Twelve years later, the company with annual revenue of more than $4 million can’t find enough qualified employees to keep up with its fast growth, and Banning has turned down customers because he couldn’t meet the demand.
To help offset that problem, the president and CEO recently moved his company into a larger building and is experimenting with ways to make better use of his employees.
Smart Business spoke with Banning about the challenges of finding employees and how he is reorganizing the structure of his company.
How do you find quality employees?
One of the challenges we have from a growth standpoint is there is a lot of work that we could do, that we just can’t do or won’t accept because of a lack of qualified employees. What we are trying to do is become more streamlined and more efficient in-house and then look at growing the company after we get the processes and procedures in place.
We are trying to reach out to colleges or high schools and find good people and even train them in-house. A big push of ours this year is increasing the amount of training we do internally, and then we will be able to promote people within the office.
In the long run, that will benefit us as a company, and maybe we won’t have to hire as many people because we will be better trained and more efficient in what we do in-house.
How are you restructuring your business to make better use of employees?
We tend to put a square peg in a round hole and make, in our case, engineers and surveyors into managers, and I’m not sure that’s really what they want to do. I think they would be happy doing engineering and surveying.
So how can we make them better engineers and surveyors? Give them the assistance they need with someone who can do more of the administrative things and they can do the technical things. I see a lot of good technical people that are put into administrative roles, and it probably doesn’t work as well as it could or should.
We recently hired a couple people and put them in charge of specific items. To promote the continued growth of the company, you need people to help keep the technical people focused on what they can do. They help the technical people, whether it’s performing contracts or client development or follow-ups with clients.
The engineers and surveyors are still going to need to do that, but if we can get some administrative people to help out with some of those responsibilities, I see that as more beneficial having people that are comfortable doing that do that, and then have our technical people do what they are good at.
How are you retaining the quality employees already have?
We have tried to develop an atmosphere that is very beneficial to them. When I hired my first employee, one of the things that I told my insurance agent is, I don’t want to be in the insurance business. Therefore, I want insurance for the employee, as well as his family, paid 100 percent. As a company, even to this day, we pay 100 percent of the premium. That has been huge in starting that atmosphere that we wanted to promote throughout the company.
We try to promote the company as a fun place to work, and we also try to have events where the family is involved.
How has that atmosphere influenced employee turnover?
We probably have five or six people that have been with us at least 10 years. We’ve had pretty phenomenal growth over the last couple years, but I wouldn’t be surprised if almost half the people have been with us for five years or longer. Our turnover rate is very low. When we hire someone, we don’t hire them to get a project done and then they’re gone. We try to be more stringent in our hiring. When we hire someone, we expect them to be here forever.
It doesn’t always work out for either party, but that is the attitude that we tend to take.
HOW TO REACH: Banning Engineering, (317) 707-3700 or www.banningengineering.com
“It’s actually based on a concept taught at the Harvard Business School called the Service Value Profit Chain,” Dunn says. “We adapted it and tailored it for Steak n Shake. It’s based on a very simple premise: If you have capable and empowering leaders, they will create inspired and loyal associates, who will be able to create delighted and loyal guests.
“When your guests are delighted, they’ll come back more often, which will end up with rewarded shareholders. Rewarded shareholders will then, in fact, be very excited about empowering leaders to continue their work.”
Here is how it benefits a company.
“The theory is that every one of those things less management turnover, less associate turnover, more delighted guests, improved margins works its way in there,” Dunn says. “When you have delighted guests, it’s also easier to have improving margins. Every one of those things literally contributes directly to the bottom line, and they also re-enforce each other.
“Every year, you peel some of those potential profits off and put them back into leaders, associates, guests and margins. They each keep getting stronger each year, but you peel off enough to keep shareholders happy. You therefore have a perpetual motion machine.
“The way we present this is that we’re building on a foundation of heritage and strength that we know is successful. We re-enforce that with this Virtuous Cycle. When we do that well enough, we earn the right to open more restaurants to empower leaders.”
“The U.S. Chamber of Commerce and the Institute for Legal Reform report that America’s civil justice system is the world’s most expensive,” says Kirk Barry, team lead for complex casualty claims at Westfield Insurance.
Smart Business discussed with Barry how business owners can take a proactive approach to litigation risk and respond effectively to lawsuits to avoid unnecessary costs.
Why do business owners need to be prepared for a lawsuit?
Lawsuits have time limitations that require the defendant to answer a complaint (lawsuit) within a specific period of time, normally 30 days or less. If the defendant does not respond in time, the court can award damages to the plaintiff, to be paid by the defendant without the defendant having any opportunity to defend himself or herself.
A business owner may have insurance coverage that provides a defense against allegations covered by the policy. If the business owner fails to promptly notify his or her insurance carrier about the lawsuit, the business owner may forfeit coverage.
Business owners should contact their insurance agent immediately to determine if there is any insurance coverage for the lawsuit. Insurance agents and insurance carriers can help guide business owners through the process and let them know (whether) they need to hire their own attorney to provide an answer to the complaint and represent them against the allegations.
What preventive actions can companies take to minimize the chance of a lawsuit?
Training employees about how to conduct themselves and represent the business reduces the chance of being sued.
Create a company vision statement that includes ethical conduct as a key to the company’s success, and then live it and breathe it by communicating it to all levels of the organization. Create and distribute an employee handbook that is rigorously followed, and have each employee sign and date an acknowledgment that he or she has reviewed it.
Conduct meetings to educate employees on matters that can affect both them and the company as the result of certain actions or inaction. Standard reporting procedures for employees involved in on-the-job accidents protect the company and also potentially protect employees. Use corporate counsel or an outside vendor if necessary. Some investment upfront may save the company in the long run.
Be proactive. Watch for trends that may affect the business and its stakeholders. As appropriate, move to change the way the business is handling situations.
Another issue to consider is that contracts with other companies can expose business owners to defending or indemnifying other individuals and entities for their actions. Read contracts and understand how they can affect the business. Having an appropriate party review contracts is a proactive step in litigation avoidance.
In addition, business owners may be able to transfer risk to another party via contractual language that commits the other entity to buying appropriate insurance coverage for both companies.
How can companies be prepared to respond to a suit?
Prior to being sued, identify individuals within the organization who have authority to accept the service of a suit and train them on appropriate action steps. This provides consistency and helps avoid missing deadlines, which could lead to a default. It’s also important to educate employees about what to do if they are sued directly.
Throughout the process, open and honest communication with the attorney and insurance company assists in the planning, strategy and execution of any available defenses from the start. New or changed information during the litigation process will only hurt a defense later. When a company is legally liable for its or its employees’ actions, a prompt response helps protect those involved.
A business will need to provide all documents to its insurance company and attorney, but it is also important to keep copies, including postmarked envelopes, for its records and to immediately record the date of service of suit. Do not discuss the allegations with or provide documents to anyone outside of the business other than the insurance company and your counsel until appropriate guidance is provided.
Kirk Barry, team lead for complex casualty claims, can be reached at (330) 887-0248 or email@example.com. In business for more than 157 years, Westfield Insurance provides commercial and personal insurance services to customers in 17 states. Represented by leading independent insurance agencies, the product Westfield offers is peace of mind and a promise of protection is supported by a commitment to service excellence. For more information, visit www.westfieldinsurance.com.
Born: 1944, Indianapolis
Education: Purdue University, chemical engineering
First job: Putting hardcover books in boxes for shipment
What is the greatest business lesson you’ve learned?
The value of the people you associate yourself with and how to inspire them and help them help themselves and help the company progress has been the biggest lesson and the biggest challenge.
Whom do you admire most in business and why?
From a creating value for shareholders’ perspective, Jack Welch would have to be at the top of that list.
McNeeley on the sale of Reilly Industries to Arsenal Capital Partners: It was very much a cooperative effort between the management, the board and the (Reilly) family. As the senior manager of the company, I was at the forefront of the activity at first. It was my responsibility to bring those issues to the board. We had complete alignment between the shareholders, the board of directors and management on all the issues.
Barry Siadat, managing partner of Arsenal Capital Partners, on McNeeley: Bob can tell you how important he was because we had to do everything we can to make sure he stayed on (after the $250 million sale). He also has built a really good team, and we wanted to make sure the entire executive team is in place and will continue to work together.
Law, AllMed’s chief financial officer at the time of the sale, bought the company’s billing software to start Zotec Solutions, a medical billing and medical records imaging software company.
“I was at the right place at the right time, relatively speaking, to the opportunity that got created,” says Law. “Anthem was a wonderful company to deal with on the way out, and they allowed me to set up a very nice business.”
Today, his $7 million company employs 80 and has more than 4,000 clients. And although Zotec is growing rapidly, Law is trying to keep its atmosphere welcoming and laid back.
“We have a very casual business attire philosophy,” he says. “We are a laidback, work hard, play harder kind of company. We want people to enjoy what they are doing and be here because they want to be here versus being here for a paycheck.”
Smart Business spoke with Law, president and CEO of Zotec, about how he provides a quality product and the impact acquisitions have had on his company.
How did you turn the software you bought from Anthem into a rapidly growing company?
We tried to focus on providing value to every single customer that we have taken on. They have then, by word of mouth, told other people about what we have done and so on and so forth. It’s all been growth basically by having satisfied customers.
With more than 4,000 physician clients relying on Zotec, what do you do to ensure that you provide the best quality product?
I stay in touch with them. ... I know all of our clients personally. I’m still involved in the business on a day-to-day basis.
We’ve got a tremendous amount of checks and balances on statistical reporting that allow us to make sure that every client’s charges are coming in and every client’s claims and money are coming in.
We’ve built a model that allows me, from anywhere in the country, to know exactly what is going on with my business. I get on my Blackberry every day (to see) how much work was done by all of the individuals in my company.
How has the acquisition of Medcor Data impacted your company?
Both positively and negatively. Quite honestly, the integration of acquisitions, the culture shock in two of the companies that we have acquired, is significant. We have tried to manage that the best we could.
We kind of take the approach of gardening. We water the flowers and we pull the weeds when we make an acquisition. That is a difficult process.
It takes a toll on the people who are staying and the people who are going to grow from that acquisition. It’s a difficult balance to manage. Overall, financially, they have been extremely rewarding acquisitions.
How do you manage the culture shock?
As professionally and as humanely as we possibly can. We try to give people the opportunity to re-educate themselves on the way we do business. We try to be very open and upfront with people about what our intentions are and tell them basically what to do, not necessarily how to do it. And they usually step up to the process, and that also spawns creative ideas.
If you get a few people out of an acquisition that really get behind the team and want to help, they usually lead the rest of the people. We identify very early on the key people and the keepers that we want to make sure we take care of, and we reward them for positive steps that they take.
How will acquisitions contribute to the future growth of the company?
We have been just exploding with internal organic growth, which in the software side of the business has been enormous in the last year. We’ve had record quarters in the last four quarters. We are growing in the software side, and we see that as being a much more sustainable way of growing the business.
Acquisitions, they come along every once in awhile, but if you start forcing yourself to make acquisitions, it has always been my philosophy that you are going to make a bad one. If you can’t ever walk away from a deal during due diligence, then you are probably in the wrong business.
I like to be able to be in that position where we have enough organic growth where we don’t need acquisitions to sustain our infrastructure. Yet, we can go out and find an acquisition and make sure we do the proper due diligence and the culture fits and it’s a nice smooth transition.
We will make more acquisitions it’s just not a core strategy for us right now because of our organic growth.
HOW TO REACH: Zotec Solutions, (317) 705-5050 or www.zotec.com
That’s the situation Cathy LaValley found herself in 17 years ago before she started Cathy’s Concepts, a wholesale manufacturer and distributor of wedding accessories. To make matters worse, she had recently been swindled out of most of her life savings by a jewelry wholesaler.
“It was a low point in my life, for sure, but it made me determined to find success on my own terms. I was not willing to be homeless or live at home with my mother at age 32,” LaValley says.
LaValley took the jewelry business knowledge she had gleaned from working at Claire’s for 13 years and began selling wholesale jewelry products to local nail salons and boutiques. Her luck began to change when she showed her products to a local bridal shop.
“They were happy with the manufacturers they were buying from, but I kept asking questions until I identified two unmet needs: immediate shipping of white pearls, and colored jewelry in quantities for bridesmaids’ gifts. I was able to satisfy these needs and got the business.”
Today, Cathy’s Concepts supplies virtually every bridal accessory imaginable.
“We take the bride and groom from engagement to honeymoon,” she says. “The average engagement is 14 months, and as soon as the engagement is announced, the buying begins.”
Smart Business spoke with LaValley about how she plans to grow her market and target her customers.
How do you maintain the right staffing level?
I use an outsourcing service. Although we just started outsourcing, I am confident it will work out great. Like most small businesses, we do not have the specialization to handle the human resource functions such as paid time off, disciplinary action and benefits.
We can now focus on running the business instead of getting bogged down in staffing issues. I am looking forward to gaining efficiency, since previously, we were overstaffed at nonpeak times of the year.
The fourth quarter is our slowest time, but it is the busiest time for businesses such as retail and shipping and packaging companies. (The outsourcing service) can provide our employees with other work until we need them again.
How do you plan to grow the business and further target your market?
Our current revenue is $5 million, which is an improvement over the past couple of years. It has been difficult to make the transition from bridal retailers buying stock for their stores to drop-shipping to the consumer for Internet retailer sites.
I expect sales in the $6 million range next year. Nobody else offers drop-shipping of exclusive, personalized wedding and gift items with the unique offerings of personalization quite like us on the Internet.
The average age for brides these days is 27. Our studies show that over 80 percent of brides surf the Internet for information and products related to their wedding. I expect that our Web-based business will increase to 80 percent of our sales or more in the not-so-distant future.
We are expanding our personalized products to appeal to the nonbridal buyers. For example, we have a personalized bathrobe that can be a bridesmaids’ gift but is also a perfect Mothers Day, holiday, graduation or birthday gift. This diversification will allow us to increase our sales during our slow season, the fourth quarter of the year.
How do you keep your employees motivated?
I have four executives reporting directly to me. We work as a team, and I am always encouraging them to think strategically. I am currently in the process of restructuring the responsibilities of my executive staff and am totally involving them in this process.
I pulled them together, gave them paper and said, ‘Pretend you are me. Lay out the executive responsibilities that make the most sense to you.’ This was a great exercise because it led to lively and honest discussions.
Some things came out that I was not aware of. For example, one executive was responsible for an area that was always a real challenge and it became obvious that another executive would be much better suited. I was able to gain tremendous insight during these candid discussions.
It is crucial for the executives to be involved in the day-to-day process and grapple with the real business issues.
How do you network with other business owners?
I’ve been involved in TEC (The Executive Committee). This committee consists of 14 CEOs, entrepreneurs and business owners. We meet once a month, have a guest speaker and spend time discussing our individual challenges.
It’s a life-saver for me because being an entrepreneur can be a lonely situation. It’s not like working in corporate America, where you can bounce things off a number of people who understand the business.
How to reach: Cathy’s Concepts, (800) 969-7417 or www.cathysconcepts.com
That’s why proactive companies are trading up to Web-based software programs to help organize, track and manage lease and owned-property information.
These robust programs make lease information accessible and can help corporations reduce risk in current property investments and plan appropriately for future real estate transactions.
Link to lease terms
Companies with a network of properties offices, storage facilities, manufacturing sites, etc. easily can lose track of specific lease terms for each location. This is especially problematic when lease agreements are managed by the individual entities (properties) vs. a more efficient, centralized approach. When one lease expires, another might require attention regarding expansion options.
Or, while one lease might automatically renew, another property’s rent may be scheduled for an automatic rate bump. Organizing information in a software tool that is dedicated to real estate lease management ensures that companies don’t get blindsided by lease terms.
Rather than leaving leases in file cabinets to collect dust, owners can scan actual lease documents and upload information to those systems. Then they can create links to specific sections in leases that they refer to often, such as rent escalation or expiration terms. By building a link to these items, owners avoid wasting time searching for critical dates or terms.
Relying on memory alone to manage contract activity is risky, especially when more than one lease is concerned. Lease-management programs allow owners to program e-mail alerts to remind themselves of critical dates and to create helpful alert dates leading up to the more critical, hard dates.
For example, if a lease will expire in one year, a quick e-mail reminder notifies the owner that it’s time to initiate due diligence on other location options and/or to begin renewal negotiations.
One pitfall of most filing systems is that information is inaccessible if the owner is not in the office. Because many of the leading leasing software programs are Web-based, the information in the program can be accessed on the road, from a home office just about anywhere. Remote access to lease information not only enables owners to stay abreast of critical dates, but to also administer and conduct informed discussions while traveling.
Translating international leases
More sophisticated programs convert multiple currencies and measurement units. For instance, a software program can convert the standard square foot measurement prevalent in North America to the European square meter, to the Pyung measurement in Korea.
One company tried using a spreadsheet program as a holding area for lease information. The leases were in various foreign languages that weren’t properly input into an Excel spreadsheet. Eventually, the data system became such a burden that the company hired a consultant to translate and standardize the data before migrating to lease management software. The company could have saved a lot of money and anguish if they used a lease management program.
Managing property taxes
By organizing and tracking lease information through a software management program, business owners can also better manage property taxes, which certainly adds up for corporations that own multiple locations or a few large properties.
Managing expenses and risks and putting a system in place that creates accountability will ensure that property owners better understand and realize the full value of their real estate assets.
Jon Jessup specializes in investment and global corporate services with an emphasis on proactive, strategic management of real estate assets. Reach him at (317) 713-2120 or jjessup@SummitRealtyGroup.com.
Initially, the company provided on-site support services, sending technicians into the field to fix problems. But as time went by, technologies were developed that allowed Netfor technicians to fix problems using remote control technology.
From there, the company grew into a full-service help desk that takes calls from approximately 30,000 end users around the country. And as Netfor has continued to come out with new technologies, it has grown in size and popularity. Revenue for 2003 was $1.6 million, growing to $2.5 million in 2004.
Smart Business talked to Medley about Netfor’s fast growth and rapidly changing technology.
What obstacles did you have to overcome as Netfor grew?
Cash. We’ve never borrowed any money. Early on, I was able to leverage credit cards. We’ve really shied away from going to investors it’s a wholly owned company.
We haven’t gone after venture capital, and we haven’t borrowed money from banks. We’ve grown on our own profits. We could probably have 80 employees instead of 34 if we would have sold out to somebody.
To what do you attribute your company’s fast growth?
In the late ’90s, a lot of companies tended to be product-focused, selling only certain products, like Microsoft. We made a commitment around 1998 to become more client-centric. That basically meant we started taking the interest of the client and what they wanted into account, rather than what we thought they wanted.
It was really about listening. We parlayed that into developing products around what a lot of clients wanted. We developed a customer satisfaction tool to track the satisfaction of our clients.
We also developed a piece of software that is Web-based, that allows enterprises like our clients, as well as our own technicians, to track all of the issues through a single interface. Everyone can work on issues as needed and can assign them from one person to another.
Then the managers and owners of the companies can report on all these issues. They can find out where the problems are in the enterprise and check which technicians are fixing the most problems and which are fixing the least.
How do you plan to continue your company’s growth?
We continue to develop and implement the latest technology for our clients so that they can utilize everything on the cutting-edge that’s available to them when it comes to support and installation of their computers. We’ve partnered with Cognos, which is a business intelligence software company, so that we can elevate the quality of the reports that we give our clients.
One of the vertical markets that we work in is K through 12. A lot of the employees that we bring on here are high school graduates rather than college graduates.
We started working with the Department of Education in Indiana to help write the curriculum so that kids coming out of high school are better educated and have more hands-on experience when it comes to technology. Then they are more employable when they come to companies like mine.
How do you train new employees?
We go through the basic certification process. But, for the most part, because we are customer-focused, we go through a process with our new clients where we go on-site with them to their enterprises and learn their technologies. Not specifically how to fix one piece of hardware, but how they use it.
That way, when they call into our service desk, we know what they are using it for, and then we can better service them.
We also have a great knowledge base where we capture information about a particular issue so that it can be used the next time that issue pops up.
How do you differentiate your company from the competition?
We are unique and really don’t know anyone else like us out there. We both own the software that we use and provide the resources or the people to actually do the service.
Most software companies sell to help desk companies who own the people. Most help desk companies don’t write their own software. They buy it from someone else.
We’re unique in that we write our software. Our customers see a lot of value in that and a lot of customization opportunities. If they need a certain button there or certain feature there, they know they can get it with us, whereas if they are using a different piece of software, we all know how easy it is to call up Microsoft and ask them to change their software to make it easier to use.
What are your growth goals for the future?
We feel like 57 percent is a good number, so we’re trying to maintain 50 percent to 60 percent growth. Recently, we started testing the waters out in other states. One of our growth goals is to grow our partners program into other states. That is something that I am working intently on.
Those are our two focuses right now, as well as continuing the development of our own technology.
HOW TO REACH: Netfor, (877) 638-3674 or http://www.netfor.com
At the same time, most employers have largely ignored and even diminished the greatest untapped resources of performance gains and competitive advantages the health, well-being and functionality of their employees.
There are major challenges to worksite health and productivity. The average age of workers is increasing, and with each year the cost of health care increases by 3 percent. Keeping in mind that at least 25 percent of health care costs are preventable, it only makes sense that program design affects use patterns and costs.
The reality is that productivity costs are much bigger than absenteeism and disability. Presenteeism being physically present at work but being less than optimally productive makes up about 20 percent to 60 percent of all costs for 10 leading health conditions, and in many cases costs are higher than medical. The magnitude of the demonstrated loss of productivity time is startling, with a number of medical conditions and lifestyle behaviors contributing to between three and 11 hours of lost work time each week per employee.
A new movement has emerged. Health and productivity management, defined by the Institute for Health and Productivity Management as “the integrated management of health and injury risk, chronic illness and disability to reduce employees’ total health-related costs including direct medical expenditures, unnecessary absence from work and lost performance at work (i.e. presenteeism).”
This model applies a proactive approach to better health for individuals by integrating health-management programs to optimize health care delivery and costs. It is all about maximizing human capital investments and producing the best functional outcomes that lead to productivity gains for employers. There is no question that employee health is a capital investment, not an expense. The following are key elements of health and productivity management.
- Comprehensive focus
- Well-integrated interventions
- Metric-driven refinements
- Prevention-centric focus
- Use of active recruitment strategies and techniques
- Strategic alignment
- Systems approach to interventions
- Health as a major strategy for human capital enhancement
- Strong economic focus
So how do health and well-being issues impact the bottom line? Numerous health risk factors have been associated with an increase in short-term absence, including obesity, stress, physical inactivity, smoking, alcohol consumption and poor sleep. Research suggests the impact of these have upon absence levels range from 15 percent to 23 percent of total absence time, and if addressed, would reduce absenteeism levels by some two to three days per employee per year. With interventions, results show reductions in absenteeism ranging from 14 percent to 30 percent in such organizations as DuPont and Coors.
Below are three ideas for improving employee productivity.
- Implement a population health management benefit that keeps the majority of employees who are mostly healthy most of the time in that category.
- Provide targeted disease management to minimize total costs for the increasing numbers of chronically ill workers by keeping them as functional as possible.
- Engage employees in active management of their own health through tailored behavioral change programs, as well as instruction in medical self-care techniques.
We are in a time when health and productivity management is not just nice to have for organizations, it is an area that has a clear and demonstrable business imperative. The new evidence is that health and performance optimization is the new model for global business competitiveness.
Sally L. Stephens, R.N., is president of Spectrum Health Systems. Stephens founded Spectrum Health Systems, an independent health management company, in 1997 to provide Fortune 100 quality health risk management programs to middle-market employers. Reach her at (317) 573-7600 or firstname.lastname@example.org.
First job: First job out of college, I went back to a family business, I was third generation.
What has been your greatest challenge in business?
I think one of the things, when we started, was that I ran from failure. I sort of got into business and realized how much I didn’t know and how little money I had, and I really did run from failure.
And that is a challenge it’s not a good strategic plan. But now I run to success, and that is a far more exciting thing. It’s a more positive thing to do.
What has been your greatest business lesson?
I worked for a family business, and you sort of grow up in a family business and you don’t know anything different. And you learn very quickly that you treated everyone in that company with respect.
There wasn’t a question that’s what you did. I didn’t realize that that was a philosophy. So I guess it was how my father treated people I believe you need to treat everyone with respect.
Who was your mentor?
My cousin. He was eight years my senior. When I went back to the family business, he was there, and he really told me what was important and taught me, basically, how I could be significant. And worthwhile maybe that’s a better thing, how I could be worthwhile.
I always thought about agriculture, initially because it was such a humane thing to do. To be able to produce food that was impressive to me. You’re taught all kinds of things [in college], like what does Vitamin E do, and you have tables telling you how much you need in any specific diet and all these kind of things, but I didn’t know how really to apply that and get it out on that farm. And that is what he taught me.
And really taught me that a small company could compete against giants. And that was a change in my way of thinking.