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Thursday, 27 February 2014 21:15

How GOJO has made sustainability a business imperative

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GOJO Industries Inc. was one of five 2013 Summit of Sustainability Award (SOSA) winners, an award that recognizes companies for their sustainability efforts. The awards acknowledge organizations that are helping to fulfill the SOSA mission of introducing green best practices to Summit County’s business community, showing the value of the triple bottom line: People-Planet-Prosperity through Recognition-Education-Engagement-Networking.

Smart Business spoke with Nicole Koharik, Global Sustainability Marketing Director at GOJO, about what the company has done in the category of sustainability.

What is key to moving an organization toward sustainability?

Imbedding sustainability into the culture for long-term results is critical.

At GOJO we used an approach we call SWOW (Sustainable Ways of Working). And because of that approach, sustainability is not only inherent in our business strategy, but it’s also integrated into our key processes.

For example, during annual business planning every unit thinks about sustainability and how it fits into their plan and priorities. It’s also included in our new product development process, and in our employee education and communications programming.

How can companies begin establishing a sustainability-minded culture?

Benchmarking is a great first step because it serves as the input for setting goals, which is ultimately how you measure your success and communicate your results. It also helps educate employees about your impacts and understand where you’re starting from so that they can also engage in identifying solutions to drive that improvement. The result has been employees who embrace sustainability and see how they can contribute to the organization’s goals.

How did GOJO develop a deeper culture of sustainable operations?

One important step was establishing a shared vocabulary. For example, when we started talking about sustainability internally, we noticed that our team members were using the terms green and sustainability interchangeably, and were thinking primarily about the environment. Properly defining those terms helped employees understand that sustainability really means that we’re committed to social, environmental and economic considerations.

We also adopted an overarching guiding principal that we call sustainable value. This helped make sure employees understood that the work that we were taking on was ultimately about creating social, environmental and economic value both for our business and for our stakeholders.

What metrics best reflect your progress towards your stated sustainability goals?

In our sustainability report we have a scorecard, which we established in 2010, that includes 2015 goals to reduce our water use, solid waste generation and greenhouse gas emissions.

On the social metrics, we generated a 25 percent improvement in hand hygiene delivered in equivalent uses relative to the 2010 per-use rate.

In environmental metrics, we reported a 40 percent reduction in greenhouse gas emission since 2010, a 29 percent reduction in water use over the same time period and a 13 percent reduction in the generation of solid waste.

On the economic side, we achieved a 52 percent increase in our sales from sustainability certified products.

What is the greatest benefit the sustainability plan has brought to GOJO?

Through our efforts we’ve experienced a strengthening of our competitive advantage in the marketplace — winning new business and enhancing our brands by driving innovation. And we’re also making significant progress on the long-term goal of becoming a sustainable organization.  

How did winning the SOSA help your business?

Winning the SOSA led to an increased engagement opportunity with many new stakeholders. We formed new relationships with organizations that have won previously and it helped validate our leadership position, which is really helpful and a great sign to our customers in the marketplace.

Nicole Koharik is Global Sustainability Marketing Director at GOJO Industries Inc. Reach her at (330) 255-6000 or koharikn@gojo.com.

Insights Sustainability is brought to you by Keep Akron Beautiful

Friday, 28 February 2014 02:06

Are you and your employees ready for retirement?

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Employers are trying to encourage their employees to save more for retirement, but the numbers aren’t in plan sponsors’ favor. According to the U.S. Census Bureau’s 2010 census, 73 percent of our population will struggle financially during retirement.
   
Why are employers so interested in employee plan participation? Discrimination testing plan sponsors must go through has encouraged the drive to make sure participation is adequate for non-highly compensated employees. If participation and deferral percentages are low for non-highly compensated employees, highly compensated employees can’t defer the maximum contribution amount, which leads to refunds at the end of the year.

“To make a plan financially healthy for all employees, good participation is needed across the board,” says Linda A. Cahill, a principal at Benefits Resource Group.

Smart Business spoke with Cahill about ensuring you have adequate participation in your retirement plan to maximize its impact for all employees.

How does discrimination testing affect employer plan participation levels?

Although individual situations can vary, the general rule of thumb for discrimination testing is that highly compensated employees (HCE) are only able to contribute about 2 percent more than the average of the non-highly compensated employees (NHCE). For instance, if a company’s average HCE is deferring 7 percent and the NHCEs were only deferring 4 percent, it’s possible that the company could fail the discrimination test and the HCEs would be given refunds. These refunds can end up costing HCEs thousands in potential retirement savings, so it’s important for a company to encourage plan participation among all employees.

How can employers boost plan participation?

Employers are adding plan design features such as automatic enrollment to boost engagement. Survey data shows that about 47 percent of all plans have an automatic enrollment feature, and 89 percent of those employers use auto enrollment for new hires. This automatic enrollment is also being used to bring in nonparticipants, allowing employers to ‘refresh’ enrollment.

Many plans have increased their automatic enrollment amount from 3 to 6 percent. In 2010, 7 percent of all plans used 6 percent contribution. Now it’s 10 percent. That’s the direction things are headed.

What aren’t more employees participating in or saving enough for retirement?

It’s a lack of education and communication regarding the importance of saving and starting early. Fortunately, there’s been an increase in communication to employees regarding retirement plans. More than half of plan sponsors surveyed indicated they’ve increased their employee communication. This takes the form of group and one-on-one sessions. Some are integrating a retirement income calculator in these sessions to project if an employee is on track to meet his or her retirement goals.

Technology is the key to driving participation, but it’s underused because of a lack of communication and education. There are tools that can dial-up deferral or contribution levels and determine the outcome, but participants must be made aware of these in order for them to be useful.

How can employers help employees know if they’ll meet their retirement goals?

Employees should sign up on the Social Security Administration’s My Social Security (www.ssa.gov) site to determine their estimated benefits and double-check salary data. Using that information with current account balances and a retirement income calculator gives a pretty good estimate of what income a person has for retirement.

It’s good to have an annual review with the plan sponsor to determine if employees are participating, if they’re invested appropriately or if they are paying attention to details, because with a 401(k), participants are responsible for their own retirement outcome. They need to look to make sure it’s doing what they want it to accomplish.

People spend hours planning their vacations, but don’t spend the same amount of time planning their retirement, which is potentially the longest vacation one will ever take. Get people to think about these things today rather than allowing them to continue to delay planning until it’s too late.

Linda A. Cahill is a principal at Benefits Resource Group. Reach her at (216) 393-1812 or lcahill@benefitsrg.com.

Insights Employee Benefits is brought to you by Benefits Resource Group

Many people join a nonprofit board of directors because they are passionate about the organization’s mission. What they really want to do is to help the organization accomplish it, but there is a host of governance responsibilities that go along with that.

Marie Brilmyer, CPA, M.Acc., a director of assurance services at SS&G, says nonprofit boards need to think about strategy, monitoring, oversight, compliance and financial health like a corporate board.

“A board needs to think ahead,” she says. “It needs to be sure that the organization can fulfill the mission today and tomorrow. It can’t be uncomfortable with profit because a model where an organization continues to lose money, and is budgeted to do so, is clearly not going to be sustained.

“While there are different nuances, at the end of the day, they really need to be looked at, whether it be for-profit or nonprofit, in a similar manner with regards to finances.”

Smart Business spoke with Brilmyer about the nonprofit board’s role in creating smart, sustainable fiscal decisions.

Many nonprofit board members are from the corporate world. How similar are the two board types?

It’s not that different. Nonprofit boards look at the executive director’s performance; corporate boards look at the CEO’s. Corporate boards look out for investors; nonprofit boards look out for the donors. The two discuss compensation, internal controls and fraud risks. Each of the respective boards’ charges can be aligned.

Nonprofit boards often have people with financial backgrounds for their expertise. The organization looks to the board to set financial policy and help management make decisions. Boards go through the budget process, review financial reports regularly, ensure investments are prudent and oversee compliance. Compliance is key because nonprofits follow rules and regulations for gifts, endowment restrictions, fundraising, lobbying, tax filings and private inurement, when a 501(c)(3)’s money is devoted to private use, not charitable purposes.

What can happen if the oversight falls short?

Not only could the nonprofit organization be unsustainable, it could lose its tax exemption status. Recently, there’s been a slight trend of nonprofits, especially in Ohio, losing that status by not properly filing taxes. Although recent IRS regulations make it easier to regain tax-exempt status, it can still cripple the organization.

How should a board be set up?

Boards need to discuss financial matters routinely, which might be more often than standard board meetings occur. At every meeting, the board should receive a formal report from the treasurer or staff — and then ask questions of those reports. Check for consistency from period to period.

Monitor restricted dollars regularly. If a donor donates money for a specific purpose, such as a scholarship, somebody must keep track of that donation to ensure it gets used for what it was intended.

Examine the organization’s internal controls. In a small organization with few employees, the board should see if it could possibly be part of that internal control function, such as acting as a check signer or reviewing certain transactions.

Assess the capabilities of the accounting staff. Is the bookkeeper capable? Are things being recorded properly, or is it somebody who is inexperienced? Assessing this upfront can help lessen the headache later when things have to be cleaned up.

Always check on compliance, whether taxes or other areas. The board needs to review and approve of tax filings, making sure they are going out the door properly.

Finally, assess the fraud risks and see if there is potential for fraud. Does staff have an open line of communication to the board? Direct communication can head off fraud that may occur later.

Board members need to know what their responsibilities are, and if for some reason they can’t fulfill them, especially for complicated matters, seek outside council.

Do board members get nervous about finding funds to pay for outside expertise?

That’s always the No. 1 concern, but often the board gets accountants involved too late. You can save time, energy and money by setting things up properly first, rather than going back in after something has been accounted for incorrectly.

Marie Brilmyer, CPA, M.Acc. is a Director of Assurance Services at SS&G. Reach her at (330) 668-9696 or MBrilmyer@SSandG.com.

Insights Accounting & Consulting is brought to you by SS&G

Thursday, 27 February 2014 20:15

How the ACA could change Ohio workers’ compensation

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Although it appears the Affordable Care Act (ACA) was not intended to affect the workers’ compensation system, it may influence it. Ohio may be less likely to experience some of the hypothetical outcomes discussed for other states, but there is a correlation and potential impact.

Smart Business spoke with David D. Kessler, medical director at CompManagement Health Systems, about how the ACA might affect workers’ compensation.

What aspects of the ACA could be used in the workers’ compensation system?

An important concept with the ACA is the reference to Accountable Care Organizations, which are groups of health care providers who coordinate the care given to their patients. This requires sharing information for informed decision-making among stakeholders.

Workers’ compensation has many moving parts that involve multiple interested parties, creating variable goals. These have the potential to introduce inefficient processes, escalating costs and compromising care for injured workers. Sharing clinical information between parties helps with enhanced decision-making and permits the use of evidence-based best practices. Coordination on this level should reduce duplication of services, potentially reduce medical errors and enhance recovery from an injury, permitting a timely and safe return to work.

It is generally accepted that fee-for-service payment methodology has a tendency to increase utilization for optimizing provider revenues. Although a higher frequency of care in the acute phase may increase initial costs, it can mean achieving long-term goals and better outcomes, lowering costs to employers.

How could the ACA’s expanded benefits affect workers’ compensation?

The ACA may result in healthier employee groups because it covers those who previously had no health care benefits, allowing them to address primary health care needs. A healthier employee population should have lower risks for claim frequency or severity, reducing associated costs from disability and medical care post-injury. Although employers may fear increased exposure for filing claims or prolonged use of services initially, this may lessen when other health care options are offered. However, high deductibles or co-pays may create financial stress to the beneficiary, discouraging greater use of health insurance.

Another common situation in workers’ compensation is when an employee’s current health status or pre-existing condition prolongs recovery and requires additional care, successively producing greater costs. Accurate diagnosis and complete records help the Managed Care Organization (MCO) determine if the requested services are necessary for treatment in a claim. Engagement and personal responsibility from the individual through accessing available health care that may be external to workers’ compensation can help decrease barriers affecting response to treatment.

How might the ACA affect the kind of care provided through workers’ compensation?

Another component of the ACA that affects the workers’ compensation arena is the Patient-Centered Outcomes Research Institute (PCORI), which is designed to improve health care delivery and outcomes. In a comparable process, MCOs in Ohio are required to use Official Disability Guidelines (ODG), which are a meta-analysis of evidence-based protocols that serve as the basis for evidence-based care collaboration. When providers are reluctant to cooperate and discuss evidence-based practices, it impedes achieving ideal outcomes. Utilization management of requested services from the MCO industry is enriched through use of tools such as ODG, and should serve as an educational opportunity for informed decision-making for injured workers, employers and providers. PCORI’s success could facilitate applicable use in the workers’ compensation system.

Although the ACA may not directly impact Ohio workers’ compensation, its focus on the interactive communication of evidence-based medicine for informed decision-making, regardless of the payer or administrative organization, should be the guiding message driving quality, cost-effective, patient-centered care.

David D. Kessler, DC, MHA, CHCQM is Medical Director at CompManagement Health Systems. Reach him at (614) 760-1788 or kesslerd@chsmco.com.

Insights Workers’ Compensation is brought to you by CompManagement Health Systems

There’s a saying that necessity is the mother of all invention.

For most businesses in the last several years, tough economic conditions created a lifetime supply of necessity, resulting in companies large and small seeking creative ways to do more with less.

For most CEOs, that meant taking a long, hard look at every position and every product, weeding through the “nice to have” and “need to have” in both categories. The next step was taking what remained and finding new ways to maximize efficiency.

The silver lining to the economic downturn is that companies looked at things in new ways and became focused on efficiency. Those lessons remain in place today. Existing positions and potential new ones are given greater scrutiny than before, and products are measured and remeasured for profitability.

To continue to not only survive but thrive in this new economy, it’s imperative that these lessons are not forgotten. Companies need to operate at the bare-minimum of staffing levels to avoid unnecessary costs. Employees need to be cross-trained to keep everyone at maximum capacity to eliminate downtime. Products have to be scrutinized to squeeze every penny out of production costs and pricing needs to be studied to increase profitability.

Innovation and efficiency have to be paired to create new products that stand out from the competition. Take Sonos, for example. The company created a wireless sound system that easily plugs into your existing wireless router, providing music in any room with a Sonos device, all controlled from your iPod. Installation is easy — no need for a technician, and because it’s wireless, you no longer have to figure out how to hide all the wires older systems required. Add in a simple interface on a ubiquitous device and you have a winning product.

But Sonos can’t rest, for competitors like Bose are offering similar systems, looking to improve on the idea. If Sonos is innovative and does so in an efficient way, it will most likely continue to succeed.

We all have to continue our search for efficiencies within our organizations. We have to be willing to change processes, systems and people, even when those changes are difficult to make. Failing to do so will only put you at a disadvantage against competitors who did make the changes.

Never stop innovating ways to be more efficient in every aspect of your business. Innovation isn’t just about the next great product; it’s also about how you produce and manage that product and how you manage the people behind it.

A great product with an inflated cost structure behind it won’t do you any good in today’s economy.

 

Fred Koury is the president and CEO of Smart Business. Reach him at fkoury@sbnonline.com

Cloud technologies have transformed the playing field for small and midsize businesses, largely because of their flexibility. Organizations have the ability to quickly and painlessly ramp up their services when they need something more.

“Using their Internet connection, they can harness the power — and reap the rewards — of applications traditionally available only to large enterprises with big IT budgets,” says Kevin Conmy, regional vice president, Freedom Region at Comcast Business. “Cloud-based services, from servers to storage, provide access to high-performance infrastructure without high-priced investments. Streaming video can be used to bring conferences and training to any employee, anywhere. Mobile devices increase productivity beyond company walls, with businesses seeing increased efficiency and a growing bottom line.

“But what may not be immediately visible is the impact these tools are having on company networks,” he says.

Smart Business spoke with Conmy about sufficiently planning for your company’s bandwidth needs for today and tomorrow.

How are Internet connections and networks affecting business operations?

As organizations move to the cloud and embrace applications like high-definition video and Web-based tools, their Internet connection becomes more important. Suddenly, more data needs to move — and move quickly — over your connection. If your network doesn’t have sufficient bandwidth or speed, you could experience slower response times, or risk losing connectivity completely.

As a result, many tools intended to allow businesses to analyze data, make decisions, and interact with employees and customers with lightning speed are at risk of not operating at peak efficiency. There may be a delay between a query to a cloud-based data center and a response, or video streams may freeze as they struggle over a lagging connection. Remote workers also might have difficulty accessing applications or email because too many people are accessing the company network simultaneously.

Which businesses face bandwidth problems?

This need for speed is more the rule than the exception. In a 2012 Comcast Business poll, 84 percent of small and midsized business respondents experienced increasing bandwidth needs because of their use of the cloud, Wi-Fi and mobile devices.

This trend is expected to increase, too, as companies continue to aggregate and unlock value from customer data, such as order histories, buying preferences and online shopping patterns. More than half of respondents in a different Comcast Business survey expect the quantity of collected data to grow at least 50 percent within two years.

How can organizations deal with the challenge of increasing bandwidth?

Clearly, a bandwidth upgrade is, or soon will be, in order for many. In the old days, companies often relied on T1 lines from traditional phone providers. So, boosting speeds involved buying and tying together more lines, a pricey and complex endeavor.

Today, things are easier, but only if you ask the right questions before an upgrade:

  • Does the network have the reach we need? If you rely on transferring data between offices, make sure your provider has a wide network, and double-check to ensure all locations are within that footprint. Just because one office may appear to be in the middle of a coverage map doesn’t guarantee your satellite location 20 miles away will have that same good fortune.
  • How quickly, and in what increments, can we change our bandwidth? Having the ability to scale up or down can help companies buy only what they need and cut long run costs. Select a provider that can do this via a simple phone call to save you hours of aggravation and help enhance business productivity.
  • What happens if the network goes down? The majority of telecom providers operate over another provider’s fiber lines. So, although you may be under contract with a smaller company boasting a less expensive monthly bill, you’re likely using the same line as one of the larger companies. What does this mean? In an outage, your main contact may not be able to immediately resolve the issue.

By asking now, you can help ensure your company knows what it needs for the future so you can begin planning accordingly.

Kevin Conmy is regional vice president of the Freedom Region at Comcast Business. Reach him at (215) 642-6457 or kevin_conmy@cable.comcast.com.

Insights Telecommunications is brought to you by Comcast Business

When John Sheppard stepped into his role as president and CEO of EveryWare Global Inc. nearly two years ago, he knew he was faced with the difficult challenge of bringing together two ingrained cultures of two iconic brands — what he didn’t know, was that the two companies had yet to meet.

Anchor Hocking and Oneida, two of the most well-known and long-time consumer brands in tabletop and food preparation products had been purchased by Monomoy Capital Partners in 2007 and 2012 respectively, and the two companies were set to become one under the umbrella of EveryWare.

“I think there might have been a phone call at one point, but for the most part, they operated independently,” he says. “There was no discussion between them.”

Sheppard has more than 25 years of senior leadership experience with some of the world’s largest consumer goods companies, including 20 years in executive positions at Coca-Cola Co. When he came to EveryWare, he was looking for an opportunity to move back into a CEO role, growing a branded business, especially on the international side.

Sheppard was up to the challenge of turning perfect strangers into one team.

“This was exciting to me because Anchor Hocking and Oneida, particularly Oneida, are some of the best-known brands in the business,” he says. “When I came in, the whole objective was to take these two companies and great brands and combine and integrate them — so, pull together a leadership team, create a vision for the company and then execute on that.”

Here’s how Sheppard merged the companies together and took them public, creating an organization with more than $440 million in annual revenue and 2,000 employees.


Becoming one company

The first step in a merger is usually to get the management teams together and go through the transition punch list, as it were.

Sheppard began by telling them how EveryWare was going to operate moving forward. Then, he looked for strengths and weaknesses, finding the right talent and putting them in the right place.

Sheppard says he came in with an open mind, trying to meet with and listen carefully to the employees in the first few months he was there to find out where they believed the business could expand, and where it couldn’t.

“It became pretty clear where the strengths and weaknesses were, and where we had opportunities to cut costs,” he says.

“There were definitely some headcount reductions during that process, and that was natural because in any acquisition you don’t necessarily need two complete sets of SG&A [selling, general and administrative] costs,” Sheppard says.

But open communication is key — letting people know what you’re doing and when you’re doing it. Sheppard says the uncertainty is what drives people crazy.

“They would rather hear the bad news, as opposed to just dragging on, with no information at all,” he says.

Over time, it became apparent that most of the resources would be moved to the Ohio headquarters.

Sheppard says even though he’d been through many mergers and acquisitions before, you always learn as you go forward and see things you would have done differently.

In addition to making sure you communicate proactively with your board and the outside public as much as possible to avoid surprises, management changes should be made quickly if there’s a problem.

“I think probably, from a management team standpoint, I would have integrated food service and retail sooner, rather than later. I waited until last year and I probably should have done it earlier,” he says.

“So, move quickly when you know you have an issue to resolve.”


Going public

At the end of 2012, the decision was made to take EveryWare public. An initial public offering would create currency for the company, opening the door to potential acquisitions down the road.

It also was an opportunity for the private equity firm to take some money off the table. Because it owned 100 percent, an IPO allowed the firm to give back to its shareholders and partners.

Sheppard says they worked intensely for four or five months before going public under the stock ticker EVRY last May.

“That was intense,” Sheppard says. “That was a lot of midnight, 2 a.m., weekend, holidays, you-name-it meetings.”

Sheppard drew on his experience working in public companies and taking companies public to help spearhead the time-consuming and complicated transition.

“It’s quite an intense process,” he says, “It requires an understanding of the difference between a private and public company. You have to be extremely open about business, making sure you’re communicating effectively both internally and externally.”

Everyone had to come to the realization that life as a private company is a lot different than life as a public company.

“Some people found that more difficult than they would have thought,” Sheppard says.

“It’s probably not a great place to start trying to learn — right when you get thrown into the middle of a public offering,” he says. “We had some learning curves with some of the finance people, as they were learning the systems and processes and how to go public and all that. But we had a lot of hardworking people in finance and everywhere else.”


Expanding to new markets

After two major changes over the past two years, Sheppard says the company’s biggest challenges now are execution and focus as management works on a number of initiatives.

EveryWare has begun to expand into new categories, launching new products and SKUs.

“We entered into Brazil, Korea and expanded our business into Mexico and China,” Sheppard says. “And we also added a bunch of new customers in 2013, and we’re also starting to announce some in 2014.

“We’ve really started to grow the brand — expanding both horizontally and vertically. We’ve expanded our current customers and we’ve added new customers.”

EveryWare sells tableware, flatware, dinnerware, beverageware and serveware to retail outlets like Wal-Mart, Target and Bed Bath & Beyond. It also sells to hotels, restaurants and cruise lines.

Sheppard says the top-line growth was about 5 to 6 percent in 2013, which is three times the industry rate.

“International is driving a lot of that. International drives a lot of the growth — that’s because of both new markets and doing better in existing markets,” he says.

Again, Sheppard can draw on his 12 years of experience running Coca-Cola’s operations in Africa, England, Poland and Austria to help guide global moves.

The company chose to enter Brazil and South Korea for a number of reasons: the two countries have a $1.2 billion tabletop market and there are not many Western companies there, though both have relatively stable governments and a strong affiliation towards American goods.

EveryWare also wants to focus on penetrating new U.S. channels.

“Our retail business will be focusing on clubs, department and grocery stores, and in new product innovation, where we launch new SKUs,” Sheppard says. “Internationally, we’ll be opening new markets. In food service, we’re really focused on driving our placement of new products in restaurants and hotels. We’re excited about that. That’s going to be the focus going forward — profitable top-line growth.”

 

Takeaways:

  • Communication is key.
  • Going from a private to public company requires new thinking.
  • Finding the right international markets will drive top-line growth.

 

The Sheppard File:

Name: John Sheppard
Title: President, CEO and director
Company: EveryWare Global Inc.

Born: Washington, D.C.

Education: Bachelor of arts in marketing at the University of Georgia, master’s degree in business administration in finance at the University of Georgia’s Terry College of Business.

What was your first job and what did you learn from it? I was in graduate school and saw an ad in the paper for Coca-Cola about an IT job, a systems job. I didn’t really know what system they were talking about, but I read up on it and got familiar enough with it so that when I went into the interview, I could talk about it. It was a financial IT package that I had used a little bit in graduate school.

So, I expanded my knowledge of the financial software package and got the job at Coca-Cola. After I became an expert on that software, I moved on to more regular financial analysis and financial management, eventually going overseas as the CFO of the Africa division.

I got my foot in the door at Coca-Cola, which is what I wanted to do. I knew once I got in, I could probably find my real calling in life.

Who do you admire in business? I’ve met so many. I met Bill Gates a couple of times. I really like that he was tough and always saw the end game.

I also joined a group called YPO, Young Presidents’ Organization, which is a worldwide organization. That brought me in touch with a lot of different executives around the world in a similar position. It was sort of networking for senior executives.

What is the best business advice you ever received? Listen well and base your decisions on facts, and then act decisively. Don’t waffle.

When you’re the leader, you listen, you gather the facts and then you act decisively. That’s what leaders do. They need to do that because then people will follow them.

 

Learn more about EveryWare Global Inc. at:

LinkedIn: www.linkedin.com/company/everyware-global-inc

 

How to reach: EveryWare Global, Inc., (740) 681-2500 or www.everywareglobal.com

Highlights for Children might be best known for its Highlights magazine, which many children — and before them their parents and their parent’s parents — get at school or thumb through in doctors’ and dentists’ waiting rooms across the U.S.

While it’s proud of its past, the company has invested heavily in its future, propagating its brand internationally to reach children across the world. As it grows its presence and its products, the company is studying its customers and consumers, adapting its processes, expanding digitally and aligning its focus on the customer experience.

“We’ve definitely shifted from being a magazine-focused company to putting the customer at the middle of our thinking; we like to think of ourselves today as a family media brand,” says Shelly Stotzer, executive vice president and chief marketing officer for Highlights For Children.

Highlights breaks its audience into two segments: its consumers, who are the children from ages 0 to 12 who use its many products, and its customers, who are “almost anyone who is part of the village of raising a child,” Stotzer says. That includes parents, grandparents, aunts and uncles, teachers, doctors, caregivers and anyone else who is helping raise a child.

“We see people who buy from all demographics, all backgrounds, all different types of professions,” she says. “We definitely have a very diverse market.”

The company has a stronghold in the U.S. market, and has spent the past four years working to establish its brand across the globe. Today the company has a presence in Korea, Brazil, Ireland, India, Poland and China, putting some 4 million products in the latter country this year, compared to a few thousand in years prior.

Reaching all those countries means the company has had to expand its infrastructure, working with local partners in foreign markets to adapt its products to each one’s specific culture and people.

“We find great partners who we trust, we work closely with them to make sure we stay true to our mission, and then we adjust to make sure we’re appropriately meeting expectations and needs,” Stotzer says.

Highlights has also expanded its digital presence, providing children’s content on the Web for the past 10 years, and launching apps as far back as five years ago.

“Each day we learn something new,” she says. “The technology is changing so quickly. It wasn’t long ago that there weren’t many children’s books available in e-book format, but there are today.

“Children are not only downloading them but they’re also borrowing them from the library in a digital format.”

That means the company has had to keep its eye on the market to understand the needs of its consumers.

 

Putting customers first

Monitoring customer behavior serves multiple purposes for Highlights, such as helping its shift in philosophy from product-centric to customer-centric, in part to improve customer service.

“When we were product-centric, we were focused on how to increase sales or improve the experience within that product experience,” Stotzer says.

The company’s more recent customer-centric approach focuses entirely on the purchase and service experience.

“It says regardless of which product you buy or which channel you buy it through, we want to make sure that the infrastructure we’re putting in place, the processes, the experience is consistent and positive across that entire experience,” Stotzer says.

Illustrating the difference from one approach to the other, she says if someone bought a book from a retailer and they had a question about it, they could call an 800 number. But if that same customer on the same call had a question about a different product, they would need to be transferred or call another number. Today, one customer service staff at one number serves all its products.

“I believe that repeat buyers come from good customer experiences, good brand impressions. What necessitated it was recognizing that if we want to be as successful 60 years from now as we are today, if we’re going to get into all these new products and markets, we need to make sure we do it well.

“Simply saying if I’m a customer of Highlights, this is how I want to be treated, and if I want customers to come back this is what we should expect,” Stotzer says.

This approach is particularly important as the company continues to grow its product offerings from magazines into toys, merchandise, books and mobile apps while simultaneously building on its direct marketing approach by adding e-commerce and retail, all along with developing strategic partnerships in foreign markets.

“By doing so we needed to really pause and make sure every interaction, how we made decisions, how we set up our teams, how we engage the customer really reflected what we wanted it to reflect, which was a consistent, positive, customer experience,” Stotzer says.


Gaining greater insight

Taking that time to reflect led Highlights to establish its customer insights team, which was put in place to not only help the company provide better customer experiences, but also to leverage customer and market data differently.

“We have always done a good job of doing market segmentation for direct marketing,” she says. “We’ve always done a good job of understanding the profitability of our sources.

“But our customer insights team kind of flips that information on its side and allows us to look at who are our best customers across all the different channels we sell through — all the different product formats that we sell, who our best customer is, who is most likely to buy another product once they’ve bought our Hello magazine, who is most likely to transition into our High Five and into our Highlights, but then who also might be buying an app or some other type of product that we have to sell,” Stotzer says.

Highlights’ marketing database tool enables the company to better understand its customers’ experiences and life cycles across all of its products.

“So with the new database, it is structured in a way that the customer view is the first view that we see,” she says. “It provides a lot more flexibility in slicing and dicing that information so we can make good decisions. It also allows us to effectively target the right message to the right customer at the right time through the right channel and allows us to track that in a very visual way.”  

The database further allows Highlights to track customer purchases and marketing, which permits more trigger and automated marketing that makes it easier to follow up with the right transactional, sales or content touch point at the appropriate time.


Chasing a vision

The customer insights team also fielded Highlights’ first brand study this past spring. The study was an effort to understand not only what customers think, but what potential customers who aren’t engaging with Highlights today think and how Highlights might change their perceptions over time.

It’s also a step toward helping the company transition from being known primarily as a magazine for children in the U.S. to an international family media brand — “A customer-centric, global, multichannel, family media brand,” Stotzer says.  

She says the study was a starting place that established where the company was and compared it to where it wanted to be.

“We really put ourselves up against brands that we looked to as family media brands,” Stotzer says. “In the study, we did not put us up against brands that we felt were our historical competitive set where we might have been the leader in the group. We really wanted to create an aspirational set that would help us understand where we sit compared to those.”

She says she was happy with the results.

“I’m quite proud of what we’re known for. If you look at the characteristics that people think of us, they are right where we want them to be. We’re known as wholesome. We’re known as good for children. We’re known for being respectful. We’re known for a lot of the characteristics that we’ve strived to be known for.”

Highlights will repeat the study annually to track its progress against its benchmarks.

“We have a lot to build from, and that was helpful because there’s so much noise in the world today, you’re not sure where you really sit, but it was really helpful to know that we have a great foundation to build on,” she said.

The company is looking forward to spring boarding from that foundation to the next level.  

“The world is a big place,” Stotzer says. “We have plenty of countries and plenty of children all over the world who we can reach with the products we have, and we’re also continuing to add several products a year to our portfolio.

So we need to do all those things while also keeping an eye on the changing digital market and the changing needs of children.”

 

Find out how Highlights for Children is creating a comprehensive Web and social media strategy for all digital platforms

 

Learn more about Highlights for Children, at:

Facebook: www.facebook.com/HighlightsforChildren
Twitter: @Highlights

 

How to reach: Highlights for Children, (614) 486-0631 or www.highlights.com

The Payroll Fraud Prevention Act of 2013, introduced in the Senate last fall, seeks to reduce intentional misclassification of employees as independent contractors.

“It clearly reiterates that it is on the federal government’s radar and that they are concerned about misclassification,” says Brendan Feheley, a director at Kegler, Brown, Hill + Ritter.

IRS and Department of Labor (DOL) officials also are aware that the employer mandate in the Affordable Care Act (ACA) may provide more incentive for businesses to classify workers as independent contractors to avoid providing health insurance.

“It’s going to be a heightened issue in 2015 as it relates to health insurance,” Feheley says. “I think the government is trying to get ahead of the issue and increase penalties for misclassification so it doesn’t look like an attractive option.”

Smart Business spoke with Feheley about employee classification and what businesses should do to ensure legal compliance.

How would the proposed legislation increase penalties for misclassification?

New civil penalties of $1,100 will be imposed for each affected individual, and $5,000 for repeated or willful violations. Plus, you would also need to pay for overtime underpayments or other damages related to the misclassification. Also, the Fair Labor Standards Act allows for recovery of attorneys fees for the plaintiff’s lawyer.

You can envision a scenario in which someone not covered by company health insurance has a medical condition and files a claim saying they’re really an employee and have been misclassified and are entitled to coverage, as mandated by the ACA.

What should businesses be doing regarding classification of workers?

First, look at your industry. If it’s known for using independent contractors — for example anyone using installers, or those in the hotel industry — the DOL has been targeting them. Businesses in these industries may want to take a more conservative approach to classification and make independent contractors part-time employees or seasonal workers.

Companies should audit their workforce and review the independent contractors being used and the work they’re doing. Many times people are initially classified as independent contractors and the relationship evolves so it’s very different from when they first signed on.

How do you determine whether someone is an employee or independent contractor?

There are no absolute rules, but there are tests the various agencies use. The IRS has a 20-factor test, while the DOL’s test has six factors. The few that cross over are the ones that warrant the most attention, and those really go to who has control over what the individual does — setting work hours, determining how the work is done. The more control the company has, the more likely that person is an employee.

Another important factor is whether there is opportunity for profit or loss for the contractor. A contractor typically can profit by finishing a project in less time, while a person paid an hourly wage is more likely an employee. Independent contractors typically are expected to bring materials they need; if you supply equipment and they’re working in your facilities, you’re closer to having a problem.

Another major consideration is whether the contractor’s activity is vital to your business. A cable installer is not an ancillary part of the business, for example. Last November, the DOL settled with a Kentucky company that paid $1.5 million in violations relating to misclassification of cable installers.

If you’re using independent contractors, have an agreement that states everyone agrees on that status. Then think about the permanency of the relationship.

Because there are no hard and fast rules, it’s important to pay attention to your industry and how things are done.

Companies that have the hardest time regarding classification are startups, because they don’t have money to bring people on payroll but what those people are doing is very integral to the company’s interests.

Misclassification is not always intentional, but because it is a tax issue the government is taking a closer look and a more skeptical view.

Brendan Feheley is a director at Kegler Brown Hill + Ritter. Reach him at (614) 462-5482 or bfeheley@keglerbrown.com.

Insights Legal Affairs is brought to you by Kegler Brown Hill + Ritter

Smart Business spoke with Phil Scott of Sequent Retirement and Benefits Group about trends for plan sponsors.

What are some areas of growing interest and focus for plan sponsors?

One area that continues to be explored is automatic contribution enrollment and automatic contribution increases as ways to boost participation.

By providing better education and communication platforms, plan sponsors are enabling employee participants to be more prepared for their retirement.

Finally, plan sponsors are continuing to keep a close watch on their administrative duties and regulatory requirements.

What are plan sponsors doing to help protect themselves and manage fiduciary risk?

They have leaned on third-party administrators, recordkeepers, investment advisors and legal counsel to identify their responsibilities to maintain plan compliance.

Companies that have embraced outsourcing elsewhere in their organizations have also outsourced segments of their retirement plans to 401(k) fiduciaries. That can be 3(38) investment advisors, who assume responsibility for monitoring, maintaining, selecting and removing investment plan options; or 3(16) advisors, who accept responsibility for plan administrative functions.

Some plan sponsors have adopted or explored the option of joining a 413(c) multiple employer plan. The multiple employer plan option provides an alternative for companies seeking relief from the burdens of independently operating and maintaining their own plan.

How do safe harbor plan designs create advantages?

One great advantage for participants is that all employer matching and non-elective contributions vest at 100 percent immediately. Also, all participants, whether they’re considered highly compensated or non-highly compensated, are allowed to maximize their elective deferral limits. Elective deferral limits, set by the IRS in 2014, are $17,500 for those age 49 or under and $23,000 for those age 50 or older.

Without safe harbor protection, highly compensated participants would only be able to defer approximately 1.5 to 2 percent more than the average contribution of the non-highly compensated group.

From a plan sponsor perspective, safe harbor plan designs are great tools for recruitment and retention of top talent. In addition, the IRS permits a safe harbor plan to be top-heavy, meaning that 60 percent or more of plan assets are attributable to key employees: an officer of the organization, whose annual compensation exceeds $170,000; any employee, who owns more than 5 percent of the company, or owns more than 1 percent and has an annual compensation exceeding $150,000.

What are the implications if a plan is deemed top-heavy?

The plan must meet minimum contribution and vesting requirements for non-key employees for each year the plan is top-heavy. The minimum contribution to bring the plan back into compliance is the lesser of 3 percent of annual compensation for all non-key employees or a percentage equal to the highest percentage contribution of any key employee. Top-heavy penalties are painful infractions, which plan sponsors are able to avoid when utilizing safe harbor as a strategy within their compensation and benefits package.

Phil Scott has over two decades of experience in the financial services industry. He is a registered representative with LPL Financial and investment advisor representative with Advantage Investment Management.

This information is provided as a courtesy and should not be considered specific advice or recommendations for any individual. Please consult your tax professional before taking any specific action. LPL Financial nor Advantage Investment Management are engaged in the rendering of tax or legal advice.


Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Advantage Investment Management, a Registered Investment Advisor and separate entity from LPL Financial.


Phil Scott is with the Sequent Retirement and Benefits Group. Reach him at (888) 456-3627, (937) 521-1911 (direct), pscott@sequent.biz or philip.scott@lpl.com.

Insights HR Outsourcing is brought to you by Sequent