“We are pleased to have someone of Michael’s talent and experience taking the reins at QVC,” says Greg Maffei, president and CEO of QVC’s parent company, Liberty Media Corp. “We have enjoyed working with him during his transition over the past several months and are confident that he will lead continued growth and innovation at QVC.”
George came to QVC from Dell Inc., where he worked as chief marketing officer and general manager of Dell’s U.S. consumer business. Prior to his time with Dell, George was a senior partner at McKinsey & Co. Inc. and led the firm’s North American retail industry group. He earned his bachelor’s degree and master’s degree in finance from Northwestern University.
“As I take on this new challenge, I am most excited by the tremendous potential QVC clearly has in its future,” George says. “There is a stellar team of thousands who make up this truly revolutionary company. I’m confident that together we will forge groundbreaking new opportunities that will serve our customers’ interests like no other retailer.”
Ken Murray joined J.G. Wentworth in the newly created position of chief marketing officer.
Prior to joining the company, he worked for MBNA, where he served in a variety of marketing leadership roles, most recently as senior vice president of research and development.
GLOBAL POLICY ADVISORS
Global Policy Advisors promoted Charles Arthur Kendall to vice president of business development.
He previously worked as director of development for the company. Prior to joining GPA, he managed business trends, profitability and analytic matrices at EchoStar.
The company also promoted Patrick Gross to vice president of strategic planning. He previously worked as the director of strategic planning.
Ecount appointed Baruch Katz chief information officer. He focuses on technology strategy and oversees the further development of the company’s electronic payments platform.
Before joining the company, he co-founded and worked as chief technology officer of Adapt Media. Prior to that, he worked as a senior technology management executive with Intel Corp., Deloitte Touche and Lehman Brothers.
Traffic.com Inc. appointed Brian Sisko senior vice president and general counsel. He oversees the legal and compliance functions for the company.
He comes to the company from Warp Technology Holdings, where he worked as chief operating officer. He also held high-level positions with Katalyst, National Media Corp. and Klehr, Harrison, Harvey, Branzburg & Ellers LLP.
He is also on the board of overseers of The Annenberg Center for the Performing Arts.
TASTY BAKING CO.
Tasty Baking Co. appointed Mark G. Conish to its board of directors as a Class 3 director with a term expiring in 2007.
He works as vice president of global operations for Church & Dwight Co. Inc.
DELAWARE COUNTY ESTATE PLANNING COUNCIL
Bruce J. Cumby was appointed to the board of directors for the Delaware County Estate Planning Council.
He is president of Cumby, Spencer and Associates.
AMERICAN FINANCIAL REALTY TRUST
American Financial Realty Trust appointed Harold W. Pote to its board of trustees.
He has worked as vice chairman of retail financial services for JPMorgan Chase & Co., where he was responsible for bank acquisitions. He also served as executive vice president and head of Chase regional banking. Prior to that, he was a founding partner of The Beacon Group, which was acquired by Chase Manhattan Corp. Before founding The Beacon Group, he was CEO of First Fidelity Bancorp.
OTHERA PHARMACEUTICALS INC.
Othera Pharmaceuticals Inc. appointed Al Reaves senior vice president of clinical development.
Reaves has 22 years of ophthalmology drug development experience. He has worked as head of clinical and regulatory affairs at Xenon Vision as well as manager of clinical research at Alcon Laboratories.
SATORI GROUP INC.
Robert E. Gross joined Satori Group Inc. as vice president of sales.
He has more than 24 years of sales management and direct selling experience in BPM and Enterprise Resource Planning. He previously worked at Systems Union, where he last worked as vice president of sales.
Submit items and photos to firstname.lastname@example.org
Until this two-year-old interest rate-tightening campaign ends (which is possible later this year), what are small- and mid-sized businesses to do?
Asked about their short-term outlook, 55 percent of business owners nationwide say the likelihood of further interest-rate increases will negatively affect their business. In this recent survey of 1,100 owners and executives commissioned by The PNC Financial Services Group, Inc., 61 percent of the respondents with annual revenues up to $250 million said higher rates have a moderate to significant adverse impact on their cash flow/profitability.
Joe Meterchick, senior vice president for corporate banking at PNC Bank, told Smart Business that there are a few steps that businesses can take to adjust in this higher-rate environment.
If a person is interested in investing, what should his or her first step be?
Put your money to work now. Now you can shop around and find a money market account that might yield more than percent. Even though rates aren’t as high as they were five or six years ago, don’t pass up a chance to allow your money to make money for you.
If business owners need to grow their business, is it wise to borrow now?
Review your credit lines. If you need to borrow to grow your business, don’t despair. Short-term rates can still be reasonable. So shop around. Just remember that borrowing will cost you more than it used to. Many short-term lines of credit may be indexed to an industry benchmark. That means as the rates rise, the interest rate on the line of credit may also rise.
Can companies continue to have higher debt loads?
Use excess cash to pay off debt. If borrowing is not something you need to consider right now, you might want to pay off your existing loans with the cash you have on hand. In fact, in PNC’s survey, 50 percent of business owners surveyed said they would begin to pay down their debt in light of increasing interest rates and improving cash flow in their businesses.
In the banking/financing arena, how important are the terms that banks and financial institutions offer businesses? How important are the terms suppliers offer businesses?
They are both important, so you should make sure you understand the terms. If your suppliers offer you trade terms, such as 30 days to pay your invoice, you may want to take advantage of them. This extra time may not have been important to you when rates were low. Now it may be advantageous to take the extra time.
On the other hand, taking a discount for paying early might make more sense if you have the cash. On the other side of the ledger, you may want to reconsider the terms, or time you are giving your customers to pay you. Fifty-one percent of respondents in PNC’s survey said they are considering a change to the credit terms offered to customers, and 56 percent said they would offer discounts for paying early, two actions that are likely to speed up cash flow.
What should my next step be?
Talk to your banker. Before you make any decisions, have a cash flow conversation with your banker. The cost of that precious commodity is higher right now, and when costs are rising, businesses should reconsider their thinking.
This summary is not legal or financial advice, and does not purport to be comprehensive. Please consult your own advisor. Any reliance upon this information is solely and exclusively at your own risk.
JOE METERCHICK is senior vice president for corporate banking in Philadelphia for PNC Bank. Reach him at (215) 585-6810.
Education: Pennsylvania State University, bachelor’s and master’s degrees, business administration
First job: Not counting the paper route and the gas station, when I got out of school, I worked for an accounting firm as a CPA.
Whom do you admire most in business and why?
First, the people I work with. If you have an effective management team that works together, you have to admire them. I admire my immediate predecessor, George R. Gunn Jr. He was the CEO here for 10 years.
I also admire Marvin Heaps, our board chairman who, at one time, was the president of ARA. Another individual is Sidney Miller, the vice president and controller of former American Medicorp. He was also an officer at Universal Health.
What was your toughest business challenge?
Migrating from COO to CEO, which means letting go of details. You must recognize that you work with effective people and give them a chance, and they can handle the issues.
Describe your management philosophy.
I try to have a participatory management style. There is a phrase that says, ‘To be a great teacher, you have to be a great learner.’ You also have to make decisions and stick with them, so you have to be faithful.
What is the company vision?
ACTS started in early 1970-1971, and it is a result of an individual in a local church being concerned about the care of the seniors in their congregation. They went out and built the first community, which was in Fort Washington.
The demand led to the opening of the second. From there, the company evolved. All that is in fulfillment of the commandment that says to honor your father and mother (from the Book of Acts in the Bible, from which the company derives its name).
That is part of our overall philosophy. We have a dedicated board that is very supportive of that intent.
They are worrisome because class actions are a form of claim aggregation. Instead of one or a handful of plaintiffs bringing a claim, state and federal courts permit lawsuits by classes of plaintiffs that can number in the thousands or tens of thousands.
Thomas M. Goutman, chair of the litigation department of White and Williams LLP, explains that the sheer volume of claims in a potential class action makes the consequences of losing financially ruinous to the defendant corporation.
White and Williams has handled class actions throughout the country in such areas as antitrust, security, consumer liability, insurance, toxic torts, pharmaceutical and medical devices, labor and employment, RICO, product liability and banking.
So Smart Business asked Goutman about the impact of class actions.
Can all types of claims be filed as class actions?
Certainly, plaintiffs’ class action attorneys have creatively attempted to force all types of claims into a class action framework. But the Rules in State and Federal Courts provide criteria that judges apply in deciding which cases are appropriate for class treatment.
What are those criteria?
Most jurisdictions require that putative class plaintiffs demonstrate that their claims are sufficiently numerous (“numerosity”), are typical of the claims of other class members (“typicality”), that common elements of their claims preponderate over noncommon elements (“commonality”), and that a class action would be a fair and efficient method of resolving the claims.
Most putative class actions that fail to get certified do so because they fail to meet the commonality factor. In those instances, the defendant has been able to demonstrate that each potential claim involves individual and unique circumstances that make class treatment of those claims simply impossible.
So, just because a case is filed as a class action doesn’t mean it will stay one?
It is filed as a putative class action. Then, typically, there will be a short period of discovery interrogatories, exchanges of documents, dispositions on the issue of whether the class should be certified. Then there will be a certification hearing before a judge, which will be like a mini-trial, where the class representatives will testify, as well as representatives of the defendant and expert witnesses.
Because a lot is riding on the certification decisions, class hearings can be lengthy and involved affairs.
But even if a class is certified, that doesn’t mean that the defendant loses, does it?
No. If permitted by the Rules, the defendant can appeal the certification decision.
But, failing that, more often than not, the case will settle because many defendants will make a business judgment that the financial risks of a jury trial on a class basis are simply too great. For that reason, others have called class actions a form of legalized extortion.
Is a class certification always a bad thing for corporations?
No. In certain circumstances particularly where it is in the corporation’s financial interest to resolve large potential liabilities in an efficient and predictable way obtaining court approval of a nationwide or statewide settlement class may be the best course of action.
Is there any hope for corporations?
Yes. Congress passed the Class Action Fairness Act last year that makes it easier to move cases filed in a state court to a federal court. In most jurisdictions, federal court judges and jurors tend to be more conservative and less apt to certify a class action or award substantial damages once certified.
I would like to think that there is a developing consensus that certain types of cases should not be certified. Examples of these are product liability cases involving claims for personal injury, property damage and medical monitoring ... cases where individual issues tend to preponderate over common ones.
Another example is consumer class actions where a necessary element of proof often is a consumer’s individual subjective reliance on allegedly misleading or fraudulent misrepresentations of defendant corporations. Here again, individual issues seem to preponderate over common ones.
In the securities field, there is a greater index of judicial suspicion about the manner in which these sorts of claims are brought. That has led to investigation of plaintiffs’ class counsel.
THOMAS M. GOUTMAN is chair of the litigation department of White and Williams LLP, where his practice involves the defense of corporations in class actions, product liability and toxic tort litigation. Reach him at (215) 864-7057 or email@example.com.
That could be good news for of Living Assistance Services Inc., the Havertown company that franchises Visiting Angels agencies, providers of in-home, nonmedical services to senior citizens. Founded in 1998, the company in 2005 topped $120 million in revenue a nearly 77 percent increase over the previous year’s mark and reached 250 franchises.
A franchise consultant for most of his business career, Meigs has not allowed any shortage of experience to stymie his success. In some ways, he’s built a stronger organization by finding and hiring the kinds of people who can fill in where his skill or experience might tail off.
Meigs spoke with Smart Business about the importance of a self-directed team, the value of communication and the dangers of a cluttered organization.
I don’t try to micromanage the people I work with. I try to surround myself with people who are better than I am at doing various tasks that represent my weaknesses, ones that I wouldn’t have time to do even if I could do them. Beyond that, I’ll stay pretty focused on the areas of strength where it makes sense to dedicate most of my day.
I’m relatively laissez faire with respect to the work environment. I’m not beating up on them by any stretch during the course of the day, trying to make their lives miserable.
Maybe it would be better to be a little tougher than I am, more directive. I don’t have the time for that. So I do have to have people that are more self-directed. If I had people that needed more micromanaging than I’m capable of, then we’d really be in trouble.
Donald Trump could do a little better with his view of, ‘We’re going to meet in the boardroom and somebody will be fired.’ That’s never been my strong suit.
Acknowledge your dependence on others.
The only way CEOs are going to achieve success is mainly by relying on their past experience. They’re either in a position where they’ve got the experience to know how to go forward that they can draw on or they don’t.
I think you have to recognize how dependent on others you always are, regardless of how much you know, how smart you think you are. Whatever skills you have, you’re still tremendously dependent on those around you. You’ve got to focus on building relationships with all those people. Even the person at the bottom of the ladder in your company should have some kind of relationship with you.
We’re small enough that I can speak individually with most, if not all, of my staff every day. You want to take advantage of that opportunity as best you can. If you build relationships with your customers and your staff, you can make mistakes, sometimes big mistakes, and they’ll give you second and even third chances.
Beware of the bureaucracy.
I never worked for big corporations, so I don’t have the perspective that some others have. But my guess is ... that so many of these big companies, they get to a point where they’re successful, but after awhile, the bureaucratic weight of having so many departments and department managers where you don’t know what they’re up to can become a burden that can be difficult to control.
And then they start going in the wrong direction. I think to overcome that, you have to conduct the best talent searches that you can in order to find the most self-directed people you can. It gets even more critical the larger you get because if you’re just establishing a lot of departments and department heads who still need a lot of direction, then you’re in need of some monolithic head of that company that can still micromanage everybody, and I don’t think that’s possible. The larger it gets, the more impossible it gets.
Encourage the flow of information.
We recently started a program with Outcome Concept Systems for client outcomes data benchmarking where we’re compiling the data concerning the outcomes of our clients. And we’re trying to stay on top of the various home care and health care conferences and ideas that are being presented.
That’s the great thing about having a large network of franchise offices. You’re subject to receiving a lot of information out there in the field that would be very difficult to duplicate if you’re running your own single operation. Every day, in addition to the information we send out, other new information comes in from franchisees and others associated with us.
Reach out and touch constantly.
We believe that the more face-to-face exposure we can facilitate, the more buy-in we’ll get. You have to keep people on top of what you’re actually doing.
You have to bridge the gap of the physical distance between the home office and what are currently 260 franchise locations in 42 states. So many companies will do it by sending out a newsletter occasionally, make themselves available if someone calls them.
We try to be much more proactive than that because we know that, in a sense, you’re always proving yourself to the franchisees and reselling the value that you’re bringing to them. You can’t effectively do that without getting in front of them as much as you can.
We utilize the Internet every day to send out information to the total group. There’s probably not a day that goes by the total group doesn’t get new information from us, whether it’s a marketing piece that’s being distributed ... or the questions and answers that come in from our franchisees that are shared with the entire group.
Think ahead of your needs.
I’ve believed since Day One in bringing people on board who can help us. We’ve brought in new people all along, especially when we run into people who are talented.
I believe we’ve actually stayed ahead of the need for services to our franchisees, but certainly growth is something we’ll need to keep up with. We’re anticipating some significant growth and trying to plan for staying up with that. We just brought in a new vice president of franchisee guidance who’s got 20 years of experience in home care. We saw a need for somebody to go out and do field visits with our franchisees, hold regional meetings with them.
That’s really relieved a need for the franchisees. When I was bouncing that off the other directors in the company, some of them weren’t so sure it was the right move, although I felt a strong need to do it.
How to reach: Visiting Angels Inc., www.visitingangels.com
To gain a better understanding of how companies are optimizing their payables process, Smart Business recently spoke with Jeffrey Felser, senior vice president and product group manager for PNC’s Treasury Management Division.
What are the payment alternatives available to companies looking to streamline the procure-to-pay process?
Paper checks continue to be the core payment service, representing 80 percent of the $16+ trillion in business-to-business payments. However, the payments business is undergoing the largest transformation of its history, as migration from paper to electronic accelerates with businesses demanding more value, lower cost and simplicity. Aiding this transformation is technology, which is driving new forms of convenience and innovation with both ACH and purchasing cards growing in both volume and size of transactions being processed through these electronic alternatives.
How can an organization determine the optimum mix of payment options?
When thinking about how to make payment on your business-to-business transactions, we believe it makes sense to look at the economics of the various payment alternatives. The purchasing card, for example, has the most interesting economic proposition, as most banks issuing the card are willing to provide revenue sharing based on the value of the transactions being processed through a purchasing card program. Comparing the ability to generate income versus paying service fees (12 cents average for ACH transaction, 39 cents per check processed, $7 for wire transfer) creates an opportunity to pursue an optimum payment mix and a winning proposition for the payer.
Knowing that you can’t move all of your payments to cards, we think it makes sense to always think cards first, followed by ACH, then checks, to capture payments that cannot be migrated to an electronic method. Wire transfer will always have a specific role in executing timely and final payments whenever needed.
What are some of the variables that come into play when deciding how to process a payment?
There is no one solution for payment processing because different purchases call for different payment types. However, both qualitative and quantitative analysis is required. On a qualitative basis, consider contract terms, vendor relationships, current practices and protocol, as well as the sensitivity or priority for the receipt of goods or services. On the quantitative analysis side, the size, frequency and timing requirement of the payment are considerations. Additionally, the existing financial characteristics of the transaction such as cost of the payment for both the buyer and seller is an important aspect.
Are more organizations opting for one method over another, and is there a clear winner among all payment types?
Though business-to-business payments continue to migrate to electronic channels, the pace is much slower than what is occurring among consumer payments. Organizations that take the opportunity to assess their current procure-to-pay process can benefit from focusing on the payment component of this financial supply chain.
As noted previously, there is no one type of payment that ideally fits for all purchases. However, the material differences in the economics of the various payment alternatives create the opportunity to pursue an optimum payment mix. The clear winner is the organization that takes the first step in evaluating its entire procure-to-process.
This was prepared for general information purposes only and is not intended as specific advice or recommendations. Any reliance upon this information is solely and exclusively at your own risk.
JEFFREY FELSER is senior vice president and product group manager for PNC’s treasury management division. Reach him at (412) 762-9714.
The two most frequently used forms of ADR are arbitration and mediation. Arbitration is a simplified version of a trial. Either both sides agree on one arbitrator, or each side selects one arbitrator, and the two arbitrators elect a third to its panel. Arbitration hearings can take a few hours or a couple of weeks. The opinions are not public record. Mediation is less formal. It’s used for resolving a wide gamut of case types.
“The size of a dispute does not say whether it’s going to court or mediation,” notes Tom Allen, a partner and head of the Reinsurance Practice Group at White and Williams. “For instance, mediation played a very big role in huge cases between various governments and Microsoft.”
Smart Business asked Allen more about alternative dispute resolution, and here’s what he said.
In your experience, what are the most common kind of disputes that corporate managers seem to face?
Any kind of a dispute involving contracts, ranging from a contract to sell something or a contract to buy a business which is always very dicey to a contract of insurance. Corporations are also involved in employment disputes of all kinds.
What are the most common ways of settling those disputes?
If it’s enough of a dispute, the most common way is to go to court. That gets you involved in a very formal process that is a pathway to resolution. However, courts are expensive; they can take a long time; and there is a bit of uncertainty about whether you’ll really get a knowledgeable resolution.
What are “alternative dispute resolutions”?
Many court systems use alternative dispute resolution as part of their bag of tricks. The most common forms of ADR are arbitration and mediation. Arbitration is a binding process that should be faster, more economical and better than going to court. When you go to arbitration, you try your case in front of one or three arbitrators, and they issue a binding decision. In the mediation process, both sides present their cases to a mediator who tries to work a resolution in the form of a compromise. There is now an industry of capable and experienced mediators who are very, very good at working out disputes.
Are mediators and arbiters lawyers?
Most of the mediators are lawyers.
Arbiters sometimes come from the industry that is involved, so you should get a more knowledgeable fact-finder than a judge or a jury. For instance, if an arbitration clause is written into a reinsurance contract, the arbiter is likely to be involved in the reinsurance industry. Arbitration has a huge advantage over litigation, because it’s more efficient.
How often are contract or corporate lawyers needed for ADRs?
In arbitration, it’s pretty common for both the outside lawyer and inside (corporate) lawyer to be heavily engaged and to take part, just as they would for a lawsuit in court. For mediation, companies often use outside lawyers, too; but sometimes the dispute is less elaborate and formal, so an in-house lawyer or even the businesspeople themselves can handle it.
How do you determine what kind of dispute resolution is the best?
Whether a matter should go into mediation really depends on an assessment whether the parties to the dispute have a substantial overlap of shared interests. If they do, you can capitalize on those interests and work out a resolution. If the relationship between them doesn’t matter if they’ll never see each other or do business with each other again then mediation is less likely to be chosen.
With ADR, can both parties come away happy?
If a lawsuit or arbitration goes all the way to verdict, I’d say there’s usually a happy and an unhappy side. A judge simply doesn’t have the power to issue a verdict that’s a sensible compromise. In the litigation and even in the arbitration system, there are lots of pressures to settle.
Mediation is a little bit of a different animal, because the mediator is trying to capitalize on the shared interests of the parties. Some of those professional mediators have a bag of tricks that is dazzling when they employ them. The key is that the mediator is free to be creative to put together a solution. Very often, both sides walk away from a mediation feeling that it was a good process.
TOM ALLEN is a partner at White and Williams LLP and head of the firm’s Reinsurance Practice Group. Reach him at (215) 864-7001 or firstname.lastname@example.org.
As its customers began to push across international borders, Chairman and CEO Ronald Naples knew it was time for the Conshohocken-based business to change the way it looks at the world.
“Companies have been international for a long time,” Naples says. “These companies operated all around the world, but they operated as if they are units all over the world. Quaker was the same way.”
Quaker’s offshore offices had matching logos and sold the same products, but this uniformity didn’t cover its disparate systems. For example, it separated its European and U.S. income statements, its regional offices collected and stored information in different ways and managers measured progress for regional businesses. Quaker’s worldwide offices were linked but not integrated.
“The crux of being a global organization is not a matter of being everywhere but in operating as if you are in one place,” Naples says.
To do this, Quaker needed to connect its regional operations by unifying its systems, reorganizing its management structure and changing the way customers thought about its products.
“That’s a tall order,” Naples says. “As you look at the world, you have to ask yourself, ‘Can you afford to look at your company as discreet businesses alone, or do you need to look at it as a global whole?’”
The answer was simple.
“The how is always more difficult than the what,” Naples says, adding that he prefers to think of the company’s global strategy and the destination statement he wrote “To deliver everywhere the best from anywhere” as his way of leading the company toward progress, not change.
In fact, Naples is sensitive about not calling Quaker’s global strategy change management.
“I like to talk about progress management,” he says, “And we think (our global strategy) is a way we can deliver value to our shareholders while we recognize the reality of the world we operate in and what we need to do strategically to remain strong as our customers change, shift, consolidate and become more global themselves.”
Quaker’s customers are largely industrial businesses, steel and metalwork manufacturers that produce consumer durables such as cars. More than half are based outside of the United States, and all of them purchase specialty chemical products that Quaker develops, produces and distributes at its worldwide facilities.
Customers purchase a product, which is a solution to a specific problem. But Naples realized that Quaker’s real asset is knowledge. Take the steel industry, for example.
“Our market share in steel is such that we have been inside every steel mill in the world,” he says. “That means we know more than anyone else, and our organizational challenge is to turn what we know into a competitive advantage a competitive advantage everywhere.”
So Naples considered why customers depend on Quaker and divided the answer into three areas: product technology, process knowledge and application know-how.
“As we looked at them more, we realized that building the business regionally and basing business on disaggregating our assets wasn’t the best thing for us,” Naples says.
Quaker’s asset knowledge was dispersed among its geographic locations rather than cultivated and sold as its No. 1 product.
“If the customer sees us as a provider of a customized lubricant, that is one thing,” Naples says. “But that is not what we want to be. We want them to understand this lubricant is only the vehicle for what we have to offer special value to them. We were shifting what customers think we can do for them.”
To measure the value of an intangible product such as knowledge and leverage this asset on a global basis, Quaker needed a structural makeover. Naples could not show customers that what Quaker knows about steel in Japan applies to the automobile industry in Detroit until systems were integrated. To do this, he needed a revised technology platform, management structure and communication tools, along with employee buy-in.
So in 1999, Naples pulled the rug out from under the old international set-up and built the foundation for the $400-million global business that Quaker is today.
The global movement
Naples talks about the power of the common purpose, an ideal he learned as a U.S. Army Ranger that also applies to the corporate world.
“One of the toughest things that managers and leaders in a company have to do is help people understand the common cause,” he says
So Naples confronted every aspect of how Quaker collected, shared, marketed, researched and sold its knowledge. Employees bought into the plan, he says, because they understood why it was critical to the company’s future success.
“Our folks identified with the changed world and shared a willingness to respond to it by adopting new practices, doing business in a different way and reporting to new people,” Naples says.
Employees viewed Quaker’s globalization efforts differently, depending on their roles in the organization.
“If a production employee works in a plant in Holland, the fact that we have a plant in the U.S. doesn’t affect his life,” Naples says. “But globalization changed the life of a production manager in a plant who could measure how he is doing versus another plant.”
Connecting these worldwide operations introduced myriad accountability issues.
“Someone may have worked in a European organization and understood his or her impact on the business,” Naples says. “Now, all of a sudden, one’s impact was more remote. What someone did in Holland may affect what someone did in the U.S., but it was harder to feel the impact of that, so they felt removed from the results of their actions.”
Naples fine-tuned communication tools to ensure that employees realized their critical role in the company’s processes.
“The one safe assumption you can make about any company is no matter how much you communicate, it is never enough,” Naples says. “We now focus more closely on how we communicate, who is communicating and what they are communicating.”
Global managers travel more often, meet employees more regularly and address the company’s strategic goals so each of Quaker’s 1,200 employees understands why their world quickly got a lot bigger. E-mail plays a key role in delivering daily company updates, and time zone differences are less troublesome when communicating this way as opposed to by telephone, Naples says.
The second piece of globalizing personnel was to centralize leaders in corporate headquarters. Rather than having regional leaders with regional resources such as research and development, marketing and technology, Naples collected these divisions and created global units.
But similar accountability and management oversight issues surfaced.
“There is the whole expression to think globally but act locally,” he says. “As you move toward a global organization, those things really become more real to you. We were trying to do as much globally as possible and we thought that was the way to focus on knowledge and value, the two things we felt were most important. Much of what we did was still locally executed, but it was all directed from central business unit management.”
He says Quaker never ignored the importance of thinking locally, but at first, its focus on worldwide integration went a bit too far. In 2005, Naples concentrated on pushing certain decision-making and execution responsibilities back to regional management, while Quaker maintained its global product management, key account management and R&D.
“That way, we can look at what resources we have in local markets and see how we can reallocate these resources,” Naples says.
Accountability for financial results now lies in the hands of local managers. This allows regional operations to understand their costs and evaluate their contributions to Quaker’s bottom line.
As part of the integration, technology also had to be upgraded. Legacy software suited Quaker’s regionally fragmented business model, but the information collected and stored in these systems wouldn’t function well in a global organization.
“You have to collect information the same way,” Naples says. “Information has to mean the same thing to managers [in different countries.] We had to get rid of legacy systems that caused us to have different views on how the business was doing around the world.”
Quaker needed to measure and allocate its resources, and the way to do that was to upgrade to an integrated system.
“We needed to make sure we were aligned with a world that worked through the World Wide Web,” Naples says. “And if you have systems that aren’t modern, that will give you problems.”
The five-year process of installing an enterprise management system eventually allowed Quaker to operate on a single technology platform the foundation for its global strategy.
“Knowledge goes into a system that allows us to share and use knowledge around the world,” Naples says.
Now, Quaker must manage the learning side of the equation.
“We know what we know technology- and product-wise, but because we have people calling on customers every day, our people learn every day,” Naples says. “They learn about a problem a customer has and how to solve it. We don’t want that learning to reside with one person.”
An online sharing tool allows employees to input information they learn in the field. These nuggets are indexed so others can access them through the global technology platform.
“In the past, someone may have sent out an e-mail asking, ‘Who knows about this problem on rolled steel?’” Naples says. “Before, an e-mail would have gone out and (getting a response) was always hit or miss.”
Quaker’s sharing tool eliminates time as a hindrance to getting information. Rather than hoping that a co-worker will see, read and respond to an e-mail inquiry, the employee can access the global knowledge index and even compare field information and findings from China or Brazil.
Technology allowed for improved customer service by indexing knowledge and accessing vital information from anywhere in the world.
Customer service functions such as call centers for marketing and sales stayed local despite global initiatives. But customer management in terms of identifying products and technology to suit each customer is a different story.
“Car companies in Detroit operate in China and Brazil all over the world,” Naples says. “It shouldn’t matter if our customer is in Detroit and China; we operate as if that customer were one.”
Now, Quaker employees can leverage what they know about steel production in the United States and what they know about the industry in China. Technology and integrated systems allow them to access pricing, marketing, sales and product information from facilities around the world, making Quaker a more valuable partner to its customers, Naples says.
Maintaining the mission
Following through with Quaker’s mission to “deliver everywhere” is a job that’s never done. Naples constantly considers how the company can reallocate its regional resources, leverage global knowledge and strike a balance between local and global execution.
He can tweak and modify these variables, but he can’t control climbing crude oil prices or reverse changes in customers’ markets. He can, however, maintain a diverse customer base to guard the business during tough times.
“We have a good portfolio in terms of the kinds of manufacturers we serve, and this usually works to our advantage,” he says. “A piece of business may be down and another may be up, and the combined result is OK.”
Operations in China and Brazil thrive, capturing new business for the company. And despite economic challenges, the automobile industry is steady.
“We are trying to build our business with the manufacturers that are growing, as well as continue to serve key American manufacturers who are very important customers to us,” Naples says.
Quaker’s global platform will allow it to penetrate this customer base by offering, for example, chemical management services, a promising business segment. Today’s customers demand Quaker’s chemical knowledge, not just its products.
“Leaders need to deal with the way things are as they find them, not as they wish they were,” he says. “On the other hand, in moving forward, you need to think about what you wish the organization could be. Then you will find the guide to the right destination.”
How to reach: Quaker Chemical Co., http://www.quakerchem.com or (610) 832-4000
Education: One semester at Villanova University. Dropped out of college to pursue a retail career. A ski-tuning business he started in his parents’ garage when he was 13 grew to Mike’s Ski Shop, a five-store, $2 million enterprise by the time he graduated from high school.
First job: I worked at The Gap (as a teenager). It was the only time I ever worked for anyone else. I didn’t last long there, but I did win a lot of contests for selling corduroys.
What is the most important business lesson you’ve learned?
Hire the right people. Through time, you learn that the whole business is people, and you have to have the right people.
What inspires you as an entrepreneur?
Having fun learning and growing. I’ve always been a focused individual, and as long as I’m in here every day growing the business, I’m having fun.
What does it take to be successful?
You have to be a risk-taker. A lot of people talk about great ideas, but they never do anything about them. You have to take the risk and go after your goals.
What has been your toughest business challenge?
Making the change from Global Sports to GSI, from a market leader in sporting goods to a market leader in e-commerce. Our strategy was right, but sporting goods didn’t have the greatest opportunity in total e-commerce.
Describe your leadership style.
Entrepreneurial. I’m a good listener and I’m street smart, and I give people the ability to do their jobs. Examples are some of the e-commerce capabilities we’ve added and the way we continue to add more value for partners.