That’s putting it lightly.
Emulex Corp. (NYSE: ELX) has done more than merely survive. In fact, it’s grown by leaps and bounds more specifically, by acquisitions, partnerships and diversifications.
McCluney came on board through the acquisition of his company, Vixel Corp., in November 2003. He was named president and CEO in September 2006, and since then, he has continued expanding the offerings of storage networking convergence solutions.
“The company’s been around for 30 years, so it’s been through a number of economic and technology transitions,” McCluney says, clarifying his definition of survivor. “It’s had the flexibility and determination to move into new directions many times over its life.” But none of those transitions are haphazard, no new directions unplanned. Everything ties to a strategic vision.
“If you don’t know where you’re going, any direction’s fine,” McCluney says. “You really need to understand where you want the company to be three to five years down the road. And to do that, you need a good understanding of where the technologies and markets and customer pain points are, and then have a very clear understanding of what capabilities and intellectual property exists within your own company.”
Setting that path ahead of time helps McCluney make decisions about new opportunities and challenges like when, in April 2009, Broadcom Corp. made an unsolicited takeover bid to acquire Emulex.
“That was incredibly challenging because we had to not only stay on plan and deliver what we needed to deliver for this new market and a growth trajectory, but at the same time, defend the company,” McCluney says. “I spent a lot of time out on the road with investors, articulating our strategy and convincing them that there was a better future for Emulex than what the hostile bid was offering.”
Put out feelers
Knowing your direction starts with knowing what the road around you looks like.
“It’s so easy to get trapped in the daily [or] quarterly grind,” McCluney says. “You need to take time to get out and really understand what’s going on in the world.”
At Emulex, different employees have different lenses to look through, whether that’s international markets, technology trends and advances, partners’ investments, and so on.
Customers are the best source of that information. McCluney and his executive team visit big customers both original equipment manufacturers and end users at least twice a year.
When you touch base with customers, you’re looking for insight into how they use your company but you’re also digging deeper than that.
“I’m always asking how they’re doing and what their views of Emulex are. I think it’s very important to hear firsthand and that can be everything from operational things to the quality of the products as well as the quality and interaction of our people,” McCluney says. “And we’ll talk about markets and market trends and technology. I like to hear from them what their challenges are and what they’re trying to achieve.”
When you ask those kinds of questions, customers will expect the same kinds of answers from you. So McCluney goes in prepared to share Emulex’s goals, investments and road maps as well as trends he’s seeing in the marketplace.
That will help facilitate information and ideas from them sometimes, making it pretty easy to determine your direction.
“Sometimes customers come to us with problems and say, ‘Hey look, if you could solve this, I’d be really interested,’” McCluney says. “That’s why I think it’s so important to stay close to your customer base; you learn things and occasionally we get some real breakthrough ideas.
“For instance, over the last several years, a big theme with our very large customers like IBM and Hewlett Packard and Dell has been globalization and getting into new and emerging marketplaces. The advice they’ve given me is, ‘Jim, you better be there with us because that’s where we see a lot of future growth for our business.’”
With that direct line of input, it was a fairly easy decision to take Emulex global by building strategic partnerships and even a physical presence in global markets where customers needed them.
But it’s not always that easy.
Test new opportunities
You’re not always lucky enough to have customers hand you opportunities. Even in those cases, you have to strategically decide what to pursue.
“It’s all about pooling pieces of sometimes diverging information and seeing trends that we can capitalize on,” McCluney says. “We’ve employed some portfolio management techniques with some fairly strict financial guidelines around them. Before we get too enamored with a given technology or market, [we ask]: ‘Can we make money? Can we grow? What are the competitive dynamics? Can we capitalize on what we have today, or is it something that would require major working capital investment?’”
Of course, many opportunities may pass that test, and you won’t have resources for all of them. Set priorities against other existing investments.
“You decide what the best investment is and best return for each of the markets and segments that you’re competing in,” McCluney says. “So you balance that portfolio against your overall objectives in terms of earnings and return to shareholders.”
You can predict some of that by researching markets, technologies and financials. But sometimes you have to see an opportunity play out to know whether the market will really adopt it.
If a trend passes those initial somewhat subjective tests, McCluney has a system for allotting more resources to winning ideas.
“We keep a pocket of funds to one side where it’s like seed money,” he says. “So for a while we’re seeding some things and maybe not spending a lot of money on it. If it starts to look really interesting, we’ll do a much further market, technology and financial analysis.”
When you start testing a new opportunity, put as much planning and goal-setting into it as you would a new business. The more targets you set ahead of time, the better you’ll be able to track progress and determine how many resources to add or subtract.
“Before we actually get into creating the new product, we write out a business plan, a marketing plan, a development plan that says, ‘Here’s what we expect to see and here are the outcomes we expect,’ so we have a scorecard for each of our programs, whether that’s in relation to revenue and profitability expectations, the profile of the product the features, the cost the timing of when we’ll get things done,” McCluney says. “We lay all that out to begin with. Then we usually have a very senior program manager on top of it whose job it is to monitor progress.
“We have a very straightforward red-yellow-green marker system for each of those attributes, and we monitor it as we move through the product life cycle.”
At first, new programs are tested with key customers, industry analysts and business partners who serve as marketplace guinea pigs under confidentiality agreements. But the key is having an internal leader devoted to each new project.
“You have to watch it doesn’t get subsumed or disappear into the day-to-day,” McCluney says. “Even in the best-run organizations, it’s so easy for new ideas to just disappear because people are so busy servicing customers, getting the quarterly results done and fighting the daily fires. So it’s very important to have leadership for the new idea and people championing it. Make sure you give it enough oxygen and enough money to thrive, even if it means taking something away from your day-to-day business to make those investments.”
But at the same time, don’t become so focused on the new line that it slips into a vacuum. Always keep your eyes turned out to watch for obstacles or more lucrative opportunities.
“We also have business development people who are out looking at the market and what’s happening outside to see if anything’s changed in our assumptions for that specific market,” McCluney says. “Has the growth changed? Are there other new technologies that could be disruptive to what we’re doing?”
All of those factors play into your decision of how many resources to feed the new opportunity and when to cut it off entirely.
“When any of those [parameters] starts to get out of bounds, that’s when you really look closely at the project,” McCluney says. “And if too many things go out of bounds or if you see a competitor come out with something sooner, then that’s when you start saying, ‘Is it time to cancel this program, or could we repurpose the technology in some way that we’re not in direct competition?’
“If things change in the market, you may want to kill the program because it’s the best thing to get scarce talent onto some new things. What you always want to do is keep the hopper full of new ideas. We always have more ideas than we have money to put on them.”
There’s still something missing from this equation. You’re not going to find opportunities or make these decisions without help. And you’re certainly not going to get the necessary power behind new projects if you can’t rally your employees in support.
“Make them part of the process,” McCluney says. “If you run some kind of ivory-tower process and people don’t understand what’s going on, you’re opening yourself up for what I call passive resistance. People just don’t get behind it.”
Start by simply keeping employees informed. McCluney holds quarterly all-hands meetings at each site either physically or through a webcast as well as regular round-table discussions. That communication involves some translation.
“A lot of employees need a little bit of a decoder ring in what’s going on in the markets. They see all the press releases; they hear us talk about design wins,” McCluney says. “But it is tough when you live in technical jargon all the time. You have to try and remember, not only for employees but also for our shareholders: They may like the sound of it but they’re not always as technically literate as we are.
“You’ve always got to take it from the technical into, ‘Here’s what’s good for the company. Here’s what’s good for the market. Here’s why customers will buy this. Here’s the problems that we’re solving. Here’s how it’s going to translate into the performance of the company.’”
McCluney simplifies broadly, for example, by cutting acronyms out of his presentations. While he leaves it to the managers to further tailor each message, he remains on-call for assistance.
“Our line supervisor gets to see what’s happening and he or she knows their team best of all and how to translate what’s going on,” McCluney says. “And we say, ‘If you don’t understand it, call us and we’ll try and translate it for you.’”
Involving employees also means asking for their input. Meetings at Emulex include Q-and-A sessions, but with 768 employees, McCluney doesn’t have time to hear from everyone.
Knowing who to ask can be a selective process. McCluney relies on annual employee assessments that ascend all the way to the top, keeping his executive team attuned to the talent in the organization. Every employee has a chance to share their input in that meeting when they’re asked whether they understand the direction of the company and their role in that and whether they have suggestions for improvement.
More specifically, because those evaluations are geared at identifying future leaders, they also reveal where strengths and talents lie so you know who to ask about certain issues.
“We invite people into different meetings to hear what their opinions are and what they’ve got to contribute,” McCluney says. “Over time, you get to know where the talent is and where the skill sets are that you need to draw on for a given issue or a given opportunity.”
The point is to stay in touch with people, both internally and externally, to constantly gauge whether your direction makes sense. That has helped McCluney make the right decisions for Emulex, which reported $378.2 million in total net revenue and $231.8 million in gross profit for fiscal 2009.
“You’ve just got to keep asking questions,” he says. “Never assume the plan you set will be identical to what actually happens. There are always twists and turns in the road. … Always be looking out over the horizon, and if you’re lucky enough, you set your own directions there and set the path for the industry to follow.”
HOW TO REACH: Emulex Corp., (800) 368-5391 or www.emulex.com
The training was a failure. All of that time, all of that effort, all of that money, just gone, just out the window and gone. What other explanation was there, after all, for drop after drop in the hard numbers from a talented sales team in the wake of a training and development session?
It could have happened at any business, but for the purposes of this story, it happened at a large technology company with headquarters in the Midwest. The top executives, frantic for answers, called a corporate training firm. “Our sales are down,” the executives said. “We need training.”
That technology company was part of a large percentage of businesses that continued to invest in corporate training, education and development during the last couple of years. Thousands and thousands of others turned away from training, unable or unwilling to spend more money during the recession.
But a panel of more than 30 industry experts and academic professionals agreed that it would have been far better for businesses to continue to spend on training during those tough times to invest in their employees and to show the extent of that investment, to improve the business and keep it up to date, to be in a better position when the economy ultimately turns around than to tighten the budget. The same rule applies now, too.
“Training is always important but even more so in times like this,” says Pat Galagan, executive editor, ASTD. “This is when you really have to come out of the gate running. It’s a big mistake to cut your training budget when times are tough because it leaves you unprepared for better times.”Make a plan
Members of the corporate training firm arrived the next day and talked with as many employees as possible at the technology company, from executives to engineers to those slumping sales representatives and everyone else in between. They prodded and probed and asked questions. They were curious about what, exactly, had happened.
They wanted to know, before they embarked on another training session, whether another training session was actually necessary.
This is what you should do when you’re in the process of determining whether to invest in training and development for your employees. You should prod and probe and plan, because just as you shouldn’t approach a new business venture without a model and a solid idea of what you want to accomplish, neither should you approach training without thoughts of what you need to tackle.
“What should companies focus on for their employees?” says Newt Margulies, professor emeritus and associate dean, executive education, University of California Irvine. “Companies are taking a harder look at their strategy, and whatever flows out of that strategy becomes the areas they would like to focus on for education and training.”
And even though those needs will vary from business to business, from industry to industry, there are a number of common training areas on which almost all businesses should focus.
“Every place I go, I hear about five things, and the first is leadership,” Margulies says. “Leadership means different things in different companies, but 90 percent of what we do in those programs is helping people do an assessment of how they lead. I also hear a lot about operations excellence. How do we improve the way we deal with customers and how we respond to customers?
“The third is management strategy. What is it, and how do we formulate a management strategy? The fourth is project management. How do you really manage an effective project team? What are the elements that contribute to project success? The fifth is really teams, in every sector. How do we become more effective? And how do you make judgments about the effectiveness of teams?”Open your wallet
Those members of the corporate training firm remained in the offices for a couple of days. They wanted to follow every lead and turn over every stone. They wanted to find out what had happened to the sales team after that apparently disastrous training and development session. And the technology company executives had no problem paying to keep them around. They wanted to find out what happened, too.
Do you want to keep your top employees after the job market opens again? Do you want all of your employees to be happy and to enjoy their work right now? Investing in training and education is an important part of helping you do just that. The average business spends about $1,060 on training and education per employee per year, according to research by ASTD.
“That’s an average, not a recommendation,” Galagan says. “In that pool of companies, some are large, some are small, some are government, some are private.”
Businesses that have the most success tend to spend between 2 and 3 percent of their total payroll cost on training, education and development. The average is in the middle, of course, right around 2.3 percent.
There are also effective ways to spend a little less, if your revenue is still down or if you opt to not invest as much in training. Turning toward local colleges and universities to design a custom program for your employees is often less expensive than sending them to open enrollment courses, as are distance learning and online courses. Some businesses opt to look within for employees who are experts in a specific area and can train the rest of the staff.Keep an eye on results
At last, an answer for our corporate training firm and our technology company in the Midwest. That previous training session, as it turned out, was not to blame for lower sales numbers. No, the culprit was instead the fact that the technology company executives had recently installed a drastic restructure of the compensation program. That program encouraged the sales team to try and sell only one of their many products, and that is what changed everything.
The training had not been the problem at all.
In fact, without that recent training session, the technology business might have planted itself in more trouble because of the new structure of the compensation program. The best money spent might well have been the money spent on the training and the worst might have been the money that was about to have been spent unnecessarily correcting that training.
The only way to know where you are is to know where you were. In order to receive a more relevant return on your investment, watch the progress from the planning stages through the training itself, then during the months, even years, beyond.
“This is a good time to begin thinking seriously about it,” Margulies says. “Now is the time to ready yourself for the upswing, because the upswing is coming. I can’t tell you that it’s coming in 2011 or 2012, but you know it’s coming. Here’s the opportunity for you to help develop your internal talent so that you’re ready. Whatever you want to do, how do you ready your folks for that?”
Sure, lean philosophies worked in Japanese manufacturing companies, but he wasn’t building cars. Could those waste-reducing principles really organize the five Southern California hospitals in MemorialCare Health System to operate more efficiently?
But Arbuckle, president and CEO, had to do something. Even before the recession struck, technological advances and labor shortages drove up his costs about 6 percent annually — triple the pace of government reimbursement. Medicare alone, which was already 20 percent below his costs, only creeps up six-tenths of a percent annually.
“It doesn’t take a genius to figure out how that math works,” he says. “You draw those lines out, and at some point, they cross where your expenses are rapidly outpacing any increase you can get in revenue. After that, it becomes a downward spiral.”
He tried obvious fixes like scrutinizing programs and laying off employees to save cash.
“You just can’t keep doing that,” he says. “There’s got to be a better way.”
So he started investigating how lean might make MemorialCare more organized and efficient by minimizing waste, errors and unnecessary costs and resources.
That journey required getting approximately 10,000 employees and 3,300 medical staff members on board to embrace a new way of thinking toward continuous improvement — in essence, fundamentally changing how the company operated.
“It’s not like a consulting engagement where they come in, you make some changes, you operate that way for a several months and then you slip back,” Arbuckle says. “We knew we couldn’t go down that path. Lean represents a fundamental change in the way you’ve always done things.”
Educate how change works
A trip to The Boeing Co. headquarters in Seattle opened Arbuckle’s eyes, while visits to lean hospitals sealed the deal. He realized this could actually work.
Seeing may not be believing, but it’s a good starting point to prove proposed change can be successful. In lean terminology, observation involves three actuals.
“Start by going to the actual place, talk with actual people and observe actual processes,” Arbuckle says. “Rather than talking about a situation and solving problems during a meeting, you start out by visiting the area where the work is being done, talking with them and observing key processes, and from there, identifying improvements to prioritize.”
First, expose senior leaders to the concept, then down the line with managers and other employees who will drive the change. Take them to companies that have been there, done that, asking why they went lean and how it worked for them.
You probably can’t transport every employee to other locations, so bring the evidence to them.
“Provide them little snippets of success stories from entities that had done this before — that, yes, it can be done,” says Arbuckle, who also invited lean veterans in to share their testimonies.
You don’t need everyone on board immediately. As long as you have enough people to begin rolling out the change, you can start small and let your own successes secure buy-in from the rest.
“Once you’ve set the stage and created a vision for how we can change, that’s all lovely, but at that point, this is all just words,” Arbuckle says. “But the proof will be in the pudding. Your first series of executions have to really show benefit, not only in improving the process but maybe also improving the workplace morale, employee satisfaction, things that people can really grab onto both tangibly and emotionally.”
You have to know where to start, so you have to identify low-hanging fruit to easily and successfully improve.
“Lean focuses heavily on eliminating waste, so look at processes that have multiple steps,” Arbuckle says. “(Look at) anything that has processing, which likely has the opportunity for redundancy. (Look at) any area that involves inventory, as you can have excess inventory or idle time while you wait for that inventory to get from point A to point B. Wait time — which can apply to clients waiting or staff waiting — that’s another area where you can focus.”
Basically, look for unnecessary, repetitive steps or breaks in the workflow.
Arbuckle started in a laboratory where the time between ordering lab tests and returning results averaged 88 minutes. After reorganizing the workflow through lean philosophies, he cut that to four minutes.
“I said, ‘Oh, for God’s sakes, that’s almost embarrassing,’” he says. “People thought they were doing all the right things, but it was just the processes that had been put in place for so many years. That was really what got things going: ‘Wow, you can make change. Yes, management’s serious about it. It makes life easier.’”
While Arbuckle brought in lean experts to train lean “fellows” — who now educate others internally about lean formulas, measurements and steps — the solutions to streamlining don’t come from a secret handbook. They come from the employees who deal with the problem.
When someone requests a slim-down in their area, lean fellows interview the staff there to better understand their frustrations and the scope of their work.
“Rather than just talking hypothetically during a meeting and saying, ‘Oh, that should be easy to fix; just do a few of these things,’ we actually went there and talked to people who have done it for years,” Arbuckle says. “[We] talked to them about, ‘Why do you do it that way? What could we change that could make your life easier?’
“It was amazing to see some people say, ‘You’d be willing to do that? Because if you could just move my desk from here to there or the laboratory bench from there to here, that would shave off 15 steps every time I walk across this room, and I walk across this room 300 times a day.’ It’s like ‘Why haven’t you told somebody before?’ kind of answers.”
Arbuckle asks a set of questions to prioritize which areas to improve, including: customer benefit, impact on key performance indicators, probability of success, opportunity for increased capacity and potential to apply similar changes elsewhere.
In addition to gathering ideas from employees, look at the facts — which can often speak for themselves to reveal fixes. Collect data around the aspects of the job that made employees identify it as a problem in the first place.
“It’s inventory or steps to get from here to there, number of employees, or minutes — a lot of things are measured in minutes: turnaround times, wait times,” Arbuckle says. “Some of it needs to be reduced to or presented by charts and graphics because the numbers would baffle people.”
Then, all of those details are compiled and mapped out in a value stream analysis. It shows the process, from start to finish, including every step each employee takes along the way. For example, Arbuckle charted the complex workflow at the Long Beach Memorial emergency room before and after a lean revamp.
“Even if you know nothing about lean, you don’t understand how this cha
rt works, the first one looks like an electrical wiring diagram of a fighter jet and the second one looks like, ‘God, that’s easy; I could figure that out myself,’” Arbuckle says. “Once you see it visually, it’s like, ‘Wow, we don’t need these three steps, or did you notice we’re repeating the same thing four times?’”
Run with the solution
In lean, it’s more complicated than looking at data or asking what would make employees’ jobs easier. The more rigorous methods of the lean process include five-day solution-seeking workshops — condensed versions of continuous improvement — to completely redesign or at least drastically alter the process.
Most importantly, the workshops force diligence by immediately implementing change.
“You can do it right then and there,” Arbuckle says. “It’s not like, ‘Eh, we’re going to go off and we’re going to think about this for two weeks and then give you the answer.’ You’ve lost all your momentum.”
In addition to front-line employees, you can also invite feedback from customers, peers from similar companies and even colleagues from other parts of your company.
“You could bring someone from another department in; they just take a fresh perspective,” Arbuckle says. “It’s looking at things differently than you ever have — which sometimes just takes encouraging the people who have always worked there but also may take people from outside coming in. I’m not saying hiring consultants, for goodness’ sakes, but just bringing someone from the pharmacy into the laboratory. They might say, ‘Well, why is it that way? Maybe you could do it this way.’ It gets a dialogue going.”
And that’s the point. After all the facts and opinions are on the table, you must decide which proposed solution is best.
“There is more than one way to solve a problem,” Arbuckle says. “You can actually, using some data collection or a little pilot project, determine which of those two ideas works best — or maybe it’s a hybrid of the two.”
The other consideration in selecting both an area to tackle and a solution for it should be the required cost, time and effort versus the return. If one solution is better but much more difficult to achieve, Arbuckle takes the simpler route — usually as a doable step to the grander plan.
“Don’t delay the process to go for perfection if you can achieve some gains now,” he says. “There’s always going to be opportunity for improvement. If you keep waiting around or doing analysis endlessly trying to achieve perfection, you’ll never get too much done.”
The caveat at MemorialCare is that employees won’t lose their jobs if lean projects eliminate positions. Arbuckle finds other positions within the organization, even investing in training if none fit their skill sets.
“We’re not going to come in and use your ideas and then you or your colleague are out of the job,” he says. “You can imagine that doesn’t really cause people to want to be too participative.”
Now that Arbuckle has embraced lean — even deciding MemorialCare will use it for the long haul — he has to maintain momentum by keeping everyone aware of how it’s working.
“The communication, the publication of these things ... that’s what really keeps people going and thinking about how it might impact their work area,” he says.
Departments that have streamlined with lean can share in Friday report outs, where they stand before a group of peers, executives and sometimes even board members and they explain how things were before and why, what they did, and how it changed the process.
On an everyday basis, both employees and patients can see the changes on visibility boards throughout the workplace.
“Anybody can walk by and see storyboards [of] where we’ve been in certain areas, what was it like before, what’s it like after. There’s sometimes quotes and testimony from people in terms of what was done,” Arbuckle says. “That serves to remind people that this is going on and inspire them that if it’s not impacted their area, it can.
“If you have multiple sites that do some of the same stuff, once we see success in an area, that can easily and immediately translate to another hospital in the same area. It may be slightly different, but it’s a place to start.”
Additionally, several of Arbuckle’s 8- to 12-minute webcasts have covered lean events. He uses before and after footage, including visual charts and interviews with the people involved, to share their excitement around the change.
“That has been quite useful in getting people to stop and think about how might it apply in their workplace,” he says. “They see that the organization is committed to it. We’re willing to spend money that we believe can so fundamentally change the work in an area — either increase efficiency, reduce waste or improve the quality, improve engagement.”
The excitement has spread. Arbuckle has more requests for lean intervention than he has staff to handle them — though more than 100 leaders have been certified through MemorialCare’s Lean Leader Training program. After less than three years with a lean outlook, MemorialCare eliminated 342 unnecessary process steps, freed 3,177 square feet and reduced the distance staff travels to do their jobs by 936 miles. The company, which had 2009 revenue of more than $1.5 billion, anticipates savings of more than $17 million over three years.
Through lean philosophies, he continues improving operational efficiencies, employee satisfaction and the patient experience.
“It’s really an elimination of waste, and along the way, you’re improving quality because you’re eliminating waste and unnecessary steps. You’re eliminating the chance for errors to occur so you’re eliminating errors, making it more efficient,” Arbuckle says. “It’s really that whole theme that I think is driving the process and what causes it to resonate with people without regard to what industry they’re in.”
How to reach: MemorialCare Health System, (714) 377-2900 or www.memorialcare.org
Real men do get sick. However, their reluctance to seek medical care on a timely basis can take a toll helping to explain the longevity gap with women outliving men by 5 to 10 years.
If men took better care of themselves, they would lengthen their life spans. Reasons for pushing aside their health needs include not being able to take time away from work duties, inertia, feeling invulnerable and out of control of the situation, or a macho stereotype that believes consulting a doctor is a sign of weakness.
What can men do to improve their health?
For answers, Smart Business turned to Brian Henry, M.D., board-certified internal medicine physician at Saddleback Memorial Medical Center in Laguna Hills, and Frank Marino, M.D., family physician and medical director for the Orange Coast Memorial Medical Center in Fountain Valley.
How serious is the situation?
Research shows too many men stay away from physician visits and health screenings activities that can spot medical concerns before they become more serious. While women traditionally have a history of doctors’ visits, know the health system and find it less threatening, men too often put their health needs on the back burner. Managers especially spend so much time taking care of their employees that they often forget to take care of themselves.
When do problems arise?
Because of stress levels associated with management which often translates into poor eating habits, lack of exercise and not enough attention to age-related screenings serious health problems can occur at any age. Worsening the situation are managers who will cancel appointments because they feel they can’t get away from work and are less likely to take medications as directed.
What steps should be taken?
Because tests and treatments can add years and quality to one’s life, men can no longer avoid health screenings, ignore warning signs and hide emotions. The best time to visit a doctor is when you are well. This allows physicians to assess your overall physical condition through proper tests and screenings and get a baseline to observe future health.
Why are checkups so important?
Getting the right screenings at the right time is one of the most important things a man can do for his health. Regular checkups and screenings tailored to your age, gender, personal and family history, and lifestyle can lead to early detection and quick treatment of many ‘silent’ disorders lacking obvious symptoms. These include high blood pressure, heart and vascular disease, diabetes, orthopedic (back, shoulder, hip, knee and feet) issues and cancer. When test results warn of such problems as growing cholesterol levels, precancerous polyps in the colon or increased prostate problems, it allows you and your physician to map out a plan to lower the risk of serious disease since concerns are being identified in their most treatable stages.
You can no longer dodge the doctor when faced with serious problems such as shortness of breath and chest pain. Some of the most prevalent medical conditions men face as they age can be cured or controlled if caught early. For example, diseases like diabetes partly result from an unhealthy lifestyle aggravated by stress, which can be controlled by adopting healthier habits.
What about gender-specific diseases?
While men are screened for and adopt preventive measures for diseases mainly afflicting their gender, they are also susceptible to other ailments. Nearly 2 million men 65 or older have disabling bone disease, and nearly twice that number is at risk. Older men suffering hip fractures have more than three times the risk as women of dying within a year. And, while in much smaller numbers, men may be diagnosed with breast cancer, contract bladder infections and are subject to eating disorders.
Where should I start?
Take responsibility for your health. Get regular checkups, preventive screenings, tests and immunizations determined by your physician. Eat a variety of fruits, vegetables and whole grains. Limit foods and drinks high in calories, sugar, salt, fat and alcohol, and eat a balanced diet to help keep a healthy weight. Include activities that raise your breathing and heart rates and strengthen your muscles. Protect yourself by wearing helmets, seatbelts and sunscreen, and wash your hands to stop the spread of germs.
Make prevention part of your business. Collaborate with hospitals and physicians by offering health programs, preventive techniques and screenings at your site or a convenient location. MemorialCare’s business outreach programs include executive physicals and onsite seminars. Our Web site (memorialcare.org) offers free online tools, calculators, guides and referrals to physicians that can help you and your work force reach the goal of a healthier life.
If any of this advice rings true, make that appointment now. If someone you know needs to make that appointment, pass this page along to them.
Brian Henry, M.D., is a board-certified internal medicine physician at Saddleback Memorial Medical Center in Laguna Hills. Frank Marino, M.D., is a family physician and medical director for Orange Coast Memorial Medical Center in Fountain Valley. The not-for-profit MemorialCare Health System includes Long Beach Memorial Medical Center, Miller Children’s Hospital Long Beach, Orange Coast Memorial Medical Center in Fountain Valley and Saddleback Memorial Medical Center in Laguna Hills and San Clemente. For additional information on excellence in health care, please visit memorialcare.org.
America’s hospitals face seemingly insurmountable odds. In this environment of increasing regulations, unfunded mandates, demand for services and rising costs that outpace smaller increases in reimbursement, philanthropy is becoming more and more critical.
To learn about hospital philanthropy, Smart Business spoke to Cecilia Belew, president, Saddleback Memorial Foundation in Laguna Hills and San Clemente, and Paul Stimson, director, Orange Coast Memorial Foundation in Fountain Valley.
How important is philanthropy to hospitals?
These are your community hospitals, and your philanthropy makes a difference. Even in these challenging times with less discretionary income, we are witnessing a larger number of donors committing their support to becoming engaged to ensure their communities have access to the best health care available close to home.
Philanthropic donors and organizations are vital partners in planning for and achieving success at Orange Coast Memorial and Saddleback Memorial Medical Centers. This is especially true at a time when many hospitals report an inability to access the newest technology and expand programs to meet the needs of the community. Thanks to countless philanthropic friends, our hospitals are able to add the programs, services and facilities necessary to keep pace with the latest medical advances.
How does philanthropy support hospitals?
Every gift has a story. These stories all begin with a philanthropic friend, continue through the work of our health care team and then impact the lives of our patients and our communities. Every week premature babies are saved, elderly patients comforted, illnesses diagnosed, bones mended and lives saved thanks to the generous philanthropy of individuals, corporations and private foundations in our caring communities.
Philanthropy elevates a life of success to a life of significance. We see people making that choice every day: children raising $12 for cancer research through a lemonade stand, adults funding charitable trusts and annuities and making outright major gifts, board members providing expert leadership, hundreds of volunteers and organizations sponsoring fund-raising events all appreciate the value of having high-quality patient care and want others to receive the same today and in the future. Our foundations have funded patient programs, education, expansion projects and medical equipment with philanthropic funds entrusted to us by our donors and grantors. In addition, many individuals choose to fund endowments that provide sustainability to critical patient programs. The gifts, grants and bequests given to our medical centers help distinguish our hospitals as among the best in the region.
At Saddleback Memorial, recent gifts funded a medical geneticist for our Breast Cancer Genetics Program and a new Women’s Wellness and Prevention Clinic. At Orange Coast Memorial, donations supported the new Hybrid Cardiovascular Interventional Suite as well as staff development and training with the Interactive Patient Simulator technology.
What is the history of philanthropy at your hospitals?
Our decades of offering compassionate, quality care are based on generosity and expertise of extraordinary people.
Saddleback Memorial began when the residents of Leisure World, envisioning a world-class hospital in South Orange County, raised $500,000; and developer Ross Cortese donated nine acres. It opened in 1974 and was the first community health facility serving the growing Saddleback Valley. Philanthropy helped build Meiklejohn Critical Care Pavilion with a gift from the late philanthropists Louise and Bill Meiklejohn, the largest in Saddleback Memorial Foundation history. A current $50 million plan further expands facility needs and technological capabilities. The gifts to Saddleback Memorial-San Clemente helped support heart programs and technology. Orange Coast Memorial Foundation supported development of the new six-story Patient Care Pavilion that provides access to some of the most respected physicians, advanced diagnostic and treatment facilities for cancer, surgery, obesity and imaging services at Orange Coast Memorial, the only not-for-profit hospital in the region.
MemorialCare Health System also does its share to help our communities. In fiscal year 2009, our medical centers provided $158 million in charity care and community benefits. We support local charities like March of Dimes, Susan G. Komen for the Cure, Habitat for Humanity and the American Heart Association.
How can employers help?
Philanthropy is an effective tool for companies trying to meet consumers’ rising expectations for the role businesses should play in society, says a McKinsey survey. Employers and their work force can help ensure high-quality health care through many philanthropic channels individual gifts, corporate grants, in-kind gifts, payroll deductions, major gifts, estate and planned gifts, endowments, tributes, corporate giving, fund-raising events, sponsorships and more. As businesses continue to be impacted by the economy, many are supplementing their charitable giving with longer-term pledges and gift commitments. No matter the size of a gift, we are deeply indebted to those who choose a life of significance through generous philanthropic commitments and trust their philanthropy to us.
Cecilia Belew is president, Saddleback Memorial Foundation at Saddleback Memorial Medical Center in Laguna Hills and San Clemente. Paul Stimson is director, Orange Coast Memorial Foundation at Orange Coast Memorial Medical Center in Fountain Valley. The not-for-profit MemorialCare Health System includes Long Beach Memorial Medical Center, Miller Children’s Hospital Long Beach, Orange Coast Memorial Medical Center in Fountain Valley and Saddleback Memorial Medical Center in Laguna Hills and San Clemente. For additional information on excellence in health care, please visit memorialcare.org.
Praful Kulkarni struggles with the same challenge many leaders do: finding the right people and aligning them under one vision.
“That’s kind of an ongoing challenge for every leader, to make sure everybody is on board,” the president and CEO says.
Since founding gkkworks, originally his MBA thesis, Kulkarni has kept to a few steps in order to surround himself with the right team and ultimately grow the company.
When it comes to hiring the right people, first you have to determine, as the leader, your strengths and weaknesses. Then determine the talent you need and reach out to those in your industry for suggestions.
If you’re looking for people to subscribe to your vision, you need to communicate it to those whom you’re interviewing and employees who maybe aren’t getting it.
The process has helped Kulkarni grow gkkworks, an architect and construction firm, to 250 employees and $81 million in revenue in fiscal 2009.
Smart Business spoke with Kulkarni about how to surround yourself with the right employees.
Understand your abilities. Recognize your strengths and weaknesses as a leader.
One could kind of take a look at whatever stage they are, or the CEO is, and see what kind of experience base they’ve built. Where they’ve had successes and where they’ve had failures stepping aside and not getting too much bravado and emotional tie up into what you’re doing. An objective evaluation of what has worked and what has not worked will typically tell you what your strengths and weaknesses are.
When I started the company, I had a good sense of how to create successes in business development, so I needed somebody who could do great project management in the work that we do in design, planning and construction management because that was not my strong suit.
I was reasonable at it, but you want to find people who excel in that.
If accounting and finance and management is something that you need, then you need to find people with that skill set. It also depends on the complexity of the company and what are the different pieces that you’re going to need and what piece you’re going to run as the primary charge.
Find the right people. You have to figure out what your specialty business is, and then you have to look at the talent that you need.
Obviously in a successful business, you’ve got to have the business development portion, then you actually have to produce the work, and then you have to manage it in terms of the finance and accounting side. That means you need people in all of these three areas that are competent to have a successful business model.
Depending on what the leader or the entrepreneur’s strength is, you need to complement for the other pieces to have it as a total business.
Then, it’s just a matter of finding the people in your sphere of influence or in the industry so that, first of all, the people that you bring on board then need to subscribe to your vision, … (and) at the same time, they need to be competent in their area of expertise.
Our experience is if people come through other employees, through our staff and or our clients or some consultants, typically that is a better way to go because then you have familiarity, and these people tend to understand our culture and these people can indicate if it’s a good fit for our company.
Outline your vision. You obviously have to share that vision with (interviewees) and elicit responses from them.
Have discussions in terms of what their philosophies are, and you can get a sense of people whether they’re just doing a lip service or they actually have some strong convictions in terms of where the business may go.
I think it’s very important to share the vision and the culture of the company and see how these people respond. Or ask about their vision and where they see themselves, and see if there is a match.
One of the questions I like to ask is, ‘Where do you see yourself five years from now?’ It’s that old technique of getting people to really start (talking.)
I need to listen to them, [and] then they need to listen to me. If I’m going to hire that individual I need to understand where that individual is coming from.
You obviously want to hire people who have leadership qualities, and you need to figure out by asking questions about their leadership capabilities and what that DNA is of that individual.
The (leadership) qualities you typically can tell with simple questions like, ‘What did you do in college?’ or, ‘What did you do in school?’ There’s certain things that you start to find out about them that will give you clues about what their skill sets may be because that starts pretty early in your student life.
Move employees if needed. You talk to them and you figure out what their desires are to be a part of this company and work with them.
To me, open communication is absolutely the way to go. People need to know exactly where you’re coming from, and you need to be able to understand people that you’re working with and what their goals and desires are in their personal and professional lives.
See if we can find the right position for them within the company or if there is a mismatch, then they need to part with the company.
One of the common mistakes leaders make is when somebody doesn’t want to work with you or move on to another opportunity or you are not satisfied with what they’re doing, the people are terminated.
Invariably the people who are working for you that need to be reassigned or let go, you’re going to run into these people again because they’re going to be around in your industry. That means you have to have the best of relationships even after these people are gone from your company. You need to handle each one of these particular situations on its own merit so that these people are not your enemies. Otherwise, they will come back to hurt you.
How to reach: gkkworks, (949) 250-1500 or www.gkkworks.com
Loren B. Shook loves telling stories. One of his favorites is the one about Rose.
When she was transferred from a hospital to Silverado Senior Living Inc. where Shook serves as chairman, president and CEO 100-year-old Rose Arrington had been diagnosed with Alzheimer’s disease and pneumonia. She couldn’t walk, feed herself or speak coherent sentences. People figured she didn’t have long, so it was just a matter of making her final days comfortable.
But within six weeks at her new home, Rose wasn’t just walking, talking and feeding herself. When the residents held a competition at the park, Rose won the medal for throwing the ball the farthest.
Shook doesn’t just share the tale because it’s touching but because it encapsulates what the company he co-founded in 1996 is all about. In other words, he talks about Rose to illustrate his vision and culture.
“The storytelling culture helps keep the culture in place and keep it alive and renews it every time you tell a story,” says Shook, who gathers tales from Silverado’s 20 care communities and several other home and hospice offices across four states. “You can celebrate successes with those stories.”
Silverado’s vision is to give life to memory-impaired seniors, their families and others in the company. With a goal that big, he needs everybody to be totally committed to the vision which means being totally committed to the culture that will help all of them achieve it.
“It starts with the vision of the company and the clarity of what that vision is [and] clearly communicating that,” Shook says.
That culture is obviously important when it results in success, like thousands of Alzheimer’s patients who regain motor skills and reduce medications. But it also benefits his 2,042 employees and the business he runs.
“You get to have the choice of making a positive difference in your co-workers’ lives as a supervisor or the employer,” says Shook, whose company has made multiple best places to work lists. “It also can be and is directly in alignment with making a better business for you to run and a more profitable business and a more secure one.”
Here’s how Shook sustains the culture that carried Silverado to 2009 revenue of $108.7 million and keeps improving life for thousands of patients and employees.Articulate your culture
Potential employees who interview at Silverado will certainly hear about Rose or Edith or Floyd or any other thousands of success stories Shook shares. The test is whether that matters to them.
You want employees who naturally sync with your culture, but first you have to know what you’re looking for. In other words, be able to clearly articulate and illustrate your culture in order to bring in like minds.
It starts with explaining your purpose to ignite passion for where you’re going before you get into the details of how you’ll get there.
“One of the big [mistakes] is to not clearly communicate a compelling vision as to what the company is about,” Shook says. “You’ve got to have that foundation what your company’s about and what you’re doing. Without that, you can’t build a culture.”
To make your vision compelling, explain not only what you do but why it matters.
“No matter what you’re doing, what you’re doing is important. Any business has a meaningful place to play or nobody would be buying it as a product or service,” Shook says. “You’re making not only just some old shoes; you’re making shoes that have the benefit of this or that. You can look at whatever you’re doing as just turning out a humdrum commodity or you can look deeper at what it is your product or service does for people and there is meaning.”
Shook, always the storyteller, gives the example of several men laying bricks to build a church. The first one, when asked what he’s doing, says he’s just stacking this brick on top of that one. The second one says he’s creating a building and getting paid $30 an hour. The third one says he’s building a church where people will get married and find peace.
The way candidates respond to your purpose or even a question like, “Why do you want to work here?” can cue you into how broad of a vision they have for themselves, whether it’s just laying bricks or being part of something bigger.
Continue gauging their responses as you zoom into the details of the culture you rely on to achieve your purpose.
“It extends off of the vision of the company and the purpose and the reason the company exists,” he says. “Then you roll that down to the operating philosophies. … Let people know what it looks like.”
To do that, explain the principles that guide your company. For example, Silverado values the get-give philosophy, which means employees should get more out of the job than they put into it, and likewise, the company should get more from the employees than they give them. You can train them more later on how to practice those principles, but for now, just give them an outline of what to expect.
Part of your explanation is also sharing success stories whether it’s Rose’s winning pitch, products you launched, clients you landed or sales records you broke. Show them proof that the company is actually achieving what it aspires to and that they can be part of that success.
“Let them know that the company does make a difference, the people who’ve come before them have done that,” Shook says. “So it’s not just a dream; it’s reality.”
Their responses will indicate how well they’ll fit the company.
“Going through those stories with a prospective staff member, you see: Does that matter to them? Do they care about that?” Shook says. “The right person will be blown away at what a wonderful change in Rose’s life that is, and the wrong person will say, ‘So what?’ You don’t even have to hear them; you can see in their eyes whether that’s significant.”
Whether they come out and say it or not, you can sense excitement and passion in their reaction. And, of course, you can just ask if they want to be a contributor to that result.
“It’s all about the view that the employer paints for the employees in producing that and what they feel about it,” he says.Hold everyone accountable
Shook is quick to admit nobody including himself is perfect. But the responsibility of maintaining a culture means keeping yourself and others accountable to it.
“Part of building a culture that’s sustainable and works is you want to make sure that the people from the very top on down are walking their talk,” he says.
Accountability starts with clearly laying out your expectations. The key is to make it digestible by giving employees pieces they can practice anywhere.
“You boil it down into very small parts that are understandable,” Shook says. “Show them the significance of what it means for them: how it solves their real-world problems that they face every day doing whatever job it is that they do.
“You up the ante any time you can say, ‘This is a technique you can use at home to make your life bet ter.’ Extend it beyond just the workplace and provide a ‘what’s in it for me’ kind of thing.”
Of the skills that are crucial across positions and industries, perhaps the easiest place to start is communication. Explain skills that employees will need at the company, providing examples of specific situations they might encounter.
Shook offers sample customer satisfaction issues. A resident’s family members visit and get upset that their mother’s socks aren’t organized the right way. They’re not mad at you, and maybe they’re not even mad about the socks. The point is to teach employees to find out what the issue is and be conscious of their response to it.
“When somebody’s angry or accusing you of something, recognize your own place. Human nature is to protect yourself, to deny,” Shook tells them. “Do the opposite of that: Repeat back to them what you heard them say and make sure that you are hearing them clearly. If they are angry, acknowledge that they’re angry and [say,] ‘I want to know what it is you’re upset about so that I can address that.’”
Only after you’ve provided tools and expectations for upholding your culture can you monitor employees.
Shook’s observation starts with an overall look at the department or location, which includes satisfaction surveys and understanding personnel data. In culturally strong areas, staff satisfaction and retention will be high. But a lot of turnover, low survey response rates and workers’ comp injuries or other liabilities should send red flags.
To pinpoint where the problem is, start at the top.
“First, make sure that the leaders are living that culture and modeling it for their associates,” Shook says. “Because if they’re not, then it’s really difficult to expect the people below them to be doing it.”
Shook and one of his senior vice presidents hold staff meetings at each location minus the supervisors. He asks employees for their needs and wants as well as the company’s strengths and weaknesses. Then he’ll dig into specifics about the leaders, asking for three things they do well and three things they could improve.
You raise the level of employees’ openness by not including leaders in the meeting and by assuring them you won’t disclose who said what.
While their answers will help you evaluate how leaders model the culture, it’s not all about what they say. Pay attention to how quickly they answer and which list of three comes more easily.
“When I ask about a leader where the culture’s not right, I have silence in the room,” he says. “People have a difficult time coming up with anything good. Sometimes they’ll come up with one thing but they can’t come up with three good things, so I see them struggling.”
If the leader seems to be doing everything right, then you can rely on him or her to help evaluate employees.
“You start with [asking,] ‘Are they living the culture?’” Shook says. “And then, ‘Give me examples of how they’re doing that.’”
If you get a lot of complaints around certain people from peers, superiors and customers, their reaction can say a lot. Do they place the blame on colleagues or talk openly about the issue?
Investigate why they’re out of sync with your culture. If they previously modeled it and suddenly slipped off track, maybe there’s another change in their life affecting them, like a death or divorce. Offer to adjust their schedules or set them up with a counselor.
Maybe they were never on track to begin with. Those are the employees who don’t want to fix the issue. Even if they say they do, the real answer is whether their behavior changes or not.
“My responsibility is to give them a work environment where they can succeed, give them leaders to work under where they can succeed and give them the resources needed,” Shook says. “But it’s up to them to take and use those resources and to improve. They have to be responsible to make themselves successful.”
Those who won’t don’t belong. But the process of helping willing employees improve can also help you keep yourself accountable. Each coaching moment is a chance for you to evaluate yourself on the issue so you can give them an opportunity to learn from your experience.
“I go through my own dilemmas I’ve had and the growth I’ve had as a leader throughout the years and let them know that the feelings they’re having are the same everyone else has,” says Shook, whose sharing gives employees paths to improve how they model the culture, therefore improving the company.
“What’d you learn from your failure that you’re going to do differently next time? What’s your responsibility in that failure, and how can you improve yourself?” he asks. “When failures happen, it’s not that you failed that matters; it’s what are you going to do about it that matters.”
How to reach: Silverado Senior Living, (949) 240-7200 or www.silveradosenior.com
Believe Doug Schneider when he says he knows what trust looks like.
Prior to joining Genea Energy as CEO, Schneider was in charge of an acquisition strategy at Verio Inc., which required him to integrate more than 60 companies, many of which were competitors. Besides coordinating the business and operational issues, he helped employees of rival companies form working relationships.
When dealing with constant change, as many companies are, there is one ingredient that can’t be overlooked, says Schneider. That is trust.
“Building trust is very critical,” he says. “If you do not have trust with your executive team, with the management, with the employees throughout the company, it’s very hard to manage change. It’s also hard to communicate effectively if you don’t have a foundation of trust.”
Schneider now uses that lesson while leading his 62 employees at Genea, a provider of energy consumption optimization services for commercial office building owners.
Smart Business spoke with Schneider about how to build trust among your employee base.
Reach all employees. A lot of it is just being honest and open with people. I think that’s one of the most important things. Also, it’s really about communicating. These things are interrelated.
To the extent you need to drive that open communication at the executive level, you want to drive that down throughout the ranks of your employees. You do that by going out into the field with your employees.
Say you have field employees who are out serving clients. Periodically, I like to get out in the field with them so you can get an understanding from their perspective of what’s going on. You start to build that trust with employees at different levels within the organization.
If you can, do a combination of these one-on-one interactions, smaller group interactions and even large group interactions every quarter, we try and do an all-associate town-hall meeting.
Communication is not a one-legged stool it’s something that takes on a lot of different contexts and processes.
Maintain clarity. You have to have a perspective as a CEO that you’re honest and open with people, and when there’s uncertainty, you try to bring clarity.
Even sometimes when you can’t bring clarity, you still tell people what you do know and what the situation is or what the issues are.
For a lot of companies, the past 12 months have been very trying times with what’s called ‘The Great Recession.’ We ourselves as a company, over 12 months ago, went through a reduction in force where we started to downsize part of the company. That starts to create uncertainty for people.
When you start to take an action like that as a company, and then it’s kind of combined with the macroeconomic environment, which itself has created a lot of uncertainty in this case, you have a lot of people saying, ‘Is my job (safe)? Am I next? What’s going on in the company? Is the company going to have further reductions?’
What we did in that case was explained to people why we did this, what the rationale is, how we kind of arrived at some of the decisions. Talked to them about the future health of the business, where things were going well in terms of sales and where things weren’t maybe going as well, and talk about milestones and metrics that we’re trying to drive to.
Sometimes the clarity means not letting rumors take on a life of their own, which means getting in front and getting comfortable talking with people about things that are creating some uncertainty. If you’re the CEO saying, ‘You know what? I understand there’s uncertainty about this.’
Hopefully, you can bring clarity and sometimes you can’t. Sometimes people just want to know that, ‘Hey, we’re working this issue through.’
Listen clearly. To be an effective communicator and start to be open, you have to listen to people first. Be authentic in how you listen to them before you maybe respond to them or disagree with them.
Part of it is building an environment where you actually encourage employees to challenge your thinking. When you do that and actually take in that new information and change decisions that have been made or go down a new path, I think that reinforces to people in the organization that you’re a company that does take feedback from employees to heart. That builds that openness and that trust.
A lot of it starts at the top. It is about how you carry yourself as an executive. I encourage my direct reports to challenge my thinking. Then, the idea is that they likely encourage the folks that report to them to challenge their thinking.
You have to practice what you preach. Go out and really seek that interaction with people in your organization. You can’t be an executive that gets comfortable sitting inside your four walls.
Gauge whether employees trust you. You start to know it when you get a sense that they are starting to challenge, in a constructive way, decisions that get made that they don’t think are the right decisions or their willingness to ask a tough question and not be worried about asking that tough question.
When you start to see two-way interaction, that is a sign that you actually are building up trust, and I also think that sometimes it’s one of those things where you just have a sense of it.
Let’s say there’s something important that the company needs to get done in a short period of time dealing with an unexpected customer issue or there’s some new sales opportunity that just came down but it’s going to require the involvement of a number of different folks from the organization.
When you start to see people rally together in almost a self-initiated team environment, I think that’s indicative that you’re building not just this trust inside the company, but that’s evolving to enthusiasm for people to really try to do what they can do for the greater good of the company.
How to reach: Genea Energy, (714) 694-0536 or www.geneaenergy.com
If your company lost profits because of another company’s actions, you may be able to recoup some, if not all, of that loss.
“Most civil lawsuits arise out of a plaintiff’s belief they have been monetarily damaged due to actions of the defendant,” says Richard Squar, Tax & Litigation Support director at Glenn M. Gelman & Associates, CPAs and Business Consultants. “If damages exist, the plaintiff’s reward is recovering money to be made whole as if the losses did not occur.”
It’s a complicated process, and both sides will have to work with a financial expert to estimate the damages.
Smart Business spoke with Squar about how the recovery process works.
When are damages due to lost profits recoverable?
There are three requirements that must be met for these damages to be recoverable:
- The defendant is proven to be at fault.
- It’s found that the defendant could foresee that his actions would cause damages when he was at fault.
- Damages can be calculated with reasonable and acceptable certainty, not just through speculation.
What is the role of a financial expert in the recovery process?
First, he or she must come up with an opinion on the damages how much should be paid if the defendant is found to be at fault. Second, he or she should be an adviser to the lawyers, judges and juries. The expert should use clear language without getting too technical.
An often-used phrase is ‘But for the fact that the damage happened, what would have happened?’ This refers to an estimate of what would have happened if the damages did not occur, less what happened, less what the plaintiff did to try to minimize those damages (mitigation).
How are monetary damages from lost profits calculated?
It doesn’t have to be an exact calculation of the damages. Estimates are OK, just as long as they aren’t speculative. ‘Speculative’ is a term that the opposing counsel will use to try to discredit the expert’s testimony. If the expert isn’t provided with enough information and tries to make a conclusion from limited data, the other side may say he or she is just speculating as to what the number would be.
The expert has to be using some kind of tested techniques and theories that are generally accepted by peers in order to withstand the scrutiny of the opposing counsel.
What methods are used?
The ‘before-and-after’ method deals with the internal data and financial trends. For example, you might look at a company’s past three years and determine an average percentage of growth that occurred. From there, use that percentage to go forward from the day the damage occurred.
If the expert determines that the past trend has been that sales were increasing by 6 percent each year, then he or she might estimate what would have happened after the date the damages occurred to be a 6 percent annual increase. That gives you your projected revenues. Then you calculate your costs associated with those revenues and that tells you what would have happened but for the fact that there were damages. You then subtract the actual sales and associated costs that occurred with the damages and that gives you your lost profits and damages.
The ‘yardstick’ method uses some kind of benchmark or standard figure. For example, the expert looks at what type of growth trends have occurred in similar businesses and looks for comparisons. If you’re a widget manufacturer, then he or she finds another company that makes something similar and finds out what that competitor’s growth has been. The expert then uses that as an estimate of growth and to come up with lost profits. Your benchmark is that other growth from similar businesses in similar situations.
How can a company ensure the financial expert has everything needed to arrive at a conclusion?
The ideal situation is when the company itself has done a summary of what it believes the damages are. It supplies any and all documentation that supports what happened compared to what would have happened. Companies can provide their budgets or any projections they’ve done or are continuing to do. They should make sure they identify for the expert exactly what revenue was lost. For example, if you have five product lines and one line that was damaged, you want to identify that one line along with bulk revenue numbers.
You want the expert to be working with the best available information within the context of the case. The expert usually doesn’t just go in and have total access to any and all information. He or she should have access to information that is produced in the strategy of the case.
Certainly, a company can still make sure the description of the company and its history is made available to the expert. You want to make sure the expert has a very good idea of who you are as a company, so that when the expert makes assumptions or does projections, he or she can do it with a greater feel for what makes sense.
Richard Squar is the Tax & Litigation Support director at Glenn M. Gelman & Associates, CPAs and Business Consultants. Reach him at (714) 667-2600 x254 or firstname.lastname@example.org.
Week after uncomfortable week, Donald Trump leaned across the edge of his famous boardroom table, his hands locked together, his lips curled in a sneer, and stared some poor sucker right out the door. During eight seasons of his reality television show, “The Apprentice,” Trump has mastered the ability to pound out the two words that no employee, not even a contestant eager for fame and fortune, wants to hear.
As has been the case so many times during the last couple of decades, Trump proved to be far ahead of the curve. He mastered the fine art of the fire long prior to the start of our current recession, long prior to millions of workers hearing the same words, more or less, as that unfortunate contestant on the other side of the table. But perhaps Trump and you will not need to utter those words as often this year as you did last year.
The national unemployment rate dropped to 10 percent in November 2009 from 10.2 percent in October, according to the Bureau of Labor Statistics. That figure, however slight, represents enough of a drop to provide some glimmer of hope to human resources and human capital experts across the nation and some hope that the start of a long recovery will soon be under way.
“This is providing an opportunity to step back, re-evaluate and reset the human capital agenda,” says Jan Rose, market business leader for human capital, Mercer LLC. “Everything is up for examination. Many of our clients are reviewing the effectiveness of all their human resources programs and assessing whether the programs are having the effect they want it to have for their investment.”
All of which means that, after a long and frustrating year filled with layoffs, wage freezes, the elimination of bonuses and perks, and the addition of more assignments for employees already under stress, the economy and the human resources industry might start to take a turn for the better at some point this year. Challenges do remain, of course, but there is hope.
Whenever the figures and charts tick upward, the time to move will be as soon as possible. Will you be prepared?Focus on your top employees
The challenges throughout the last year focused on how to maintain the revenue, trim the budget and retain as many employees as possible. Almost every business of every size lost something and, more important, somebody as evidenced by that aforementioned unemployment rate, which has increased during almost every month since April 2008.
You might still need to trim your budget, but you will also need to focus on identifying and retaining your high-performance and high-potential employees. So often, those employees might think the grass is greener on the other side of the proverbial fence. But what about when the grass is brown? What about when there is no grass? Heck, forget the grass, what about when there is no fence? They remain where they are for as long as necessary, as they are doing now because there are so few available positions in the marketplace.
Then they leave.
That is, at least, the consensus among dozens of human resources and human capital experts.
“When the economy turns around, and we all believe it will, and jobs become more available, employers will have to ask themselves what they have done to ensure that the people who are important to their success are going to stay with them, that they are engaged, that they are motivated and that they are committed to the organization,” says Thomas Grass, senior consultant, Towers Watson. “Because what they don’t want is to be in a position where they have their employees right now, but as soon as things turn around, those employees say, ‘Good, I made it through that. Now let me go and find a good job.’”
The process of retaining those high-performance and high-potential employees has already started, with your top workers likely influenced by how you handled the fallout from the shock of the recession. If you handled layoffs with dignity, communicating why decisions were made and what they meant for the future, that helped so did any revenue investment in those top workers, from compensation and bonuses to training programs and seminars. And if you talked with those top workers and relayed to them where they fit in the vision for your business, that would have been about the best thing you could have done.
“One thing we’re beginning to understand that is really important, perhaps the most important thing, is to have employees feel connected to their sense of purpose in the organization,” says Bruce Barge, market leader and principal, Buck Consultants, LLC. “There’s more and more research showing that’s the most important motivator. Not that compensation and other more traditional motivators aren’t important, but what really matters, especially for your highest-performing employees, is that sense of purpose. They want to feel like what they do makes a difference.”Develop and share your plan
In addition to identifying and targeting your high-performance and high-potential employees to prepare for a future of healthy economics, you should develop a plan to address possible human resources challenges and plot the path you want your business to follow during the next couple of years.
“One thing that will hinder your growth is a lack of a plan,” Grass says. “Planning is really important.”
Chief among your objectives for that plan should be the development of a balance between continued cost reduction and simultaneously positioning for growth. During the last year, many companies have aimed to manage and contain all costs related to human resources and human capital because they have been trying to do little more than survive. Survival is important, but it is also important to not damage the viability of your business in the big picture, well beyond these few years and even beyond this new decade.
Once you develop your plan, share it with your employees, especially your key employees. That advice might sound obvious, but experts say that too many business owners fail to relay information to their managers and their employees. And even in a good environment, employees who only hear about meetings behind closed doors and have no idea what is happening and what is about to happen will often speculate incorrectly, either causing additional stress or inadvertently spreading incorrect information. In short, you can still have those meetings behind closed doors, just be sure to share what is said on the other side of the oak.
“A lack of communication could really hinder any type of growth or improvement,” says Mistee Torres, director of human capital consulting for Southern California, TriNet Group Inc. “If people are uncertain, it can hinder your business, too.”
Communication is a key to developing a successful human resources department, either internally or by bringing in an outside firm. You want your employees aware of what is happening in your business, and you want them to be engaged.
“I want someone who knows where we’re going as an organization and who knows how they’re helping us get there,” Grass says. “That’s engagement.”