"We are delighted to have Kathy join IBC's senior management team," says President and CEO Joseph A. Frick. "Her significant executive experience and background in human resources, customer service and operations will help us refine our corporate structure and build upon the talented team already in place."
In her new role, McEndy manages human resources, business development, corporate planning and administrative services at IBC. Previously, she worked as senior vice president - human resources and administration at Keystone Mercy Health Plan, an affiliate of Independence Blue Cross. At Keystone Mercy, she provided strategic leadership and operational management of the company's HR initiatives for associates in Pennsylvania, South Carolina and Kentucky.
Prior to joining Keystone Mercy, McEndy spent 19 years at CIGNA Corp. in a number of executive level positions, including senior vice president - customer service and senior vice president of human resources.
McEndy is active in the Health Ministry Program for Women. She is a member of The Forum of Executive Women and The Human Resources Planning Group. She has an MBA from St. Joseph's University and a bachelor's degree in psychology from Fairfield University.
PHOENIX MANAGEMENT SERVICES
Phoenix Management Services named James Fleet managing director. In his new position, Fleet continues to manage client relationships and lead cases on a national level for Phoenix Management Services, as well as for the firm's investment banking division, Phoenix Capital Resources.
Fleet joined Phoenix to open its Providence, R.I., and its Boston offices. He is a graduate of Southern New Hampshire University, with a bachelor of science degree in economics/finance and a minor in information technology. He is a member of the Turnaround Management Association and the Association for Corporate Growth, and is active with the YMCA and Catholic Youth Organizations.
ENDO PHARMACEUTICALS HOLDINGS INC.
The board of directors appointed Peter A. Lankau president and CEO of Endo Pharmaceuticals Holdings Inc. Previously, Lankau was president and chief operating officer of Endo. He replaces Carol A. Ammon, who continues as chairman of the board of directors.
In addition, Endo's board appointed Lankau to the Endo board of directors, expanding the number of directors to 11. Lankau had served as Endo's president and chief operating officer since April 2003. Prior to that, he was Endo's senior vice president, U.S. Business.
TMX Communications named Mitesh Patel executive director of technology. Patel oversees all phases of program development, from the first meeting with a client, to ensure that the creative concepts can be translated into customized digital and Internet-centric communications.
Patel joined TMX in 2000 as production director and managed all TMX production systems, including global delivery networks, tracking systems, final content creation and quality testing for clients such as Northwestern Mutual, GlaxoSmithKline, Schering-Plough, SAP and EMC Corp.
Patel is a certified green belt expert in Six Sigma methodologies. His background includes network design and support for Fortune 500 companies, as well as emerging new venture businesses. As the senior systems engineer for DuPont ESnet, Patel was responsible for worldwide area network design and support, proprietary communications system design, integration and support. He was also the primary technical point of contact for all DuPont ESnet clients.
Cephalon Inc. appointed Todd MacLaughlan general manager of CIMA LABS INC and vice president of Cephalon. He manages overall operations of CIMA LABS, focusing on growth of the company's drug delivery partner business.
Most recently, MacLaughlan served as vice president, Business Development and Alliance Management at Watson Pharmaceuticals. Previously, he was vice president, Licensing and Acquisitions - North America at Bayer Corp. His experience also includes roles of increasing responsibility in business development, product planning, sales and marketing with Monsanto's GD Searle unit. He began his career in the pharmaceutical industry with positions in marketing and sales at Allergan and Syntex.
MacLaughlan earned his bachelor of science degree from the University of Prince Edward Island and his MBA from the Kellogg Graduate School of Management at Northwestern University.
PHILADELPHIA NEWSPAPERS INC.
Peter Ricker was named vice president of advertising and marketing at Philadelphia Newspapers Inc., publisher of The Philadelphia Inquirer and the Philadelphia Daily News.
Ricker is responsible for the advertising division, marketing and promotion, and Broad Street Magazines. For the last four years, he has been vice president of advertising at The Indianapolis Star, a Gannett publication. He previously held senior sales management positions in New Brunswick and Bridgewater, N.J., and at the Idaho Statesman. He started his career in newspapers at the Wichita Eagle more than 25 years ago.
Ricker has consistently been recognized as a top sales executives. He was named outstanding advertising executive in 1999 and is a seven-time winner of Gannett's President's Ring Award for superior performance.
He is a graduate of the University of New Mexico.
So why should health care benefits be any different? Health care is the single most expensive purchase a company makes each year, yet it is often left unchallenged.
CEOs need to become savvy consumers of employee benefits. If you are part of the 87 percent of businesses still waiting for renewals, now may be the time to shop around for a new broker. A knowledgeable, aggressive and innovative broker knows how to find the best deals and can make the difference between saving 25 percent or losing 25 percent on employee benefits.
Even if you've already renewed your benefits package, shopping around is worth the effort. There is no rule that says you have to wait until renewal to switch brokers.
When you're searching for a new broker, make sure to find one that is knowledgeable about consumer-driven health plans (CDHPs).
The freedom to choose
With CDHPs, your employees will spend your money as if it were their own, making better-informed, budget-conscious health care decisions. They have the freedom to make their own choices regarding their health care, choosing a la carte health services from both in-network and out-of-network practitioners.
CDHPs pair high-deductible insurance products ($1,000 to $1,500 annual deductibles) with individual spending accounts, potentially offering a significant reduction in overall health care costs. Interest in CDHPs has grown with the IRS's guidance on health reimbursement arrangements (HRAs) and health savings accounts (HSAs), which typically offer employees a year-to-year rollover for funds not spent.
A well-designed CDHP -- one that is nimbly and intelligently negotiated by a skilled health care consultant -- can deliver the best a health plan has to offer. That means health care coverage that allows for preventive health measures, as well as crisis interventions, and is comparable in cost to the existing employee health care program.
To understand how such a plan can save money for you and your employees, you must understand two central concepts.
1. Employees will become better consumers.
When employees pay for health services out of their own accounts, they become more selective buyers. They'll be more apt to research the best mix of quality service and affordable price. But this means employees must have access to information on quality and price as it pertains to medical services, doctors and hospitals.
2. Plans and costs vary by carrier.
Insurance rates have always varied from company to company for similar health plans. CHDPs are no different. Different insurance companies and underwriters have their own outlook, risk-assessment indicators and program pricing structures.
In today's market, some carriers provide absolutely no savings through a CDHP, while others offer substantial savings. Each company believes or "bets" something different about future claims or market share objectives.
Work closely with your health insurance broker to actively investigate and negotiate the best alternatives for your business.
Are CDHPs right for you?
Will implementing a consumer health care plan today save you money? It depends on local insurance carriers and your previous claims experience -- both of which need to be analyzed.
Taking the time to work with your health benefits broker to investigate your options and shop for the best price can't hurt. You'll either realize that your current plan is the best fit for your company or you'll find a better plan. Either way, you win.
Eric Raymond, CLU, is founder and CEO of Corporate Synergies Group Inc., a full-service employee benefits brokerage and consulting firm in the Philadelphia region. He is a frequent guest speaker at insurance and HR conferences and serves on the board of directors of Albert Einstein Medical Center. For more information on what benefits service brokers offer, including development of CDHPs, go to www.corpsyn.com or call Corporate Synergies at (877) 4-CORPSYN (877-426-7779).
Fortunately for him, he's quite good at working for himself.
"I think it's about the only place I can survive," he says. "I belong alone."
Yesulaitis is far from alone, however, when it comes to the ranks of Philly's high-performance entrepreneurs. His current venture, Aavalar Consulting, a technology consulting firm that performs personnel searches for IT companies, recruitment consulting and human resources training, was named twice to the Philadelphia 100 Hall of Fame, a group of the fastest-growing companies in the Greater Philadelphia region. ALTA Technical Services Inc., a company he launched in the late 1980s and sold in 1996, made the list four years in a row.
Yesulaitis, 44, spent time in the corporate world during the 1980s as a hardware and software engineer, working on military satellite command and control systems and on the new generation of air traffic control systems. After a stint with an unsuccessful investment start-up, he launched ALTA Technical Services, returning to serving clients in the military and aerospace industries. The company later moved away from its original market, evolving to serve the growing need for businesses -- particularly those in the financial services industry -- to connect personal computers to their mainframes.
Yesulaitis later sold ALTA Technical Services to a $1.5 billion company and stayed on to manage the business as part of the deal. After fulfilling the contract with the new owner, he decided to return to running his own business and founded Aavalar Consulting.
With one successful start-up behind him and a second in the works, Yesulaitis suggests that would-be entrepreneurs seek out professionals who can render services the average business person can't quickly master. In the long run, he contends, it saves time and money.
"You can buy a couple of hours of an accountant's time to set up your chart of accounts and the structure of an accounting system rather than you doing it wrong and spending weeks screwing around," says Yesulaitis.
So, what's a better use of an entrepreneur's time?
Says Yesulaitis: "Go sell something."
Yesulaitis talked with Smart Business about the things that entrepreneurs can't compromise on, why even a small venture needs a good team of advisers and why working for big companies gives him a pain.
What encouraged you to become an entrepreneur?
It was 1988, and I had gone into a different business, actually an investment business, with a friend of mine. It didn't work out, and I decided to start my own consulting company. I figured I could make all the same mistakes that everybody else can make and make more money at it.
So I started my own shop, starting out as a free-lancer, and hired people to work with me, really kind of the classic organic growth story. I went back to the industries that I knew, which were military product contractors, the FAA, prime contractors and subcontractors, and went into these companies and started to get jobs, contracts, projects, working on subsystems within these really enormous systems that have many, many pieces, many subcontractors.
That was really just a natural for me, but really more in the hardcore engineering world than so much in the data processing world. Around that time -- this was in the late '80s -- people decided that they wanted these things called PCs to talk to their mainframe systems, and one of the places they wanted that to happen was in the financial companies. Now, it's a no-brainer; you plug it in and it all works. But it used to be a lot of real low-level development within those systems to make the big iron work talk to these little PCs.
So we took some of our core competencies there and we walked into these environments and started to grow. Some of our biggest accounts became companies like Vanguard and Independence Blue Cross, not in the traditional parts of the information systems departments but rather in sort of a middleware role, and that became bread and butter for us. We eventually drifted completely out of the military and government contracts world.
Why did you sell Alta Technical Services?
It was really a goal from the get-go to grow it for an acquisition. When I executed (the exit), the market was ramping up, pre-Internet bubble time, and it was a time to get a valuation that ... we may never see again. I've got to tell you, with the way the market crashed in 2000-2001, there's not a lot of regret there.
What does Aavalar Consulting do?
We are primarily a technical consulting and staffing company. We complement the staffing services we provide with organizational development and the HR soft skills training component so, hopefully, we differentiate ourselves from our competition by doing that. Not only do we provide the technical guns for hire and the full-time staffing for our clients ... we walk in and do team-building and diversity training and things that increase productivity and retention. It's really what the market seemed to be demanding in 1999 and years thereafter.
What did you learn as an employee of ALTA Technical Services after you sold it?
I think I learned -- I relearned, I should say -- that many, or at least the companies I observed of any size, tended to be very political atmospheres that I was not good at functioning in. There are some people that are natural politicians. I'm just not one of them, and so, in a world where you tell it like it is when the emperor doesn't have a new suit on, you can't function.
You either align yourself with the powers that be or you don't function well. So I realized that I wasn't a politician ... that you can't make hand-waving, unilateral decisions based on a bean counter mentality. For instance, in a company like the consolidator that bought my old company, it was very easy to say, 'Look at these salespeople who are working for this company we just acquired, look at how much money they're making. If we got rid of them, look at how much more money would go to the bottom line. We'll just put cheaper people in place of them', which actually happened after we left. They went in and went after the highest-earning people. It's very shortsighted.
How did you approach Aavalar differently from Alta Technical Services?
I'm less negotiable now on a lot of operational details than I was before. You know that certain things work and certain things don't work. If you're in a new in a business or an industry, you might allow other people around you, or even yourself, talk you into cutting corners, doing things that look like an easier route between point A and point B.
Inevitably, those things are traps. You have to have a nonnegotiable business process because you know when you cut corners or do things too differently without some justification, of course, in the end, while it might seem easier or simpler or quicker, it's really not.
Let's say we're hiring a consultant to do a project for us. We absolutely know that we have to get into that person's head to understand them by meeting with them on a face-to-face basis, by doing background checks, by checking their references, by maybe checking references they don't even know we're checking.
You can't talk yourself into thinking we're doing all this extra work and we can probably let this slide and get the project done. It will come back to bite you.
What are the critical skills an entrepreneur needs to be successful?
Tenacity, first. Attention to detail, ability to think strategically, ability to construct systems where you have instant financial statistics and feedback, and a personality where you believe, for better or worse, that you can do anything. You've got to think that failure is not an option.
What advice would you give to potential entrepreneurs?
It definitely happens on a day-to-day basis that your time is gobbled down by every available distraction, and it's really, really important to have good advisers who can step in and run with it and get it off your plate so you can focus on what your business is, what your job is.
And that means a good administrative assistant, somebody who's got a high bandwidth, someone who can understand a lot of things and doesn't need a lot of direction; a good lawyer, who, when you need a contract written or reviewed ... understands your business and doesn't have to come back to you and eat up your time to get that thing done. A good accountant who will probably be a small businessperson's CFO until they can hire one, understands the business, digs into the company's reports and gives you a quick thumbnail analysis of what's going on because unless you're running an accounting business, you don't want to be an accountant.
How to reach: Aavalar Consulting Inc., www.aavalar.com
Many observers predict that tort law will eventually impose a general duty to keep information secure. These trends indicate that it will be increasingly important to stay ahead of the legal curve for information security.
Information security means the processes and measures by which organizations attempt to ensure the confidentiality, integrity and authenticity of data, as well as the availability and accessibility of data and systems. Businesses should employ information security measures to protect customer, vendor and business partner data, tax and financial records, trade secrets, and information systems and system components.
Threats to information security arise from numerous sources, including natural disasters, environmental problems such as excessive heat or cold, physical alteration or destruction of data, viruses, hacking and equipment malfunctions. Furthermore, every man-made threat can emanate from persons both within and outside of an organization.
There are numerous federal and state information security laws already in effect. These range from well-publicized laws such as the Sarbanes-Oxley Act to lesser known laws and regulations governing information security in federal agencies and financial institutions. There are also specific regulations applicable to tax, health care and financial records and information used in electronic transactions.
Moreover, even businesses that are not expressly subject to regulation may find that their business partners who are subject to regulation will insist on compliance by contractual means. In addition, the regulations are helping shape the standard of care for information security, which will, in turn, guide future legislation and business practices.
Information security fundamentals
Good information security starts with an initial risk assessment, which should encompass both information and technology systems and address all relevant areas of operation.
It is important that the assessment be conducted by personnel with the requisite expertise and credentials. In addition, it should identify internal and external security risks and the potential damage from those in light of the sensitivity of the information, match the current security measures with the risks and assess the sufficiency of current security for addressing the risks, in light of the nature and scope of the organization's operations and the sensitivity of the information.
Businesses should use the initial risk assessment to design and implement an information security program and designate employees with appropriate credentials to oversee and implement the program. The program should be enterprisewide and in writing, and should be regularly monitored and tested, evaluated and adjusted. The program should also allow for independent, third-party auditing.
The program must utilize appropriate administrative, physical and technical security measures. Administrative measures are procedural and include items such as documentation procedures, employee training and differential levels of access for employees. Physical measures can include the use of security guards, locked doors and access cards.
Technical measures can include firewalls, antivirus software and data encryption. Obviously, the measures that are appropriate will vary with the situation.
Businesses that use a vendor to implement or administer their information security program must exercise due diligence in evaluating vendors and contractually require them to follow appropriate procedures and implement appropriate security measures. Businesses must also subject their vendors to independent, third-party auditing.
Businesses should be similarly cautious in communicating with their customers regarding their information security program and policies. In particular, businesses must not act inconsistently with promises or representations regarding the use or sale of customer data and should not overstate the capabilities of their security measures or products.
Implementing sound information security measures is good business and is becoming a legal necessity. Businesses should consult with qualified legal and technical professionals to ensure that their business's information is secure and that the business properly documents and communicates its information security efforts.
Francis X. Taney Jr. is a shareholder in the Philadelphia office of Buchanan Ingersoll PC. He is chair of the firm's Information Technology Litigation Practice Group and focuses his practice on complex commercial litigation matters in a variety of substantive areas, including advising clients on ways to avoid or minimize disputes arising from IT related transactions. For more information on commercial litigation matters, especially those relating to information technology, reach Taney at (215) 665-3846 or email@example.com.
Ask the sports management industry leader how he nurtured Philadelphia's first hockey team, the Flyers, into a league with a loyal following. Ask him about growth -- his formula for building a business that dips into every entertainment pot from cable television to arena management.
Ask him about the ventures he launched or acquired since 1966 -- he can't remember exactly how many. He sloughs off the question, figuring his start-ups near a dozen. The Wachovia Center, a $210-million state-of-the-art arena, is the company's latest entertainment gem.
Then ask him how he manages the whole act, and he supplies a two-part response that sounds as basic as baking from a box mix.
"You have to have the right idea and the right people," Snider says, passing ovations and overtime credit to his players.
Snider's got game -- and his formula is simple: "Take what you do well and grow it."
He recognizes overlapping opportunities and connects the dots, from teams to television, fans to arenas, ticketing to concessions.
"My thrill in business is to start something from scratch," he says.
And because a company's team is its critical success factor, Snider listens carefully and trains relentlessly. The team, after all, wins the game -- not one player.
"In the business world, [our company] is much like sports," says Peter Luukko, who worked his way up from college graduate rookie and now works closely with Snider as president of one of the company's numerous subsidiaries, Comcast-Spectacor Ventures. "We win together and lose together here. Ed is like your favorite coach. He is demanding, he cares and he's always rooting for you -- always rooting for you."
"You have to have a strong desire to win ... "
Snider recalls the first days with the Philadelphia Flyers. Hockey was new to the city when he founded the team in 1966, and filling the stadium with fans presented marketing challenges he met with ticket giveaways.
"We had to get people into the building to see the sport," he says. "We felt that once they saw a game, a very good percentage of them would enjoy it and want to come back."
Family-focused seat-filling efforts paid off.
"We invited schools as our guests," Snider says. "We worked out a plan so schools could transport kids here in busses. The thing with children is they don't have preconceived prejudices. Adults might say, 'Who wants to go to a hockey game? I'm a baseball fan.'
"Kids loved the game and started dragging their parents to the sport."
Today, tickets for Flyers games are $23 for nose-bleed seats; corporations occupy suites and box seats are a hot commodity.
"We grew every year," says Snider.
Comcast-Spectacor sprouted new businesses from Snider's initial hockey franchise and the Spectrum stadium.
"We are always finding new ventures, but every business is interrelated," he says. "We are not interested in expanding in areas that are not related in any way to our industry. We love what we do and we are good at it, and there are plenty of opportunities for growth in [the businesses] we already have."
Observation is the crux of Snider's growth; entrepreneurs don't necessarily harvest original ideas, he says.
"I didn't invent the arena," says Snider. "I just knew that we needed one in town. It wasn't an original idea, but it was an idea that the city needed."
Still, an entrepreneurial spirit has innate radar for solutions and can design ways to develop, adapt, fit, form and sell a concept to the market, Snider says. Essentially, his acute sense for demand and the innovative means of filling it molded a multibillion dollar arena management business that really picked up momentum in 1996 when Snider merged Specacor and Comcast Corp., selling 66 percent of Spectacor to Comcast.
Today, Comcast still owns 66 percent of the business.
Initially, this venture consisted of the Flyers, the Philadelphia 76ers, Wachovia Center, Wachovia Spectrum and the Philadelphia Phantoms minor league hockey team. Since then, the corporation joined with the Philadelphia Phillies to form Comcast SportsNet, one of the country's top-rated regional sports networks.
Comcast-Spectacor's most recent additions to the business play list include the Flyers Skate Zone, a series of regional ice skating rinks, and Global Spectrum, an international facilities management company. And the corporation provides all of the arena fixings through Ovations Food Services, Patron Solutions box office management, and event and customer communications divisions.
Snider says fans want more than a home-team win; he is providing them with an experience.
"The arena business has changed from just arenas to hospitality," he says. "It's almost like a combination of hotel management and entertainment. We have to cater to suites and box offices and make sure clients have a wonderful experience.
"They bring their clients and entertain in these suites and we, in turn, provide food, beverage and entertainment as necessary."
First-class service is just part of today's game, and winning arena management organizations serve up the finest fare possible for fans. These expectations have created business opportunities for Comcast-Spectacor -- more spokes reaching from this sports entertainment hub into new profit sectors.
"We manage a lot of facilities, and we are good at it," says Snider. "Our concessions and ticketing businesses keep growing."
Arena management possibilities represent a significant growth opportunity, Snider says. Careful management is the key to continued, controlled expansion, as are strong players who want nothing more than to win.
"You have to have a strong desire to win in the sports industry," he says. "You have to do everything in your power and within reason to win. At the same time, you must have financial responsibility and you need two-way loyalty in the organization -- loyalty to the organization's people and people who are loyal in return."
"Fish stink from the head"
Snider learned his first business lessons from his father. Working side-by-side in the family grocery store, young Snider picked up philosophies that shape Comcast-Spectacor's work culture today.
"My father was a man I looked up to tremendously," Snider says, pausing as he considers a bit of wisdom he quotes regularly to employees. "Fish stink from the head. In the grocery business, you know that the head is where the fish starts to rot."
In a greater sense, the supermarket mantra speaks to leading by example.
"It means an organization is only as good as the guys at the top," Snider says. "Managers have to set standards for everyone."
Company culture filters from the boardroom to the box office, says Luukko.
"We are big hall walkers," he says, explaining that visibility and approachability allow managers to reach an organization's field leads.
Locker-room talk sparks business ideas and cultivates a comfortable culture.
"The first quarter of Flyers games, we have a dinner with people of all levels in the company -- whoever is working that night," Luukko says. "We talk business, we poke fun at each other, we laugh."
Fostering a teamwork culture means leaving corporate doors open. As coach, Snider is a sounding board. He shows interest in employees -- in projects his managers oversee and in ideas that start as hallway chatter and continue as conference-room discussions. Snider leads by listening, and when he likes what he hears, he applauds, Luukko says.
"Ed is my greatest resource," he says. "When I have a deal I think is right and I'm excited about it but it's missing something, I can sit down with Ed and we'll brainstorm. Based on his experience, he'll ask, 'Did you look at it this way?' or 'How about if we tried that?'"
Luukko cites one of the first nuggets he gleaned from Snider.
"Once a deal becomes too complicated, it's really not a good deal," he says, pulling another memorable Snider one-liner from his repertoire. "We are in business to make money and to have fun."
That said, Snider says both characteristics - money and fun -- are why his employees stick around, and how he can recruit talented players. Teams execute strategies, he explains, reverting to his formula of fitting people into appropriate roles.
With players in position, Snider can enjoy the vantage point of watching employees provide animation to company strategies.
"Once you have the idea, you have to find the right people to execute it," Snider says. "Our people know they can grow with us -- the sky is the limit. That's how we get the best."
"...Who can say where the arena business is heading?"
Technology offers a home-team advantage for Comcast-Spectacor, and Snider figures advances will present new and exciting ways to bring Philadelphia sports to fans. Consider concessions, which has matured from yesterday's hot dogs and cotton candy to today's high-class catered fare.
Cable television, high definition TV and digital technology can essentially hot-wire a stadium.
"The way technology keeps advancing, who can say where the arena business is heading," Snider says. "We've gone from color TV to HDTV, which is now being used at most games to make you feel like you are there."
Broadcasting games on computers is another possibility. And with Internet access already available in suites, Snider says that perhaps the next step is connections at every seat.
Keeping up-to-date and constantly seeking ways to connect related businesses to the Comcast-Spectacor core will drive the company's growth, Snider says. Meanwhile, the company will stick to its game plan --providing fans a winning sports entertainment experience. And Snider has his bases covered.
Settled comfortably into the box seats in the game of business, he considers his coaching tactics -- his inspiration, his driving force.
"Entrepreneurs are people who not only have ideas but want to execute them," he says. "Make them happen."
How to reach: Comcast-Spectacor L.P, (215) 336-3600, www.comcast-spectacor.com
Hampshire is a free-lance writer in Cleveland, Ohio. She contributes monthly to Smart Business Philadelphia and Smart Business Cincinnati.
It's all true. It's also true that some companies switched to self-insured programs and increased their costs by $1 million. They lost carrier discounts, increased their risk of ending up with no coverage for run-out claims and increased their internal administration costs.
Self-insuring can be either a great way to reduce expenses or a disastrous path to higher costs and loss of employee satisfaction.
Self-insurance is one method of funding the cost of health care insurance. Self-insured companies do not purchase conventional insurance; instead, they pay for the claims directly, usually through the services of a third-party administrator (TPA), with stop-loss insurance in place to cover abnormal risks. The same kinds of plans, networks, benefits and limitations can be included in both fully-insured and self-insured plans.
Self-insuring can give an employer greater control over benefit designs and costs by avoiding most state mandates and state premium taxes, saving more than 7 percent in costs. That could mean a realized savings of hundreds of thousands -- if not millions -- of dollars in a single year.
Not to self-insure
Self-insuring shifts the risk, onus and potential administrative headaches from a carrier to the employer. Self-insured employers are responsible for selecting a suitably comprehensive health care network, analyzing provider discounts and selecting a reputable utilization review and case management company, as well as a TPA.
Self-insurance may be a poor choice if you have an older employee population that is at greater risk for unexpected, high-dollar claims. These claims can disrupt projected cash flow and affect your bottom line.
Such claims can't be anticipated, and can quickly drain financial reserves. An ideal organization for self-insuring should have more than 100 young, male employees on the plan.
Stop-loss insurance is essential when self-insuring because it protects against higher-than-expected catastrophic claims. However, carriers can "laser" individuals with higher risks, meaning an employer would have to pay a much higher claim before the stop-loss kicks in. Self-insured companies can also lose carrier discounts they previously enjoyed.
There are other hidden risks to self-insuring. A poorly chosen or executed self-insurance plan and network causes disruption among employees and resentment toward management and can affect employee recruitment and retention.
If you decide that self-insurance is the right option for your company, it's beneficial to enlist a benefits broker. A savvy broker knows to evaluate key factors.
* Reserves. A company must have enough in reserve to cover run-out claims and other costs that might occur.
* Reinsurance. If the language of your existing reinsurance contract does not match your actual health benefits program, you may be paying for coverage you don't need and can never use. Your broker must be familiar with the intricacies of reinsurance as it relates to your specific requirements.
* TPAs. A TPA is, by definition, an administrator of payment claims. Are its network alliances in your best interest? Is it negotiating sharply to build the best network for you? Is it enough? An objective independent broker can help find a solid TPA that participates in networks that you and your employees need.
Self-insuring can be a viable and money-saving alternative for some businesses. It is possible to control insurance costs, protect your financial investment in your company and provide your employees with the benefits package they deserve.
The key to achieving maximum efficiencies with any insurance program lies is obtaining accurate and objective counsel.
Ron P. Weiss is senior vice president for Corporate Synergies Group Inc., a full-service employee benefits brokerage and consulting firm in the Philadelphia region. He has been a benefits consultant for more than 14 years, specializing in short- and long-term strategic planning for his clients. For more information on the benefits service brokers offer, go to www.corpsyn.com or call Corporate Synergies at (877) 426-7779.
"Most of them were interested in investing in us, opening offices all over the country and then having an IPO," says Aronson.
Aronson, on the other hand, wanted to control his own destiny and that of his firm, something he figured would evaporate once investors sunk their hooks into the company. So he endured slow cash flow, lean paychecks and all of the other pains involved in bootstrapping a business.
It paid off, and in a sense, Aronson now has the best of both worlds. In December 2003, 100-employee i-FRONTIER was acquired by aQuantive Inc., a public company based in Seattle that functions as a holding company, with several divisions that provide digital marketing services including software, online marketing and advertising, and purchasing and reselling online ad inventory. It maintains offices in more than a dozen major U.S. markets.
Aronson says some i-FRONTIER clients, among them Alaska Airlines and pharmaceutical giants Wyeth and Aventis, wanted to continue to do business with i-FRONTIER but also wanted to work with a firm with deeper resources to serve their needs. That led to the sale to aQuantive, a deal that gives clients access to the more comprehensive capabilities offered by that firm. Part of the deal, says Aronson, was that i-FRONTIER wouldn't be simply swallowed up by the 800-employee parent.
Aronson retains that autonomy as head of the Avenue A Razorfish Philadelphia office, the name the company adopted earlier this year. Avenue A Razorfish is the online advertising and marketing division of aQuantive. The relationship, it appears, couldn't be better.
Says Aronson: "I told them that to be successful, I need to be able to run the Philadelphia business. I need to have some autonomy, and they have completely delivered on that."
Aronson talked with Smart Business about how i-FRONTIER made a pioneering effort in online advertising, what makes for successful interactive marketing and the importance of taking careful measurements.
What factors were most critical in growing i-FRONTIER?
Something I think that has helped us a lot is that when I've looked at hiring, especially when we were small - we were completely funded through cash flow, never had any investors, never took out any loans, so we grew from my bedroom -- and when I looked to hire people, I tried to hire people who were a lot smarter than me, and I tried to think of what takes up most of my time.
So during the time period when HR took up most of my time, that's when we hired an HR manager, and when negotiating media buys with sites like Yahoo! and AOL took up a lot of my time, that's when we hired a media director. And then those people built their teams so that there are a lot of experts running their departments much better than I ever could.
How did you manage to grow i-FRONTIER during a period that included wild speculation in online ventures, the Internet bubble and a sluggish economy?
Prior to starting i-FRONTIER, I worked in direct response marketing, so when the company was founded, we really took an approach of trying to measure everything we did, so we weren't just trying to do things that were sexy or flashy, but implanting strategies and tactics that would sell product for our clients and deliver bottom line results.
And we've always had a focus on analytics, so we've been able to track that, and that was really helpful because when there was the downturn in the economy, for a lot of our clients, we were able to show the impact we were having so online wouldn't be cut from the budget. However, that being said, we did have a number of clients who went out of business.
We had to supplement that by going out and finding more stable companies to work with.
How did you handle the fast-growth periods?
There were definitely tight periods. We would do the work for a company and we wouldn't be able to bill them until 30 days into doing a job, and they would take 60 days to pay us, so there were cash flow issues. We had a line of credit with our bank and just managed it extremely tightly. And there were some years when I had a very minimal paycheck.
How are the major players like AOL and Yahoo! affecting your business and online advertising in general?
We work closely with publishers like Google and Yahoo! As an example, Google just had an executive summit where folks went to learn about what's next in their business. What we look to do with publications is to give them our input, what types of things would our clients spend more on online.
So when we see that something works really well for us as an ad unit or tactic, we'll go to someone like Yahoo! or The New York Times and see if they would be interested in implementing that on their site as well. So together, hopefully, we're driving the industry by pushing for innovation and really impactful, effective ad units, and also making sure that we have the right measurements in place so we can benchmark how well things work.
How do you integrate online advertising with traditional advertising media?
Actually, I think to really leverage a campaign, you have to integrate it. I think it's something that can be done and something that many people are doing really well. You get a lot from learning about your customer, so when you're doing an ad campaign and they come to your Web site, you can see where they go on the site and see what their interests are.
Most of our clients do surveys of the people coming to their site and they find out how to fine-tune the message and what the real hot buttons are, if we're missing them in our advertising, and then also, of course, when you can measure results, it can impact what clients might expect from their other ad buys.
What do businesses need to keep in mind when they are creating an online advertising strategy?
First and foremost, you've got to start with a clear idea of what you want to do and what you want to accomplish. It should be related to your core business. Some of the biggest failures that I've seen are when someone's in one business and they decide, because of the Internet, they could get into a new business.
Companies need to do the things they're good at. If my company sells home improvement products, the focus of my online presence should be selling these products; that's my business.
I need to figure out how I'm going to measure success, and it's not how many people come to my Web site. It's really about how much am I paying for every sell, and what's my profit for every dollar spent for my online marketing effort. A lot of folks think that they should start in a really big way. What's great about the Internet is that you can test. You don't have to start with a giant investment for your advertising.
Companies should think about what works. What works really well is building a house e-mail list and sending out e-mail messaging, because your current customers are typically your best customers for up-selling and renewals.
After e-mailing your house list, we find that search advertising is the best because it's very targeted. So not only are you getting someone, but you getting them at the exact time they're searching for '
'hammer' or 'home improvements' or some other relevant word. So you know they're in the right mindset.
Also, you've got to have a plan for optimizing. What's great about online is you can track results and fairly quickly change to improve on what you're doing.
What technical advances have been most critical in moving online advertising forward?
Targeting and segmenting have been enormous, so instead of just broadcasting your ad, you can really segment your message so that people who are your current customers see a different ad than people who have come to your site and never purchased vs. peopl e who are within your demographic but you haven't done business with them before.
What have you learned about online advertising since you started i-FRONTIER?
If we look at the early days, companies looked at it as an R&D experiment; let's put some money into the Internet and see how it works. And now, everyone knows that it makes money for business. It's at the table when people are making marketing decisions as a main tactic.
We've also learned that, unlike a lot of other media, where the consumer doesn't have control, it's kind of just pushed to them, online the consumer controls whether or not they interact with ads. They decide if they click, they decide if they go to a Web site, they decide if they fill out a form.
So, instead of just pushing a message, what we've seen be most successful is providing value in the ads, and value can be entertainment if that's what a consumer expects from your company ... or it can be a discount or it can be targeted offers relevant to what someone is searching for or relevant to their needs. And I think if you look at trends in offline, it's also going in the direction of more consumer control.
Take Tivo, for example. If you watch Tivo, you can fast-forward through advertisements. Tivo did a study and found that more than 80 percent of their users fast-forward through the ads. It has the ad community really concerned, because as Tivo gets greater penetration, and as other digital video recorder devices emerge that are similar, what we're going to see is more and more people skipping through the ads.
The question becomes, how do we create engaging ads, and for online, that's been the question from Day One.
Business intelligence (BI) applications that can automate the process of gathering, storing, analyzing and providing access to data are approaching their maturity. Unfortunately, when it comes to determining which direction to take, many first-time adopters painfully learn that all roads do not lead to Rome.
In your quest to automate the planning, reporting and analyzing process and provide actionable information to support decision-making at every level within your organization, consider this BI Traveler's Roadmap to Success
* Don't start without a roadmap. Develop a strategy. If you don't know where you're going, you're never going to get there. A good strategy aligns long- and short-term information initiatives with your business strategy, objectives and enterprise performance goals. A solid strategy will ensure a financially beneficial deployment of BI within your department or across the enterprise.
* Take along an experienced guide. If you haven't done this before, hire someone who has successfully done it many times. Many of the early adopters of BI applications found themselves getting lost in the journey. A competent BI guide will keep you moving in the right direction, help you to fill in the gaps in your company's information resources and needs, and create an enterprise-level business intelligence architecture that delivers a rapid return on investment on your existing IT assets, as well as a reduced total cost of ownership.
* Make the journey in a series of short hops. Build incrementally with valuable deliverables along the way. Creating an enterprise BI solution in a single effort is enormously difficult and financially risky. Enterprise BI touches all parts of the business, and integrating information from all these parts can be a very complicated process. Businesses have been much more successful building incremental solutions that fit into an enterprise BI strategy. The incremental solutions individually deliver valuable information on a single aspect of the business, and in aggregate provide an enterprisewide view.
* Plan extra time if you take a less-traveled route. New and boutique solutions will probably require more time to implement and support. There is no such thing as out-of-the-box BI. The best BI solutions combine packaged software with customized components, so be prepared to invest the necessary time and resources to do it right. In the end, you will be glad that your BI solution is tailored to meet the demand for your specific information assets.
* Make it a family trip. Ensure a commitment from both business and technical resources. Implementing a BI solution is a major undertaking, so it is critical that everyone understands the business, technical and cultural impact throughout the organization and actively supports its adoption. To be successful, a BI solution must be driven from the business, rather than from the technical team. And since an enterprise BI solution touches all parts of the business, it's important that each of those parts is represented when the solution is being crafted.
* Keep a flexible schedule, allowing for short side trips. Some of the most rewarding parts of a journey aren't on the itinerary. The discussions about the business that are part of designing BI solutions often lead to surprising insights into the business. Take advantage of those insights and adjust your plans as necessary.
The bottom line is that there is a whole world of information available for companies to use to profitably grow their businesses. With the proper preparation, the right attitude and the right traveling companions, any company can reap the benefits of following the BI Traveler's Roadmap to Success.
Bryan McClain (firstname.lastname@example.org) is the business intelligence practice manager at Innovative Consulting, a leading provider of IT Strategy, Business Intelligence and eBusiness solutions to Fortune 1000 and middle market enterprises. Reach him at (610) 725-2101.
Education: Point Park College, degree in psychology with minors in math and Spanish; Duquesne University, MBA finance and information technology; University of Pittsburgh, MBA
First job: Consolidated Natural Gas Service Co., office services. "The position was called a key operator -- putting toner in the printer, delivering mail and driving executives in the company car," he describes. "I wasn't allowed to talk to them then."
Involvement: Serves on boards for the Philadelphia Orchestra, Philadelphia Police Foundation, Hershey Foods and Temple University; member, Committee to Encourage Corporate Philanthropy; chairman, CEO Steering Committee on Financial Services for the American Council of Life Insurers
Whom do you admire most in business and why?
Peter Drucker's intellect and insight is incredible. He walks the line between tactical and strategic thinking and has an enormous ability to transition a business to be a bottom-up organization.
What is the most important business lesson you have learned?
All of my lessons come back to the value of employees and people. I cannot get beyond how important people are to the success of a corporation.
What has been your toughest business challenge?
Changing the company infrastructure and separating sales functions from manufacturing.
Describe your leadership style.
I am collaborative and I love and encourage responsible debate. I ask a lot of questions and delegate a lot of authority. Also, I have a high demand for excellence and accountability.