Northern California (1069)

Thursday, 26 March 2009 20:00

Full-service banking

Written by

Innovations in the banking sector have transformed the way that business is conducted. In order to fully take advantage of such technological advancements, it is imperative to partner with a bank that communicates how new products and services on the market can improve your company’s efficiencies.

“If it’s been over a year since you’ve had a conversation with your bank about new innovations and the banking services you should have at your disposal, then you are probably being underserved,” says Syd Saperstein, senior vice president, division manager of Comerica’s Special Corporate Financial Services Division.

Smart Business spoke with Saperstein about what products and services should be expected from one’s financial institution.

How would you define the term ‘underserved’ as it relates to banking?

The banking industry has grown, as all industries do, and has come up with innovations, new cost-effective services and labor-saving solutions to handle problems that businesses face in the electronic age of the 2000s. We have consolidated and developed a lot of services that used to be spread around many different banks or many departments within a bank — now they are often seamlessly available in one place. Most customers, however, have not been given a road map on how to interface with their financial institution. And most financial institutions have done a relatively poor job of educating their customers about what improvements have been made. Consequently, customers are not getting the full benefit of the banking relationship that they could.

How can a business determine if it is being underserved by its bank?

Start by asking some questions: When was the last time my bank spent the time to educate me on the improvements in their world? When was the last time they pointed out improvements to the interface between businesses and banks? How can changes in treasury management services and the work that banks do internally translate into cost savings for me by taking over some of my work?

If you haven’t had a conservation like that, then chances are — just by the sheer increase in new products and services that banks develop and the passage of time — you are probably being underserved.

What advancements in the industry have occurred in the past decade or so?

Complicated multilevel transactions are now handled electronically, and there are advanced methods for batch file handling and consolidation. Internal accounting and subaccounting systems have developed within the most progressive banks. These sophisticated systems enable a bank to slice and dice their customers’ business and deposit relationships into regions, territories and sales offices, for example. In the past, a company’s employees used to have to keep track of all this information. Now, it can be handled within the bank, which saves the customer on personnel expenses.

What specific industries are most commonly underserved?

The ones we find most underserved are either the newest industries or the oldest industries. A company that starts today may ‘think small,’ go to a local branch and find the expertise that exists on the street level within a banking structure is not sophisticated enough to handle its needs.

On the other end of the spectrum are old companies with a lot of mature management, such as law firms or insurance companies. Law firms are often run by a management committee composed of the most senior partners. While their skill sets were probably well suited to manage a banking relationship 25 years ago, they may be very different from the skill sets that are being taught and used most effectively today. In order to keep their company as progressive as possible, they could very well benefit from partnering with a bank that is able to give them some up-to-date advice about what should be improved.

What products and services should be expected from one’s bank?

First, businesses need to take a look at the nature of the relationship. If they’re not having a conversation with their bank about innovations at least once every six months then something is wrong. Innovations within the banking world happen that frequently.

Second, you should investigate how the bank can take over labor-intensive transactional activities that are currently being handled internally. A specific example is processing 1099 Interest Income statements. Law firms frequently have to dedicate lots of staff time or even add staff in January and February so they can handle the processing of 1099 forms for the individual taxpayers whose funds are sitting in trust accounts with them. In today’s world, the 1099 work can be done by the bank for each component of a trust account. What’s worse is that, based on our experience and what we have learned by survey, the error rate on 1099 work done by nonfinancial institutions is around 20 percent, which can be very costly. Our error rate, for example, is far less than one-tenth of 1 percent. This is an area where businesses could avail themselves of using a bank’s services at low or no cost and replace a cost that is very high to them.

SYD SAPERSTEIN is senior vice president, division manager of Comerica’s Special Corporate Financial Services Division. Reach him at (415) 477-3246 or

Thursday, 26 March 2009 20:00

The Xie File

Written by

Born: Beijing, China

Education: Bachelor of science and master of science degrees in electronic engineering from Tsinghua University in China; also attended Stanford University

What’s the best advice you’ve ever received?

The best advice I have ever received has come from a variety of sources throughout my life and career, but it boils down to one thing: Success comes from clarity of focus.

What was your first job ever as a child?

As a child, I had a fascination with all things electronic. My hobby was repairing radios, TVs and VCRs, which I turned into a job in my high school and college years. I had a small business fixing electronic devices around the neighborhood and later led a team in college, trading and fixing electronic gadgets.

As a child, what did you want to be when you grew up?

I wanted to be two things: To turn my electronic assembly/disassembly hobby into a business and to become a professional volleyball player. At 6’6”, I was quite good at volleyball and trained at a top sports school from the time I was 9 years old to about age 17. While good enough to join the Chinese National League, I decided instead to attend college at my parent’s insistence that I get a college degree.

What’s your favorite board game and why?

My favorite game is called Go, a strategic board game for two players that is popular in China, Japan and Korea. Go originated in China, where it has been played for more than 2,500 years. The object of the game is to strategically maneuver black and white stones on the game board in order to control a larger portion of the board than the opponent. I like Go for its strategic nature, as players balance defensive and offensive positions to defend and gain territory — and it offers good mental exercise and lessons for winning in business. It’s easy to play the game but very difficult to be good.

Monday, 23 February 2009 19:00

A long-term relationship

Written by

Companies looking to retain accounting firms as their service providers often go through as rigorous an interviewing process as they would when hiring their own employees. Applying their own hiring standards enhances the possibility of retaining the accounting service providers that meet their specific needs and can help them immediately.

One way companies can identify the best match is to look at the standards accounting firms apply in their own recruiting programs and develop a list of questions to ask them based on those criteria. Asking those questions can improve companies’ chances of creating the viable, long-term partnerships that benefit both participants.

Smart Business spoke with Beth Baldwin of Burr Pilger Mayer to get a general idea of the criteria accounting service providers look for when hiring accountants. Those criteria are the foundation for a list of factors that companies might consider as they interview potential accounting service providers.

Should potential clients inquire about the continuity of the accounting service provider’s recruiting program and balance in the level of experience?

Successful accounting service firms experience turnaround. How accounting firms replace departing employees is important. The new employees might be experienced hires, recent college graduates, interns or a combination. If the accounting firm maintains a balance of employees at different levels of experience in its work force, that is a positive factor. Companies should look at the balance and continuity of an accounting service provider’s work force when considering it as a partner.

Should companies worry about working with newly hired professionals at accounting firms?

There are a lot of factors to consider here. Some of the issues involve the types of degrees the accountants have earned, where they obtained them, how early in their employment they got to work with partners and whether they completed internships with their firms. In the case of experienced new hires, it might be helpful to learn about where they gained their experience, e.g., at a ‘Big Four’ accounting firm or at a one-person operation. Knowing those things can provide insights into the level of the experienced employees’ technical and client-oriented skills and shed some light on whether they have track records of being successful. Companies should take the answers to these questions into account when considering which accounting service providers to work with.

Is there a benefit to knowing what types of degrees accountants at prospective accounting service firms have?

Yes. For example, it would be helpful to know whether accounting service providers prefer to employ people who have accounting degrees, rather than finance degrees. Hiring people with accounting degrees accelerates the new employees’ learning curves, since they are already familiar with the accounting principles clients do not want to wait for them to develop. Employees with other types of business degrees may take a little while longer to acquire in-depth knowledge of those principles, which inhibits how quickly they can get up to speed with clients.

Is it advisable to ask about the colleges from which the accountants earned their degrees?

The information can be helpful. For instance, some colleges in the company’s area of coverage might have better, more established accounting programs than others and better track records in placing graduates with the more prestigious accounting firms. Others might focus on general business majors, rather than accounting specifically. Accounting firms take those differences into account. Their clients should, too.

It might also be helpful to learn how long a firm has worked with a particular college. Some accounting firms form close working relationships with people in a college’s career development centers and become well known at the schools. Consequently, the students become familiar with those firms and their reputations. Those longstanding relationships create pipelines for the firms, and provide employment and internship opportunities for students. Eventually, the benefits of those relationships filter down to the clients.

How do internships influence newly hired accountants’ experience?

Internships familiarize the accountants with their firms’ cultures, areas of specialization, etc. The experience they gain in internships provides them with the knowledge they need to apply when they become full-time employees and gets them involved in the firm’s operations more quickly. They are better prepared to work with clients as a result.

How do the factors discussed above benefit long-term relationships between companies and their accounting service providers?

Once the companies realize that the service providers can offer a beneficial mix of experience and skill sets, they will feel more comfortable working with them. That is particularly true if the accounting provider employs professionals who are ready to start working at once. That saves companies time and money, and provides a good starting point for the long-term relationship that benefits them and the accounting service provider.

BETH BALDWIN is the director of human resources at Burr Pilger Mayer. Reach her at (415) 677-3300 or

Monday, 23 February 2009 19:00

The science of service

Written by

If you’re looking at your budget and considering cutting back on support for customer service, you might want to reconsider. About 96 percent of unhappy customers don’t take the initiative to tell you they’re unhappy with your service, but they will tell nine other people and not return.

Customer service should be as important to you as it is to your customer, and customer service is second in importance only to product quality when it comes to satisfying customers.

The difference in today’s market is that brand loyalty isn’t what it used to be. Businesses are making a new promise every day without credible reasons for the consumer to believe the promise. Customers make purchases because they believe you’re selling something they need, but they also know they have many options. A single bad experience with you can result in your customers making purchases from the vendor down the street next week. The products may be similar but the quality of your customer service can be why they prefer to make purchases with you.

“The quality of your customer’s experience is one of the most important sustainable advantages a company can have, particularly in a competitive environment,” says Andy Bodea, senior vice president of global operations, Equifax Inc. “Senior leadership must be behind the initiative in order to provide the right tools and all elements of providing customer service need to be adopted throughout the company for it to work well. It’s OK to admit that you’re not perfect with customer service, but you should have an execution focus on how to make it happen.”

If customers have a good experience with your business, they’re more likely to return and spend money again. Positive word-of-mouth is one of the cheapest and most effective means of growing your business. It’s also much less expensive to retain a customer you already have than to attract new ones.

“Customer service overall is mediocre and inconsistent,” says Adolfo Perez, vice president of worldwide reservations, Carnival Cruise Lines. “One day you may have an incredible experience when dealing with a company, and the next time, you have an issue [and] the experience causes a headache and heartburn. You wonder how those very different people could be working for the same company. The work force has changed over the past few decades. Things an employee might say to a customer or even a supervisor today would never have occurred 20 years ago. It seems that there is an overall lack of respect in the work force, but this can be harnessed with the right mix of salary and environment.”

Customer service in today’s market entails doing business where and when your customers want. The trick is to cut costs while being flexible with your ways of improving customer service quality across all avenues, including online and by phone.

There’s an easy formula for this, yet it’s not utilized. It starts with paying better wages. Then you have to invest in your employees’ ability to perform through education and train them to respond to customer needs.

Why a customer service program is important
Your customer service representatives have unlimited access to your customers, products and equipment, yet they’re largely considered dispensable and are often treated as such. This is the wrong approach. You can’t personally know who your regular customers are or what their preferences entail, but your employees do, so it’s important to retain them. Investing in customer training and rewarding them with a pay increase upon completion of the course or offering another benefit, such as time off, makes for a more enthusiastic employee.

“Salary increase isn’t the main motivator for employees,” says Jason Few, senior vice president of smart energy and residential for Reliant Energy. “The most impactful incentive is having an ability to move forward in the company. Survey your employees in the same fashion in which you survey customers to get a snapshot of their satisfaction level and make changes where necessary to improve their job satisfaction.”

Although many customer service positions are considered entry level, giving the employee the option to advance within the company will be an incentive for the employee to stay and can help you reduce employee turnover, which on average costs businesses 20 percent of an employee’s annual salary to replace that person.

“If you have different levels of customer care positions in your business, those who are working at the lowest level get bored easily because their job entails performing simple tasks,” Bodea says. “These positions are typically filled by the newest hires and have a 20 to 60 percent turnover rate. The next tier requires more knowledge and has a lower turnover rate. The third tier is considered specialists that have special knowledge of the company’s workings. This position has less than 5 percent turnover.

“If the workers are interested in advancing and given the opportunity, they will make the best employees because they’ll have gathered the most information on your business and your customers. These employees are very valuable and may not be with the company if not provided the opportunity to advance.”

When you are looking at data, make sure you are getting the whole picture.

“When you are considered a provider, you must maintain communication while meeting and exceeding expectations,” says Robert Smith, senior vice president of marketing and membership, American Management Association, a professional development firm. “You must always take into consideration that your actions are being done profitably, but when speed is the only measure you are looking at when analyzing an employee’s performance in solving a customer’s problem, you’re looking at the situation wrong.

“If an employee gets off the phone with a customer in three minutes but hasn’t answered all of his or her questions, good customer service wasn’t performed. The customer may have to call back or decide not to use your services again. Another error is customer service representatives asking the customer if there’s anything else they can help them with. For the most part, the employee should be able to provide the customer, without him or her asking, everything they can offer them to resolve the issue. What do you train your employees to say if a customer asks, ‘I don’t know, what else can you do?’”

You may see investing in customer service training as a luxury in today’s economy, but experts warn that not doing so could lead to your company’s demise.

What you can do
The biggest error you can make is getting too caught up in cutting costs and other internal workings to see your business from the customer’s point of view. Customer service is what keeps the lifeblood of your business — customers — coming back. Even when inevitable mistakes are made, customers return if the error is handled properly.

“Make it easy to do business with your company,” Perez says. “Layers upon layers of rules, multiple layers of escalation, poorly trained and unempowered employees make for a poor customer service experience and negatively affect your sales. Simplify your business process and obsessively train your staff upon hire and on a reoccurring basis. Empowered employees can handle customer’s issues directly. You don’t have to give up all the control, but it’s better to trust your employees, than manage exceptions.”

Another mistake is investing money in loyalty programs focusing on drawing in new customers, while losing focus on appeasing your current customers. If you don’t ask customers about their experience with your business, they’ll likely not tell you — but they will go home and tell others. If you stay flexible and listen to what they say by acting on their feedback, you can best design a customer service program that works for you.

“If you get to know your customers like Amazon does, for example, you’ll be able to make suggestions to them on purchases based on their past experience with you,” Smith says. “Customer service has improved dramatically over the years in the sense that businesses have a better idea of how to understand their customers and the competition to win their loyalty, [which] makes it an essential business practice.”

What many companies don’t understand is that good customer service is rare. If you already have brand recognition, you can further your competitive advantage by listening to customers’ concerns and acting on them. You need to define what good customer service means to your specific set of customers before you can best meet their expectations. This can be achieved by polling them in a variety of ways — comment cards, e-mail or an online form.

Even with well-trained employees and a list of customer recommendations, you still need your managers to be an integral part of your program. They should point out positive behavior and not just the negatives. Successes should be noted to encourage employees to do more than the bare minimum, and negative incidents should be handled immediately instead of waiting for an evaluation.

“Employees may repeat a behavior they’re not aware is undesirable,” says Liz Tahir, an international marketing consultant and speaker. “Having the proper communication with employees is essential. If you treat them well on a regular basis, they won’t react negatively when a manager points out an area that needs improvement.

“Employees treat customers the way you treat them. Ask yourself if you greet employees enthusiastically, interact politely and try to accommodate them in their requests.”

Making sure employees have the correct set of tools to perform their jobs is another important step in ensuring good customer service. Proper training and empowering employees to handle customers’ concerns or problems will build employee confidence while expediting the customers’ requests.

“Always putting yourself in the customer’s shoes when determining how to best resolve issues or respond to a request is the best way to resolve issues,” Tahir says. “All of the great companies have incorporated customer service in their core business philosophy, helping to brand their business as one known for great customer service.”

Monday, 26 January 2009 19:00

Save time and money

Written by

United States businesses lose about 7 percent of annual revenue to fraud. Small companies alone report a median loss of $200,000 to employee fraud. Yet, executives do not always deal with fraud wisely when it occurs at their companies. Often, their immediate reaction is to investigate the issue internally. That sometimes makes matters worse.

For instance, executives may identify the fraudsters but cannot fire them because they could not obtain sufficient evidence to prove wrongdoing. In some situations, companies find themselves being sued by fraudsters for harassment and lose money by settling the claim.

Such outcomes can be avoided. As Chandra Papneja, director in the Fraud and Forensic Accounting Practice of Burr, Pilger Mayer LLP, suggests, “If you find or suspect fraud in your company, hire a forensic accountant who can obtain evidence to support the action you will take against the fraudster.”

Smart Business spoke with Papneja to learn how that advice can save companies’ time and money.

How does a company benefit from hiring forensic accountants?

Forensic accountants can gather and protect evidence, determine the extent of the problem, create a ‘no tolerance for fraud’ tone from the top down, give executives the time they need to run the business, and assist with the development of anti-fraud programs and controls to prevent future loss from fraud. The intrinsic and extrinsic advantages to hiring forensic accountants outweigh any drawbacks.

Should companies contact forensic accountants as soon as fraud is detected?

By all means. According to the Association of Certified Fraud Examiners, embezzlement schemes typically last two years before detection. That explains why forensic accountants play such a valuable role in fraud protection and fraud investigation and why they should be called as early as possible when executives suspect any kind of financial irregularities in their operations.

What advantages do forensic accountants have over internal fraud investigators?

Executives investigating suspected financial irregularities waste time and money in their efforts. Their internal investigations consume valuable time they could be using to oversee business operations and to make money. Often, they tip off perpetrators to the fact that there is a probe going on. Consequently, they often exacerbate the problems instead of finding solutions. Worse, they can create situations that lead to costly and embarrassing harassment claims and lawsuits against their firms — and themselves.

The forensic accountants take the lead and launch investigations at any level of the company — from the top down — to determine whether financial irregularities actually occurred. Once they make that determination, they ascertain how long the process has been going on, identify the party or parties responsible for the irregularities, calculate the loss amounts from those irregularities and assist in loss recovery. More importantly, they recommend, implement and monitor remedies to strengthen the company’s reporting systems — including deterrent programs.

Why are internal fraud investigations not advisable?

The list of difficulties executives can encounter in their self-investigations is lengthy. For instance, proof is hard to come by, it is difficult to identify all the people who might be involved in suspected irregularities, and the wrong person or persons can be named. As a result, the executives might determine who has committed fraud, but they cannot terminate individuals because of their inability to obtain specific evidence to substantiate their suspicion. The list does not end there.

Results like these lead to bigger problems for the company than would exist if executives had turned the investigation over immediately to forensic accountants when the problem first surfaced.

Is it possible for companies to deter fraud?

Yes. Companies do not always have to wait until they suspect that fraud has occurred to bring forensic accountants on board. One of the keys to detecting and preventing financial irregularities is to develop, implement, publicize and enforce strong, effective deterrent programs that let employees at all levels know that fraud, embezzlement, etc., will not be tolerated. That is another area in which forensic accountants can be of help.

Forensic accountants’ services go beyond uncovering irregularities and preventing ensuing fraud-related activities. They also provide liaison services between clients and regulatory agencies, such as the SEC; oversee compliance with SOX, FASB standards, etc.; instill in CEOs, CFOs and other executives a level of confidence that fraud and misconduct are minimal in their companies; design effective anti-fraud controls to reduce the risks of future lawsuits; and testify on companies’ sides in trials.

Pragmatic executives recognize that fraud, embezzlement, etc., are possibilities and prepare plans to prevent them whenever possible or deal with them when they do occur. They can accomplish those objectives by partnering with forensic accountants as soon as fraud is suspected.

CHANDRA PAPNEJA is a director in the Fraud and Forensic Accounting Practice at Burr Pilger Mayer LLP. Reach him at (408) 961-6331 or

Friday, 26 December 2008 19:00

Smooth finish

Written by

No matter how bad the economy gets, people will keep drinking. That’s what helps make Winery Exchange Inc., the company Peter Byck co-founded in 1999 with two partners, recession-proof.

“People aren’t going out to restaurants as much, but they still want that nice bottle of wine or some premium vodka — they’ll just drink it at home,” says Byck, the company’s president and CEO. “That saves them money, but they still get to enjoy that luxury item. We’re kind of recession-resistant.”

The company has proved that, growing from $4.2 million in 2002 sales to $44 million in 2007, and Byck expects sales for 2008 to top $60 million.

Smart Business spoke with Byck about how you can determine if a new direction is worth your time and why you have to make a decision when something isn’t gaining traction.

Q. How have you dealt with the company’s exponential growth?

We’re a management team that can adapt. We started as a (business-to-business) with four businesses. One was trading bulk wine and grapes online back in the exchange day. We also sold supplies online. We did private-label wine, and we had strategic information for the wine business.

We constantly evaluate what’s happening, so we quickly cut off the things that didn’t work — which was the trading of the bulk wine and grapes and the selling of the supplies. They were B-to-B models, and the wine industry is too relationship-driven.

But then we focused on the private-label wine and the strategic information, and we’ve really been focused on that ever since. We’ve expanded; we constantly adapt.

Q. How do you determine which ideas to pursue?

We’re open to all ideas, because I can’t think of everything. You have to evaluate ideas based on what the economics are and how it fits with the overall business model. We’ve created a core engine at this company, which is the ability to rapidly develop these private-label programs from all over the world.

If the idea can augment the engine and we can get a good return for the engine that we’ve built, that’s going to be something we look at closely. It comes down to, ‘Do we get a good ROI from what these ideas are?’

Q. How do you determine whether a new idea is working?

To me, it’s looking at how the customer is behaving. Is (the idea) getting a lot of traction? We’ve got some good ideas that haven’t worked. But we keep at it for a while, and you make that call when you’re not getting traction with the customers, when you’re not getting the growth and you’re not getting the buy-in.

Then, the economics aren’t there if it isn’t working. You are not getting a good return on your investment. If you’re investing a lot and you are not getting the traction, that’s a pretty good indicator that it’s not going to work. We would invest in things where you’re not getting a short-term return but you can see the traction with the customer — then you keep at it with the idea that you will get future returns.

Obviously, if it’s screaming right out of the gate, then it is pretty easy. Or if you are getting very little traction from customers, then it’s easier. It’s the ones in the middle that are hard.

Q. How do you decide whether to stick with an idea if it’s performing in the middle?

For example, we’ve moved into beer. It wasn’t really totally profitable out of the gate. We actually struggled at first, but there was definitely continued demand from customers for the products.

Also, we were making progress on making it more efficient, a little step at a time. We still have a ways to go, but you can see the growth, the acceptance from the customers, and there is very little competition in that segment. So we’ve gotten enough good indication that we are continuing to work away at it.

Q. How do you communicate your direction to employees?

I develop a strategy for the year, and I keep going back to the strategy we developed and hit on the points of the strategy and update everyone on where we’re going. Then, I openly share the financials with how we’re doing and what the targets are and how we’re going against that.

A few years ago, our strategy was we wanted to diversify revenue streams more. So, at every company meeting, I would get up and reiterate, ‘Here’s our diversification strategy, this is how we’re going to do it, and here’s how we’re progressing against it.’ Then, you have to champion people who are executing against that — single out certain employees who are exceeding expectations and really driving toward the strategy.

HOW TO REACH: Winery Exchange Inc., (877) 946-3793 or

Friday, 26 December 2008 19:00

The rising dollar

Written by

The U.S. dollar has surged as investors, wary of the stock market’s extreme volatility, have flocked to the relative safety of U.S. Treasuries. In some respects, a strong dollar adversely impacts the U.S. economy: It increases the trade deficit while weakening exports and eroding the competitiveness of American-made goods.

However, some entities stand to benefit from the strengthening dollar.

“American importers, consumers buying foreign goods, corporations making capital investment in overseas ventures and American vacationers traveling overseas can all benefit from a stronger dollar,” says Gary Loe, vice president, foreign exchange at Comerica Bank.

Smart Business spoke with Loe about the dollar’s rise, its implications on the global economy and his prediction for how the dollar will fare in 2009.

Why has the dollar strengthened against major currencies?

This past summer, beginning with the global credit/financial crisis, we experienced a ‘flight to quality’ effect. As equity markets around the world have been battered, many investors sought the safety of U.S. Treasuries to protect their money. As investors from around the world reevaluate their risk tolerance, they buy dollars in order to purchase U.S. Treasuries, which are very liquid and have low default risk, backed by the power of the U.S. government.

The world started a global economic race to the bottom in 2008. The world economy has been heading toward a global recession with the U.S. in the lead. The first to reach the bottom should be the first to bounce back. Problems are not just contained within the U.S., as evidenced in Germany. Europe’s largest economy is at a 15-year low in consumer confidence, and the spillover in the credit crunch has already reached Asia. Many believe that the U.S. government has helped steer us away from a deep depression. The U.S. can act quicker to get to an eventual recovery as opposed to Europe where many countries are needed to come together for action.

How has the stock market’s recent volatility affected foreign exchange?

The market has experienced extreme volatility with a downside trend. We have had thousand-point swings in a day in the Dow. We have had 10 percent swings in a day in the dollar against hard currencies like the euro, British pound and Australian dollar. It’s not just the U.S. stock markets that are volatile and weak, as seen in the S&P 500, currently down about 45 percent this year. London’s FTSE index and Tokyo’s Nikkei 300 index are down about the same. The biggest effect the volatility has had in foreign exchange is the increased bid/ask spreads and diminished liquidity with tighter credit standards.

Is a strong dollar good for the United States?

Usually, the word ‘strong’ is perceived as a positive feature, but when it comes to a country’s economy, it may not be in its best interest. Some say a strong dollar helps accelerate growth. Growth will attract foreign capital and boost our stock market. This leads to increased production, consumer spending and an expanding economy. However, there are many negative ramifications. It tends to widen the trade deficit as we purchase more imported goods. This increase has its detriments as it erodes overall growth, hurts GDP and weakens the economy. It will also hurt corporate profits of global companies as foreigners will have to pay more for U.S. goods. The dollar should act as a self-correcting mechanism as a stronger dollar leads to a weaker one and vice versa.

How do foreign central banks tend to react when the dollar rises?

Central bankers in export-driven economies, such as Japan, would tend to do nothing as it would allow growth in the export sectors. However, if I am a central banker where my currency is devaluing at a pace that needs defending, I would raise my interest rates to defend it. This should attract flows into my currency, therefore stopping the depreciation. Malaysia’s central bank froze its currency in the 1997 Asian financial crisis when facing steep depreciation by cutting off all market players.

Where do you see the dollar heading over the course of 2009?

Through the beginning, we will still be watching for weak global equity markets and weak commodity prices and bracing for possibly the biggest economic slowdown since World War I. As investors flee from chancier bets and more deleveraging takes place in the credit world, this will give further room for boosts in the U.S. dollar. Take advantage of any further dollar strength at the beginning of 2009. Once our government’s actions in stimulating the economy and getting our credit situation back in check take effect, look for the dollar to start weakening again, which I predict will happen later in 2009. Fundamentals are bound to return. At the forefront will be renewed talk about America’s huge ‘twin deficits,’ budget and trade. In addition, all the printing of money that has, and will, occur to help us out of our current financial and economic crisis will turn inflationary, which will erode the value of the dollar.

GARY LOE is vice president, foreign exchange at Comerica Bank. Reach him at (800) 318-9062 or

Tuesday, 25 November 2008 19:00

Flying high

Written by

Paul Touw has a saying at XOJET Inc.: “It’s not the spin that kills you; it’s the lack of recovery.”

The saying refers to the moment an airplane begins an uncontrolled spin toward the ground — one of the most dangerous situations a pilot can face. The executive chairman of the fast-growing private jet company uses the saying to prove to his 150 employees that mistakes can be forgiven — if you can fix them before it’s too late.

“If something’s not working, even if you were the cause, let us know, and we’ll help you fix it,” Touw says. “That’s more important than getting into the mess in the first place.”

Smart Business spoke with Touw about the challenges of delegation and how creating a “do not do” list can help you delegate.

Q. What are the keys to delegation?

The biggest problem with delegation is (CEOs) having a problem letting go. They often think they can do it better than someone else, and that is generally one of the biggest fallacies of people who lead companies.

You tend to think you’re in a leadership position because you’re better at something than someone else is. That’s not the case. You’re in a leadership position because you’re the best person to lead the company — not because you’re the best person who can do every job in the company.

No. 2 is hire great people who can do the specific functional things better than you can. So if you are in a position where you find you’re not delegating, it’s probably because either you think you can do it better than anyone else, or you haven’t hired the right people. It’s one of those two things.

If you think you can do it better than the people you’re delegating to, you haven’t hired the right people. If you have people who can’t accomplish what you’re trying to do, you haven’t hired right in the first place.

Q. How do you decide what to delegate?

Figure out your ‘do not do’ list. Sometimes that’s more important than your ‘do’ list. You have to prioritize your time, and to do that, you have to figure out what things are the most important and what things are the least important.

My role in the company is to set the vision, set the direction and make sure the team is all marching down the same street. To do that, I have to make sure I’m not doing a bunch of things that would distract from that.

Q. How do you decide what things go on the ‘do not do’ list?

You have to force yourself to say, ‘I can’t do everything.’ So the things you cannot do, you have to off-load onto someone else and trust that they can do it. They’re not always going to do it as well as you think you can do it, but you have to let that process work itself out.

You might get an 85 percent product, but that’s better than me spending a small amount of time on it when I don’t have enough time to do that particular thing and getting a 50 percent product.

Q. How do you attract the right employees?

People aren’t just looking for a good job. They’re looking for a variety of things. The traditional military environment is very good for military applications — it’s not so good in corporations. But a lot of companies still run their company command and control down.

That doesn’t bode well for attracting a high-performance individual, because they don’t want that kind of environment. They’re looking for a safe environment where they might make a few mistakes here and there, but they won’t get battered over the head for it.

Quite frankly, the great corporations are ones where you do make a few mistakes along the way and you learn from them. So in some respects, we encourage people to tell us what’s not working. We’re not going to turn around and tell you, ‘You dummy, you screwed up.’ We’re going to recognize that you took a path that didn’t work. Now tell us how you’re going to fix it.

Q. How do you create that environment?

There is a lot that goes into the mix of how you make that happen, but there are some simple rules, like people support what they help create. So you have to make sure that your people are part of the creation process. Then, they are much more likely to buy in to that and be a strong advocate of it.

In some of the older styles of management, you had a dictatorial CEO saying, ‘This is how we’re going to do it. Now let’s go execute.’

What’s more important from a leadership standpoint is setting a clear objective. Inspire them to climb that mountain. Then ask them, ‘How do we get there?’ They’re part of the process of climbing the mountain, as opposed to saying, ‘We’re going to climb Everest, and this is how we’re going to do it.’

HOW TO REACH: XOJET Inc. (650) 594-6300 or

Sunday, 26 October 2008 20:00

Check marks

Written by

Bruce McWilliams is thinking about the future right now.

He’s not ignoring what’s on his plate for today; it’s just that McWilliams constantly remembers advice given to him by a mentor.

“He would tell me a business is either growing or dying; there’s no such thing as steady state,” he says. “You always have to be thinking about growing your business, how it needs to change over time.”

If those are the only two options for a business, you can guess which one McWilliams, chairman and chief strategy officer of Tessera Technologies Inc., is striving for. So he is forever challenging the 400 employees of Tessera — which provides manufacturers with transformational technologies for next-generation electronics, optics and imaging solutions — to make a bigger splash in the marketplace. In turn, they have helped grow the company from 2003 revenue of $37.3 million to 2007 revenue of $195.7 million.

Smart Business spoke with McWilliams about how you can set growth goals for tomorrow while working on today’s business and why a customer who hates your new idea is a good thing.

Create a team specifically for growth. Four years ago, we set up a group that is focused on nothing but how do we grow into new businesses and think far out in time. And then, when we acquire those things, how do we protect them so they don’t get squashed by the organization, even though they will seem at the time to be in their infant stage.

You start by saying you have to grow at a certain rate, and you have to find a certain market to do that. I often had ideas of where to go, but when I would come to a particular executive in the organization, they would say to me, ‘Do you want me to work on the current quarter or year, or do you want me to go look at this new thing?’ And I’d always say, ‘Well, you’ve got to focus on the current quarter; if we don’t make that, we’ll get hammered.’

So how I overcame the problem is I set up a separate group that’s job is the vision, and I hired a guy who was very talented in marketing, I put my chief technical officer in there, an engineer who can run the numbers and two lawyers ... and I told them, ‘By 2010, we need an additional $100 million in revenue, come back with ideas,’ and we set up a strategic committee with the board.

You can’t just overnight create a big business, so this is a key strategic plan, and we have to isolate this group. And there are people working on nothing but this.

Explain your vision — for now and later. A leader needs to have a vision — both near-term and long-term — of where the organization is going and the value it delivers to its customers. So you need to be able to explain that to anybody almost in an elevator speech.

In terms of the near term, have two or three, or four at most, goals that you can say, ‘These are the things that we need to accomplish,’ and it needs to be at a level that everybody down to the receptionist can understand.

Have a compelling vision for why your company is going to grow and be an exciting contributor in the marketplace. (For Tessera,) it might be why people like pictures and video and why we’re going to see more and more of that, and that will be something people can understand.

Bounce ideas off the marketplace. To understand the marketplace, your people and the leader really need to get in touch with your customers and your customers’ customers. We sell to the people who buy the components that make the things like mobile phones, PCs and games. But for us to really understand the marketplace, we need to go to the level of HP and Apple and understand what type of products they want to get to the market and how what we do is working or doesn’t work.

One way is to come in with specific concepts and then ask them to critique it so you almost can’t lose. If they like it, they’re going to tell you why they like it. If they don’t like it, they’re going to tell you why they don’t like it, and that’s going to tell you where to go.

Divide the power; then check in. A leader has to really empower people. If they get a sense they’re going to be micro-managed, there’s no way really talented people are going to work like that.

The way our process works is those top-level things we do become the corporate (management by objectives). They are made more quantitative, and on each of those, you decide which of your executives contribute to making that happen. Then they become owners of that goal and expand on down to a bunch of things they need to accomplish to achieve that.

So, basically, if they are on track for hitting their goals, then they don’t see much of me. The other thing is having a weekly staff meeting where you listen to what the problems are, and the problems between groups, and take a stance on how we’re going to address that. Generally, if you truly listen to them, even if you don’t agree and do something else, they’re fine — they realize there’s not necessarily a right or wrong answer, they just need to make sure their input is heard.

HOW TO REACH: Tessera Technologies Inc., (408) 894-0700 or

Sunday, 26 October 2008 20:00

Clear as water

Written by

When Peter Nelson was applying for the president and CEO job at California Water Service Group back in 1996, he wanted to learn a little bit about his potential employer. He decided to drop in for an unannounced visit at one of the local offices.

“I received a call from a headhunter about the opportunity here at Cal Water, but I really didn’t know much about them,” Nelson says. “So I walked into the local office and said to the service representative, ‘Hey, I’m applying for a job with this company. What’s it like to work here?’

Over the next 45 minutes, the representative gave him a copy of the annual report, and three other people in the office came out to speak with him about the company. He also asked what the rep would change about the company, and the man replied that he’d like to have more tools to service customers. The board of Cal Water was searching for a CEO who could grow the company through acquisitions, and for Nelson, the local office visit cemented the deal, because it validated his ideas on how the company could grow. The only way for Cal Water to expand would be through improving its service image. In order to acquire municipal or independently operated water districts, Nelson would need a compelling value proposition for the local customers, and that value is most often created by one thing — improved service.

In order to do this, Nelson had to create a plan, involve his employees and then work to improve.

Create a plan

To validate his initial assumptions and establish his action plan, Nelson spent his first two months on the job talking with staff members.

“I spent time in one-on-one meetings with my direct reports, visited with the staff in all our locations and went out into the field with meter readers,” Nelson says. “I heard a lot of good ideas about how to improve service, but what was needed was a vehicle to get those ideas into place, because they weren’t being acted on.”

Nelson says that installing a continuous improvement process starts with a return to the basics, and that includes listening to the voice of the customer.

“In order to get more structure around creating a customer service ethic and to get that ingrained as part of your corporate culture, you have to start by measuring your results because you need data to track how you’re progressing,” he says.

Nelson began by reviewing water industry data, which produced a list of 69 customer needs. He prioritized the needs according to customer importance and then surveyed customers for performance feedback, establishing a performance baseline for the organization.

Involve employees

For Nelson, establishing customer service excellence as a part of the company culture was vital to achieving his growth plan because Cal Water’s union environment didn’t offer him the variable compensation options that many CEOs rely on to help drive key business initiatives. The organization’s growth would have to be supported by employee pride and a desire to service customers above and beyond their expectations.

“The next step is to train your employees on the continuous improvement process,” he says.

Nelson used trainers and conducted the training in-house. Employees went through these sessions every day.

“It’s vital that they understand how to interpret the voice of the customer as part of a continuous improvement process,” he says.

The vice president of human resources and the vice president of operations over-saw much of the training because those leaders are key to getting the training accomplished.

“Those VPs must work on getting rapid pull-through on any concepts that you’re teaching because it can take up to seven years to get a continuous improvement process fully implemented,” Nelson says.

Once the staff completed initial training and reviewed Cal Water’s first set of customer feedback scores, the staff was divided into teams of up to 14 employees by service location. Each team was led by a manager, who also acted as the team’s coach and a water quality expert. Because the customer survey results are measured by each service locale, the continuous improvement teams are charged with developing solutions that raise customer perception within their assigned geographic service area.

Teams met weekly, and they designed and presented a business plan around a suggested quality improvement to an officer review panel every 90 days.

“The plan must include step-by-step details outlining the problem, the analysis of the problem and the suggested improvement,” Nelson says.

Every member of the team must present to the panel, which is composed of other employees and three or four officers of the company.

“This step is vital because not only are we bringing forward ideas, but we’re teaching employees about the continuous improvement process and we’re building their confidence and presentation skills,” he says.

The presentation doesn’t always have to be a brand-new idea; they can also present an update on how a previous business plan is progressing. Under this system, he had 870 employees presenting in an open forum every 90 days.

“What you’ll find by installing this kind of process is that the employees build skills and talents they didn’t have before, or in some cases, it brings those talents to the surface and that helps you develop people as well as improve customer service,” Nelson says.

He says nearly every employee has stepped up through this process.

“It helps that they are part of a team because they can rely on each other and the team environment also helps in interpreting the voice of the customer, because they can discuss what the data really means,” he says.

In addition to requiring employees to articulate the prospective value of their ideas to customers, Nelson requires the teams to estimate the cost and the return to shareholders as part of their business plan. For example, if the customer service improvement plan calls for increased capital investment, the team must present a recommendation about how to finance the improvement, how many additional customers can be serviced through the proposed investment and when the company can expect to recapture the costs.

One of the best suggestions to come out of this process was improving customer satisfaction in Bakersfield.

“The customers were reporting a problem with water pressure and with water quality, and after the team conducted their analysis, they recommended that we build a new treatment plant,” Nelson says.

Although that idea would result in a major capital expenditure, the team moved forward with that recommendation and investment. In another service location, the customers complained about a strong chlorine taste in the water in the mornings. The team monitored the water quality and recommended a device that regulates the chlorine dispersal.

Work to improve

As a final step toward building an organization entrenched in continuous improvement and customer satisfaction, Nelson includes expectations in performance plans and implements continuous improvement process training for the employees of newly acquired companies immediately.

“This is part of the expectation of working here — it’s not voluntary,” Nelson says. “You always get some push-back from new employees when you acquire a company because it’s a change and so that’s to be expected.”

To get them on board, he spends time talking with the employee groups telling them why they do this and why it’s important. Once they complete the training, it helps them understand the process and overcome some of their fears, so they begin training with new employees right away. While a few opt out, most stay because it’s a better deal for many of these employees to work for Cal Water because the compensation, benefits and security are better and it has a larger footprint, which opens the door to increased career opportunities.

“That value proposition at least gets them to move forward with the training, and once they’re engaged, they generally don’t want to go backward,” Nelson says.

Every six months, he establishes a new set of objectives for his 20 field managers and six headquarters managers that support his corporate goals of providing excellent service, developing employees, delivering shareholder value and communicating well.

“You don’t want to set objectives that are too long-term because things change, and you can’t make corrections,” Nelson says.

He has eight officers on personal performance contracts with him, and he checks in on their progress every Monday. Additionally, they spend the day together once a year to select one major initiative for that year.

“If you just always focus on goals and objectives it gets routine and people can lose their enthusiasm,” he says. “I like to select one annual initiative that will really make a difference and focus on that. The officers are then charged with communicating the initiative and how each employee can contribute.”

By doing these things, Nelson has increased Cal Water’s service connections by more than 100,000 and has grown revenue from $210 million when he started in 1996 to $367.1 million in 2007. The company has made numerous acquisitions under his leadership, and he’s achieving the board’s original charge by delivering growth.

“It’s a great question to ask how customer satisfaction is tied to business performance, and I think it’s one that CEOs should ask themselves all the time,” Nelson says. “Good service is the key to customer retention, and when you have it, everything just seems to work better.”

HOW TO REACH: California Water Service Group., (408) 367-8200 or