According to Kim Sharkey, vice president at The Graham Company, no business is exempt from the possibility of a workers’ compensation claim. “I think every employer in every industry has to worry about it,” she says. “Unless you’re in a firm where most of the staff is sitting behind a desk at a computer, but, even then, you have to worry about such things as carpal tunnel or other unexpected injuries. So I think it impacts everybody’s bottom line.”
Smart Business spoke with Sharkey about managing workers’ compensation claims and the accompanying costs.
What drives workers’ compensation costs and how can they be controlled once a claim arises?
As far as the claims costs themselves, they’re driven by a lot of factors, including medical costs, medical inflation, how well claims are managed by insurers and if you have a return-to-work program. When controlling costs on the back end, the biggest thing is to identify a contact within the organization that’s going to oversee the claims management process. We typically call them claims coordinators. Most of the time they’re involved with human resources type functions already, and they take on this aspect as well. That person works to establish a solid claims management program, part of which is developing relationships with physicians and providers. We help our clients set up a panel of physicians so that when a person gets injured they’re sent to an occupational health provider that knows our client’s business. The goal is to work with those providers to get the person back to work as soon as possible. Returning to work stops the ‘lost wage’ or indemnity component of a workers’ compensation claim.
Is it common for an employer to have relationships with people in the medical field?
Absolutely. We stress that our clients not only develop the panels and have them posted for the employees, but that they also get to know the providers with whom they’re working. We want them to make phone calls and visit the plants and locations so they can see the types of jobs the employees do. Medical providers need to understand the client’s return-to-work program and modified duty, which enables the employee to come back to work even if not fully recovered, and make sure that the physician sees what types of jobs are available with restrictions to get the employee back in the work place immediately.
How much control does the employer have over a workers’ compensation claim?
Ultimately, the relationships with the medical providers are key, because they control how long that employee stays off of work. They treat, rehab and manage the injury. Having the employer work with that physician to make sure that any accommodation can be made to get the employee back into the work place as soon as possible is the key to controlling that overall cost of the claim.
What if the employee is unable to return to work?
If there’s a situation where an injured employee has permanent restrictions, then there are a couple of things you can do. If the employer can accommodate those permanent restrictions and keep the employee working, that would be the first choice. If returning to work would cause an undue hardship or the work place can’t accommodate the worker’s permanent restrictions, in Pennsylvania we have to find that person a job elsewhere in order to get them off of workers’ compensation benefits. If another job is not available at the employer, then we sit down and talk about how maybe a potential settlement would be the best cost control measure. We try to help our clients with a cost benefit analysis of what happens if you can’t take the employee back, if we have to search for another job elsewhere, or if we settle the claim.
How can an employer keep tabs on injured employees?
The biggest key is that centralized coordinator. He or she is responsible for keeping in touch with employees and not just relying on the insurance company or third-party administrator. Find out how they’re doing. Let them know you’d like to have them back as soon as you can and will make a job available for them. You want to make them feel part of the company and you want to make them feel that they do have a job to which they can return. Staying on top of that goes a long way for the ultimate cost of the claim. Stay in touch with them and the physician and make sure that they’re all working together to achieve the best outcome.
Anything else an employer should know?
When accidents occur, it is critical to have solid accident investigation procedures. Ultimately you want to find out why the accident occurred, determine the root cause and then put things in place to prevent that situation from ever happening again. We do a lot of trending and analysis for our clients, analyzing where the claims are coming from and looking at the accident investigations to make sure that all types of programs are put into place to prevent the same incidents from happening. The bottom line is that employers do not want employees to get injured and they want to do whatever they can to create a safe work place.
KIM SHARKEY is vice president of The Graham Company in Philadelphia. Reach her at email@example.com or (215) 701-5278.
“Dare to be great.”
Those four words might sound like a slogan from a break room motivational poster, but to Bill Whitmore, they are four words with which he has done more than just tack to the wall.
He has placed those words in the hands of every employee at AlliedBarton Security Services in a very real way.
Upon being hired and entering training at the $1.2 billion private security provider, each employee receives a “Dare to be Great” booklet. It outlines the company’s core values pertaining to leadership, vision and teamwork, it includes some of Whitmore’s personal beliefs on management, and it gives new hires something of a path to follow to become a working cog in the AlliedBarton machine, which has about 50,000 employees nationwide.
For Whitmore, chairman, president and CEO of AlliedBarton Security Services, “Dare to be Great” is about keeping his work force on the same page and giving it the tools to be successful.
“We describe the core purpose of the organization, the core values,” he says. “We actually list what our ideal culture is. Then we have leadership nonnegotiables, we have operational nonnegotiables and security officer nonnegotiables, and we have to live by those.”
Whitmore says you can leave nothing to chance when it comes to building and communicating your culture. Employees must know what is expected of them and know that the company will support them as they do their jobs.
If you have well-coached, enabled employees, chances are you will have satisfied customers who keep coming back to your company. But it all starts with the words and actions that cascade from the CEO’s office.
A singular vision
Driving a finely tuned culture through an organization involves far more than just standing on your proverbial soapbox and preaching team unity. Whitmore says it’s as much about feedback from employees as it is about what you tell them.
If you don’t give employees a voice in the direction of the company, your chances of getting them to buy in to what you are saying go down, and that factor increases exponentially when you’re dealing with a company of 50,000 people.
In order to give everyone at AlliedBarton including the security guards who provide the company’s end product a chance to have a say in the company’s vision and values, Whitmore employed a third-party research firm to gather data in advance of producing the “Dare to be Great” booklet.
“We hired a third-party firm to go out and do online and in-person focus groups,” he says. “We didn’t do all 50,000 people, but we did do thousands of employees, enough to validate the results.”
The data were evaluated and processed with the help of a strategic planning specialist, who helped compile the “Dare to be Great” booklet.
“Dare to be Great” is a starting point for Whitmore, but it’s intended to be more of a companion guide and quick-reference tool. The most important opportunities to communicate your vision and culture are the face-to-face meetings with your managers and employees. It might not be practical to make face-to-face meetings your primary means of communication, but Whitmore says it’s the most effective means of getting your message across.
Periodically, Whitmore runs a series of leadership “boot camps,” designed to get the company’s various levels of management together and talking.
During those camps, Whitmore makes personal interaction a top priority.
“We were running a leadership boot camp (in May), and every evening I’d go out and do the Jack Welch thing, have a fireside chat with our managers,” he says. “When we do camps in Philadelphia, my wife and I have whoever attends come to our house for dinner.
“Frankly, it drives my wife a little crazy because we have a lot of them, but for a class of 60, we’ll have a buffet at my house and get people to speak and build teamwork. For a class of eight, we’ll sit around the dining room table and have dinner. But at every step, we’re trying to foster a sense of teamwork and let people know they’re empowered to act on behalf of the company.”
Whitmore says that after gaining a certain level of experience, business leaders form a kind of intuition about their company and their people. He calls it developing a “gut feeling,” and it factors heavily in how he manages his employees.
Among other factors, Whitmore places a high emphasis on getting to know his managers personally so he can properly direct them when they come to him with a question or a concern.
“Someone posed a question to me one time about a client, that our employees might be exposed to personal risk,” he says. “Employees and managers spoke to me; they said, ‘I’m really debating this. It’s a big client, a lot of money, but in my gut, I’m a little worried.’”
After listening to their concerns, Whitmore directed them back to the “Dare to be Great” booklet.
“I told them the answer is in there, and we ended up not taking the piece of business. Because if you do feel your employees are your most valuable asset, and you do care about them, you’re not going to expect them to do something you feel isn’t right. That’s how people recognize that they are valued.”
Recognition and engagement
Whitmore says there are two levels of employee recognition. And contrary to popular belief, he says money falls in the lesser of the two.
The first level is the tangible rewards, such as financial compensation and gifts. While the vast majority of employees would never scoff at a cash bonus or a gift certificate, Whitmore says you are missing the point if you think your employees are working hard because they want more material compensation.
The best employees aren’t driven by that first and foremost, he says, and he tries to set his own example.
“What I believe as the chairman and CEO, I don’t come to work thinking about what my paycheck is. I get engaged in our company, and I get excited to come to work to build the company and build a future for our employees and shareholders.”
That’s why the second level of employee recognition the intangibles is more important to Whitmore.
By intangibles, Whitmore isn’t referring to simple pats on the back or applauding someone at the quarterly all-company meeting. When Whitmore talks about intangible recognition, he is referring to reward by engagement.
The more an employee shows a willingness to work toward your company’s goals and objectives, the more that person should be involved in steering the company.
Whitmore says that type of involvement, in and of itself, is a reward to a truly driven worker.
“Don’t think of it in terms of the surface, in terms of somebody getting a pat on the back,” he says. “I’m going deeper than that. Here is an example: We have standing committees in the company. They could be on anything, be it risk, sales and marketing, technology. We rotate membership and invite managers to participate.
“If you’re working at a company and believe the company really values your input, you feel like you’re really creating value here. Not necessarily monetary value but a good customer relationship, a good employee touch.”
Whitmore goes a step further and gauges his employees’ level of engagement. As he did when AlliedBarton was compiling information for the “Dare to be Great” booklet, Whitmore has his staff send out periodic engagement surveys to field offices in various markets.
The object of the surveys is to give management a sense for how connected AlliedBarton’s employees feel. Low scores in a given market means that market gets more attention from headquarters. High scores will also make management sit up and take notice.
“If we come back in a market where employees feel extremely engaged, we want to take that manager and have that person help mentor others,” he says. “It’s a combination of hiring people, giving them the tools, programs and practices to keep people engaged, and the last thing we do is monitor their engagement.”
As the company leader, chances are you are always asking yourself how your company can be more efficient, how your employees can do their jobs better, and how you can draw up policies and procedures that are streamlined and effective.
But even with all the evaluating that you must do on a day-to-day basis, Whitmore says you can’t forget to look in the mirror.
That businessperson staring back at you needs occasional maintenance, too.
One of the traits Whitmore says he most admires in a president or CEO is curiosity. Good leaders are curious about themselves as much as or even more so than they are about the companies they run.
“If you’re not curious about yourself, about others, about how to improve, about how things work, I find that does not make for a good attitude,” he says.
Whitmore says a good leader wants frequent feedback on how he or she can perform better. When he recently attended a leadership conference, Whitmore picked up a stack of 360-degree personal evaluation forms. When he returned, he had just about everyone who knows him personally family, friends, peers, employees complete an evaluation of him.
“I felt I knew how I performed, how people perceived me, but I wanted to know, in an anonymous way, was I the person I thought I was?” he says. “That’s curiosity about your leadership skills.”
Whitmore wanted to know where he stood as a leader in the eyes of other people. He believes that if you aren’t a good leader in the eyes of those who follow you, then you aren’t a good leader, period.
That is why Whitmore believes in taking a people-first approach to leadership. Above all else, he says, it’s motivated, enabled, engaged people who will make your company successful, not necessarily the efficiency with which you do things.
Whitmore’s fundamental business leadership belief is this: Efficiency, prosperity and satisfied customers come when you have great people doing great jobs for your company.
“It’s not just about efficiency,” he says. “I think there are a lot of statistics that will show you that engaged employees perform better than disengaged employees.
“What I’m looking for is, are the employees really engaged, are they delivering great service to our customers? If you do that, efficiency is a byproduct. You can be very efficient and lose every customer you have. It isn’t the be-all, end-all. But if my employees are engaged, my fundamental belief is that they’ll deliver great customer service, and we’ll have good financial results.”
HOW TO REACH: AlliedBarton Security Services, www.alliedbarton.com
A lot of executives stress the importance of communication, but how many of them have their own blog? At least one does. Bob Kreider, president and CEO of The Devereux Foundation, keeps and maintains “The President’s Blog,” in which he keeps the organization’s 6,000 employees updated on the current happenings and future goals of the nation’s largest nonprofit provider of behavioral health care services. Kreider touches on everything from the organization’s mission statement to informational briefs on Devereux-relevant legislation in his blog, which is designed to be useful for both clients and employees.
Smart Business spoke with Kreider about why it’s a good idea to smile once in awhile.
Prove you know your business at every level. I don’t think a strong leader can be afraid of going into the details when necessary. You have to give your people room to operate and be successful.
But if it doesn’t feel right, you have to understand your business at the detail level well enough to go after a problem. If you show that willingness once or twice, it makes the quality of information you get in other circumstances better, if people know you can go into the details.
Keep your growth on pace with your resources.
The (pitfall) that seems most tempting in our business is growing too fast. Once you achieve a basic level of success, and you’ve proven your product, and you have access to capital, the temptation is to grow as fast as you can finance.
In our strategic plan, we lay out a 6 percent to 12 percent growth rate as the maximum sustainable rate for Devereux based on an analysis of our financial resources and our human resources. If we outgrow either one, that’s a formula for trouble.
You need an understanding of what limitations you have of your financial resources and human resources, what growth they can sustain as far as capital and additional work capacity.
Smile every now and then. The toughest challenge I faced in a senior leadership role was being a real person to my staff. I was trained as a lawyer, an investment banker, and I also am an introvert.
When I first joined Devereux, I was told by a key person in the organization that people couldn’t read me, and that was a very bad thing. In my prior jobs, that wasn’t a bad thing. But I was told I was scaring people.
So I learned to smile a little more, be more expressive, engage in small talk a little more. It’s made me more effective, and I know it’s made my team more comfortable.
Take the blame. The most critical and difficult times are obviously when something bad happens or a bad decision is made. You
need to acknowledge it, not look through rose-colored glasses; then move on.
Nothing builds a team like the senior person shouldering the most blame, saying, ‘I’m most accountable.’ And telling your team, you’re still batting .800, let’s minimize the damage and move on.
Don’t look in the rearview mirror. Vision is important. We all feel we’re in fast-changing markets, and the demographics of markets are changing.
You have to manage toward where the industry is going, not in the rearview mirror. You can’t manage based on history; you have to see the changes coming. That is important, but even more important is humility.
One of my favorite books is ‘Fooled by Randomness’ [by Nassim Nicholas Taleb]. (Taleb) makes the wonderful point that human beings naturally assume that when something happens, it’s because they caused it. My approach is, you’re never as good as you think or as bad as you think.
That’s a hard thing to do as president of an organization. When things go really well, it’s easy to stand up and take credit for it all. The flip side is if things go poorly, you really got stupid quickly.
Try to keep things in perspective and not react too much to temporary fluctuations.
Get feedback. When I joined Devereux, I had
never been involved in strategic planning. But I found I really enjoyed that process. I used that strategic planning process as a way to communicate with the organization.
I used it both to communicate how I saw the organization and the industry and where it was going, and also to listen to all levels of the organization and where they saw it going. There are a lot of important insights that our staff who are working with our clients every day can help me with.
Strategic planning is a wonderful way to create a shared vision of where we’re headed.
Every five years or so, we go back and put together where the vision is going; what are the critical elements we need to be ready to address. Then I go on the road and get reaction from the organization.
We have the process take a full year. It’s an iterative process that gradually hones into something that we hope a good percent, if not all, of the staff can buy in to and feel ownership of.
Offer a career, not just a job. Our strategic plan is focused around three areas. We want to be the provider of choice for the services we deliver, we want to be the charity of choice for our communities, and we want to be the employer of choice. In many ways, that is the most challenging one.
The service industries are going to be very competitive in terms of being able to attract an adequate, high-quality work force. We make a real investment in training and trying to offer all our employees a career path, a way they can see an interesting future at Devereux. Even if they can’t, the training will offer them a solid base for whatever direction they go.
We attract them with what it is we do. For the right idealistic person who wants to save the world helping others who have significant challenges, Devereux is a wonderful opportunity. We attract them with our mission and keep them with the training.
HOW TO REACH: The Devereux Foundation, (800) 345-1292 or www.devereux.org
In the current economic climate, employees rank among a company's most important assets. It makes sense that healthy people make for healthy companies. Yet, experts suggest preventable illnesses make up approximately 70 percent of illness and associated costs in the United States.
“Investing in your employees’ health is one of the soundest investments employers can make,” says Eugene Sun, M.D., M.B.A., vice president of Medical Affairs for HealthAmerica. “By initiating a health promotion program, employers can take important steps toward preventing unnecessary sickness.”
Smart Business spoke to Dr. Sun about why employers should be concerned about their employees’ wellness.
Why would a company invest in workplace wellness?
More and more health experts are turning that question around and asking, ‘How can a company not invest in the health of its employees?’ The evidence is becoming quite convincing that keeping employees healthy and on the job is worth the effort. After all, if you can reduce the burden of illness among your work force by preventing major causes of sickness, more of your employees will remain healthy and productive. You most likely will save money in the process.
What’s the real return on investment with worksite wellness programs?
That turns out to be one of the most incisive questions of all. In the last decade, large-scale studies on the effects of work-place health programs have shown a dependable bottom line. These studies show worksite wellness programs often result in a reduction of health care and insurance costs, as well as declines in absenteeism, injury rates, and improvements in performance and productivity.
One recent study showed that when employees used fitness facilities at least eight times a month over two years, hospital and clinic claims declined by more than 64 percent, physician claims dropped by 13 percent and claims for prescription drugs decreased by more than 9 percent. It’s encouraging to see when facts match your intuition; healthy people really do use health care less.
Have you seen an increase in companies investing in wellness programs?
Definitely. According to the United Benefit Advisors' (UBA) 2007 Employer Survey, the number of employers of all sizes and industries that are adopting personal health management strategies continues to increase. Roughly, 25 percent of all employers currently provide various wellness or health risk assessment programs, and an additional 50 percent of employers would like to add such programs in the future. In addition, employers now overwhelmingly believe there should be a difference in benefits or costs based on an employee's involvement in managing chronic conditions.
What would you say to an employer who says starting a worksite wellness program is too expensive?
Successful workplace health interventions don’t always need to be big-budget affairs. Most health insurers have a variety of health resources to make it easier for employers to start their own wellness program.
Ask your health insurer about integrating worksite wellness and benefit plan design through consumer-directed health plans. These lifestyle-driven plans reward healthy choices. One study found that employees in consumer-directed programs are 25 percent more likely to engage in healthy behavior and 20 percent more likely to participate in wellness initiatives.
Several excellent Web sites provide free information employers can use. Welcoa at www.welcoa.org/freeresources provides employee presentations, incentive campaigns, free reports and much more. Wellness Proposals at www.wellnessproposals.com is also a good place to start, as is the American Journal of Health Promotion at www.healthpromotionjournal.com.
Anything else an employer should consider?
Every little bit counts. The most cost-conscious program can help create a health-positive environment. When the goals are well-defined and the approach well-designed, success can be affordable. Furthermore, worksite health programs that appear to have only a modest, immediate result are of great value. Not only will the programs improve performance and satisfaction of current employees, good health and fitness programs tend to attract good applicants.
EUGENE SUN, M.D., M.B.A., vice president of Medical Affairs for HealthAmerica. Reach him at (412) 553-7385 or firstname.lastname@example.org.
Technology in business has evolved from being a tool to help master tasks, such as basic communications and
record keeping, to serving as a critical success factor in a company’s productivity, customer satisfaction, processes and profitability. Owners invest large dollar amounts in information technology (IT), and they expect a sizeable return-on-investment (ROI).
While companies spend considerable amounts on IT, their ROI depends on whether the owner has integrated technology into the business plan, rather than making it an afterthought. “Business owners should ask how technology will impact the company,” says Sassan Hejazi, director of Technology Solutions at Kreischer Miller. “Will it enforce their goals? What value will IT generate both quantitatively and qualitatively?
“Technology projects are really business improvement projects,” he says.
Obviously, investing in must-haves like billing or e-mail systems is critical. These rudimentary “cost of doing business” technologies are baseline components that must be upgraded. But innovative technologies that help a business become more “lean” will separate a company from its competition, Hejazi says.
Smart Business spoke to Hejazi about how to align your IT investment with your business strategy to realize a return through improved profitability.
Explain the difference between ‘must-have’ and innovative IT.
There are certain technologies that are essential to doing business, which should be world-class in terms of uptime, reliability and accuracy. Without them, it’s comparable to not having power. A Web site that isn’t functioning or e-mail that is down will inhibit customer service and your ability to communicate with vendors, customers and employees. Outages and security breaches are serious disruptions to your business. You have to make sure this technology is updated, and doing so is a serious investment for most companies. Still, this ‘must have’ IT won’t set you apart from your competition. That’s where innovative IT comes in. This is technology that will help you improve processes and profitability, and it should be closely linked with your strategic business plan.
How can IT increase a company’s competitive advantage?
First, it’s important to recognize that no two businesses are alike. When you consider ways to integrate IT into your business, you should evaluate the following categories: customers, suppliers, competition, employees and processes. What type of technology will enable your customers to do business with you more easily? Can you attract new customers by offering a certain technology, such as a customer service function on your Web site? What is important to your suppliers? Supplier transactions, shipping, receiving, accounting and other activities can be modified for convenience and ease. What is the competition doing? Also think about your employees and what technology capabilities they require to work productively. From there, review all of your processes and your operation. Are there areas where you could eliminate paper, waste, downtime, etc.? Finally, what ROI do you expect from this technology?
How do you measure a technology ROI?
Before you invest in any technology, you need to take a look at the current state of your business. Figure out how long it takes your company to complete a certain process. Survey customers and employees. Learn where the weak points are in your business so you can decide how technology can provide an advantage. If, for example, your current technology enables you to ship orders in two days, how much time and money could you save by cutting this shipping time in half to just one day? From a customer service perspective, perhaps an average service call takes one hour. Can you provide an online tool for customers so they can solve their own problems? And, if so, how much labor, time and money will that save you? This measurement process is tedious, but important to determine the true ROI of technology.
What is the biggest mistake business owners make when investing in technology that prevents them from realizing a substantial ROI?
Often, we forget to include people who understand technology early on in the business-planning process. As I mentioned before, technology projects are business projects. Management has to be aware of technology and include it in their strategies. If you devise a business plan and technology isn’t a part of it, you will put yourself at a disadvantage. Technology sets the stage for your success.
SASSAN HEJAZI is director of Technology Solutions for Kreischer Miller in Horsham, Pa. Reach him at (215) 441-4600 or email@example.com
For certain businesses, the right people make the difference between a service that’s just average or the kind that’s above and beyond industry standard. So why limit yourself to the types of people you can hire?
Smart Business spoke to Margaret Jones, vice president, corporate secretary at The Graham Company, about how training programs can allow a company to bring in the best and the brightest regardless of their background.
Why implement a training program?
One consideration might be the ability to hire people from outside of your industry, especially when a lot of good people do not have industry-specific training. Some of the attributes that an employer might look for are things that you can’t really teach.
If you can hire people who have been really successful in their fields, with a strong work ethic and resourcefulness, you potentially have somebody with an aptitude for meeting client expectations. Once you identify the types of people you want for your business, the next step is to design a training program to teach them your industry.
When we started our program 22 years ago, it was almost unheard of for anybody to hire anyone outside of the insurance industry because there was so much technical knowledge required. What we decided was that we had the ability to train somebody in the technical part of the business. In our vision, it was those skills that were trainable. In our people, we looked for the intangible skills that were more innate.
What’s your advice for a business that wants to invest in training?
First and foremost, identify the types of people that you want to attract and determine what kind of training is going to be required for them to be successful.
In our business, we’ve created a three-year training program six months of classroom training and two-and-a-half years of on-the-job training. Depending upon your business and the level of training required, you may not require this kind of commitment.
You also have to focus on what is the most important component of your business. If it’s your people, you have to invest in them. That’s really the main decision. If your business is such that your people are not your strength it’s your technology or it’s your product then extensive training may not make sense. When you’re a professional organization providing a professional service, then your training department is almost like what a research and development department might be for a manufacturer that’s how we look at it.
Are there certain fields from which you’ve found excellent employees?
We have success in recruiting engineers and people with financial backgrounds, such as CPAs. We’ve also found that a lot of good hires are individuals who have attended military academies like West Point or Annapolis. They’re not really raw talent, because they have been successful in other fields, and they are going to be successful in whatever they do as long as they’re prepared for it. It’s our experience that the only way a business owner can attract these types of people is to not only assure them that they are going to be successful, but to demonstrate that you have invested in the resources to give them the training they need to achieve this success. Somebody like that is not going to change fields and industries without the assurance that they’re going to have the support to be trained.
Why don’t more companies invest in training?
Basically it’s a financial decision. It’s very hard for them to get the support of senior management because of the cost involved. In our agency, we have a ratio of one person in our technical development department that does training, continuing education and quality assurance for every 12 employees. That’s a huge investment. But we didn’t start off like that. We started our training initiative with one person 22 years ago when our company had 42 employees.
Anything else an owner should consider?
As a business owner, you can create a competitive advantage in the marketplace by having better trained, more knowledgeable employees than your competitors. Well-prepared, highly trained employees will make a difference for your clients and your business. Also, with an extensive training program, you’re able to determine whether or not somebody is qualified for the job during the training process, before they are on the front line servicing your customers or clients.
MARGARET JONES is vice president, corporate secretary at The Graham Company. Reach her at (215) 701-5264 or firstname.lastname@example.org.
Several years ago, Heinrich Kolem’s business had reached its limit.
Growth at the Siemens Medical Solutions Customer Solutions Group had stalled. Avenues of growth were rapidly being exhausted and the company’s progress was grinding to a halt. The company was, to borrow a city-planning term, approaching build-out.
With the company approaching the boundaries of what it could realistically accomplish, Kolem, the company’s president, realized changes needed to be made, or it would stagnate and begin to backslide.
The Customer Solutions Group, which accounts for about half of Siemens Medical Solutions’ approximately $11.2 billion in annual sales, needed to find new ways to grow, and for that, needed a number of changes in how it approached growth, innovation and communication.
“We had to change things to allow the organization to grow again,” Kolem says. “This is part of the changes you have to apply, and changes always cause a lot of disturbances, which is something I have had to overcome.”
Kolem says the best way to change, and to smooth over the wrinkles that accompany change, is for management to listen. He wanted a company of engineers and marketers that excelled at gathering and refining ideas from customers and from each other.
With that in mind, the senior managers started listening to ideas from various parts of the company about how improvements could be made and what was possible to achieve.
Finding a new path
Kolem says the organizational change followed one underlying theme: More decentralization. Kolem wanted his field workers and managers to have more latitude in dealing with customers, and in order to do that, they needed to be enabled to make their own decisions more often.
That, he says, is why frequent meetings early in the process were so important.
“You involve some other teams in preparing the changes, discussing in an open way what needs to be changed and what could be done,” he says. “By involving more and more people, you get a feeling of what could be done.”
However, if you want to get different perspectives, you have to be careful how many perspectives you are getting. Brain-storming is good, but when dealing with issues of steering the company, know when to say when.
“Of course, you can’t involve 5,000 people, but maybe at least pick 25,” he says. “After you talk to 25 different people, you can get a real feeling of what the needs are and then you can start in on it.”
Kolem began a program last August in which he brought together a cross section of the company’s various departments, creating a kind of think tank of decision-makers. Over the span of about 10 meetings between August and December, Kolem and his senior leadership began to form a long-term picture of where the company needed to go.
Through the input received from those meetings, Kolem began to see where the Customer Solutions Group would be in three to five years if new and expanded growth avenues were not found.
“I basically let them ask the questions themselves,” he says. “What is the situation we are in? Why do you think we need to grow significantly? We had meetings where we listed the strengths and weaknesses of the organization as is.
“From there, we looked at the projections of the business volume and intended growth from our side, and then at what would be the challenges in 2010 and 2012. From there, it was clear the current organization structure would not be able to handle that. I asked them to just think about that, and I got a lot of ideas.”
Kolem says that organizations tend to either centralize or decentralize a little more or less than what they should. By empowering the people under him to take more of an active role in generating ideas and steering the company, he says he aimed to take some of the decision-making burden off of central management and put it in the hands of the people who are most familiar with the customers.
Kolem uses customer response times to gauge how centralized his company is.
“If you find out it takes too long, it probably means you have too strongly centralized an organization,” he says. “If the customers always have to go to a certain central office, or your main headquarters, it probably means it’s too strongly centralized. Then it becomes very clear what you have to do.”
By enabling the people who deal with your customers, Kolem says you can make your business more maneuverable and able to react to changes.
Innovate to grow
On matters of innovation, you need to not only be working for your customers, you need to be working with them, taking their ideas and concerns, and splicing them into your innovation process.
An innovation that does not address a customer need is an innovation that was created in a vacuum and will probably have no real growth effect on your business.
“An innovation is only a successful innovation if it is successful in the market,” he says. “For us, that was a key ingredient, to make sure everyone understood that.”
Kolem says it has been important for his employees to view customer relationships as partnerships, as opposed to being merely transactional. Engineers at the Customer Solutions Group meet with customers regularly, exchanging ideas and feedback and above all, listening, which contrasts with some of the traditional models of customer interaction, centered on “We talk, you listen.”
“The very simple thing is just that: Listen,” Kolem says. “Very often, people go out to the customer and tell them, ‘This is what you need to do and this is how we’re going to do it,’” he says. “We first go out, listen to them, what is their environment, how they see their challenges, and ask them to describe the situation they are in. Often, they come up with a lot of ideas of what they think should be done, along with little things that are small side remarks.”
Kolem says to keep your ears open when a meeting turns to casual banter. The side remarks in a meeting can also be harvested for small innovations at times.
“Often, if you listen to those small side remarks, they are ways we can easily improve and help (the customers),” he says. “So we go through, at the beginning, these certain small steps, which help establish our relationship with customers for further future projects. A lot of things are about developing long-term relationships and starting to be successful in smaller steps.”
With an eye toward fostering long-term relationships with customers, Kolem’s staff discusses with customers the landscape of the medical solutions industry as it might appear five or 10 years from now. Through that, they begin to paint a picture of where Siemens Medical Solutions sees itself in the coming decade versus where the customer’s company sees itself, and begin to form a plan as to how they can best fit customer needs.
Kolem’s philosophy is to consider every idea, no matter where it came from, so the Customer Solutions Group interfaces with customers on three different levels, each designed to refine a project based on who came up with the original idea.
The first level deals with innovations that were directly inspired by a customer need. The engineers work with customers to make sure the project has a hand-in-glove fit with what the customer is seeking.
The second level deals with innovations that were sparked by internal brainstorming sessions. For those ideas, Kolem’s staff assembles focus groups comprised of representatives from customer companies. The focus groups are asked in a structured fashion for their feedback on the idea, and whether it would adequately address their issues.
The third level requires employees in the field to develop and maintain close working relationships with customers, then feed what they learn up the organizational ladder to the decision-makers so the company can react quickly to an emerging need in the marketplace.
Kolem says experience has taught him that a company’s fact-finders always need to dig deeper and learn a little bit more than what they already know. You do that by going beyond the business-speak at the conference table and really getting to know your customers and their day-to-day business lives.
“If you just do this in a structured way and people are only getting specification requirements instead of talking directly to the customers, there are still a lot of details that are open for engineers to solve,” he says. “Once that relationship with customers is established, it is very helpful for an engineer to just be able to ask and refine the product to the optimum. Once we had done that several times, we just started to make it a part of our regular process.”
Getting on the same page
A big part of spurring growth is to get your idea-makers to start thinking outside the box, but in order to do that, you need to get them to think together.
As with customer interaction, Kolem says listening is the most important thing a business leader can do, and the most important example he or she can set for the rest of the company.
At the Customer Solutions Group, it’s as simple as pizza pie. “What you can do is from time to time have one-on-one conversations with different levels in the company,” he says. “What we have had are pizza meetings where you just invite people for a pizza lunch and say ‘Let’s just talk.’ You let them talk and listen to what they have to say, and thereby, also have a chance to correct some of the misunderstandings that always happen when you communicate over several lines of hierarchy.”
When Kolem needs to communicate something throughout the company, he says he relies on keeping the message somewhat simple so that it can reach the largest possible audience, and reach them quickly.
But there is such a thing as making a message too simple. “It’s very helpful if you can keep a message simple, but you don’t want to keep it too simple because certain parts of the organization will dismiss it as the same old marketing-speak that they don’t want to hear,” he says. “It has to be the right level.”
Kolem walks the line between simple and not too simple by keeping his messages broad and basic to begin with, and then delving into more narrowly focused and complicated matters as employees become more familiar with the issue.
“You come out with some leading simple words like, ‘What do we want to achieve?’ and words that describe the goal like, ‘We want to achieve more customer intimacy,’” he says. “These are the things you should repeat, things your people should know. Then on the second level, you fill it out with certain content and you try it out. Then, you find out, as we do through our pizza meetings, is this too simple or too complex? Then you have to adjust the communication as to what the feedback is.”
Kolem describes the effort to refocus the Customer Solutions Group as a work in progress, but says the company is far better at listening and communicating than when the process started, and is continuing to grow.
When it comes to communicating with employees, Kolem says he has learned never to underestimate what your employees are capable of. As the head of your business, you might like smooth sailing, but don’t forget that should you encounter choppy waters, many of your employees might like a challenge.
“It shouldn’t be too easy because then they’ll say, ‘If it’s so easy, why are we here?’ It wouldn’t be a good company if we didn’t have complicated problems to solve.”
HOW TO REACH: Siemens Medical Solutions Customer Solutions Group,
“Web sites devoted to health care are among the most popular sites on the Internet,” says Eugene Sun, M.D. “Everywhere you turn, there is information about every known topic related to good health.”
Smart Business spoke to Sun about how to sort out the good information from the bad on the Web.
What are some precautions we should take when evaluating medical information from the Internet?
Knowledge is a good thing, but you have to be careful. As you bounce from Web page to Web page, be sure to check who is in charge of the site. You might start on a reputable page, but a link might take you to a site run by someone with a very different agenda.
How can we tell if a report or health care study is reliable?
Check where the study was published. The most reliable studies are found in peer-reviewed clinical journals, such as The Journal of the American Medical Association or The New England Journal of Medicine. Also, find out if a company that could benefit from the results funded the study. That’s not always a warning sign, but it can be.
What are some examples of reliable sources on the Internet?
The U.S. Food and Drug Administration recommends sites that end in ‘.gov.’ They are sponsored by the federal government, like the U.S. Department of Health and Human Services (www.hhs.gov), the FDA (www.fda.gov), and the National Institutes of Health (www.nih.gov), to name a few.
Look for ‘.edu’ sites, which are run by universities or medical schools, such as Johns Hopkins University School of Medicine, or maintained by other health care facility sites, like the Mayo Clinic and Cleveland Clinic.
Other reliable sources are ‘.org’ sites maintained by not-for-profit groups whose focus is research and teaching the public about specific conditions, such as the American Diabetes Association, the American Cancer Society, and the American Heart Association.
Be aware that sites whose addresses end in ‘.com’ are usually commercial sites and are often selling products or services.
What other types of things should we be checking with the sites?
MedlinePlus (medlineplus.gov) is an excellent place to start on the Internet. It is a service of the National Library of Medicine (NLM) and the National Institutes of Health (NIH). MedlinePlus offers high-quality information on more than 700 diseases and conditions. It does not advertise nor endorse any company or product on its site. I recommend referring to the following checklist from MedlinePlus to avoid unreliable health information when you’re surfing the Web.
Be a cyber skeptic. Does the site make health claims that seem too good to be true? Does it promise quick, dramatic, miraculous results? Beware of claims of a ‘breakthrough’ or one remedy to cure a variety of illnesses. Ask your personal physician for an opinion.
Check for currency. Is the information current? Look for dates on documents. Click on a few links on the site. If there are a lot of broken links, the site may not be kept up-to-date.
Beware of bias. Who pays for the site? Consider how that might affect the information offered. Be cautious of sites that do not identify their affiliation, perspective or source of information.
Consult with your health professional. Information that you find on a Web site does not replace your doctor’s advice. Patient/provider partnerships lead to the best medical decisions. Review the information with a health care provider who knows you, and can help you put what you have learned into perspective. And never change anything about your health care unless your doctor says it’s OK.
For more information, check out MedlinePlus’s Web site at www.nlm.nih.gov/medlineplus/heal thywebsurfing.html.
EUGENE SUN, M.D., M.B.A., vice president of medical affairs for HealthAmerica and HealthAssurance. Reach him at (412) 553-7385.
But complying with Sarbanes-Oxley, more casually known as SOX, is costly and redundant when you figure that outside auditing firms must perform double audits, first on managements’ assessment of internal controls, then again by testing the controls and forming a conclusion about the effectiveness of internal controls.
“New guidance from the SEC and Public Company Accounting Oversight Board (PCAOB) is the first major step toward addressing excessive compliance costs,” says Chris Meshginpoosh, director of Management Advisory Services for Kreischer Miller, Horsham, Pa.
Indeed, cost-prohibitive assessment and auditing procedures have driven some smaller companies to avoid an initial public offering, or to go public in overseas markets instead. Large public companies spend hundreds of thousands of dollars complying with SOX, and companies with market capitalization of less than $70 million confront similar costs a disproportionate burden.
Smart Business spoke to Meshginpoosh about ways companies can mitigate SOX compliance costs even before final guidance is expected to be passed in mid-2007.
What exactly does the proposed guidance mean by a ‘top-down, risk-based’ approach to internal controls assessment?
Basically, this approach involves starting at the financial statement level and working your way backward through internal control processes as opposed to beginning from the ground up. During their first year of compliance, many large companies started by asking process owners to document every process, with almost complete disregard to the size or risk profile of the related account balances or disclosures. In other words, even if the controls in these processes failed, it would be of no concern to investors and, ultimately, would have very little impact on the company’s bottom line. Given the size and geographic dispersion of many large companies, this type of an approach was exhausting.
Instead, the SEC and PCAOB are once again stressing the importance of a top-down risk-based approach. Which account balances are material? Which accounts involve a high degree of risk? Are there high-level controls such as detailed variance analyses that address the risk, or do I need to rely on lower-level process controls?
Where might relying on entity-level controls might be appropriate?
Let’s take payroll. Most companies rely heavily on employees to conduct operations and, as a result, payroll balances are generally material to financial statements. But let’s take an example where a company primarily employs salaried workers and experiences very little employee turnover. Because payroll balances would be relatively predictable, detailed budget versus actual comparisons performed by management that require investigation of variances in excess of defined thresholds might represent a highly effective entity-level control associated with certain payroll assertions.
However, if the company employs a large number of hourly employees, has a high rate of turnover as well as substantial cyclicality, a budget-to-actual comparison might not be as effective. Therefore, the company might need to rely on lower-level controls such as supervisory reviews of timesheets.
Are there areas where companies need to spend more time?
One of my biggest concerns is that companies have spent a considerable amount of time on low-risk areas, but have not focused closely enough on areas that require an understanding of complex accounting issues. However, if you look at the nature of material weaknesses disclosed by public companies, a substantial majority involve errors associated with the application of complex accounting pronouncements.
If companies employ effective top-down, risk-based approaches, they should identify these types of potential issues in the planning process. Once identified, companies should think long and hard about the qualifications of their personnel and decide whether augmenting internal resources with outside accounting expertise is warranted.
What resources can companies refer to as they consider ways to implement the proposed guidance now?
The Committee of Sponsoring Organizations (COSO) of the Treadway Commission established a framework a decade ago that still serves as the de facto standard for internal control assessments. Also, the SEC's proposed guidance is available on its website, www.sec.gov. Finally, companies can always consult third party advisors to assist them in their evaluation efforts.
CHRIS MESHGINPOOSH is director of Management Advisory Services for Kreischer Miller in Horsham, Pa. Reach him at email@example.com or (215) 441-4600.