Robert J. Ciaruffoli isn’t afraid of hiring too many people to come work at ParenteBeard LLC. His fear is exactly the opposite — a situation where he wakes up one day, looks at his team and realizes he doesn’t have enough people to service the accounting firm’s clients in a high-quality manner.
“It takes a long time to build up your reputation, but you can destroy it overnight by not providing your clients with great service,” says Ciaruffoli, chairman and CEO of the $170 million accounting and consultant firm.
“Because we were in a growth mode, if anything, we overhired in anticipation of growth in certain areas. If it came time to redesign our system and we were a $50 million firm, we built it for a $100 million firm so that it was scalable and we wouldn’t have to reinvent the wheel every other year.”
It’s not a mindset shared by everyone in today’s business world. Many leaders remain skittish about ramping up their payroll even as they bring in a steady stream of new business. Ciaruffoli says it’s a dangerous path to follow.
“I’d rather be in a position where I have extra people around to take on work as it comes in the door as opposed to being in a position where we have work, and we can’t get it done,” Ciaruffoli says. “And because we can’t get it done and get it done right and on a timely basis, we have unhappy clients out there. The cost of an unhappy client is significantly greater than having several extra team members on board.”
Ciaruffoli takes an aggressive approach when it comes to hiring, but he’s not reckless about it. There is a great deal of conversation with his leadership team and a thorough study of important trends that help guide the effort to keep ParenteBeard appropriately staffed. It’s one of the reasons the firm has grown from $32 million in revenue when Ciaruffoli arrived to $170 million today and more than 1,000 employees.
“Every aspect of our administration had to make sure that we were not only meeting our current needs, but also anticipating our future needs,” Ciaruffoli says. “We knew we had growth plans in place and we were going to be able to execute them.”
Talk to your team
If you think you’ve got a pretty good handle on whether your company needs to hire more people, that’s great. You still need to talk to your team.
“You try to anticipate what your turnover is going to be and then hire accordingly,” Ciaruffoli says. “But before you even get to that point, you have to wake up every morning, look in the mirror and admit that you don’t have all the answers and you have to listen to your team.”
Those in-depth conversations with the leaders in your organization are crucial to learning whether your observations match what they are seeing on the ground level.
“Gather all that input before you make an organizational decision that we’re going to hire X number of people or we have certain strategic hires that we’re going to have to go out in the marketplace and recruit,” Ciaruffoli says. “Nobody is that good that they have all the answers by themselves. There is no substitute for listening well to your leadership team and the organization as a whole.”
Listening is sometimes a tough skill for leaders at the top of an organization.
“It’s one thing to have people who are willing to speak up,” Ciaruffoli says. “There is another part of that equation. You have to have people on the other end willing to listen. If people have something to say or something that is on their mind, it may or may not sway a decision. But it’s important that they be heard. It’s important that I hear what everybody has to say so I have all the information I need to make a decision.”
It comes back to the idea that Ciaruffoli doesn’t want employees feeling overburdened and in a situation where they feel like they’ll never be able to climb out of the hole they are in. If more staffing is needed, he wants to know about it.
“People need to feel loved, feel that they contribute to the organization, feel that they have a meaningful job and feel that they have the ability to learn and grow in an organization,” Ciaruffoli says. “If not, in this mobile society that we have today, it’s all too easy for people to find another position somewhere else.”
Look below the surface
Ciaruffoli puts a lot of stock in the referrals he gets from employees when a position opens up at ParenteBeard.
“They are putting their reputation on the line,” Ciaruffoli says. “They know it can come back to bite them. If they recommend somebody who doesn’t work out well, whether the individual on the other end is going to hold them accountable or not, I think most human beings would hold themselves accountable for that and feel bad about it. Nobody wants to be put in that position.”
In order to get good referrals from your existing employees, you need to have an environment that those employees would want to encourage others to join.
“We need to have people who want to be here and have the ability to perform,” Ciaruffoli says.
Beyond that, Ciaruffoli likes to see candidates who have done something in their life that is meaningful.
“What has this individual done with their time?” Ciaruffoli says. “What activities have they been involved in? Besides book smarts, what have they learned about life? Sports, the military, the Peace Corps, working in a restaurant, you learn a lot about people and teamwork. Those other qualities they bring to the table are extremely important.”
The other part of hiring is what you do on your end to select candidates. Ciaruffoli says it’s almost impossible to get a good read on a candidate after just one interview, so multiple touches over multiple dates are imperative.
“Somebody can have a really good day or a really bad day,” Ciaruffoli says. “It’s important to have those conversations multiple times. What we saw the first time, did we still see it in the individual the second time?
“For me, a second or third interview is less about skill sets and more about the individual as a human being. It’s about getting to know them, the things they like, the things they don’t like, their family, how they react in certain situations, the chemistry. It’s all about getting comfortable with the candidate.”
Lend a helping hand
Once you’ve made your choice and decided to hire, you need to do your best to make it a smooth transition for the new employee. It can make a big difference in the time it takes to get a person up and running in their new job.
“One big mistake a lot of firms and organizations make, and we’ve learned by our mistakes also, is trying to cram too much into an orientation program,” Ciaruffoli says. “It’s basically like opening a fire hose in terms of information flow. You force that information on somebody and it’s impossible to retain it.”
ParenteBeard has developed a 4 ½-day orientation program that is about half business and half team building.
“They’ll have a lot of hand-holding upfront to make sure they understand process, policy and procedures,” Ciaruffoli says. “We’ll also spend time talking about audit philosophy and tax and consulting philosophy. We want them to know what we do as a firm and most importantly, what their role is, and what our expectations are for that individual.”
The program is customized for different levels of the company. So someone entering at the management level will have a different experience than someone joining the firm straight out of college. But much of what is covered is the same no matter who you are or what you do.
“We look at the history of the organization, the culture and the strategic direction of the firm,” Ciaruffoli says.
“HR policies impact everybody. Technology policies impact everybody. So those types of things are important. But no matter whether they are right out of college or experienced, people are always very interested in the firm’s strategic plan. Younger people want to know who they are going to work for and what is the direction of the firm.”
The ability to speak intelligently about these topics with new hires and have a strong system for finding and welcoming new employees into your organization will help position you for steady growth.
“You need to have people systems in place,” Ciaruffoli says. “There are two major components of that infrastructure. The systems themselves and the people involved in those systems. The key for us was making sure we had the right people in the right position as we experienced a significant amount of growth over the years.” •
- Don’t go it alone.
- Nurture your culture.
- Make a good impression.
The Ciaruffoli File:
Name: Robert J. Ciaruffoli
Title: Chairman and CEO
Company: ParenteBeard LLC
Born: Wilkes-Barre, Pa.
Education: Certified public accountant; bachelor’s degree, King’s College, Wilkes-Barre, Pa.
What did you learn from working on a farm? I’m the oldest of 10 children and everybody contributed. I worked on a farm for two summers picking strawberries, tomatoes, beans, weeding and doing miscellaneous other things. I hated it. Very quickly I came to the realization that it was something I didn’t want to do the rest of my life. I needed to do whatever I could to make sure I didn’t end up in that type of position. But it was a job and I was able to make some money doing it.
Who has been the biggest influence on your life? My father. I observed a lot about work ethic and doing whatever it takes. If you have to work two jobs, you have to work two jobs. Whatever you do, you have to do it well because you cannot afford to be unemployed in this life.
How much did being the oldest contribute to the kind of person you are? It had a lot to do with it. My father was a blue-collar worker, and we had a large family.
What one person would you really like to meet? Pope Francis. I find him very intriguing and I find his management style very interesting and would like to hear about his approach to change management. He’s making a lot of changes for the better and it would be quite a treat to talk to him.
ParenteBeard Social Media Links:
How to reach: ParenteBeard LLC, (215) 972-0701 or www.parentebeard.com
Believe it or not, many people within your organization possess creative genes. Unfortunately as leaders, we often don’t allow them to surface by overloading them with ongoing day-to-day tasks. Sound familiar? You should know they are a critical component to any business’s success.
OK, they may be a tad moody or eccentric … but they are an integral part of the fabric of your organization. Although every organization claims to care about creativity and innovation, very few are willing to do what it takes to keep their creative people happy. So, what are the keys to engaging and retaining creative employees?
Like them or not, here are my top five:
Spoil them and let them fail
Like parents who celebrate their children’s successes, show your creative associates unconditional support and encourage them to do the absurd ... and perhaps even fail. Promote risk-taking at every turn. Of course there are costs associated with these “experiments,” but these are lower than the cost of not innovating.
Surround them with people unlike them
The worst thing you can do to a creative employee is to force them to work with someone like them. They will compete for ideas, brainstorm eternally or simply ignore each other.
The solution is to support your creative associates with colleagues who are too conventional to challenge their ideas, but unconventional enough to collaborate with them. That’s the formula. And, yes, it’s easier said than done.
Don’t pressure them
Giving people more freedom and flexibility at work dramatically enhances creativity. If you like structure, order and predictability, you’re probably not creative.
However, we are all more likely to perform more creatively in spontaneous, unpredictable circumstances. Don’t constrain your creative employees.
Few things are as aggravating to creative individuals as boredom. Indeed, creative people are prewired to seek constant change, even when it’s counterproductive. They take a different route to work every day, even if it gets them lost, and they never repeat an order at a restaurant, even if they really liked it.
Creativity is linked to a higher tolerance of ambiguity. It is therefore essential that you keep surprising your creative employees at every turn.
Make them feel important
Why do creative people fail? Answer: Others fail to recognize them. Fairness is not treating everyone the same, but like they deserve. If you fail to recognize your employees’ creative potential, they will go somewhere where they feel more valued. Natural innovators are rarely gifted with leadership skills. Steve Jobs had better relationships with gadgets than people. We could all learn from Mark Zuckerberg, who brought in Sheryl Sandberg as COO to make up for his leadership deficits.
Research confirms that corporate innovators exhibit many of the characteristics that prevent them from being effective leaders: They are rebellious and anti-social with record low levels of empathy. Put another way, they will be a challenge to manage and will take you, as management, out of your comfort zone. Some days, they will simply drive you crazy.
Properly managed, however, their innovation and ability to look at things through a different lens will be central to your company’s ongoing success.
G. A. Taylor Fernley is president and CEO of Fernley & Fernley, an association management company providing professional management services to nonprofit organizations since 1886. He can be reached at firstname.lastname@example.org. For more information, visit www.fernley.com.
If you were to assemble some of the world’s outstanding business leaders in one place and ask them their secret to sleeping well at night amid the pressures of running a successful business, you might think you’d collect the best tips to handling anxiety in the business world.
The truth is that top business leaders often don’t have a secret to reveal — they rely on the strength and confidence they’ve developed over the years.
At the EY World Entrepreneur Of The Year conference, held earlier this year in Monaco, EY Entrepreneur Of The Year country winners assembled to compete for the World Entrepreneur Of The Year title.
We took the opportunity to collect the thoughts of the world’s most accomplished entrepreneurs — innovators, futurists, turnaround specialists and problem solvers — about dealing with worries. ●
“There’s nothing that keeps me up at night. I sleep very well. The challenge we have as a company is to keep delivering the culture we have created and expand it, keep evolving at the speed our customers expect us to evolve and keep creating value for them as we have for the past 10 years.”
Entrepreneur Of The Year 2012 Argentina
“The main thing is to make sure that we are always looking for new, creative ideas that keep our business updated with new technology and creativity. The other thing is making sure we are working faster than before.”
Lorenzo Barrera Segovia
founder and CEO
Entrepreneur Of The Year 2012 Mexico
“Business has its highs and lows, because let’s face it, it’s not easy. It has its challenges. They asked Steve Jobs what was the most important thing in business and he said, ‘Passion.’ If you don’t have passion you would give up when things get difficult. We have so much passion and love for what we do that it becomes a part of our life.”
founder, president and CEO
Entrepreneur Of The Year 2012 United States
2013 World Entrepreneur Of The Year
“What if the stock market crashes? What if there is some unknown thing that happens? What if there’s another 9/11 type of situation? Companies need to carry on, but maybe they don’t need to do events. Maybe they cut back on entertainment and speakers. The worry is what happens if something happens that I can’t control.”
President and founder
SME Entertainment Group
“We are in recovering times. I feel very positive about the economy in general, but I’m still very worried about Europe. And while we are recovering, it’s still choppy and choppy times are times when there are more needs out there.”
Retired global chairman and CEO
"I guess there is a point in my life where I thought it is all about me, and I am going to be the guy that guides everything and controls everything. What I have learned is that the best thing that I have done for our business is learn to let go and learn to get people who are better equipped to manage specific areas, do their thing and not get in the way."
Dr. Alan Ulsifer
CEO, president and chair
Entrepreneur Of The Year 2012 Canada
“Nothing keeps me awake at night becase my work is solid.
My father married at 60 and my mother was 23. They had four children. Then he died, and we quickly had to start thinking about what to do. There was no money — nothing. We had to leave the little town we lived in because of violence there. Thanks to that, I am where I am right now because I still could be on the streets of my village selling tobacco. There is no wrong that can do good. That's what I have to teach people.”
founder and president
Entrepreneur Of The Year 2012 Colombia
The idea of driving aimlessly seems glamorous in movies and songs. In reality, few of us get in a car without knowing how to reach our destination. We’ve created smartphone apps, GPS devices and satellite mapping to make our trips as efficient as possible and to avoid what we know to be an inconvenient, expensive outcome — getting lost.
I bring up this idea because many companies using social media have inadvertently become lost drivers. They start using social platforms with the goal of reaching some number of likes, retweets or shares, but as they embark on their social media strategies, many experience a disconnect between the content they post, blog and tweet and their progress on measurable business goals. These companies are driving without a roadmap; they just don’t know it.
Sound familiar? If social media isn’t working for you, your social media approaches may be missing a fundamental component: an effective content strategy. Here are three ways a solid content strategy will enhance your company’s social media success.
A like is just a like
All social media engagement is not created equally. To be successful, the social media activity that you generate needs to support your marketing goals — whether you want to improve employee engagement, boost customer conversions or build interest in a new product.
Creating a content strategy before you engage in social media will help your business clarify the specific marketing goals you want to achieve through content, as well as what messages you need to communicate to reach those goals. This process will ensure you get the right likes, shares and retweets from social interactions.
Social is a vehicle
Social media is a vehicle for sharing compelling content with your audience, and it doesn’t work if you don’t know what issues, topics and trends your audience finds compelling. Part of developing a content strategy involves learning how those you are trying to reach want to be talked to. Where do they go for information? How much time do they spend online? What kind of content are they looking for from your industry?
By getting to know the interests and pain points of your audience (customers, employees, shareholders, etc.), you can develop tactics to reach your online audience more effectively, saving you time and enhancing your company’s social influence.
Relevant content is meaningful
Kings of social content don’t become that way by luck. They use strategic tactics to connect with their audience through the right channels at the right times. More importantly, they make these connections meaningful and memorable by posting and sharing strategic, relevant content that their audiences desire.
When you deliver social content that your audience members find valuable or interesting, they’ll reward you by sharing your content, engaging with your business and, ideally, helping to promote your reputation as a thought leader in your business or industry. A content strategy allows you to do that by providing a roadmap for what kinds of informative, helpful, educational or creative content you need to make meaningful interactions.
As a recent Huffington Post article put it, the golden rule of the web is clear: “To know us better is to sell us better.” Ultimately, being successful in the social media space means taking the time to map out what success looks like. In this sense, a solid content strategy is not only an important component of any social media strategy, it’s the key to driving the results your business wants.
Michael Marzec is chief strategy officer of Smart Business and SBN Interactive. Reach him at email@example.com or (440) 250-7078.
When Albert “Chainsaw Al” Dunlap was the CEO at Sunbeam in the late ’90s, he had a reputation for ruthlessness. Besides massively downsizing the company, he was also known to intimidate everyone around him and resort to yelling and fist pounding.
While extreme, Dunlap’s behavior is an example of the type of “dictator” leadership that used to be fairly common in the C-suite. Rules were rules, there were no exceptions for anything and people were just a line item on a budget. Need to cut thousands of jobs? Don’t think twice about it.
On the other end of the spectrum is the Christ-like leader. This leader focuses more on building people up rather than tearing them down. This type of leader understands that there are rules, but sometimes to do the right thing, the rules need to be broken. For example, during the economic downturn, some Christ-like leaders went well beyond what was called for to make sure laid-off employees were taken care of.
They made sure they had the use of office resources to look for a new job and did everything they could to lessen the hardships. They weren’t required to do this; it was just the right thing to do. They saw employees as human, not just numbers on a spreadsheet.
Does it cost money to take the more humane route with your leadership? Yes and no. From a short-term, bottom-line perspective, it probably does cost a few more dollars to help people through a hardship. But long term, it can pay dividends. By treating people with respect and doing the right thing, it helps eliminate animosity toward you and your company from both the ex-employees and current ones. Maybe there are some good employees who you wanted to keep, but couldn’t afford. By showing compassion, when the economy turned around, they were far more likely to consider coming back than if they had just been shown the door with little regard to their well-being.
And what happens when these ex-employees end up in key positions in companies that could be customers? Do you think an ex-employee who you mistreated is going to buy anything from you or recommend your company to someone? It’s a small world, and what goes around often comes around, so it’s always best to treat people as best you can.
You can lead like a dictator and still get results. But do the ends justify the means? Will you conquer all, only to find yourself alone with no friends, the equivalent of Ebenezer Scrooge in “A Christmas Carol?” Or will you have an epiphany and realize there’s a better way to do things?
During this holiday season, think about your leadership style and the long-term effect it has on people’s lives. If this exercise makes you uncomfortable, then maybe it’s time to change how you lead. ●
Employers today are more likely to have an employment practices liability (EPL) insurance claim than a property or general liability claim.
EPL provides protection against claims made by employees, whether former, current or potential, regarding discrimination — age, sex, race, disability, etc., wrongful termination, sexual harassment and other employment-related allegations.
When looking to have your exposures covered, underwriters carefully evaluate your company’s written procedures and practices.
“You need to confirm that these procedures are distributed and enforced constantly throughout the organization,” says Daniel R. Slezak, vice president at ECBM. “There should be a way to promote awareness and a ‘hotline’ for employees to communicate concerns without fear of intimidation or retaliation.”
Underwriters also will look at factors such as turnover rates to judge employee moral and/or possible management problems.
Smart Business spoke with Slezak about what is — and is not — covered by EPL insurance.
Retaliation claims have greatly increased, according to the Equal Employment Opportunity Commission (EEOC). What do employers need to know about their risks?
Title VII of the Civil Rights act of 1964 states an employer may not fire, demote, harass or otherwise ‘retaliate’ against an individual for filing a charge of discrimination, participating in a discrimination proceeding or otherwise opposing discrimination. The same laws that prohibit discrimination based on race, color, sex, religion, national origin, age and disability, as well as wage differences between men and women performing substantially equal work, also prohibit retaliation against individuals who oppose unlawful discrimination or participate in an employment discrimination proceeding.
Retaliation occurs when an employer, employment agency or labor organization takes an adverse action against a covered individual because he or she engaged in a protected activity. For example, it’s illegal to refuse to promote an employee because he or she filed a charge of discrimination with the EEOC, even if the EEOC later determines no discrimination occurred. The law forbids retaliation when it comes to any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff, training, fringe benefits, etc.
Employers can reduce claim risk by training managers and supervisors to be aware of anti-retaliation obligations under Title VII, including specific actions that may constitute retaliation. They also can reduce risk by carefully and timely recording the legitimate business reasons for disciplinary or performance-related actions, while sharing these reasons with the employee.
What is covered with Family and Medical Leave Act (FMLA) claims?
The FMLA was virtually unknown, but now most employees know it’s a tool they can use to adapt to life changes. Plus, with recent Americans with Disabilities Act amendments, the number of persons defined as having a disability has increased. While disability discrimination is covered, typically there isn’t coverage for the cost of accommodation and employer fines.
How are social media, harassment and gender/sexual orientation covered?
Social media has little regulation at this time, but employers need to have policies in place that address those practices. An event involving a social media claim is covered to the extent there was discrimination.
Harassment claims increased by 33 percent from 2006 to 2008, according to the EEOC. This seems to always be in the news, whether in schools or the NFL’s Miami Dolphins locker room. These events may trigger coverage, but you should make an effort to ensure everyone is getting along.
Policies can be extended to cover third-party discrimination claims made by customers and tenants. The policy also covers discrimination and sexual harassment claims made by customers for the acts of employees.
Read your policy and pay attention to carve outs and exclusions/endorsements that give coverage or take it away. Expert insurance professionals are available to help with any issues or questions. ●
Insights Risk Management is brought to you by ECBM
What would it take for a company to succeed if its leader could effectively do only one of the following: innovate, instigate or administrate? We all know that an innovator is the one who sees things that aren’t and asks why not? The instigator sees things that are and asks why? The administrator doesn’t necessarily ask profound questions but, instead, is dogged about crossing the “t’s,” dotting the “i’s” and making sure that whatever is supposed to happen happens.
Ideally, a top leader combines all three traits while being charismatic, intellectual, pragmatic and able to make decisions faster than a speeding bullet. Although some of us might fantasize that we are Superman or Superwoman, with a sense of exaggerated omnipotence, the bubble usually bursts when we’re confronted simultaneously with multiple situations that require the versatility of a Swiss army knife.
Business leaders come in all shapes and sizes with various skill sets and styles that are invaluable, depending on the priorities of a company at any given point in time.
Every business needs an innovator to differentiate the company. Without a unique something or other, there isn’t a compelling reason to exist. Once those special products or services that distinguish the business from others are discovered and in place, it takes an instigator to continuously re-examine and challenge every aspect of the business that leads to continued improvements, both functionally and economically. It also takes an administrator — someone who can keep all the balls in the air, ensuring that everyone in the organization is in sync and delivering the finished products as promised to keep customers coming back.
As politicians and pundits of all types have pounded into our heads in recent years, “It takes a village to raise a child.” All who practice the art and science of business have learned that, instead of a village, it takes a diverse team working together to make one plus one equal three.
On the ideal team, each member possesses different strengths, contributing to the greater good. The exceptional leader is best when he or she is an effective chef who knows how to mix the different skills together to create a winning recipe.
In many companies, however, leaders tend to surround themselves with clones who share similar abilities, interests and backgrounds. As an example, a manufacturer may have a management team comprised solely of engineers, or a marketing organization could have salespeople who came up through the ranks calling all the shots.
If everyone in an organization comes from the same mold, what tends to happen is, figuratively, one lies and the others swear to it. This builds to a crescendo of complacency and perpetual mediocrity.
There is a better way. Good leaders surround themselves with others who complement their capabilities, and savvy leaders select those with dramatically different backgrounds who will challenge their thinking because they’re not carbon copies of the boss. This opens new horizons, forges breakthroughs and leads to optimal daily performance.
Strange bedfellows can stimulate, nudge and keep each other moving toward the previously unexplored.
To have a sustainable and effective organization, you can’t have one type without all the others. While everyone on the team may not always agree, each player must always be committed to making the whole greater than the sum of the parts.
The single most important skill of the leader who has to pull all the pieces and parts together is to have the versatility of that Swiss army knife — selecting the precise tool to accomplish the objective at hand. ●
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. “The Benevolent Dictator,” a book by Feuer that chronicles his step-by-step strategy to build business and create wealth, published by John Wiley & Sons, is now available. Reach him with comments at firstname.lastname@example.org.
“Planning for an exit can be a very emotional event in a business owner’s life. There are feelings of mortality — not only with one’s health, but also his or her role as the leader of a business. Businesses that achieve long-term success typically do a good job planning for succession,” says Steven E. Staugaitis, a director in Audit & Accounting at Kreischer Miller.
“It makes sense that companies that effectively plan leadership transitions will do better because they can sustain positive momentum when a leader is properly groomed and allowed to rise within the organization,” he says.
However, many business owners and executives don’t properly plan for an orderly exit. Less than 20 percent of organizations are well prepared for the departure of a key individual, according to the American Management Association.
“We see that particularly with first-generation business owners. One day they realize they’re 65 and ready to retire. They expect to be able to turn a key and exit the business. In those cases, it is rarely a successful exit,” Staugaitis says.
Smart Business spoke with Staugaitis about planning for succession and what business owners should be considering to increase their chances for success.
What steps should owners consider?
The succession process involves evaluating several steps. These steps include, but are not exclusive to:
- Identifying potential candidates.
- Training those qualified candidates.
- Publicly affirming the decision.
These action items are necessary to set the right tone and expectations for the organization and those around them.
When should owners start thinking about exit planning?
Successful transitions occur where sufficient planning takes place — five to 10 years from a planned exit is best. This time frame allows for potential ‘false starts’ as circumstances change. These changes can be a shift in the operations of the business, the unplanned departure of candidates or candidates simply not demonstrating the necessary qualifications to take over. It is important to start the process early in order to keep your options open.
Who should be involved in the selection process?
Certainly the current owner or owners should be involved as well as any identifiable candidates. These candidates need to confirm their intention of really wanting to take over.
Also, having an outside, independent entity such as a board of directors or advisory board can be helpful. The board can help balance decisions by removing the emotion, since they don’t work as intimately with the candidates on a daily basis. Board members are able to provide outside perspective and new, innovative ways for evaluating candidates.
What about contingency plans?
It’s always a good idea to have what is sometimes referred to as a ‘disaster plan’ in place. These plans are a set of key instructions for a spouse or the management team of a business to act upon in the event something happens to the owner. Unfortunately, there are situations where a key owner of a business passes away suddenly. If there is no clear direction left to anyone either in the family or in the company, the company may go out of business as a result.
Are there any other things an owner should be thinking about?
A leader who is planning to leave the organization should think about what he or she is going to do once he or she actually leaves. The most successful transitions occur when the owners take up an active hobby or they participate on advisory boards of other companies. Showing up at the business every day can undermine the whole process and give the perception that a succession has never really occurred.
The succession process needs to be mapped out like you would any other aspect of the business. Even if you’re not planning on exiting the business in the near future, being prepared ahead of an actual event sends a positive message to employees and customers that you’ve built a strong company that is focused on long-term success. ●
Insights Accounting & Consulting is brought to you by Kreischer Miller
More than 800 years ago, medieval philosopher Maimonides outlined eight levels of charity, the greatest of which was supporting an individual in such a way that he or she becomes independent. In Maimonides’ view, support was defined as a gift or loan, entering into a partnership or simply helping that person find employment.
Few things are more powerful than philanthropy — especially when its end goal is to better the lives of others. These days, philanthropy, and corporate philanthropy specifically, has assumed a broader role in society.
Today, companies give back more strategically than ever before. They align themselves with nonprofits that foster missions they believe in. The wealthiest people on the planet have even coordinated the Giving Pledge (www.givingpledge.org), where they’ve committed to dedicate the majority of their wealth to philanthropy.
At last count, more than 115 people had taken the pledge. Warren Buffett and Bill Gates may be the most prominent names on the list, but others include Spanx Founder Sara Blakely, Cavs Owner Dan Gilbert, Progressive’s Peter Lewis and Netflix Founder Reed Hastings.
Last month, one member, David Rubenstein, CEO and co-founder of The Carlyle Group, discussed the importance of philanthropy during a presentation at EY’s 2013 Strategic Growth Forum.
In his pledge letter, Rubenstein explains why: “I recognize to have any significant impact on an organization or cause, one must concentrate resources, and make transformative gifts — and to be involved in making certain those gifts actually transform in a positive way.”
One way Rubenstein is being transformative is through “Patriotic Philanthropy.” He has given $10 million to help restore President Thomas Jefferson’s Monticello home and underwrote renovations to the historic Washington Monument. Yet Rubenstein’s most noteworthy initiative is the whopping $23 million to acquire a rare copy of the Magna Carta, ensuring it remained in the United States. After its purchase, Rubenstein gifted it to the National Archives.
Not everyone has Rubenstein’s vast resources. But every organization and any individual can make their own impact.
In the workplace, for example, organizations that give back elevate their status perception-wise among competitors and peers. It doesn’t take much. But by being a company that cares, prospective employees want to work for you. For your existing team, deliberate and well-organized corporate philanthropy programs quickly take on a life of their own, becoming a rallying point.
Think strategically and get started by finding your cause. We all have them. They exist at our very core, forming the belief system we live by every day. So why shouldn’t our philanthropy follow that same course? Consider aligning your giving or volunteerism with something you personally believe in or care about; something that fits with what your company does or something that is close to your employees’ hearts.
Most important, get involved and just make a difference. It really comes down to that. One initiative that has always impressed me has been the annual CreateAthon event undertaken by WhiteSpace Creative, a member of the Pillar Award class of 2005. You can read a first-hand account of this year’s program here.
Being a good corporate citizen goes well beyond making good business sense. When you align yourself with causes you care about, whether big or small, you make a difference in someone’s life. And the bottom line is this: It is all of our duties to get involved. It’s no longer a question of if, but rather of what, when and how. ●
Dustin S. Klein is publisher and vice president of operations for Smart Business. Reach him at email@example.com or (440) 250-7026.