Los Angeles (1224)

Sunday, 31 December 2006 19:00

The Thiry file

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Age: 50

Born: Milwaukee

Education:
Bachelor of arts degree, political science, Stanford; MBA with honors, Harvard Business School

What is the best business lesson you’ve learned?
Just like beauty is in the eye of the beholder, leadership is in the eye of those you lead. You are not the leader you think you are, you are they leader they think you are.

What type of people do you admire most in business?
Leaders who create work environments that are simultaneously fulfilling and competitively strong. Life is too short to concede that work should be anything but fulfilling, no matter what the task is.

How do you define success in business?
Competitive success combined with a work environment that is marked by a high level of mutual emotional commitment and trust.

Friday, 24 November 2006 19:00

A personnel investment

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Mark Weinstein — a lawyer by trade — had no formal business training when he founded MJW Investments in 1983. Now, more than 20 years later, one lesson he learned then still applies now.

“Surrounding yourself with the right people makes your life easier,” Weinstein says. “You should invest a lot in your employees and a lot in their training.”

By surrounding himself with the best people and creating a culture built on accountability and growth, Weinstein has expanded his Santa Monica-based company into one of the fastest-growing developers in the region. MJW’s revenue has grown from less than $45 million in 2003 to more than $70 million in 2005.

Smart Business with Weinstein, president of MJW, about how he builds a culture, inspires employees and uses community service to make himself a better leader.

Q: How can CEOs motivate their employees?

We have accountability groups and personal growth groups where we feel we have a value-added component to our company by having consultants that are working with people as individuals and as a group. They improve not only their work skills, but improve their ability to get along at home with their significant others and their family. My employees feel that that’s a value-added.

When we set the example of doing good things in the community or doing good things in our company, it inspires all the people in the company to want to do better. We encourage not only personal growth but business growth by promoting people and giving them the opportunity to have as much responsibility as they can handle.

By constantly raising the bar, communicating our goals, having an open environment and supporting them both personally and in business, it makes people want to work for you.

Q: How does your community service influence your leadership style?

I get involved in the community for two reasons: one is that doing good things is one of the values of our company, and another is that you meet other business leaders and sources that you might deal with in your business.

I lead by example of what I do in the community and by being a visionary, and I surround myself with really good people. I have a management structure that’s well-defined, and each person knows their role and we support each other.

I give a lot of feedback and behind-the-scenes support, but I try to let the other members run the day-by-day stuff. I don’t have to be so much the key person in integrating every detail of the company.

I have other great people, so I don’t have to think about whether they’re doing a good job or not. I trust them, and they get the job done, and I get the benefits of their work ethic.

Q: How do you know when you’ve found the right person for the job?

It’s more important who a person is than what a person does sometimes. People development is often not focused on, and that’s really key because you can always train people to do work, but if they’re not the right people, then it’s kind of hard.

Sometimes there are people who don’t want to work for you. They will self-select out.

If everyone else is on a certain road and training and the other person doesn’t fit in, a lot of times here they’ve self-selected out where they realize they’re not really into personal growth or business growth. There’s accountability here, and they don’t want that, so they leave.

Q: How would you describe your company culture?

Our culture is one that’s committed to growth, accountability and creativity. Those are our values, and we meet a lot and we have defined what our values are and what our goals are.

When we make decisions, we often ask whether the decision is consistent with our values, and it creates a good environment because everybody knows what our values are. Our goals are clear.

Our environment is very open to having people communicate to each other. We have group meetings where we network and brainstorm, and even if it’s not your area of expertise, everybody has good thoughts, and we try to run things by the brain trust of everybody so that we can get better ideas and be more efficient.

Q: How do you measure success?

Success is a very individual thing. We all set our own personal business goals, and when we do things both in the community and at work that achieve our goals, I think that’s success.

But what happens in most businesses is you keep raising the bar. You set certain goals for the company and as individuals, and you reach those goals and you suddenly move the bar up. So you’re always chasing the sky.

Success is an ever-changing target, but accomplishing your goals and giving back to the community and being recognized for the work that you do — that’s success.

HOW TO REACH: MJW Investments, (310) 395-3430 or www.mjwinvestments.com

Tuesday, 24 October 2006 20:00

Family incentive trusts

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As executives plan for their retirements and ways to secure their familys’ futures, they have traditionally set up wills and trusts to pass along wealth to their children and to mitigate tax consequences.

These types of estate-planning documents can provide peace of mind for executives along with financial security.

A relatively new way to pass along a sense of ethics and values that helped to create the family wealth is the Family Incentive Trust (FIT). The FIT provides more than just a vehicle to distribute assets; it establishes a framework that correlates to the beliefs of the grantor and helps to reduce the worry that heirs will make errors or life choices that are not reversible.

Executives and CEOs have worked hard and put a great deal of effort into building their wealth, and they don’t want a child to become a less than productive member of society because of a significant inheritance, says Kerry-Michael Finn, vice president of financial planning for the Western Region of Comerica Bank.

Smart Business spoke with Finn about FITs and how they can help high-wealth individuals assure the future for their families.

What is an FIT?
An FIT is a trust that passes along assets to the next generation while trying to minimize potential negative effects. For example, the trust may specify that the inheritance be passed along through income matching or it can be distributed based upon clauses that require the heirs to achieve specific education levels or contribute community service time.

Income matching can be very valuable, because it may allow an heir to pursue a career in teaching or philanthropy that might not otherwise be an affordable option. It is also possible to tie monetary rewards to other achievements, such as refraining from drug or alcohol abuse or raising a family. Monetary awards can also provide the capital to make a down payment on a home or start a business.

How can CEOs benefit from having an FIT?
If the family business is privately held, it may be possible to pass along the ownership through the trust and preserve the same values that built the business. Even if the wealth has been built through a career in public companies, the concept of transferring values as well as cash can still be achieved.

How can I make certain that an FIT is a positive motivation for my heirs?
This can be accomplished by making certain that the document is flexible enough to accommodate a variety of circumstances while allowing each heir to become successful in his or her own way. For example, placing a requirement of obtaining a four-year university degree might not be achievable for everyone, but receiving a certificate through a trade or technical college as a substitute might be the type of incentive that will transfer the value without placing an unreasonable restriction on the heir.

If I currently have an existing trust, can it be amended to include an FIT?
In some cases yes. Incentive language can be added or incorporated into an existing trust document. It may be best to review the existing trust as some tax laws may have changed since it was originally drafted, so it might be more efficient to draft a new document.

What measures can I take to make certain the FIT is flexible enough to handle unforeseen circumstances?
When an FIT is created as an irrevocable trust, it has a safety net built in, because the assets in the trust are not considered as assets of the beneficiary and therefore cannot be attached by creditors or subject to division through a divorce decree.

The standard provisions of an FIT allow for additional distributions based upon the need for health, education or maintenance and support by the heirs. In addition, the FIT allows for additional distributions at the discretion of the trustee.

I normally recommend that the trustee be a family friend, attorney or accountant along with an institution. In these cases, having a family friend and an institution serving as co-trustees can be beneficial, because the institution will outlive the individual trustee. It is always good to start the process well in advance, so that the staff at the institution can get to know you and your values and thus make decisions and interpretations that they believe are in line with your core beliefs. I also recommend that grantors draft a letter or statement that very specifically states their beliefs and wishes for this trust.

KERRY-MICHAEL FINN is vice president of financial planning for Comerica Bank. Reach him at (714) 424-3823 or kfinn@comerica.com

Wednesday, 25 October 2006 10:44

E-mail fraud protection

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Anyone with an e-mail address is at risk of being scammed by a practice called phishing. For the perpetrators, it’s simply a numbers game. They send out millions of deceitful e-mails with the hope that even a few recipients will act on them, and in the process, unwittingly provide personal and financial information.

The objective behind phishing e-mails is a sinister one, says Hormazd Dalal, president of Castellan Inc. “Underground organizations do it to access bank accounts and glean the information they need to make online charges or to make wire transfers from banks.”

Smart Business spoke with Dalal about how to spot phishing scams, the manner in which phishing has evolved and what type of protection is available.

What is phishing?
Phishing is the process of duping Internet users, by e-mail, to go to a fake site that poses as their bank. Once a target visits the phony site, they are requested to type in private, confidential information like bank account numbers, PIN numbers, Social Security numbers, and so on. This information then enables the ‘phisher’ to access banking information for illegal purposes, such as withdrawing funds, making fraudulent purchases and stealing identities.

How can a person spot a phishing scam?
Typically, valid banks send notices in their statements to customers saying that they never request information via e-mail. Any e-mail that requests this information should be treated with skepticism.

If you’re an advanced computer user, you can usually determine whether an e-mail is fraudulent or not by verifying the link to the Web page that has been pulled up. In many cases, you will notice that it is not actually at your bank home page and that it has a different IP address. The Web page, however, looks very professional and it looks like it could be the bank’s. Sometimes it is possible that the Web site could be secure so you can’t judge whether it is legitimate by the lock in the corner of the page.

The best way to avoid phishing is to know that you should never be typing your information into a Web site that you have arrived at from a link in an e-mail.

What are some common elements of phishing e-mails?
The major characteristic is that they have a clickable link to another Web site. A valid e-mail from a bank would instruct the user to log onto their site and will give no further information. It would not contain a link, but rather would direct the user to authenticate the transaction by using his or her specific password.

How have phishing scams, such as spear phishing, evolved in an effort by perpetrators to elude detection?
As the Internet populace becomes savvier and more aware about identity theft, phishers try and pose as though the e-mail is coming from a known person rather than from a bank. This is part of the technique that spammers use to spoof an e-mail address.

Spear phishing is when a scammer attempts to make the e-mail appear as though it’s coming from someone you know within your company or department. Essentially, they’re targeting you with the expectation that you’re more likely to click on a link from such an e-mail because it appears to have more credibility.

What technologies are available for protection?
There are several databases of known phishing schemes. Starting later this year, Microsoft will be releasing IE7, its new browser, which will check against these phishing databases and alert you if it is indeed a known phishing site. Although these technologies will mature and the databases will be updated more regularly there is always the latest phishing scam that will slide through. The nature of phishing is that it can’t be identified by patterns. An e-mail is sent to a user who’s asked to go to a specific site and if that site is a brand new phishing site that is unknown to the databases then that user is vulnerable. No technology can stop a person from going to a specific site and typing in their private information. The best defense is to never go from an e-mail to a link to a Web site.

In the future, how do you anticipate people being able to protect themselves against phishing schemes?
As technology evolves, users will become readily protected. Protecting against phishing is in its infancy. By the end of next year, there will be far more efficient systems in place to diagnose and recognize phishing scams. The FBI is also actively involved in tracking down phishing schemes.

HORMAZD DALAL is president of Castellan Inc. Reach him at (818) 789-0088 ext. 202 or hormazd@castellan.net.

Tuesday, 24 October 2006 20:00

Pipeline to success

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 James S. Marlen has a growth lesson to teach other CEOs, a lesson he demonstrated with his own company recently: Sometimes, smart growth isn’t growth at all, at least in the short term.

In August, Marlen’s company, Ameron International Corp., sold off its coatings division, the largest section of the company. The sale trimmed the size of the company by nearly a third.

Although the move drastically decreased the size of Ameron, Marlen, who serves as chairman, president and CEO, says he looks at it as a case of getting smaller now to get bigger later.

Marlen says growing in line with your strengths is smart growth, and Ameron’s coatings business was no longer playing to a company strength.

“The reason we sold the coatings business was that it did not fit strategically going forward,” he says. “As a result, growth has become even more important at Ameron.”

While leaders of other companies might focus growth on one area, Marlen says he grows Ameron in many ways: internally and externally, domestically and internationally.

“Ameron is not a monolithic company,” he says. “We’re trying to enter new businesses with good growth potential and we’re also targeting external growth.”

At the strategy’s heart are two basic principles: A growth opportunity cannot stray from the area of expertise, and the growth opportunity must add value and profitability to the company.

Marlen’s strategy for the diversified pipe system manufacturer has helped spur it to the top of its industry. The 3,000-employee company netted consolidated sales of just more than $704 million in 2005, an increase of nearly $99 million over 2004.

Here are some insights into how he keeps Ameron focused on success.

Find growth opportunities
To Marlen, productive growth does one thing before it does anything else: It contributes to a company’s bottom line.

With that in mind, Marlen says smart business leaders carefully pick and choose their growth opportunities, especially with regard to acquisitions.

“You don’t want to have hollow growth,” he says. “You can grow a lot, but unless the margins in that business and industry are good, you need to take a second look.”

But finding a financial match is only the first step. The company must be able to pass rounds of research and analysis before it is accepted as a viable acquisition candidate.

Marlen says Ameron’s researchers analyze an acquisition candidate’s profitability, core competencies, the expertise of its employees and its culture, among other variables, before making a decision.

“We have a culture at Ameron that focuses on results,” he says. “The process is very important, but the results are really what drives the company. When you apply that test to growth, I think you can do very well.”

It’s that bottom-line-driven approach that helps Marlen maintain an emotional distance from any growth opportunity. One of the first things a CEO needs to learn is how not to fall in love with the idea of an acquisition.

Marlen says it’s difficult, but he fights his knee-jerk eagerness by reminding himself of how many businesses throughout history have poured money into a growth opportunity that ultimately failed.

“People tend to become overoptimistic, overenthusiastic and sometimes even take a romantic view of acquisitions,” he says. “In my case, I discipline myself to become emotionally detached from the process.”

Marlen constantly reminds himself of what a complex, pitfall-laden process acquisitions can be, of how difficult it is to maintain the right management structure and integrate two businesses properly. That, he says, helps remind him that he had better be really sure of an acquisition before he leads Ameron down that road.

Marlen says businesses that have succeeded in the past can gain a false sense of invincibility and are ripe for a fall if they don’t remember the principles that led to success in the first place. If you start thinking your business can go out, buy any company and be successful, that’s when something bad can happen.

“Falling in love with an acquisition idea is something that is very easy to do, especially if your financial structure is pretty sound,” he says. “You tend to spend capital without the rigorous analysis that ought to be made.”

In nearly 30 years at General Tire prior to joining Ameron, Marlen says he’s seen both the good and the bad of growth. In his business career, he’s performed about 15 acquisitions.

Marlen says failure, when it happens, is something to be learned from.

“Pain stays with you,” he says. “Business managers have to learn those lessons so they find out how not to arrive there again.”

Apply your expertise
Marlen says a company should be able to jettison a portion of its business that no longer falls in line with its vision, just as Ameron did with its coatings business.

Ameron’s marketers have brainstorming sessions in which the company’s identity and vision are regularly refined based on measuring market trends against Ameron’s core competencies.

In Ameron’s case, the company had developed expertise in the area of fiberglass pipe systems, so finding new ways to implement fiberglass pipe was a next logical step.

In a nutshell, coatings were out, wastewater pipe systems were in.

“You have to find those niches where you have a parallel position,” he says. “You want to stay close to your core competencies. If you start running too far afield with regard to growth, the risk of failure increases exponentially.”

It’s a message Marlen says must start in the CEO’s office.

“Again, you have to look at the fundamentals of your growth strategy,” he says. “It comes back to having emotional discipline and remembering that your businesses have to contribute to the bottom line.”

Communicate with management
If you want to grow effectively, you need a nimble organization. And one of the easiest ways to get that is to cut bureaucracy.

Ameron accomplishes that with a minimal number of executives.

“I’d say our organizational structure is very lean, which allows communication to be that much easier throughout the company,” he says.

Marlen calls his leadership style “interactive,” and he values having a company with a streamlined management hierarchy. Ameron’s top management includes no more than six people, which Marlen says allows him to communicate several levels below him with ease.

He says a flat or lean organizational structure gives a CEO fewer people to gather information from, which consequently helps allow that leader to keep his or her finger on the pulse of every area of the company.

While he tries to maintain phone and e-mail contact on a regular basis, he says he like to use face-to-face communication whenever possible and call meetings.

They are mostly informal check-ins, but once a year, Marlen gathers all of his top executives together for a status report on company growth. The leaders of each wing of Ameron must present to Marlen how that area of the company has progressed in identifying and capitalizing on growth opportunities.

“I ask them to present an executive summary of growth opportunities for the company,” he says. “We go through an analysis of what makes sense, what might work and what might not work. You prioritize them.”

While Marlen likes to meet with his senior managers often, he says he doesn’t like to talk too much.

He says that even though the messages a business leader must communicate are often complex and multifaceted, a CEO must simplify the message as much as possible. Too many words coming from the CEO’s office will cause the message to lose its significance to those hearing it, Marlen says. At Ameron, he tries to hone his messages down to the same simple, basic company concepts such as smart growth and producing value for shareholders.

“The leadership has to give the tone of those few messages you want the organization to focus on,” he says. “But you cannot give too many messages because they’ll lose their weight.”

Creative compensation
Marlen says a business’s ability to grow properly almost always starts in the human resources wing. To grow according to a vision, a company needs employees who fit that vision.

Ameron’s leaders are always on the lookout for employees who consistently bring initiative and energy to the business, and those employees are rewarded in Ameron’s performance-weighted compensation system.

“Track record is the best indicator of who is good and who is great,” he says. “After years of experience, you can begin judging people. But the results speak for themselves. You see the people that have the initiative, judgment and energy to grow businesses.”

Marlen says the best employees are the ones who are interested not only in company growth but also personal growth. They want to expand their careers as the company grows. People like that are motivated twice as much.

“Those people want more responsibility,” he says. “They want to succeed in business and reach the top.”

To keep and motivate those employees, Ameron instituted a performance-based pay system that takes into account how an employee performs on a year-to-year basis.

Employees have target incentives in place above their base salaries, as does about 50 percent of Ameron’s senior management.

Marlen says employees tend to respond more actively when they see the results of their work in their paychecks.

“I would say we have instituted a culture of meritocracy,” Marlen says. “That is a great motivator. If you do well, if your results are good, you will do well personally, and there will be growth opportunities personally.”

Marlen says compensation can never be undervalued. It can mean the difference between keeping and losing the best talent.

“Through my experience, I have found that in order to retain and motivate top talent, you must incentivize them,” he says. “Compensation is very important.”

HOW TO REACH: Ameron International Corp., www.ameron.com

Thursday, 21 September 2006 07:35

Financial accountability

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It’s been four years since the Sarbanes-Oxley Act was signed into law. Although private companies and nonprofit organizations are generally exempt from its provisions, many such organizations have found that certain aspects of the act can enhance their overall operations. It has raised the bar for what constitutes best practices in governance and expectations regarding internal control.

“Many companies are taking the idea of improved governance and accountability seriously and are recognizing how it benefits their organization,” says Gema Ptasinski, a partner at Vicenti, Lloyd & Stutzman LLP. “It helps to reduce risk of fraud, it increases confidence and credibility with stakeholders, and it results in having a stronger entity.”

Smart Business spoke with Ptasinski about what types of provisions make the most sense for private companies, the role of audit committees, and how to develop internal controls.

What types of private companies might want to voluntarily adopt the Sarbanes-Oxley provisions?
Companies that are going public will need to spend some time and money to show that they can comply with the act. Prior to an IPO issue, a private company will want to look into the provisions of the Sarbanes-Oxley act sections that require management to take responsibility for internal controls over financial reporting and conducting a year-end assessment of the internal control structure.

Companies considering mergers or being acquired by a public company will also need to show compliance. If you’re looking for investor funding and have documented internal controls and governance policies, you will be more attractive and able to secure investor funding.

Also, companies with absentee owners might consider the governance features of the act to help ensure that professional management is doing a good job.

Finally, some organizations are receiving pressure from board members, auditors, attorneys and investors to implement certain ‘best practices’ of the act.

What types of best practices make the most sense for private companies?
Private companies may want to consider having the CEO and CFO sign a financial statement certification. This acknowledges responsibility for the financial information being accurate and demonstrates their leadership and competence.

A second best practice would be the formation of an audit committee. The audit committee should be independent of management and should be composed of individuals who have financial expertise.

Additional best practices include developing codes of ethics and conflict-of-interest policies to set the tone of expected behavior for all employees and in light of the potential risk of fraud in any organization, providing an anonymous fraud reporting mechanism.

If an audit committee is formed, what is its role?
Committee members are responsible for interviewing and hiring the audit firm and ensuring independence of that firm. They’re also responsible for ongoing communication with the audit firm regarding the results of the audit. They should provide oversight of the fraud prevention program and assist the board of directors in fulfilling oversight responsibilities. A best practice for an audit committee — or for a board if there is no audit committee — is approving nonaudit services performed by the auditor, such as comments on candidates for executive positions and tax services.

How can a private company determine if the audit committee has a financial expert?
Sarbanes-Oxley defines a financial expert as someone who either has education or experience as a public accountant, auditor, CFO, controller, or has performed similar functions. When a company is thinking about qualified committee members, it should find individuals who have an understanding of Generally Accepted Accounting Principles and experience in preparation or auditing of financial statements for comparable entities. They should also have experience with internal controls and understand audit committee functions.

What resources are available to help an organization develop a code of ethics or a fraud hotline?
The AICPA (American Institute of Certified Public Accountants) offers a wide variety of information on their Web page at www.aicpa.org. It has an anti-fraud resource center, a sample code of conduct and ethics, and information about audit committee effectiveness. There are service organizations that provide assistance in developing a fraud hotline.

Public companies are required to attest to and report on the internal control assessment made by management. Should private companies go that far?

Developing accounting and reporting policies and procedures is always a good practice for any organization. Considering the effectiveness of the internal controls in place is the key to minimizing fraud risk and risk of errors. An organization may want to consider establishing an internal audit function or committee. If resources and expertise are not available within the organization, they can consider outsourcing this function.

GEMA PTASINSKI is a partner at Vicenti, Lloyd & Stutzman LLP. Reach her at (626) 857-7300 x243 or gptasinski@vlsllp.com.

Thursday, 21 September 2006 07:15

Two for the show

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A virtual machine is a simulated computer inside a computer. In effect, this type of technology enables multiple operating systems, as virtual machines, to run concurrently on a single machine.

The uses for such a setup are plentiful. Companies are aided by virtual machines in the testing, production and development of software applications. Also, entities with extra space on their servers can use virtual deployment to set up multiple applications for their business.

While virtual machines have not reached the mainstream yet, Hormazd Dalal, president of Castellan Inc., believes that they will eventually make their presence felt.

“It’s a technology that is more readily available as hardware costs have come down,” says Dalal. “Also, there are many uses.”

Smart Business spoke with Dalal about how virtual machines can help businesses, the costs involved, and why he believes virtual deployment will become the norm for certain types of companies.

What is a virtual machine?
A virtual machine is a program designed to behave as if it is a physical computer, otherwise known as an emulator. It clones a computer and puts it on another piece of hardware. Thereby, it gives you the ability to have multiple computer operating systems and configurations running on one piece of hardware.

How does this type of technology help businesses?
It has several useful applications. You can set up a ‘spam’ appliance and put it on the server so it functions as a virtual appliance. It’s very good for testing because you can have one piece of hardware doing multiple configurations.

In a production mode, it’s useful for businesses that have the resources to purchase one large piece of hardware because they can have several applications or operating systems running on it.

In addition, it’s very good for development. For example, if you need to develop something that will run on Windows 2000, but also Windows 2003, you can have them both running on one piece of hardware and then test them simultaneously.

What are the costs involved with virtual machines?
VMware is currently being offered free of charge. The major outlay is the cost associated with obtaining high-end hardware with a lot of memory. If you have one server that needs two gigabytes of memory, and you’re trying to emulate two servers on the same machine, then you will need four gigabytes of memory. It is important to provide the adequate resources such as processing power and RAM (random-access memory) for the virtual machines that are in operation. Also, bear in mind that any virtual machine will run slightly slower than the actual computer that it is running on.

What types of operating systems are virtual machines compatible with?
They are compatible with any operating system. You can run a Linux appliance on a Windows machine, you can run a UNIX appliance on a Windows machine and you can run all of the Windows operating systems on any given machine. A benefit with virtual machines is that you can have one machine running with Windows 98, Windows XP, Windows Vista and a Linux appliance, which is helpful for testing purposes.

Why do you believe virtual deployments will gain popularity in the upcoming years?
The fact that Microsoft has now come out with its free version of VMware, and has come into the marketplace with a VMware server, is one reason. I don’t see it becoming mainstream for all companies, but those that do have one large server with under-utilized horsepower on it will be able to set up multiple applications running on that server. It will be embraced primarily by large companies and development shops.

HORMAZD DALAL is president of Castellan Inc. Reach him at (818) 789-0088, ext. 202, or hormazd@castellan.net.

Thursday, 21 September 2006 06:59

The Ostroff File

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Born: 1960, Brooklyn

Education:
Bachelor of science degree, communication and journalism, Florida International University

What is the most important business lesson you’ve learned?
You have to have the best team around you. Unless you have people that you know are the strongest team that you can put together, you can be as passionate, as competitive and as focused as you could possibly want to be, but you need to have that team behind you or else you will never accomplish your goal.

What is the biggest business challenge you’ve faced, and how did you overcome it?
There are so many. I don’t believe in the word ‘can’t,’ and I don’t believe in the word ‘no.’ When there is a will, there is a way. As a result, the biggest challenges that I’ve faced are the challenges that seemed the most impossible.

It’s everything from when I was 18 when I decided I wanted to be a reporter, nobody would hire me, and I literally sat on the doorstep of the news director until he would hire me to coming into a network like Lifetime when it skewed so old — the average audience was in their 70s.

The challenge was to get the network to be younger and to be competitive. We were able to build the network into the No. 1 cable network, not only for women, but the No. 1 cable network.

Ostroff on knowing your limits:
It’s a great strength to be able to recognize your weaknesses. You can then supplement whatever your weaknesses are and be the strongest executive you can be. Everybody has weaknesses.

Wednesday, 30 August 2006 12:49

Hot topic

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As health care costs continue to spiral out of control, having a top-notch employee benefits plan in place is becoming increasingly important. While executives are well aware that comprehensive benefits programs play a major role in attracting the best talent, many companies have neglected to analyze the effectiveness of their benefits strategy.

Periodically reviewing your employee benefits program makes sense on multiple fronts. It provides the opportunity to revisit your carrier’s rates and make sure they are still competitive. Input from employees can be taken into consideration and implemented if feasible. And finally, you want to make sure that your program measures up well against others in your industry.

“Because benefits plans are such a hot topic,” says Phil Graybill, vice-president of benefits, sales and consulting for Sander A. Kessler & Associates, “I, as an employer, would want to either meet or exceed what my competitors are offering.”

Smart Business spoke with Graybill about the importance of analyzing employee benefits programs, what constitutes a good benefits plan and what steps should be taken if the program could be improved.

How important is it for companies to periodically analyze their employee benefits programs?
In terms of importance, it is very high. Employee benefits plans are a chief operating expense and are usually one of the two or three highest expenses that a company has. Also, employees are taking a much closer look at employee benefits nowadays. The media coverage that has been given to the cost of health care and the nation’s health care system has been phenomenal. Everyone is very concerned about the rising costs of health care — which makes employees take a very hard look at the types of benefits that an employer offers.

What factors should companies consider when analyzing their employee benefits program?
You want to analyze the network provider’s accessibility on a managed care level and what its discounts are. Determining which carrier can provide the best costs and matching up coverage options to what the company’s employees are looking for are also important factors.

When possible, benchmarking data should be used to compare your program with direct competitors. You want to review coverage options and contributions strategies that your competitors are deploying.

What are some elements that constitute a good benefits plan?
It needs to meet the coverage guidelines that will be appreciated by employees and it needs to meet the affordability of the employer.

If, for instance, you as an employer were to offer only a ‘Cadillac’ plan but you weren’t contributing the lion’s share, that might be a detriment to the employee who won’t be utilizing the plan all of the time and will face a high deduction out of his or her paycheck. The same holds true vice-versa as well.

The bottom line is that the plan needs to either meet or exceed what the employer’s competition is offering.

If upon inspection, the program could be improved, what steps should be taken?
Timelines should be constructed and adhered to by the employer, its broker and the insurance carrier based on what changes are going into place and what timeframe the changes will be going into effect. Far too many times, decisions are made very quickly and then there is a disconnect between the insurance carrier and the employer.

Secondly, properly communicating with employees is critical. They should be told as early as possible about any changes with a positive spin. It’s a good idea to provide information about the reality of health care costs. A way to convey the overall value that employees are still receiving is to create total benefits statements that include salary, benefits, workers’ compensation costs, vacation, etc.

How should a company seek input from its employees to ensure that the benefits program meets their needs?
If you have one location and 100 to 200 employees, it’s certainly feasible to pull your employees in from time to time and have a meeting about the benefits program. I’ve seen larger companies use insurance focus groups, which provide a representative sample of employees’ needs. Surveys provide a low-cost option of measuring employee satisfaction. Many options are available on the Internet.

How important a role does having a strong benefits package play in attracting and retaining key employees?
Employees know that having strong health care and benefits is the key for them and their families to stay above water. A small-percentage difference in salary in what a person wishes they could make and what the employer offers is becoming secondary to what type of health care coverage is available.

PHIL GRAYBILL is vice-president of benefits, sales and consulting for Sander A. Kessler & Associates. Reach him at (310) 309-2221 or pgraybill@sanderkessler.com.

Tuesday, 29 August 2006 20:00

Survival of the fittest

Written by
 Kevin Mintie doesn’t fear change, he embraces it. The president and CEO of Mintie Corp. knows that for his company to continue to succeed, it must continue to evolve.

Since 1940, when Mintie Corp. was founded by Mintie’s grandfather to provide indoor air-quality solutions, it has adapted its focus to meet the changing markets and new opportunities brought by each decade.

“Everything is an evolution of our past services and not a complete change in direction or expertise,” Mintie says. “We’re constantly thinking about how we can evolve and stay ahead through innovation.”

In 2003, the company introduced a line of containment units designed to control the spread of harmful airborne particles during construction or maintenance — a big shift for the traditionally service-based company.

“Our risk was, yes, we could make an investment, and this might not be as big a success as we’d hoped it would be but ... to pass on it would be worse than taking a risk and have it (be) only mediocre,” Mintie says.

Since then, the company has seen annual average sales increases of 25 percent, and Mintie expects a minimum growth rate of 18 percent to 20 percent for each of the next five years.

Smart Business spoke with Mintie about how he nurtures an environment that encourages change.

What is the key to anticipating and adapting to change?
This ties back mainly to knowing our customers and listening to their needs. Through close personal relationships and always being available, we’re able to help our clients and customers find solutions to their challenges.

We kept an eye on various industry developments and how they affect or created new opportunities with our own business. We worked hard to stay focused within our own fields of expertise.

Innovative ideas come from so many different places, so we make sure we’re listening to our customers, our channel partners and then our employees. Our employees are key to the ideas, because they’re actually out in the field and see what’s taking place and what the needs might be.

How do you promote a culture that values innovation?
It’s basically challenging that entrepreneurial spirit. Innovation can and should be the backbone of a growing business. We promote a culture of innovation at Mintie by challenging each other to think differently, and I think the overused term is ‘think outside the box’ and just do things better than before.

My experience has been people tend to be motivated by being able to make a difference, to have their efforts mean something in the overall picture. So by allowing everyone to bring their ideas to the table and often be in charge of developing those ideas, we keep this culture of innovation alive.

How do you keep employees adaptable to change?
With success and growth comes change, and that can sometimes be difficult ...You bring new people in, and some of your longtime employees may feel threatened. You bring in new technology and processes, and someone may feel intimidated.

You must try and create a collaborative culture where employees feel they have a stake in the success of your company and where their efforts actually make a difference. What we do is we come to the understanding that change makes us all more effective and, in the long run, most likely (makes us) more creative or more innovative.

Change also requires effective communication, a lot of personal involvement in changes that are essential to helping an employee adapt to a growing organization. Teamwork and collaborative meetings help change evolve naturally, because they allow the employees to be part of the process or the changes you may be trying to achieve.

How can a company prepare for growth?
The challenge now is not to be seduced by the excitement generated over a hot new product. Instead, we want to make sure we keep our eye to the future and be ready for it when it arrives. This has required us to do a lot of careful planning ... and appropriate the resource allocations necessary to continue into the future.

For a small business, resources are finite, so it really becomes a challenge. But I believe it’s just absolutely critical to stay focused on your future if you want to come out ahead — even though you’ve got something positive right there before you.

Stay focused on the needs of your employees and your customers. If you can be truly committed to shaping your business around that and are willing to challenge conventional thinking, instill responsibility in your employees and make the changes necessary, whether in your office or in the marketplace, you can accomplish more than you probably ever dreamed.

HOW TO REACH: Mintie Corp., www.mintie.com