Marcia Passos Duffy
“Companies recognize that high gas prices are affecting employees, and don’t want to lose people or suffer low morale because of it,” says Ryan Skubis, senior vice president of Robert Half’s Chicago Region.
Smart Business spoke to Skubis about how companies can help employees ease the pain of escalating gas prices in order to help boost morale and reduce turnover.
What has been the impact of higher gas prices on employees?
The increase in gas prices has been taxing on employees who have a lengthy commute to the office. Some employees may consider looking for a new job because of commuting costs; but in general, we’ve found that employees have stayed put and endured the gas price hikes.
However, if an employee is not satisfied with the job in the first place, or feels undervalued, the gas prices might be the last straw that propels him or her to look for a job closer to home. In general, the commute is seen as part of the job, and employees may be cutting costs elsewhere in their lives to compensate for the increase in gas prices.
According to your survey, what have companies been doing to help employees with escalating gas prices?
While employees are not leaving in droves because of higher gas prices, companies do realize that escalating gas prices are a burden to employees, so they are making efforts to make life easier for workers. For example, our survey showed that companies are increasing expense guidelines for employee-incurred mileage (cited by 47 percent of respondents), allowing staff to telecommute more frequently (37 percent) and encouraging carpooling (35 percent). About one-quarter of the executives surveyed said their companies are not taking any action at the moment, but one in four of those said their companies would likely try to reduce the impact of higher gasoline costs if prices continue to trend upward.
If a company can’t afford to increase compensation or expense accounts, what might they do?
There are inexpensive things a company can do to show it cares - which can go a long way in boosting morale. The simplest and least expensive is to have a place to post carpooling arrangements either via e-mail or on a bulletin board. A business can also encourage telecommuting for one or two days a week, or let employees work at a satellite office closer to home. Companies can also permit flexibility in commuting time for example, allowing the employee to come in earlier or later to avoid idling in rush-hour traffic.
Have gas prices become an issue in recruiting employees?
The majority of the executives polled (66 percent) said that it has not, but 22 percent noted that job applicants are less willing to make lengthy commutes and 11 percent said that candidates are seeking higher salaries because of the high gas prices.
Why should companies help their employees in this area especially if majority of executives said rising gas prices haven’t impacted their recruiting efforts?
The bottom line is that this issue provides employers with an opportunity to boost morale. Companies can’t control gas prices, but they can have an impact on the way their employees feel about it in relation to their job. It is a matter of showing employees that their employer cares about their needs, and is willing to help even in small ways. This goes a long way in creating staff that is loyal to the company and is happy to work there.
RYAN SKUBIS is a senior vice president of the Chicago Region for Robert Half International (www.rhi.com), a leading staffing service specializing in accounting, finance and information technology with more than 330 locations throughout North America, Europe, Asia, Australia and New Zealand. Reach Skubis at (312) 616-8200 or Ryan.email@example.com.
“As more projects and programs take up more time and capital in business, it is becoming critical that these projects are selected effectively by use of a portfolio system that attaches priorities to each project or program,” says Joiner.
Smart Business spoke with Joiner about the importance of creating a project portfolio management system in a business.
Could you define a project portfolio management?
Project portfolio management is often done in many businesses already without the label. It is simply making sure that the projects and programs that are being done are in line with company’s goals. There is a hierarchical relationship among the various elements: projects form programs, and projects and programs form portfolios.
Project portfolio management exists to ensure the effective selection of projects and programs.
Why is all this important to a business?
Because businesses have limited time and resources. Project portfolio management adds a dose of reality to the whole process.
For example, projects can come from many sources. The task is to make sure the projects being implemented are in alignment with company goals and strategy. It is not uncommon for pet projects to be approved and implemented, whether in line with company needs or not. An effective portfolio management system will minimize the implementation of these nonessential projects.
Creating a project portfolio helps the business align the projects with reality that is, with the resources available in the form of money, time, personnel and equipment, to get the project done.
Who should be responsible for the project portfolio management?
The portfolio management function is generally the responsibility of a senior manager or a management team. It’s a senior function and not something that can be done very well by a computer. This suggests the eventual creation of the job of portfolio manager, making it a complementary position along with marketing, engineering, manufacturing, and so on. The function of this portfolio manager position is to make sure the company is spending money on the right projects.
What are the first steps in creating a project management portfolio?
First, an inventory of projects and programs must be taken. It should be an actual index of the projects and programs that are happening or are in the planning phase. These projects and programs must be prioritized and some projects weeded out or selected for a later date. You may have 150 projects, but you can’t do all of them this year; maybe you can do 50.
Someone has to decide which projects need to get done that the company can afford to do, and which support its strategy. A portfolio is a way to do that it is an evaluation and screening function that takes a lot of judgment and experience, which is best done by someone in senior management.
What are the top advantages to creating a project portfolio management system in a business?
The business will know where it stands in terms of the projects that are going on. Without it, businesses are operating in the dark and are probably spending more of their money and resources on projects that may not be furthering corporate objectives.
It helps rein in costs and personnel time and helps company focus on the projects that are really important and have a good ROI or meet other strategic objectives.
Are there any disadvantages or reasons not to create a project portfolio management system?
A company may not be large enough to have a formal structure for it and no need to appoint a person as portfolio manager. But even in very small companies, someone somewhere needs to decide which projects need to get done. In small companies, that is usually the business owner. So it is helpful to go through this exercise (of taking an inventory of your projects and prioritizing them), even if a company only has a handful of projects.
JIM JOINER is the director of the Project Management Program at the University of Texas at Dallas School of Management. Reach him at (972) 883-2652 or firstname.lastname@example.org.
“It’s much easier to analyze a company’s profits if you break the data into smaller segments,” says Shaffer. “Once the data is segmented, it often turns into information that an owner can use to make good business decisions about increasing profits.”
Smart Business spoke with Shaffer about the way businesses traditionally make decisions about increasing profits, and how using segmented business data is a more effective alternative.
Could you explain why you believe cost-cutting or lowering prices is not a good solution to increasing profits?
Cost-cutting, while beneficial in the short-term, is not a viable long-term strategy because it ultimately damages current customer relationships since it reduces the ability of the company to meet customer needs. Overhead costs are important investments that allow the company’s profits to grow. Lowering prices is not a good alternative because this means that volume needs to increase in order for profits to remain the same or increase.
The better alternative is to segment and analyze the company’s financial data. If you look at a company’s financial statement, you can determine the company’s gross profit percentage, which is just an average. What most business owners want to do is figure out how to increase this average. This is where business segmentation comes in and becomes a powerful tool.
What is business segmentation?
You can slice, or segment, good data in a number of ways.
For instance, you can segment the gross profit by customer, by product, by customer annual sales, by product annual sales, by channel, by market or by geography. Often, when this is completed, an owner finds that 80 percent of the profit is coming from 20 percent of the sales (the 80/20 rule).
For example, let’s say 49 percent of XYZ’s customers bring in a gross profit below $750 and 7 percent of the company’s customers have sales or gross profit greater than $5,000 per year. The question is: should a company treat these two customers equally? This, of course, is a management decision. And an important one if a company is looking to increase profits.
How can a business owner use this business segmentation to increase profits?
Once the data is analyzed, the business owner and managers need to look at the smaller clients and determine what to do with them. Should these customers be dropped? Should there be a prepay option (which eliminates collection costs) or other special provisions that increase the gross profit coming from these smaller clients? These are options that the business owner and management need to carefully consider once the data analysis is completed.
It seems like a lot of judgment calls need to be made once the data is segmented, is that correct?
That’s right, because sometimes just looking at the hard data is not enough, and the business owner needs to dig deeper to find the real story of its profits.
For example, the invoice cost of a product may not necessarily be the true cost. When 20 percent of a distributor’s products arrives damaged and spoiled, the average cost per product sold should be increased by 20 percent if the items cannot be returned.
Another example is freight costs, which are often allocated to products based on purchase price; however, this may not be indicative of the true costs. Large, lower-cost items shipped in from abroad are most likely not absorbing the fair share of the freight costs, while higher-priced, smaller items are probably absorbing too much.
What are some other incorrect assumptions that can be made about the segmented data?
In keeping with the above example of XYZ company: 7 percent of the customers have gross profits in excess of $5,000 so one would think all of these customers should be treated the same. What if one of these customers has 3 orders per year and the other has 3,000? What if one returns 10 percent of the shipments and the other never does? What if one pays within 10 days and the other takes 90 days (and getting longer). Typically, just looking at the gross profit dollars does not give the full picture.
“A virtual CFO can step in and perform many of the functions of an in-house CFO,” says Gary Isakov, CPA and director of Entrepreneurial Services for SS&G Financial Services, Inc. “Hiring a virtual CFO is a cost-effective alternative for many small to mid-sized companies that desperately need the services of a CFO but can’t afford the salary, benefits and perks of hiring one.”
Smart Business spoke with Isakov about the benefits and downsides of hiring a virtual chief financial officer.
What is a virtual CFO?
A virtual CFO is a service provided to smaller business that cannot afford a full-time CFO or think they can’t keep a full-time CFO busy. A CFO reviews and assists the work of these individuals and serves as a visionary to guide the company. He or she takes the financials to the next level analysis and concentrates on the creation of budgets and projections.
While a virtual CFO’s work is done through the computer or by phone, many virtual CFOs also meet with their clients on a quarterly basis, usually at the quarterly management meeting, where the virtual CFO presents the financial picture of the company to the owners and leadership team.
Outsourcing the accounting functions of a company and hiring a virtual CFO often go hand-in-hand and often work very well for a company that does not want to go through the trouble and expense of having these functions in-house.
What are the benefits to a business to having an off-site virtual CFO?
A virtual CFO gives the business owner an objective perspective on the business. The beauty of a virtual CFO is that a company has at its disposal a person with not only a wealth of financial knowledge, but a person who, by virtue of his or her experience, understands many industries, business matters, and tax implications all on an ‘as needed’ basis.
A virtual CFO can be very flexible and take on additional responsibilities that may go beyond the scope of an in-house CFO. For example, the virtual CFO may have access to a human resources consultant who can take on the burden of finding accounting staff by taking resumes, scheduling interviews and doing background checks. By the nature of his or her role, the virtual CFO also may have access to a variety of bankers and financial advisers for a company’s financing, pension plan advisers and health care benefits consultants. Using the virtual CFO’s resources and contacts takes an enormous burden off the business owner, who may neither have the contacts nor the time to look at all the options.
Are there any disadvantages of having a virtual CFO?
Interestingly, while one of the benefits of hiring a virtual CFO is cost, one of the disadvantages may also be cost. Most virtual CFOs bill on an hourly or by-project basis. Some projects can be very complex and require additional time that can get costly. However, the cost benefit of using a virtual CFO can outweigh the cost in the long run.
What can a virtual CFO do that a full-time CFO cannot do, and vice versa?
A virtual CFO and a full-time, employed CFO can essentially do the same for a business. The advantages that a virtual CFO brings to the table are: an objective point of view, a wealth of industry information, and a bird’s-eye view of business trends. A virtual CFO will most likely represent a number of different businesses and industries. While they won’t share proprietary information, they will share trends in the industry that can be very valuable to the business owner. A full-time in-house CFO may not be aware of all the resources that are available to help with a project, and a virtual CFO has all of these resources and consultants at his or her fingertips.
GARY ISAKOV, CPA, is the director of Entrepreneurial Services at SS&G Financial Services Inc., a Cleveland accounting firm. Reach him at (440) 248-8787 or email@example.com.
If you think this nightmarish scenario will never happen at your company, think again, says Reed Archambault, an attorney with Newmeyer & Dillion LLP in Newport Beach. “Recent studies show that employee embezzlement has become so widespread that that it accounts for a majority of business losses suffered by employers,” says Archambault. Some estimates indicate that more than $600 billion is stolen annually, or roughly $4,500 per employee. A 2003 Price Waterhouse Coopers survey estimated the fraud loss per company at $2.2 million — 60 percent from employee theft.
Smart Business spoke with Archambault about how business owners can protect themselves from employee theft and the right steps to take once theft or forgery is suspected.
What types of employee embezzlement are the most common?
The ways employees embezzle money obviously vary. But generally, the schemes involve larceny, skimming or fraudulent payments.
Larceny is easiest to detect because the cash has already been recorded on the books and adequate controls usually exist.
Skimming is the embezzlement of cash from an entity prior to its being recorded on the company’s books. Skimming can take the form of sales skimming, in which an employee has the customer pay him/her directly for goods or services. Receivables skimming is when the amount owed is reduced on the books by write-off schemes.
The last category is fraudulent disbursements. These can take several forms, including billing schemes, payroll schemes, register disbursement schemes, expense reimbursement schemes and check tampering.
Why should owners, CEOs and CFOs worry about employee theft?
Because, sooner or later, every company will suffer from employee theft. When it happens, the theft has ramifications that go beyond financial loss. There is also a risk of jeopardizing customer/client confidence, risk of decreasing employee morale, and even a risk of liability (and potential fines) because of underreported income.
Public companies are required under Federal law (Sarbanes-Oxley) to evaluate and test the design and operating effectiveness of antifraud controls on an annual basis. However, regardless of whether it is a public or private company, companies need to have an antifraud plan in place. Any company can be exposed to its own liability or loss because of a theft.
How does a company manage against these risks?
Every company — public or private — needs to develop a fraud avoidance and assessment plan, which is an effective tool for an organization to use to identify its vulnerability and to make informed, cost effective decisions on how to prevent and detect employee theft and fraud. Proper planning helps ensure that the matter is properly handled, minimizing the exposure to the business and its officers and directors and maximizing the chances of a full recovery.
What does a fraud avoidance and assessment plan contain?
A comprehensive fraud avoidance plan usually includes some or all of the following elements.
- Pre-employment and periodic background investigations.
- Check safes and access passwords for computers.
- Anonymous reporting systems.
- Separate accounting functions.
- Internal and/or external auditors.
- An audit committee with the responsibility of implementing an effective ethics and compliance program that is periodically tested.
What is involved in the investigation?
If the loss is potentially large or the theft appears complex, the employer should seek the advice of the company’s risk manager and an experienced legal counsel. Obtaining good legal advice and using experienced professionals maximizes the company’s chances of avoiding unnecessary disruptions to the workplace and increase the possibility of recovery.
Without the right advice, a bad situation can grow worse. Accusing an employee without these first steps could result in important evidence lost, innocent people falsely accused, careers jeopardized and the organization sued for libel, slander or wrongful discharge. Legal counsel also can assist in assessing the need for additional experts, including forensic accountants and investigators.
Experienced coverage counsel also can help evaluate the company’s rights under its insurance policies. Fidelity and commercial theft insurance policies generally require the insured to provide prompt notice and to furnish a sworn proof of loss within a short period of time. Business owners should approach this with caution, since the way a theft is categorized (for example, if theft is covered but forgery is not) can result in coverage being denied.
REED ARCHAMBAULT is an insurance coverage attorney with Newmeyer & Dillion LLP (www.newmeyeranddillion.com), a full-service business law firm with offices in Newport Beach and Walnut Creek, Calif. Reach him at (949) 271-7210 or firstname.lastname@example.org.
Is your business going through changes? Has it recently acquired a company, merged with another business, or is it in need of some cultural adjustments to address the downturn in the economy?
The best way to address changes within a business is to gather the best and brightest members from each department to work on the crafting and implementing of new goals.
“High-performance teams help create business game plans that make sense and address the big picture,” says Jim Scholes, Vice President of Human Resources for Talent Tree, a staffing company based in Houston.
Smart Business spoke with Scholes about the advantages of creating high-performance teams and how to create such a team in your own business.
What are some of the top scenarios where it would be wise to create a high-performance team?
A major change in organizational culture, such as a merger, acquisition or a decision to take a business to the next level; new product or service offerings; new corporate direction, such as taking a business nationwide; budget cuts, downsizing or poor economic times; and major capital expenditures or changes in funding or revenue stream.
How does creating a high-performance team help a business get through these challenges?
By including key leaders from your company’s departments, it is more likely that the team will understand and act on the bigger picture. Working collaboratively this way helps to promote cooperation and commitment and, in the end, will improve the quality of a product or service because everyone has ‘bought in’ to the changes.
It also creates common goals that are agreed upon and make sense to the team’s members, which helps it work collaboratively toward those goals.
Using the high-performance team approach, by the way, isn’t an indication that the company is in financial trouble or under stress. It is a great technique to use whenever the company is undergoing any kind of change even positive change, such as a new marketing image, or a new product or service offering, or during expansion. A high-performance team can be assembled and come in quickly to effectively put a plan together that is more creative and addresses many more different elements than plans made with only C-level executive input.
What does a high-performance team look like?
It is a small group from about seven to 12 people from all levels of the organization, from the hourly front desk employee to the CEO. It should also include leaders from your sales, marketing, human resources and finance departments.
The team, however, needs more than good will and a desire to get things done. It should also include a coach or a moderator who has experience building high-performance teams and has the tools and knowledge to move the team toward its goal. The coach can be hired from the outside or be an internal employee with this kind of experience.
What are some other key components to a successful high-performance team?
The participants need to understand what the shared goals are and the desired end results. The team shouldn’t be created privately or in secret, since the rumor mill in your organization will form its own assumptions often not positive if employees are not told the truth. Communicate openly with your employees about why the group is being formed and the desired outcome. This will generate good will and will avoid rumors that can be counterproductive to your goals.
What happens once the high-performance team has reached its planning goals?
Then the CEO has to decide if the company needs a separate team for implementing the goals. The implementation team can consist of the same members of the planning team, but keep in mind that sometimes implementation requires a different skill set. Once the goals are met, the role of the high-performance team is not over. Today’s business world climate requires constant improvement within an organization. The team’s work is never done and it must meet periodically to tweak and improve its goals.
What are the downsides to not creating a high-performance team to address challenges or changes in a company?
Well, you can bet your competition is creating these teams and benefiting from it. With our economic circumstances at the moment, you can be sure that there will be fewer businesses when we come out of the other end of this economic crisis.
Companies that create these kinds of teams and tap into the potential of their entire work force will be the ones, I believe, that will survive.
JIM SCHOLES is Vice President of Human Resources at Talent Tree, a staffing company based in Houston. Reach him at (713) 789-1818 or email@example.com.
If you invest in the stock market, you should pay close attention to Federal Reserve actions. “Investors need to consider Fed monetary policy to help guide investment decisions,” says Gerald Jensen, professor of finance at Northern Illinois University and an author of a number of studies that track security returns and Fed policy decisions.
In a recent CFA Institute study, Jensen and his co-authors showed substantial benefits associated with following a rotation strategy predicated on Fed policy.
According to the study, when Federal policy is expansive, i.e. when the Fed is decreasing rates, stock values generally increase, while stocks tend to perform poorly when the Fed is increasing rates (a restrictive Fed policy). These patterns are exaggerated for cyclical stocks, which creates the potential for investors to gain from a sector rotation strategy.
Smart Business spoke with Jensen about his research and its implications in the current market environment.
During the period of the study, how did stocks perform when Fed policy was expansive versus restrictive?
Between 1973 and 2005, during expansive policy periods — that is, when the Fed was lowering rates — the return averaged 17.4 percent. In contrast, during periods of restrictive policy — returns averaged 5.3 percent. So, when the Fed was lowering rates, stock returns were more than three times higher than the returns earned when the Fed was raising rates.
Has the relationship between Fed policy and returns held true during the recent turbulence in the financial markets?
The relationship has been surprisingly consistent throughout history but has broken down considerably in recent months. This can be attributed to several unforeseen developments. First, financial institutions greatly expanded the leverage of their operations through the use of financial instruments, such as collateralized debt obligations (CDOs). Over the last few years, these instruments experienced tremendous growth, which was then followed by a dramatic unwinding as credit concerns caused investors to lose confidence in the instruments. The Fed’s effectiveness in influencing the financial markets was diminished by the rapid development and ultimate collapse of this market. Second, after many years of increase, real estate prices dropped substantially over the last couple of years. Finally, commodity prices, and especially oil prices, experienced an unprecedented increase in the last two years. These three factors combined to create a ‘perfect storm’ situation, which has been devastating for the financial markets.
What future relationship do you project between Fed policy and security returns?
U.S. financial markets are extremely resilient, and I expect that markets will resolve the problems that currently exist. Some stabilization has already occurred. Yet, it will take at least six months before we completely recover from the extreme shock that the markets faced over the last several months. I believe we’ve hit bottom and are on our way to recovery. I expect that the effectiveness of Fed policy in impacting financial market activity will gradually return to normal.
What does research suggest about investing in precious metals and other commodities as a hedge against all this instability?
People have always viewed precious metals, such as gold, as a good safety net during periods of uncertainty. But precious metal prices, like stock prices, have traditionally exhibited a strong link with Fed policy.
Historically, the return on commodities, in general, and precious metals in particular, has been poor when the Fed has been decreasing interest rates. So despite the fact that many people are feeling jittery and want to put their money in a ‘safe’ investment, investors should be wary of increasing their allocation in commodities and precious metals during the current period. History suggests that the time to buy commodities, including precious metals is when Fed policy is restrictive, that is when the Fed is raising rates.
With the upcoming election, are there any political factors that investors should take into account?
People like to tie market performance and politics together, but my recent research reveals links that are surprising. A commonly held belief suggests that stocks do better in periods of political gridlock. But our research shows that the gridlock theory is a myth, and market performance doesn’t differ significantly whether the government is in gridlock or harmony (where all branches are controlled by the same party).
We’ve also found that the third and fourth year of a presidential cycle are traditionally good years for investors. Why? It turns out that Fed monetary policy provides a reasonable explanation. Specifically, Fed policy has historically been expansive in the last years of a president’s term and restrictive at the start of the term. This pattern prevailed during the most recent presidential cycle; however, the perfect storm scenario may have caused returns to deviate from the normal pattern.
GERALD JENSEN is professor of finance at Northern Illinois University. Reach him at (815) 753-6399 or firstname.lastname@example.org.
U.S. staffing firms employ almost 3 million people per day across all industries, according to a survey conducted by the American Staffing Association (www.americanstaffing.net). This vast work force can provide a pool of talent that can be tapped into by businesses to fill a variety of part- and full-time jobs from secretarial to middle-management positions.
“Tapping into this resource allows a business to ramp up at a moment’s notice,” says David Lemoine, Regional Vice President for Talent Tree, a staffing company based in Houston.
Smart Business spoke with Lemoine about the steps you can take to select the right staffing firm for your business.
In what industries/jobs do staffing firms typically specialize?
The main categories are as follows:
- Office and clerical
- Accounting and payroll
- Information technology
- Nursing and health care
Light industrial (jobs such as forklift driver, picker, packer)
- Skill craft workers (such as manufacturing plant workers)
- C-level executives
Staffing firms can sometimes specialize in two or three of these areas. But it is rare that a staffing company can provide qualified employees for all these positions. Often, a business may have to rely on more than one staffing company for all its needs.
What are the steps to consider when selecting a firm?
Your human resources department can go through these steps. For smaller firms, this responsibility can fall to the general or office manager.
- Meet face-to-face with representatives of the staffing firm. This is important to start developing a relationship with the firm and for its representatives to get a good understanding of your business and its culture.
- Get references of current customers. Ask current clients how the staffing firm has helped, particularly with customized solutions to unique problems.
- Make sure the firm is stable and credible. Do not select a firm that has just started in the business. Make sure there is low turnover internally so that you can ensure that you will have continuity with representatives.
- Have the firm give you a checklist of what it provides with its services. Some important elements include: background and reference checks, social security verification, drug screening, workers’ compensation certificates, standard terms and condition of contract.
What are some red flags to look out for when selecting a staffing firm?
The biggest red flag is when a staffing firm competes solely on price. The fact is that costs and profit margins are pretty much the same for all staffing companies. If a staffing firm is coming in at 15 percent less than its competitors, you bet they are cutting costs and making shortcuts somewhere, such as not providing drug screenings or background checks.
What can a business owner do if the firm is not the right fit or the people they are sending are not a good fit?
This is why it is important to take time with the staffing company on the front end. If a fit isn’t right, you need to call the staffing company right away and have the employee replaced.
You also need to have a conversation about what went wrong and why. Was there a miscommunication? How did the staffing company miss the mark? Was more training needed? Did the employee not have enough experience? You can opt to give the staffing firm another chance to correct the situation. If the same mistake happens again, you need to move your business to another firm.
What distinguishes an average staffing firm from one that is superior?
Many businesses don’t really understand what a staffing firm can offer. They believe staffing firms exist to offer short-term solutions to pressing employment needs. But businesses need to realize that the best staffing firms can provide a wealth of advice that is outside the realm of simply filling a job slot.
For example, firms can provide a wealth of reporting statistics, such as how much a business is spending on overtime (and if the money would be better spent in hiring more employees) and the cost of vacancy. The key is to mine the firm for this information; a representative can often help a business uncover problems involving human capital issues, such as high turnover rates. This opens up possibilities for business owners to understand their business at a deeper level, and make human capital decisions based on the numbers, rather than instinct.
Regional Vice President
The days of finding the right job candidate by simply taking out a classified ad in your local newspaper are over. Today, serious job recruiters must attend networking events, surf the Internet’s job boards and actively participate in business and social virtual communities, such as LinkedIn, in order to root out the right candidate.
“Businesses need to build a good employment ‘brand’ and use the best recruiting techniques to woo candidates,” says Ruth McCurdy, Vice President for Corporate Connections at Talent Tree, a staffing company based in Houston.
Smart Business spoke with McCurdy about some of the top recruiting techniques business can use to rope in top talent.
What are some of the assumptions businesses might make about recruiting talent that is counterproductive to finding the right candidate?
In fields where companies are vying for the same candidate, it helps to get creative. There are many good workers looking for jobs but who may not be in a competitive industry. Many of these people can be retained. College graduates with little or no experience are often excellent candidates for many positions. In this market, business leaders need to have flexibility and look more at the candidate’s ability to fit into the corporate culture and his or her ability to be trained.
Another opportunity that is often overlooked is passive job candidates that is, people not currently in the market for a new job. In the right circumstances, these workers can be persuaded by a new and better opportunity. That’s where a company’s strength of its ‘employment brand’ comes into play.
Can you explain how a business develops an employment brand?
It is similar to a marketing brand, which companies already have. Look at Google it has a strong employment brand. The company has been in the press enough so that the average job candidate has heard about the perks that come along with working for that company and what the corporate culture is like. Employment branding is a mindset that changes a business owner or CEO’s thought process about recruiting: It is not about filling open positions but about constantly selling candidates the idea of working for your great company. This is done effectively through positive stories told in word-of-mouth networking either in person and online and through your company Web site. It is important to have a recruiting page on the site for this kind of information. A business needs to put as much an emphasis on getting the right people in the door as getting customers.
In addition to developing a strong employment brand, what are other top recruiting techniques businesses need to use?
- Employee referrals (with incentives given)
- External referrals (through networking)
- Continuous online sourcing (job boards and other business networking sites)
- Posting openings (online and off)
Could you tell us more about online recruiting?
Businesses need to actively engage in social and business networking sites because people who are connecting online know people who are looking for work. Some networking sites have job boards and others have subgroups for job networking. It is the same idea of networking in a community, such as a Chamber of Commerce gathering or an industry event, except broader. The Internet allows businesses to open up to the entire world and connect with potential job candidates. Plus, many of these sites are free.
Using other techniques, such as the Google alert tool, can be a wonderful source of information. For example, you can set an alert for ‘layoffs’ and the name of your industry or field, or even a company, to get the heads-up on when candidates will be entering the job market. You can also set key words for what you are looking for in a candidate’s resume. You will be amazed at the kinds of valuable information you get in real time.
What about the good, old-fashioned classified ad?
It used to be that classified advertising was the end all, but this way of looking for candidates has become very expensive and, frankly, not broad enough. Research has shown that most job candidates go to their computer first when they are looking for work.
Recruiting for the right candidate today has to be intentional and strategic, and using more than one method is the best way to do this. Businesses have to be proactive not reactive. A proactive approach will build a candidate pool for when you are ready to recruit; the old reactive approach always leaves businesses scrambling to fill a slot.
Risks from natural disasters, theft or vandalism exist for businesses anywhere in the world. As businesses operate more globally (each year more U.S. businesses conduct at least part of their operations abroad), owners need to realize that risk varies depending on where business is done.
Some countries have inadequate water supplies to put out fires or may not have reliable power supplies to trip security systems. Code enforcement may be lax or even nonexistent. Plus, some continents are more prone to extreme weather, such as tornadoes, tsunamis and earthquakes, or other risks such as terrorism or political unrest.
Thus, you may be exposed to financial disaster if your insurance policy does not cover your operations in another country, says Leo Walter, an executive vice president for Aon Risk Services Inc.
“Today, many companies, including small businesses, may have expanded their reach globally and rely on overseas operations for their supply chains or finished goods,” Walter says. “It only makes sense that these investments should be adequately protected.”
Smart Business spoke with Walter about options companies have in assuring that their assets in the U.S. and abroad are covered.
How can companies with overseas operations ensure that investments are protected?
The first line of defense is to assess the risks a company may be exposed to in its overseas operation, and then try and mitigate those risks. Have a serious conversation with top executives in your company about the risks you’re willing to bear and what risks need to be protected by insurance. Several insurance policies can come into play overseas, including property and marine insurance, as well as political risk insurance, which protects real and personal property. Basically, there are several types of insurance products that can cover overseas operations, including admitted programs, controlled master programs and nonadmitted policies.
Could you explain these specific types of insurance policies?
It is important to pay attention to a foreign country’s insurance requirements because some places require businesses to purchase and maintain a ‘local admitted policy’ that may not include the type and amount of coverage needed. These policies can be beneficial because they do comply with a country’s particular insurance regulations and allow claims to be made locally. A ‘controlled master program’ (and/or marine program) lets a business maintain a consistent insurance level locally and internationally, no matter where the business is in the world. It also allows local admitted policies when necessary.
For many companies with limited overseas operations, a ‘nonadmitted program’ is the most effective vehicle for providing international coverage. The phrase ‘nonadmitted’ refers to policies covering overseas exposures that are placed in the U.S., with all premiums and most claims paid in the U.S.; no local policies are arranged overseas to comply with local insurance laws and regulations.
Generally, a nonadmitted program is utilized by companies that meet specific criteria, including:
- A U.S. company that does not have a
local subsidiary, taxable entity or other permanent legal presence in those countries
with restrictive insurance regulations.
- Local exposures do not include ownership of vehicles, employment of local
nationals or other exposures that may fall
under a country’s mandatory insurance
- A U.S. company that operates overseas
only through branch offices, joint ventures or
- Overseas assets are carried on U.S. or
other offshore company balance sheets.
- Loss payment does not need to be taken
in the overseas location.
- Admitted insurance is not required by
- Evidence of admitted insurance, such as
certificates of insurance or shipping documentation for customs purposes, is not
To complicate matters further, many countries have their own rules about ‘admitted’ and ‘nonadmitted’ insurance and their own definitions of these terms. So it is important to check with a broker that works with international policies and understands international insurance legislation. Companies’ foreign assets are also at risk for potential losses resulting from confiscation or physical damage from political violence.
What does it take to put together a successful insurance plan for U.S. businesses with operations overseas?
There needs to be a detailed review and assessment of all physical exposures (internal and external) on a worldwide basis. You also need to assess your company’s tolerance for risk. A detailed and tailored strategy then needs to be developed. To execute global programs, global corporations need a brokerage partner that is aligned with their interests and country locations and that is able to share, plan and execute their strategy across borders. It’s important that the foreign offices are owned by the insurance brokerage firm for consistency and control factors, as opposed to a network of affiliated offices.
LEO WALTER is an executive vice president for Aon Risk Services Inc. (www.aon.com), a risk management, human capital and rein-surance consulting firm, and the largest middle-market insurance brokerage firm in the world. Reach him at (330) 571-3152 or at email@example.com.