Kim Palmer

Tuesday, 26 February 2002 12:25

From downtime to real time

If we've learned anything about the airline industry in the last year, it's that downtime is devastating. Airlines make money when flights are in the air and lose it when they're not.

Barring a national disaster or weather conditions, one of the major factors in airline efficiency is airplane maintenance. Every part on every aircraft is integral, as Argo-Tech, a manufacturer of fuel pumps for the aerospace industry, well knows.

Although a fuel pump is just one part of the aircraft, a problem with that small part can mean a plane is grounded and losing money. As Donald Sebian, manager of information systems at Argo-Tech explains, "Not knowing the status of the fuel pumps (the airline) sent to Argo-Tech for repair affects (the customer's) ability to schedule an engine through their repair line."

Argo-Tech manufactures and repairs parts for the aerospace industry; its customers include both the airlines and after-market shops. That means Argo-Tech's customer service representatives could be dealing with a global billion-dollar company like Boeing or a mom-and-pop repair shop in the next state.

In light of that, the first thing the company had to do was assess the needs of its diverse customer base.

"We talked to our customers, the airlines, and asked for feedback," says Sebian.

It has become apparent that Argo-Tech's customers wanted the company to be more accessible for both product information and repair status.

"Our customers wanted us to make information available on the Web," he says. "We used to send out lots of paper catalogs."

The time and costs associated with keeping customers aware of new and changing products has been cut substantially. Argo-Tech's site has full descriptions of its products, online technical manuals and ever-changing FAA specs.

Also, because the site is integrated into Argo-Tech's mainframe, "Different customers receive different information; it is all based on a customer, company profile," explains Paul Harty, Argo-Tech's customer and technical services manager.

This streamlines the process and eliminates a lot of redundant and unnecessary mailings.

"Now when we publish revisions," says Sebian, "we just send out an e-mail notification."

Argo-Tech also deals with customers in every time zone and that means some strange hours for customer service calls. The problem was finding a way to provide information to its international clients on a timely basis.

"Normal repair station operations could not provide coverage to support all of the different required time zones around the world," says Harty. "Sometimes, there could be a time lag of up to 24 to 48 hours between the initial phone or fax message and a subsequent response."

Now Argo-Tech's is able to report on every aspect of the repair process from receipt of the pump to shipping the product back to the customer.

"Our site is fairly unique," Sebian says. "The updates are in real time. There are updates about every five minutes."

Although the company has relationships with some of the largest names in the aerospace industry, smaller companies were often unaware of Argo-Tech.

"These smaller mom and pop repair shops are now finding us through Internet searches," say Sebian. And as far as ordering online, "ironically, the smaller businesses are more apt to use our Web site." How to reach: Argo-Tech Corp., www.argo-tech.com

Wednesday, 02 January 2002 05:38

Tech transfer

Many people are looking to biotech to fill the gap that manufacturing has left in Northeast Ohio. However, Cleveland is not the only city looking to biotech to replace or augment revenue, and the competition promises to increase as more and more scientific and technological discoveries are made.

According to BIO, the biotechnology industry has more than doubled in size since 1993, with revenue increasing from $8 billion in 1993 to $22.3 billion in 2000. Biotechnology's potential is great. The key now is to develop an environment conducive to attracting, retaining and growing biotechnology.

Dan Eramian, vice president of communications for the Biotechnology Industry Organization (BIO), a biotechnology information, advocacy and business support organization, claims Cleveland is the perfect place for biotechnology to flourish.

In a speech at Athersys in July, Eramian analyzed the region's opportunity to grow. "The nation's three most concentrated biotech centers – the Bay Area, Boston/Cambridge and San Diego – share many traits that led to their emergence as leaders," says Eramain. "First, they all boast world-class academic institutions and biomedical research facilities, which produce the initial intellectual property for start-ups and supply the technically nimble workforce needed to advance novel products through development and market launch."

Eramain says that presence of the Cleveland Clinic, Case Western Reserve University and the Metro Health research facilities and the fact that Northeast Ohio ranks 12th in the nation in total NIH funding, are case in point when it comes to proving that the area has what the fundamental ingredients to foster a biotech industry.

Eramain is quick to add that, "the second key ingredient for biotech hotbed is money."

It's not cheap to fund biotech. In fact, the U.S. biotech industry spent $10.7 billion on research and development in 2000 alone. The top five biotech companies spent an average of $89,400 per employee on R&D in 2000, compared to an average of $37,200 per employee spent by the top pharmaceutical companies.

Eramain points out that Cleveland already has in place a number of firms and venture capitalist that are making investments in biotech and he stresses how important they're involvement is.

"The venture capitalists really drive creation of marketing plans, and indeed that whole bumpy transition from an academic mindset to a business one," he says.

The amount of money invested in the U.S. biotechnology industry increased 156 percent in one year, soaring from $137.9 billion in 1999 to $353.5 billion in 2000. Eramain stresses that to build a financial base for Cleveland biotech, we will need more than individual investors. Last year only 10 percent of biotech funding came straight from venture capitalists.

"You've already got the basic infrastructure in place to nurture companies … with organizations like the Ohio Venture Association and the Greater Cleveland Growth Association," he says. Even though Ohio has an R&D tax credit already in place, he says, "You need to have your state legislators and administration officials recognize the economic benefits of nurturing biotech in this state as part of building the new economy."

It's obvious that the biotech industry is just getting started. To date, there are 1,273 biotechnology companies in the U.S. The biotechnology industry currently employs 150,800 people. That's more than all the people employed by the toy and sporting goods industries. And as Eramain puts it, "Competition between the states to attract biotech companies is heating up."

"Eight years ago, the critics said there would be no biotech industry, and that all these biotech companies would be bought by large drug companies," says Eramian. "Eight years ago, the critics said Wall Street would not invest in us. Last year we raised more than $40 billion, a record."

How to reach: Athersys, (216) 431-9900; BIO, www.bio.org

Monday, 03 December 2001 09:01

Not your father's copy machine

If you've been in the market for office equipment the last two years, you've probably noticed a lot of changes.

No longer is having a fax machine or color copier a sign of a high-tech office. In some cases, your grandmother has a fax machine that's nicer than the one you use for your business.

If you're not sure whether it's time to re-evaluate your office equipment, here's a hint: When employees would rather print things at home because the printers that came with their home PCs are faster and have better resolution than the one at the office, it's time to start looking.

"The business environment has changed," says Sunny Kumar of Northcoast Business Systems Inc. "We have gone from analog to digital to system integration in a very short time. These machines are not just copiers, not just fax machines, not just printers. They are multifunctional devices."

Today it's all about multiuse machines, speed, color and networking.

"Gone are the days when we just sold office equipment. Now we are providing total business solutions," Kumar says. "We look at the total network environment. How does the paper flow in the departments, and what is the business's total (equipment) cost?"

The idea is to save time and paper and increase efficiency. The machines Northcoast sells are connected to the network so faxes can be sent, copies collated and documents printed without the user leaving his or her desk.

There should be a law

How many times have you put the letterhead, envelope or labels face down in the paper tray, only to have the printing come up on the wrong side? How many times have you faxed a blank sheet to someone?

One of the biggest advantages of a multifunctional machine is that you and your staff only have to know how to run one machine, and you no longer need an engineering degree to understand how to make a double-sided copy.

Kumar boasts that anyone who knows Windows can feel comfortable with the new breed of office machines.

"If you have basic computer knowledge, you can run these machines. If you have any questions, there is a help function to walk you through it," she says.

But don't think these new machines are simple. On one of the devices Kumar sells, there are 330 individual functions.

Pretty colors

Back in the day -- a year ago -- you only had access to color copiers and printers at Kinkos. And if an office did have a color copier, it usually had a fence around it or a lock on it due to the prohibitive cost of reproducing in color.

"Prices have substantially dropped. Before, the cost per color copy was anywhere from 75 cents to a dollar. Today, it is more like nine to 14 cents," says Kumar.

Also many machines today can print in both color and black and white, saving the cost of buying or leasing two separate machines.

A need for speed

Although the time spent waiting for a fax to cycle or a document to scan may seem minimal, added together over a month or year, those few minutes become hours of lost productivity.

"Today's machines can scan 40 to 60 pages a minute ... and the average new printer has gone from six to eight pages a minute to 13 or even 130 a minute," says Kumar.

Add to that the cost difference of using a digital printer with lower-cost developers, and a printed page averages five cents a copy.

So what more can we expect from office equipment in the next few years? Archiving systems, higher speed, less expensive machines and, according to Kumar, "perhaps in the next 20 years, a paperless society." How to reach: Northcoast Business System Inc., (216) 642-7555

Kim Palmer (kpalmer@sbnnet.com) is managing editor of SBN Magazine.

Monday, 03 December 2001 09:00

Let's make a deal

The big news is that the downturn in the economy is significantly hampering business sales and revenue across the board.

The bigger news is that the prime rate is at its lowest in 40 years, and it's a great time to refinance and re-evaluate lease and mortgage rates.

Consumers will buy and invest these days, but only if they can get quality at a bargain. This is especially true in corporate real estate. According to a Collier's International market report, Cleveland has weathered the economic storm with only moderate increases in vacancy rates in the second quarter of 2001.

That said, there is tenant downsizing and leasing activity is slow, partially because investors are unwilling to pay the prices owners are asking. And, although the increase in vacancy rates is moderate, the economic environment has opened up the discussion of lowering leasing terms.

"Landlords are becoming more creative in their efforts to renew existing tenants and to secure new tenants," says Tom Gustafson, vice president of Collier's International. "While asking rental rates are holding steady, concessions such as free rent and increased tenant improvement allowances are being offered more frequently and more liberally."

But a bargain isn't a bargain if you don't get what you need. The first step, according to Allen Wiant of the corporate real estate firm Brandon, Wiant, Converse, is to determine what you need.

"There is a strategy and a process," Wiant says. "It is a lot about organization."

Ask several key questions before you contemplate any real estate-related move or expansion, regardless of the terms. First, where does the majority of your work force live?

Generally, people don't like to travel more than 30 minutes each way to work. If you cross that line, your employees may vote with their feet. Gustafson predicts that because of that, many higher-paying service businesses will look at the Chagrin Highlands area as a relocation option.

"A lot of company and corporate executives live on the east side," he says. "That makes Chagrin Highland very valuable property."

Even if you're bargain hunting, the key word in real estate is still "location." There may be dozens of new methods of digital and satellite communication, but nothing beats a good face-to-face meeting. And it is no longer good enough to have a central location that is accessible by one major interstate or highway -- if you've ever been backed up in traffic on Route 422, this should come as no surprise.

"Not everything has to be right off the highway," says Wiant. "Employers are now trying to find a place that has multiple points of entry and alternative routes during rush hour."

Location is not only important when considering how far your employees and clients must travel, it is equally important when you consider what is around you. Gustafson believes that means more employers will move toward locations that offer more than just office space to make things convenient for employees.

"There is trend toward the multiuse retail and office space," he says. "We have a building that includes daycare, fitness and a caf. That way, your employees don't have to leave the area."

Wiant adds one more consideration -- the environment. He believes the businesses around you can have a lot of synergy with what you are doing.

"Take into consideration who your neighbors are," he says. "It can be both positive and negative. If you are in a creative business, you want to be somewhere with high growth and excitement, where business is happening all around you." How to reach: Brandon, Wiant, Converse, (216) 574-4200 or www.bwcltd.com; Colliers International, (216) 861-7200 or www.colliers.com

Kim Palmer (kpalmer@sbnnet.com) is managing editor of SBN Magazine.

Tuesday, 23 October 2001 08:34

Necessity is the mother of innovation

Most people's lives are a series of twists of fate that are either capitalized on or not.

For Edward Crawford, CEO of Euclid-based Park-Ohio Industries and a 2001 Innovation in Business Master Innovator, necessity has been the mother of innovation and innovation has been the lifeblood of success.

Consider how Crawford landed in Cleveland.

"My father was an electrician," he says. "Like a lot of fathers in 1948, he wanted to take his family to California for a better life. The simple story is that the truck blew up in Cleveland and we stayed."

It just goes to show that often, opportunity rises from the face of adversity.

No one knows where Crawford would be today if that truck had made it to the West Coast, but most likely he wouldn't be CEO of Park-Ohio, which is paving the way in manufacturing logistics with 4,000 employees and $750 million in sales.

With an entrepreneurial spirit and youthful ambition, Crawford began his career as a salesman for steel container manufacturer Inland Steel. It didn't take long for him to get the entrepreneurial bug and he and a friend founded their own steel container business.

"I felt that we could do it better and more effectively," says Crawford.

But there was one problem.

"We got all of the equipment," he says. "We forgot one major issue -- working capital and access to working capital."

Crawford needed steel and had no capital. The answer came out of necessity -- convince a steel producer to basically lend them the steel, then produce the containers, deliver the goods at a discount for on delivery payment, pay the staff and the steel company and turn it all around in less than a week. Simple, right?

"I viewed the container business as steel in and steel out," says Crawford. "How long does it take to convert the steel to product, sell it and collect the money?"

Although the concept may sound familiar today, that wasn't the way it typically worked in the early 1960s.

"It is the concept which is very fashionable today -- zero net working capital," Crawford explains. "But using that process, the company went from $0 in 1962 to $18 million in 1969, and I was the SBA Man of the Year."

Capitalizing on problems

With the innovative process in place, Crawford continued to be successful and grow his business. But he always faced the same problem -- access to capital.

"Because of all my experience, I began to think that possibly there was a way of accessing capital by buying troubled companies -- motivating people and making changes," he says.

In the '60s, unlike today, there were not a lot of entrepreneurs looking for companies with problems.

"It was a brand new concept to go in and buy something and get it at a discount because of those problems," says Crawford.

But taking on those challenges opened the door to capital. And, as if amassing manufacturing companies and making them profitable wasn't enough, Crawford came across another failing manufacturing company, only this time it was a public company.

"We came to Park-Ohio in 1992," he recalls. "In the preceding five years, the company lost $50 million. I became the chairman on June 16, 1992, and in the fourth quarter we made 2 cents a share. We then went 33 quarters in a row of increased sales and earnings, growing the company from $66 million to $850 million."

With a new company came new challenges and new ideas. Crawford's most illuminating experience came with a trip to Mack Truck to discuss a line of fasteners from RB&W, one of the companies within Park-Ohio.

The story goes that when Crawford asked why Mack bought all of its fasteners from a single source, leaving it vulnerable in his eyes, the answer was that is was more efficient to get 78 fasteners from one source than to order 78 fasteners from 78 sources.

That is when he realized things were changing in the manufacturing business.

"When I came in to the building, I thought of Mack Trucks as a manufacturer. When I left the building, I realized that, in essence, they were going to be an assembler," he says.

That one meeting prompted Crawford and Park-Ohio to make yet another innovative move.

"Logistic supply chain management came to me when I saw the efficiency -- why would manufacturers have working capital?" he says. "Why would they have their floor space tied up? Why wouldn't they get us to deliver everything?"

Crawford immediately applied the concept of logistics supply chain management -- getting the customer what it wants, when it wants it, right to the workstation, with net zero working capital. This way, his clients are really converters. Some don't even need a sales department, Crawford says.

In reality, his approach to business fundamentals hasn't really changed since his early days.

"It is a long carryover from 1962," he says. "It is the conversion of raw material."

Today, Crawford is driving the concept of supply chain management, which, at its basest level, is the conversion of raw materials. However, as he spends more time and capital on the logistics part of Park-Ohio, he envisions selling off the pure manufacturing companies.

"We have committed all the resources of the company in the last four or five years to the building of supply chain management," he says, adding it is where the company is headed.

Currently, it represents close to 70 percent of the business.

"At noon today, our client's computer will tell our computer -- which we invested some $30 million and runs 52 warehouses serving 15,000 active industrial accounts -- what they need, how much they need and when. That trend is going to continue."

How to reach: Park-Ohio Industries, (216) 692-7200

Tuesday, 23 October 2001 08:32

Who moved my funding?

Lee Fisher talks about "moving with the cheese" in the 2000 strategic plan for the Center for Family and Children (CFC), a nonprofit organization that provides social services to families that could otherwise not afford them.

Quotations from the bestseller "Who moved my cheese?" may not be what people expect from the leader of a 31-year-old nonprofit, but then again, how many nonprofits even have a strategic plan, let alone someone like Fisher as president.

If you aren't among the millions who read John Spenser's allegory about change and dealing with it, you may wonder why anyone is worried about cheese being moved and what it has to do with the CFC. Cheese is a metaphor for things we need, and is the reward at the end of the maze of life. In the case of the CFC, that reward is funding dollars and the maze is the changing funding environment.

Like other nonprofits, the CFC is highly dependent upon the government, foundations, corporations and individuals for its cheese. Fisher says it is too dependent.

"The most recent state budget confirmed our thoughts that we cannot depend on any one source," explains Fisher, whose background in state government as state senator and attorney general give him a unique understanding of the economics. "Between 60 and 65 percent of our revenue comes from governmental sources -- federal, state, county and local."

Fisher's solution is ironically similar to what the CFC teaches its clients -- self sufficiency. Under his leadership, the CFC looks more like a traditional business than a nonprofit organization. It's akin to the age-old adage, "Give a man a fish, you have fed him for today. Teach a man to fish, and you have fed him for a lifetime."

When Fisher arrived as president after an unsuccessful bid for governor of Ohio, he decided to tackle the funding problem in a practical business fashion -- one that earned him the honor of Visionary in the 2001 Innovation in Business awards.

The center adopted the most comprehensive strategic plan in its 30-year history, articulating over nine arching goals. One of those goals was to become more self sufficient. To accomplish that, the CFC sought to develop innovative ways to get fees for its services and enhance business development and revenue generation.

Several of the CFC's programs already generated small amounts of income. The trick was to increase the amounts and build the organization's overall cash flow.

"There is an analogy to small business," says Fisher, "While it's important to focus on your core competencies, it is also important to be looking for opportunities that can capitalize or leverage on those core competencies in order to increase revenue."

Using terms like "core competencies" and "strategic plan" is just the beginning of Fisher's grand idea.

"It is combining the best of both sectors -- the business smarts of the for-profit world with the heart and compassion of the nonprofit world," he says.

Fisher expects that increased accountability will also have an effect on traditional funding the centers receives.

"If I were a contributor, I would want to know that I'm giving to an organization that is financially sound," he says. "Also, that they have a long-term view of how they are going to survive."

The mix has a fundamental synergy that Fisher believes will be appealing to both donors and clients.

"How often can you buy a service that enhances the productivity of your workers and at the same time does something good for the community?" Fisher asks. "Usually, you have to choose one or the other. The product that we sell is both."

How to reach: Center for Families and Children, (216) 241-6400

Sunday, 21 October 2001 19:59

Cybersales

Despite the hype surrounding e-business, in Ohio, the hard facts point to a case study in conservatism.

According to a survey by E-com Ohio, less than 30 percent of Ohio businesses are online and only 15 percent have a Web site. Those numbers may sound low, but they're only slightly below the national average.

What may be more telling is that 90 percent of Ohio businesses that have some sort of e-commerce initiative derive 25 percent or less of overall revenue from Internet sales. However, almost 96 percent of those surveyed say that revenue from Internet sales has increased or remained constant over the last year.

Beating the street

As with anything, there are exceptions to every rule. Arborwear, a Chagrin-based company that manufactures and sells specialty tree-climbing clothing, is one such exception.

Paul Taylor, Arborwear founder and president, says approximately 40 percent of his sales are the result of orders received via the Internet. That's even more impressive when you consider that Arborwear has grown by 100 percent each of the last three years.

Taylor says he always planned for the Internet to be one part of his business, but the results have been even greater than his expectations.

"I didn't think the Internet was going to be such a huge part of my sales," he says. "I really didn't appreciate the impact that it would have in the way of exposure."

For a company like Arborwear, which serves a global-but-niche market, exposure is one of the fundamentals.

"Sales are great, but we are trying to build the brand," Taylor says. "Your company has a lot more power in the market if the perception of your brand is stronger. We are getting thousands of hits on our Web site. Not everyone is buying, but they are looking at our logo and the unique way we present our product. They are going to remember Arborwear."

Why time is money

"Initially, we thought that the Internet would be a good marketing tool," says Skip Summerville of Summerville's, an Akron-based office supply store.

Summerville holds fast to the notion that his business is relationship-based. But, he admits, what started out as a digital catalog not only has increased sales, it has also significantly affected the company's bottom line.

"It (the Web site) is more efficient for me, the customer, the bank and the manufacturer," Summerville says. "It reduces inventory space and time."

As a result, the company has been able to grow without adding overhead in the form of employees.

As Summerville uses the Internet to facilitate his customer base, Taylor uses it to build one.

"I want to capture the people that look at our site and e-mail it to their friends," Taylor says. "I want it to be energizing and make people want to try our stuff, get fired up and say, 'I have to have a pair of those shorts.'"

As he sees it, closing sales is a natural progression.

"Now the goal is to turn those visitors into customers and build our brand through exposure," Taylor says.

Summerville isn't worried about competing with large office supply chains or even with other office supply stores on the Web. To him, the Internet is not a means to an end.

"It comes back to who are you going to buy from," he says. "You are going to buy from the guy you golf with or go to church with."

Summerville's website

Thursday, 26 July 2001 20:00

When employees attack!

Despite the recent media attention on serious and fatal violence in the home, school and workplace, national statistics reveal that extreme violence in the workplace is declining.

But as positive as this is, there remains an increased problem of low-level, employee-on-employee violence, the seemingly minor incidents of harassment, threats and intimidation that occur in many businesses.

According to the results of the Workplace Practices Survey, at least one of 92 CEOs and HR managers who responded believes his company's biggest challenge is dealing with problem employees. And, while that person is in the minority, more than 10 percent of respondents admitted there had been at least one violent incident in their workplace within the past two years.

Violence on every level is becoming more of a concern for business owners, says Tim Dimoff, a former Akron narcotics officer and president of SACS Consulting Inc. Dimoff specializes in high-risk workplace issues.

"The actual extreme violence, shootings and stabbings and such statistically are down," Dimoff says. "What has happened in the last couple of years is that society has become sensitized to violence and figured that we had to do something."

Extreme violence, harassment, stalking and the like are estimated to cost American business owners $35 billion each year.

"For every incident you hear about, there are hundreds you don't see," Dimoff says.

In fact, low-level violence can destroy morale, increase turnover of good employees and, of course, make a company and its management vulnerable to costly litigation.

"It's not simple anymore," Dimoff says. "We see some unique and concentrated efforts to intimidate and bother."

But, Dimoff admits, most often the reaction to lower-level intimidation and harassment is to ignore it or respond with a slap on the wrist.

"They don't know what to do," he says. "It is alien to them and they are too busy with running the business."

The problem with that approach is that unchecked violence tends to escalate.

"It is like having a little crack in a sidewalk," Dimoff says. "Eventually, it gets bigger and you have more cracks."

Even with this increased sensitivity, Dimoff says he still meets employers hesitant to confront problem employees and situations.

"I can't tell you how many times I've been asked, 'Should we take this guy seriously?'" he says, adding that his rule of thumb is that if you have to ask the question, you already know the answer.

There are no easy answers when dealing with workplace violence, but Dimoff has several tips:

  • Train supervisors.

  • Report every incident in writing.

  • Have an organized game plan.

  • Use outside experts to investigate and diffuse potentially violent situations.

But perhaps the most important step an employer can take to prevent violent situations is to create a zero tolerance environment for any level of employee disrespect. Creating a culture of zero tolerance begins with the leadership, but as Dimoff explains, it will quickly be transmitted to the entire organization.

"Employee communication is faster than fiber optics," he says.

Zero tolerance, interestingly enough, doesn't always mean immediate termination. Dimoff suggests a cooling off period and diffusing situations rather than rushing to a decision, especially before hearing both sides of a conflict.

"Don't fight fire with fire," he says.

Dimoff also stresses the need to diffuse potentially violent people. That may mean suspending an employee and sending paychecks in the mail while Dimoff's company does an investigation. The bottom line is that in the end, it is less costly than dealing with the aftermath of a violent ex-employee who feels blindsided by accusations.

Violence is a problem that doesn't look like it's going away any time soon.

"I have had more requests for armed termination this year than ever before," Dimoff says.

And whether it is the pressure of personal lives or simply unstable employees, the incidents are becoming more frequent.

"It used to be that I would get a call about a potential violent situation four times a year," he says. "Now, I get two or three a week."

How to reach: SACS Consulting (330) 628-6393

Kim Palmer (kpalmer@sbnnet.com) is managing editor of SBN Magazine.

SACS Consulting website

Thursday, 26 July 2001 20:00

Extra! Extra! Read all about it

In an age in which SEC Fair Disclosure rules are increasingly restrictive and Internet chat rooms filled with employee gossip can make or break a company's stock performance, sometimes the best way to control sensitive financial information is to share it.

It should come, then, as no surprise that more than half of the 92 CEOs and HR managers who responded to this year's Workplace Practices Survey said they meet with their staff at least once quarterly to review financial information, the state of the company or company policies.

A growing number of business owners and managers are opting for greater financial disclosure these days, says Helen Copeland of Copeland Communications Group. Copeland suggests being as honest and open with employees as possible, and sees such actions as good for the employee/employer relationship.

"Think of it as part of the internal public relations," she says.

Open book management, as it is commonly known, is ingrained in the corporate culture at Euclid-based Radix Wire Co., explains president Chuck Ver Merris.

"We have a fluid exchange on all topics," he says.

For Ver Merris, the exchange of all types of information on every level to every employee and even to union representatives is simply a part of the company.

"It's a philosophy," he says. "We elected to operate this way a long time before it was popular."

At Radix, every employee is involved in the business.

"We are all business people first, then we do something else within the company," Ver Merris says.

The reasoning is simple.

"A well-informed employee will make good decisions," he says. "It is also a license to expect others to use information effectively."

Another plus to liberal financial disclosure policies is not having to worry about safeguarding information within the company.

"We don't waste energy securing information or spend time keeping it secret," Ver Merris says. "I imagine some companies spend a lot of time and money doing that."

And, even with Radix's open book management, Ver Merris says he doesn't know of one incident when company financial information has been disseminated improperly outside the company. Any risk he takes by sharing information is worth it because of the return he gets in innovation and productivity, not to mention general employee morale.

"Employees like to know they make a difference and are participating in whatever happens," he says. "Just having information empowers and ensures that employees go off in the right direction."

So what happens to this open air style when the economy heads south and shakes up the business? According to Copeland, sharing financial information is important when the news is bad as well as good. That's especially true with high-exposure or publicly owned companies when a proactive approach to sharing information may keep employees from being caught by surprise.

"You don't want it (information) to show up in the media or print and employees don't know," Copeland warns.

"We do celebrate when the numbers are good, but we don't serve it up any different way when they aren't," Ver Merris says.

And for Radix, and manufacturing in general, the news hasn't been all that cheery. Regardless, Ver Merris presents the information every quarter, followed by a question and answer session in which employees can ask questions and express opinions.

"We may have different opinions, but at least they know why," he says. "There is no mystery. No one works in a vacuum."

Copeland agrees.

"Companies need to deal with the truth," she says. "Even in the case of bad news. Explaining cutbacks is being realistic so that the employees can understand that during a bad time, there may have to be some changes."

The result of this straightforward stance is an air of respect toward a business owner who is willing to be honest with employees.

There is, however, one exception to the rule. Copeland and Ver Merris agree that discussing compensation is verboten.

"The bottom line is tell the truth except in the case of individuals' salaries," says Copeland.

So, if sharing information is such a positive for business owners, why do many refuse to do it?

Copeland chalks it up to a fear factor and even a sense of ownership. That's especially true with smaller companies, where there is a distinct feeling of ownership.

"There is the idea that this is my baby," Copeland says. "It's yours and you don't go out talking about income with other people."

Copeland offers one final piece of advice when determining how to share critical data.

"Make it an enjoyable experience," she says, suggesting a lunch or dinner meeting. "Serve comforting food in a friendly kind of atmosphere. People will always come for food."

How to reach: Copeland Communication Group, (216) 932-2722; Radix Wire Company, (216) 731-9191

Radix Wire website

Tuesday, 27 February 2001 19:00

Digital repo

On July 1, changes in the Uniform Commercial Code will affect millions of daily business transactions nationwide.

Ohio is just one of 27 states that adopted revisions to Article 9 of the UCC, which was updated to take into consideration emerging forms of e-commerce. The District of Columbia also adopted the changes, and there is a growing movement to get the remaining 23 states on board before the law takes effect.

Article 9 deals with a lender's interest in personal property used as collateral to secure payment of an obligation. For example, when a bank lends money to a car buyer, it often assumes an interest in the car. That allows the bank to repossess the vehicle if the buyer fails to make payments.

But how can a lender secure an interest in intangible property? How can it protect itself when lending money to a dot-com, where the primary assets are a software program and a URL? These are some of the issues solved in Article 9's latest revision.

The old statute was written an a time when the economy was goods based. Today, it is a smart-goods based economy, and nowhere is this more evident than with Internet companies, where the important assets are nonreal or intangible.

Often, these businesses own computer equipment, a URL (a Web address) or a database. It's difficult for a lender to take an interest in those items. That's left many wondering how they can protect themselves vis--vis those assets.

Software ownership is a good example of the challenge to define property in this Information Age. Under the new Article 9, software is considered an intangible type of property. However, software embedded in hardware is defined as "goods," making it a secure form of collateral.

"The new Article 9 will bring about a seismic shift in lending practices," says Corinne Cooper, editor of "The New Article 9, Uniform Commercial Code, Second Edition," published by the American Bar Association Section of Business Law.

"Every company that holds a security interest in personal property in the United States should ask its lawyer what it needs to do to protect itself," Cooper says. "The nature of secured lending is changing, which will affect finance companies, credit unions, banks, automobile leasing companies and virtually anyone who sells on secured credit." How to reach: ABA Section of Business Law, www.abanet.org/buslaw/home.html

Kim Palmer (kpalmer@sbnnet.com) is managing editor at SBN Magazine.