. Management is responsible for communicating the “why’s” and “how’s” of the plans it has designed. In addition, keeping people abreast of performance — both corporate and individual — is paramount when a company has a pay-for-performance culture.

2. Good corporate strategy equals successful compensation plans.

All too often, compensation plans are in place because “it has been done in the past.” For a compensation plan to be truly successful, it must be tied directly to corporate strategy.

One of the biggest failures of pay plans is they do not take into account all the key drivers that will make the company successful. Without this “linkage,” pay plans can actually promote unwanted behavior that offsets the overall strategy of the company.

3. A sound employee performance evaluation process is essential.

The employee evaluation process may be tedious, but it is the catalyst that drives most, if not all, pay decisions. The employee evaluations and the process utilized should have direct ties with the compensation plans used. It gives the company the ability to show definitively that results impact rewards.

4. Pay is not perceived the same by all.

Abraham Maslow’s theory of the “hierarchy of needs” directly pertains to this strategy. Base salary and benefits are typically essential to all employees in the corporate workplace. These are key “building blocks” of pay.

Beyond these basic building blocks, the “hierarchy of compensation needs” changes as much as the demographics of the organization. Giving appropriate consideration to these unique needs and tailoring portions of total compensation allows an organization to reinforce its culture while maximizing the utility of the total compensation dollars.

5. Recognition, recognition, recognition.

Acknowledgement is a fundamental human need. Compensation is a great way to express appreciation and acknowledgement of a job well done; however, compensation plans are typically based upon milestones in the calendar year.

Remember, everyone wants a “pat on the back” or some form of recognition when they, as an individual or as a team, have achieved something worthwhile. Recognizing and reinforcing top performers through compensation will promote the corporate culture, promote desired work ethic and achieve results.

Well-designed compensation plans have the ability to propel an organization forward. These strategies, among others, should be considered by those responsible for compensation design — the CEO, CFO or vice president of HR — in order to achieve success. Leading organizations are built on talented, committed professionals — competitive, well-planned compensation packages are vital to recruiting and retaining these top performers. ●

Brent Longnecker is chairman and CEO and Chris Crawford is president of Longnecker & Associates, and are experienced in the field of compensation and corporate governance consulting. They have authored 15 books on compensation, including “The Power of Restricted Stock.” For more information, visit www.longnecker.com.



How well thought-out and executed is your customer engagement model? Is it something that has developed by default without proactive and deliberate thought? In your company, does every salesperson and service-delivery team member develop his or her own engagement model?

Simple sales typically involve commodity items such as printers or copiers. The customer’s engagement with the seller ramps down quickly after the sale.  

Complex construction projects, medical treatment and legal representation are examples of complex sales. The customer is acutely dependent on the seller’s services once the deal is inked. The service the customer buys has a material impact on the reputation and/or well-being of the customer.  

If your company is in the business of complex sales and you have not thought through and designed your customer engagement model in detail, your success is at risk. Consider these points: 

Apprehension, confusion and distrust

If a large construction project fails or is derailed, it may cost the customer executive his or her job. Customers involved in a complex sale are understandably apprehensive because of the risk factors and high stakes.

Further, every vendor promises high-quality and superior products. It is often overwhelming for customers to sift through all the claims and counterclaims about vendor capabilities and competencies. 

Your job, as a vendor, is to help reduce the confusion and address the apprehensions. If you do that, you will earn the customer’s trust and business. 

Reduce the noise

How do you reduce confusion and apprehension? You must develop and detail your customer engagement model. The vendor’s well-thought-out customer engagement process is the customer’s insurance against things going wrong.

You must start with the problem. Develop a model to describe the problems and needs so you and the customer can be on the same page.

Next, focus on the solution. Develop a model to explore possible solutions. Help the customer understand how he or she can influence the solution, and what factors constrain the solution choices.

Remember, you know more about the solution than the customer will ever know. They want to know that you have a systematic process to consider and analyze all the choices, and there is a way for the customer to guide you in aspects that matter to them.

You do not want your attorney to impart all his legal knowledge to you; all you want to do is understand the process enough so you can provide relevant information and know that the attorney is thinking things through and not overlooking items because he is extremely busy with his other clients.

Project implementation is part of the solution. Educate the customer about the steps involved, what the deliverables are at each stage that will demonstrate credible progress and what the gates/points are that the customer can provide input to fine-tune the project’s direction and thrust. Address the risks involved and explain how you will manage them. 

Engage the right team

Your credibility increases as you involve the right experts during the customer education process. It communicates to the customer you are serious. Customers do not always trust sales people and their promises, but they will almost always treat as gospel what your engineers and delivery-personnel say. 

Develop a comprehensive customer engagement model to earn credibility and trust. It is the best way to serve your customers. ● 

Quoted in The Wall Street Journal, Barron’s and WorldNews, Ravi Kathuria is a recognized thought leader. Featured on the BusinessMakers show, CBS Radio, TEDx and PBS Nightly Business Report, he is the author of the highly acclaimed book, “How Cohesive is Your Company?: A Leadership Parable.” Kathuria is the president of Cohegic Corp., a management consulting, executive and sales coaching firm, and president of the Houston Strategy Forum. Reach him at (281) 403-0250 or feedback@ cohegic.com.


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