Kim Palmer

Tuesday, 26 August 2003 12:00

Workers unite

Change is hard enough for those making the decisions, but it's often even harder on those who have to live with the changes.

This is especially true in manufacturing, where the line between management and labor is very distinct. And even in these economic times, many employees don't completely understand the need for process change.

That's what Ron Bercaw, director of operations at Keithley Instruments, tried to combat after the company's management decided it was time to revamp its traditional manufacturing process toward lean.

"We are trying to be a growth business, trying to compete ... but for 56 years, we've done the same thing," says Bercaw.

Bercaw knew that a fundamental part of the lean process was contingent on employee input and buy-in, but he was also aware it wasn't going to be easy.

"At first they don't really believe you," Bercaw says about introducing lean principles and training. "They see the plant as successful, and they didn't necessarily see the reasons to change."

Bercaw says the first step in selling the idea of change is to do it from the top down and do it as early in the process as possible.

"You need a tremendous degree of trust," he says. "You need to address what it is going to be like and that it is going to be exceptionally painful."

To move from traditional to lean, the company went through process mapping and looked at what work was needed to transform the organizational structure.

"We divided up the employees and put in a new cell manager, and then we held a draft. You literally draft the employees," says Bercaw.

Once the cells were staffed, there was a significant amount of unlearning that had to happen, and some employees needed to be taught basic communication skills.

"It is very common in traditional management to assess blame and for employees to dodge blame. Some cells develop an esprit de corps, but for others it may take longer. Sometimes you even have to change managers," says Bercaw.

Besides the 20 to 40 hours of formal training employees went through, there are informal settings designed to elicit employee feedback and critique.

"The most effective was the employee roundtable," says Bercaw of the hour-and-a-half meeting he had with employees.

But he stresses that the process is an ongoing one.

His one regret is not involving individual employees in the benchmarking process so they could see how it works in other manufacturing facilities.

"I think what you have to do is keep pulling them in, different employees, and you ask them in different ways and come at it in different directions," he says.

Bercaw admits that even with open communication, there are times when the cells have to be re-evaluated and employees moved around. On average, in lean implementation, there is a 5 percent to 15 percent employee attrition rate.

The process never ends.

Says Bercaw, "We dedicate at least one staff meeting once a month to things like, 'How do we improve morale and balance the other needs of the business?'"

Morale and overall labor relations need to be monitored at all times, because with change comes some level of fear.

"You need to be honest and work through the labor relations issues," Bercaw says. "You want you employees on your side, and you want to evolve the HR part and the lean part at the same time." How to reach: Keithley Instruments, (440) 248-0400


Leaning toward lean

According to a survey by Stiles Associates, conducted at the EASTEC Advanced Productivity Expo, more manufacturers are showing an interest in lean design.

Eighty-three percent of respondents were familiar with lean manufacturing, and more than half of those responding were in some stage of developing a lean culture in their company. Fifteen percent have fully integrated lean and 41 percent have begun the process.

The top reasons for implementing lean:

* 28 percent of respondents cited cost savings

* 23 percent cited productivity improvements

* 12 percent said competitive pressures

Greatest benefits realized:

* 16 percent cited customer responsiveness

* 10 percent said increased speed to market

* 9 percent spoke to a reduced product development cycle

Greatest obstacles to going lean:

* 27 percent cited resistance to change

* 21 percent blame problems on ineffectual leadership or a lack of lean leaders

Respondents also identified other industries and sectors that could benefit from lean principles.

* 62 percent think high technology could benefit from lean implementation

* 59 percent said health care

* 58 percent said automotive

* 57 percent said consumer products

* 49 percent said telecommunications

* 44 percent said banking

Tuesday, 26 August 2003 11:43

Design of the times

No one really needs a battery-operated electric pencil sharpener. The electric pencil sharpener is not in any way a part of Maslow's hierarchy of needs. You don't need it to survive. Really.

And let's face it, the world could live without Post-it Notes, luggage with wheels, the Swiffer, battery operated toothbrushes and a whole host of other stuff we've come to rely on.

But there's a subtle genius to these innovations that morphed them from indulgences to must-haves in the lives of many Americans.

"We don't need all of this stuff ... but for some reason, I just want to buy it," explains John Nottingham, co-president and co-founder of Nottingham-Spirk Design Associates. "We have a strong emotional response to these things."

We, as consumers, have become more discerning about our stuff, whatever that stuff may be. It's not enough that the price is low and the quality is high; even the average consumer has the audacity to expect constant innovation and a sleek design.

"In the '50s and '60s, the consumer market was controlled by the manufacturer," says Nottingham. "They made it, and the retailers had to buy. But recently, there has been a wholesale power shift to the consumer. Retailers are servants to the consumer; the consumer calls the shots."

Nottingham knows as much about this topic as anyone. He is one of the two Johns that make up Nottingham-Spirk, a 31-year-old, 50-employee design firm founded by Nottingham and his partner John Spirk, a couple of Case Western Reserve University engineering grads.

While you may not have heard of their company, there's little doubt you've used at least one of the products they've designed. Nottingham-Spirk has worked for or sold to such large corporate names as General Electric, Sony Electronics, Newell-Rubbermaid, Sherwin-Williams and Black & Decker.

Every time you pour paint from one of the new Sherwin-Williams paint cans with a spout, or brush your teeth with the Crest SpinBrush, you're using the tangible result of an idea that originated at Nottingham-Spirk.

Combined sales of the lines of products developed by the company exceed $10 billion. But what's more fascinating are the 12 companies that have originated or were incubated at Nottingham-Spirk, then subsequently moved out, including several that were acquired by larger entities.

One could easily say that Nottingham-Spirk is one of the region's most successful innovation centers.

Inexhaustible demand

"There is an inexhaustible demand for consumer products," says Nottingham, "Buyers are always looking for what's new. That makes product design and innovation the key to new markets."

Nottingham-Spirk and a number of unnamed investors understand this well. They also realize there are markets that sorely lack these innovative products, and once they see a gap, they go after it.

"It's a tripod model," says Nottingham. "There's the product line, the capital leg ... and the jockey leg ... we found a 'jockey' with successful experience in that field."

Not many men who stand over 6 feet tall have the distinction of being called a jockey, but Tony Lammers is proud of the title.

"It really describes what I do," he says.

Lammers, a former executive with Parker Pen and United Stationers Inc., is president, or jockey, of Cleveland-based InnoDesk, an office product company that was incubated at Nottingham-Spirk.

The jockey moniker makes sense when you understand how InnoDesk came into being.

"We refer to it as the Home Depot deal," says Lammers. "About once a month, we would run into each other at Home Depot ... we had a conversation on and off for three to four years. He (Nottingham) kept saying he wanted to do something in office supply."

That something turned out to be a capless or Retrac-tip highlighter, which turned into a line of inexpensive desktop, cordless office products: the electric pencil sharpener ($6.95), envelope opener ($8.99), paper shredder ($14.99) and dust blower ($9.99).

The idea for this line originated during a four-step design and focus group process at the Nottingham-Spirk office. And although the company itself was never a part of the design firm, Lammers and InnoDesk had an office, or closet, at Nottingham-Spirk's headquarters.

"We started in August 2001. The office product industry is a very traditional, noninnovative industry," says Lammers. "There is so little new product ... the most innovative thing you get is another color of stapler."

According to SHOPA (School, Home & Office Products Association), there are more than 38 million home offices in the United States; this is expected to increase to 49 million by 2005.

With that gap in the market and the need for a mobile desktop, the group, with Lammers as jockey, set out on an 18-month form process that has resulted in InnoDesk products in 4,000 stores, with 6,000 expected by year's end.

From the onset, InnoDesk was Lammers' responsibility. Nottinghan-Spirk designed and prototyped the products at a reduced fee. Handpicked investors -- including Nottingham and Spirk -- funded and housed the company until it was on its feet. Eventually, an exit strategy would be needed to make the investments liquid, in one of a number of ways.

But first, to understand why Nottingham-Spirk's other start-ups have been so successful, it's important to understand the process they use.

The process

There's a misconception that most good ideas are just happy accidents, something that comes along once in a lifetime, but there really is a process.

"Our process is not unlike others, maybe a little more organized," says Nottingham. "What you have to remember is that every great idea was thought impossible at one time."

Not much has proven impossible for Nottingham-Spirk. Between the two Johns, the company holds 310 patents and counts among its former and current clients many of the largest consumer products companies in the world.

"We are averaging about one patent a year," says Nottingham. "We've made a lot of patent attorneys very happy."

But how does one come up with the next great product -- let alone the next 20 great new products -- and why not keep these innovations in-house or sell them outright to the corporate giants once they've been developed and the bugs worked out?

To answer that, you must understand the fickle nature of the consumer market. Nottingham spends hours roaming the aisles at Wal-Mart and OfficeMax, looking not at what's on the shelves but at what's not on them.

However, the nuts and bolts part of the creative process starts with sitting down and being, well, creative.

"We start with a creative session, people from our team that can complement each other, and we come up with as many ideas as you can," says Nottingham.

This meeting has no criteria, and ideas range from "mild to wild." Negative comments, says Nottingham, are verboten.

The ideas generated during the initial meeting are pared down in the next meeting, with slightly more critical, yet also simple, criteria.

"I pass around notecards, each with a word or phrase on it that says, Who Cares, Nice or WOW," says Nottingham.

The products are then judged.

Who Cares is an easy call. So is WOW. But it's the Nice that causes the problems.

"In the world, we have too many nice products," says Nottingham.

Nice, it appears, is not good enough anymore.

Pleasure principle

Nottingham believes that most people analyze things to death. That, he says, is the key to understanding what a consumer will buy.

"If something is $10 or under, you don't have to make an intellectual decision," says Nottingham. "The question is, 'How do I feel emotionally about this product?'" After all, he explains, "shopping has become our form of entertainment."

Again, it goes back to two factors: What you need and what you want.

You may not need the electric pencil sharpener, but at $6.95, it has become InnoDesk's most sold product. Why? The question really is, "Why not?"

What's $10, really, in the big scheme of things? Who wouldn't spend that little to make life easier and save a little time? And wouldn't you spend $10 on something that's really cool?

It's the old carrot and stick theory. Pain and pleasure. Consumers want products that can solve their present pain.

That's what the Targets and Wal-Marts of the world bank on. That's what OfficeMax saw when it got the first look at InnoDesk's new line and ordered products for 940 of it stores.

In fact, OfficeMax ordered all four items in the InnoDesk line after seeing only a prototype. That leap of faith moved the company's production schedule into high gear.

"We went in there just to get feedback," says Lammers. "And they said they liked it, if you can do it for this price. They saw a cardboard mock-up in early November 2002 and they wanted orders by early 2003."

Lammers chalks up the company's meteoric growth -- 2,400 percent in 2003 -- to the innovation behind the InnoDesk products.

"Price is a given anymore, quality is a given," says Lammers. "All that leaves is design. The difference is style, and you don't get a premium for that anymore."

But, it will give your products an edge in the market.

"And really, if you are willing to step out of the mold, it doesn't cost anything more to manufacture," he says.

What InnoDesk is playing off of is that big conglomerates are good at a lot of things, but quickly bringing an innovative product to market is not always one of them.

Companies like Procter & Gamble and McDonald's have come to recognize that with their vast marketing and distribution abilities, in some cases it is better to acquire companies with innovative products or fresh ideas than to take the risk internally.

"With big companies, there are committees and bureaucracy, even if they can make a decision," says Lammers. "There is also a fear of failure and so much inertia to overcome. We can make a decision today and start making it (the product) tomorrow."

What they make tomorrow can be had at a price. And a nice price at that.

Last year, Procter & Gamble bought Dr. Johns Products Ltd., a Nottingham-Spirk incubated company that developed the SpinBrush, a battery-operated toothbrush that retails for under $5, and grew sales to $200 million a year.

It is all about competition. Why fight against a product that has proven successful when you can just acquire the company that makes it?

"If P&G acquires a company for $400 million, that's only about 1 percent of their earnings," says Nottingham.

The lack of bureaucracy in Nottingham-Spirk's process allows the InnoDesks of the world to change and add product lines without the perceived risk that larger organizations often shun.

"We can be faster and scrappier and more innovative than the big companies," says Nottingham.

Scrappier, and more adaptable.

InnoDesk and its predecessors are resigned to very specific fates.

The inevitable exit plan is decided upon during the initial phases of the company's development, and for InnoDesk, it is "a group of patient money" that Lammers refers to as professional tech investors.

But at some point, investors want their investment become liquid, and InnoDesk, like Nottingham-Spirk's other start-ups, faces one of several futures. The company may be so successful that it continues to operate on its own. It could go the IPO path. Or, it may be in the position to add one or all of the product lines to another company, like P&G or Newell-Rubbermaid.

"A company that has good products, has proven itself in the market and is making real money is more attractive to these companies," says Lammers.

In the end, it allows Nottingham-Spirk to do what it does best -- make stuff, while one sold-off company funds the next project, allowing the firm to grow without getting too big or bogged down in one industry.

Simple genius, much like what they design. And, according to Nottingham, it can be yours for a price.

"Nottingham-Spirk as an identity is not for sale," he says. "But everything else is." How to reach: Nottingham, Spirk, (216) 231-7830 or www.ns-design.com; InnoDesk, (216) 360-7950 or www.innodesk.com

Monday, 28 July 2003 06:27

Guess who's coming to dinner

OSHA inspectors can and do show up at the door of many businesses uninvited, and you have to let them in.

But depending on why and how OSHA picked your company to visit that day dictates your rights and responsibilities.

"In Cleveland, most OSHA site inspections are because an employee or relative of an employee files a complaint, and all complaints must be followed up on at some level," says James Koewler, an OSHA and environmental attorney at Kahn Kleinman.

There are three main reasons OSHA makes a visit: It will investigate a formal or informal complaint; it will investigate after a fatal or catastrophic accident (FAT CAT); and it visits randomly chosen facilities based on industry and injury rates.

Informal and, at times, even formal complaints can be resolved without an OSHA site visit. OSHA notifies the company of the alleged hazardous situation and requires follow-up documentation that the problem has been taken care of.

However, when a business is randomly selected, OSHA conducts a wall-to-wall inspection.

"Companies and industries with historically higher injury and illness rates are more likely to be inspected," Koewler says.

OSHA is require to inspect worksites after a fatal catastrophe or if three or more employees stay overnight in the hospital. These inspections have priority status, but unlike a wall-to-wall inspection, are limited to the site of the accident.

"Employers need to hold the inspectors to seeing only what they came to see ... other machines and sites are not fair game," Koewler says.

He warns businesses not to be intimidated.

"They will always ask for more than they can get," he says.

An employer's rights during an OSHA inspection are covered by the same plain sight rule that covers a criminal investigation. That means that if an inspector observes any violation not covered in the complaint while at the site, the business can be written up.

To prevent being cited for other violations, make sure you have at least two point people ready to take the inspectors out the door and through the snow if necessary to get to the area they came to inspect.

"Don't walk them through the plant where they could see something," says Koewler.

OSHA inspectors have the right to question employees during a site visit, and employees have the right to have that discussion in private. However, employees can opt to have someone with them during the conversation, including a manager, a lawyer or union representative.

"When the inspectors come in, there is a high intimidation factor, especially when it comes to talking to employees," Koewler says.

Employee interviews should be conducted in a conference room, off the shop floor, and the company should conduct a follow-up interview with employees OSHA speaks with after the inspection.

The fact is, says Koewler, "If they are coming in for a complaint, they will probably cite you. But never admit wrongdoing. And if you can make changes, do it right there on the spot."

After both the wall-to-wall and site inspection, OSHA follows up by sending a summation of the citations via certified mail, and from that time, the company has 15 working days to appeal.

"Never miss the 15-day deadline to appeal," says Koewler. "Extensions are rarely granted, and if you don't challenge the findings, they become law."

Koewler says there's always an opportunity to correct a mistake or explain extenuating circumstance surrounding an OSHA finding, but only in the time allotted. How to reach: Kahn Kleinman, (216) 696-3311 or www.kahnkleinman.com


Most wanted

"An OSHA inspection is like a surprise test at school," says James Koewler, an OSHA and environmental attorney at Kahn Kleinman.

Random visits by OSHA inspectors can't be predicted, but here are things to watch out for if OSHA gives your company a pop quiz.

The top 15 most commonly cited hazards:

1. Electrical systems general requirements

2. Wiring methods and components

3. Wiring design and protection

4. Abrasive wheel machinery

5. General safety requirements for machines

6. Use of equipment

7. Flammable and combustible liquid

8. Walking working surfaces

9. Medical services and first aid

10. Floor and wall opening guards

11. Hazard communications

12. Portable wood ladders

13. Transmission apparatus (mechanically powered)

> 14. Requirements for woodworking machinery

15. General personal protective equipment

Monday, 28 July 2003 05:44

Is there a nurse in the house?

Much has been made of the national nursing shortage, and for good reason. According to the American Hospital Association, 126,000 nurses are needed to fill vacancies and approximately 75 percent of all hospital personnel vacancies are for nursing positions.

And with the average age of a nurse in Ohio at 47, an estimated 40 percent will retire within 10 years.

Just in case that's not getting your attention, another study, commissioned by the Federation of Nurses and Health Professionals, reports that one of five nurses currently working is considering leaving the field for reasons other than retirement within five years.

With an ever-growing elderly population, the need for skilled nurses is critical, something that has not gone unnoticed by local hospitals.

"Approximately three years ago, we started with a very focused planning process on recruiting and retaining nurses," says Cathy Koppelman, vice president of patient care services at Summa Health Systems.

After looking into Summa's program, Koppelman and the planning committee attempted to discover what would make its program more attractive to both local and non-local nurses.

"We wanted to draw on information that was already out there," she says.

The first order of business was to find out what nurses wanted.

"We discovered that compensation and benefits were the No. 1 concerns, and second was flexibility in scheduling, with it being a female-dominated profession with working mothers with childcare issues ... and there is a trend to going back to school," says Koppelman.

Summa's staff concentrated on local recruitment and retention. What resulted was a program of flexible work schedules and scholarship programs to further education.

The flexible scheduling addressed the week/weekend rotation issues many hospitals face.

"Typically, at an inpatient acute hospital, you work shifts every other weekend, with rotation from days to nights every two weeks or so," says Koppelman. "Our new approach is to provide schedules ... to balance personal life and a commitment to work ... and to be very flexible in that."

The Summa program allows some nurses to work 24 hours every weekend -- and be compensated for 36 hours and receive full-time benefits -- while others work three 12-hour shifts with no weekend time scheduled.

More than 125 RNs and LPNs have taken advantage of the weekend option, and Summa has surpassed its goal of recruiting 100 new nurses to the program.

Koppelman and her staff took an aggressive approach to advertising its flexible nursing program.

"We did it in a number of different ways ... including home mailers and radio ads," she says.

If there is any question as to the success of the program, the results are quantifiable. While the national average vacancy rate for nursing positions ranges from 12 percent to 18 percent, Summa's nursing vacancy rate is 6 percent.

"Our goal was to keep the turnover rate down," says Koppelman.

It is a big culture change for everyone, not just the nurses who took advantage of the new scheduling.

"Our managers now have to come in on the weekend to accommodate the new shifts," she says.

Flexibility in scheduling is just one way Summa has tried to retain its nursing staff. Other programs, like shared governance, competitive compensation and continued education programs are in place as well.

The real success for Koppelman is in providing a good work environment for a highly sought-after, skilled employee.

"Really, it comes down to the fact that people want to come and work at a place that they are respected," she says. How to reach: Summa Health Systems, (330) 375-3000


Don't ask, don't ask

Contrary to the popular belief that Americans are seeking more health information -- especially on the Internet -- more than six of 10 adults in 2001 sought no information about a health concern, according to a national study by the Center for Studying Health System Change.

Nearly two-thirds, or about 117 million people, failed to seek any health information from a source other than their doctor in the previous year, and only one in six turned to the Internet for health information.

The study also found that:

* People with a college degree are twice as likely to seek health information as those without a high school diploma.

* Those with a postgraduate degree are more than seven times as likely to use the Internet to research a health concern as people who didn't finish high school.

* Men are less likely than women, older people are less likely than younger ones, and people with low incomes are less likely than higher-income people to seek health information.

* Only 7.7 percent of people 65 and older used the Internet to find health information, compared with 19.3 percent of those ages 18 to 34.

* Of 78 million adults living with chronic conditions such as asthma, diabetes or heart disease, more than half sought no health information.

Monday, 30 June 2003 07:26

School in the summertime

Necessity has proven to be the mother of invention for Jergens Inc. president Jack Schron and vice president Chad Schron.

Jergens, a fixture manufacturer, needed trained workers, and a dearth of apprentice programs left it without a skilled labor pool. So the Schrons developed their own school.

"It was originally designed for our own employees," says Jack Schron, president and CEO. "We started writing the classes, only to find out that when we continued to need more classes on a broader array of things."

Jack and his son, Chad, developed an in-house training program that evolved into a spin-off company named Tooling University or Tooling U.

Most classes deal with basic and more advanced factory floor skills, including machining, reading blueprints and metal cutting, but the principles behind the classes are based on sound educational principles.

"Every single class has an outline and learning objectives ... post and pre-assessment. And if you are in the middle of a class and hit the resources in the menu, it will deliver the most recent magazine articles on the subject for you," says Schron.

The Schrons also realized their classes have benefits for employees other than those on the factory floor.

"We learned that it isn't just the factory floor employees, that businesses want trained," says Schron. "People come to use saying it would be great if their sales force could learn more."

Online learning is gaining acceptance, in part because of the convenience for nontraditional students.

"For a school to put on these classes, they need at least three to five students, but we can have a 'classroom' of one," says Schron. "Another thing we've all realized is that different students move at different paces; it's called differential learning."

Although manufacturing is the industry the Schrons are most comfortable with now, there are big plans for other skilled professions like the building industry, and even continued education for lawyers.

"I don't think our timing could have been better," Schron says. "We have 78 classes and we anticipate growing to 250 in the near future." How to reach: Tooling University: (216) 706-6800

Monday, 30 June 2003 06:44

Board straight

There is a long-standing tradition of corporate leaders doubling as community leaders by serving on the boards of nonprofit organizations.

While sitting on the board of directors of a well-known organization may at one time have been all about the prestige or an attempt to fill a philanthropic agenda, anyone sitting on a board today knows it's all about responsibility.

"A lot of people that get on nonprofit boards think they are doing a good thing, and they are," says Brian FitzSimons, a partner in the Corporate & Securities Group at Arter & Hadden.

However, the increased scrutiny of the boards of directors of public companies applies to nonprofit boards as well.

"You know what they say -- No good deed goes unpunished," says FitzSimons.

That's not to say that serving on the board of an organization you believe in is not prudent, but the days of sleeping through meeting and rubber-stamping decisions are long gone.

"It is not merely a position in which you are just a volunteer doing a good thing for the community," says FitzSimons. "You are in control of funds ... and responsible for maintaining the mission of the organization."

Board members must also keep in mind the organization's potential sources of liability. For example, something as simple as hiring and firing decisions can have a huge potential for liability.

"A board has to recognize potential sources of liability," says FitzSimons. "Especially if you have a lot of employees or a lot of clientele ... then you really have to keep your eyes and ears open."

And don't assume that even basic decisions are being handled properly by someone else within the organization.

"Those kind of assumptions are dangerous," he says, because if anything happens, "the ultimate responsibility and liability lies with the board."

Preventing liability is optimal, but it is also imperative to have the proper kind and amount of directors' and officers' insurance.

"You don't have to be an accountant or lawyer to sit on a board.," FitzSimons says. "But you have to ask fundamental questions. You can't assume things you don't understand."

It's also important to avoid anything that could be construed as favoritism regarding contracts, consulting and bidding. The IRS has strict laws to prohibit individuals from abusing tax-exempt organizations for personal gain.

The laws cover anyone who receives "excess benefit" from a transaction involving a nonprofit. All compensation, property transactions and so on have to be within the realm of fair market value, especially if the person receiving the benefit has any relationship with a board member.

The only way to protect yourself from being on a board involved in an excess benefit transaction is to read the financials, ask question and ensure that the board meets in a timely manner.

"If you don't meet regularly, you ought to," says FitzSimons. "You should be meeting regularly -- quarterly or even monthly depending on how big the organizations is."

But regardless of what you do to prevent or reverse improprieties, there may come a time when there is no choice but to resign.

"If the other board members are voting for something you don't like, don't go with the flow," says FitzSimons. "Your job is to convince your other board members ... (but) there may come a time to seek outside independent counsel or eventually resign."

It's also important to document any questions or dissent with a board's decision, because even resigning does not completely insulate you from civil and criminal liability.

"Don't be a lemming or a wallflower," says FitzSimons. "It is a job, not an honorarium." How to reach: Arter & Hadden, (216) 696-1100


Excessive influence

The IRS has a specific set of regulations for payments and contracts made by nonprofit organizations.

"Ohio nonprofits and charitable organizations are held in a trust ... and you can be prosecuted by the Ohio attorney general for squandering assets," says Brian FitzSimons, a partner in the Corporate & Securities Group at Arter & Hadden.

Any payment or agreement that does not fit a "fair market" standard may be subject to IRS scrutiny, especially if it is with a "disqualified person." The IRS classifies individuals and companies that are believed to have "influence" over a nonprofit as a disqualified person. This includes voting members of the governing body and presidents, CEOs, COOs, treasurers and chief financial officers.

A disqualified person can also be certain family members of a disqualified person, and any company in which a disqualified person has an interest of 35 percent or more.

A person is also disqualified if he or she:

* Founded the organization

* Is a substantial contributor to the organization

* Receives compensation based on revenue derived from activities of the organization that the person controls

* Owns a controlling interest (measured by either vote or value) in a corporation, partnership or trust that is disqualified. Source: www.irs.gov

Monday, 30 June 2003 05:40

Write right

Public speaking is the No. 1 fear of American adults. And that really breaks down to a fear of not communicating well something we deem as important.

Most formal communication begins with an outline, so the first order of business is putting ideas down on paper.

One of the biggest challenges with all writing is simply beginning.

"Most of us procrastinate," says Norm Friedman, a free-lance writer and communications expert. "We are perfectionists, and rather than have it be imperfect, we just don't start."

And getting started is just the beginning. If you're not a frequent writer, it can take longer than you might expect, especially if the subject is one that is near and dear to you.

"For a lot of us, we know too much about the subject, and it is very hard to write concisely," says Friedman.

The most important thing to remember is to write for your reader.

"It's much like a movie or the theatre," says Friedman. "When you really love a performance, it is because that person really became the character. It the same with writing; you need to get into the mind of the person you are writing for."

Know what you're going to write about before starting, and keep the main point any article or speech to one piece of advice.

"If you don't organize well, you probably won't be brief," says Friedman. "Your writing should be closer to the way you talk. In most of our writing, the tone is too impersonal."

Once the first draft is finished, it's time to edit. Cut down long sentences and paragraphs, then cut often-repeated words and jargon.

And forgot all those things you learned in grammar class and throw away that thesaurus, Friedman says.

"Use 'I, we and you," says Friedman. "And forget adjectives, especially 'very' and use colorful verbs."

And be prepared to cut out that perfectly crafted sentence that just doesn't fit the rest of the piece. As William Faulkner put it, "Some times you have to kill off some of your lovelies." How to reach: Norm Friedman Communications: (216) 752-3160 or nfriedman@prodigy.net

Style guide

I'm all in favor of keeping dangerous weapons out of the hands of fools. Let's start with typewriters."

-- Frank Lloyd Wright (1868-1959)

Every year since 1976, Lake Superior State University has published its List of Words Banished from the Queen's English for Mis-Use and General Uselessness.

Here are few of the banished words the last two years:

* Untimely death -- An attempt to make death sound more tragic

* Totally unique and very unique -- It can't be more unique than unique.

* In the wake of -- Whatever happened to the word after

* Foreseeable future -- How long is foreseeable?

* Make no mistake about it -- Who's mistaken, anyway?

* Possible choices -- No need to include impossible choices. Source: Lake Superior State University

Monday, 30 June 2003 05:29

Double depreciation

Most business owners are aware of Section 179 depreciation rules, but in a move to help stimulate growth, the federal government is also allowing a bonus depreciation on new business property purchases.

The write-off was set up as an additional 30 percent depreciation deduction in the first year for anything with an asset life of not more than 20 years that was acquired on or after Sept. 11, 2001.

"Basically what the rule says, in plain English, is that when you buy equipment ... and it has to be new ... when you buy that, you get to deduct immediately 30 percent of that cost now and the balance of that you get to depreciate under normal limits," says Larry Friedman, a CPA with Barnes Wendling.

"The bonus is only temporary for 2001 and 2002," adds Friedman.

However, bonus deprecation will provide an estimated $97 billion in tax reductions for U.S. businesses over the next three years.

Normally, most small businesses elect to expense equipment, furnishings and other tangible personal property by taking advantage of the Section 179 deduction. In 2003, for instance, a small business can expense the first $25,000 of an investment under $200,000, and 30 percent of the remaining cost before applying the regular depreciation schedule.

But there are a number of caveats. For example, the bonus depreciation must be applied uniformly, Friedman says.

"If you buy 20 computers ... you can't take the bonus on 10 and not the other 10. It's an all or nothing ... you can't say, 'We are going to take a bonus on half and the other as normal.'"

And 30 states are not matching their tax rules to the federal standards. According to the Center on Budget and Policy Priorities, a Washington, D.C., research organization, these new federal depreciation rules would cost state governments about $14 billion over the next three years.

"There is a technical term -- de-coupling -- it's basically a segregation of the depreciation," says Friedman.

This de-coupling from the federal tax code means that the bonus depreciation must be taken over six years when filing state returns. It also means you may have to keep two depreciation schedules for business property, one for the federal government, another for the state.

And because the deduction is spread out over six years, the depreciation schedule continues even if the property is disposed of within that six year period.

"Here's the tricky part ... if, in the second or third year, you get rid of the asset, the state of Ohio doesn't permit you to accelerate the depreciation. You don't lose it, but you can't accelerate," Friedman says. How to reach: Barnes Wendling Inc. (216) 566-9000 or www.barneswendling.com

Tech tax

In February, the Ohio Department of Taxation issued the new value schedule for stand-alone computers.

"Information Release PP2003-01" has the new rates, effective in the 2003 tax year, for any computer used for general business purposes, which include data processing, payroll tracking sales data, maintaining accounting information and tracking orders.

Computers used as part of the manufacturing process, as point-of-sale equipment or directly in the rendition of public utility service are excluded.

Age of computer True percentage of original cost

* One year 75 percent

* Two years 60 percent

* Three 3 years 45 percent

* Four years 30 percent

* Five years 15 percent

Thursday, 19 June 2003 13:35

Trial by fire

You would never guess that John Beckett's beginnings as a business owner were more of a trial by fire than a case study of entrepreneurship.

"I was not equipped for the type of challenges for operating a business," says Beckett, the second-generation chairman and CEO of R.W. Beckett Corp. who took over the business after his father died. "It was a trial by fire, literally. Four months after my father died, we had a fire that almost destroyed the business."

But Beckett prevailed, and took over the oil burner manufacturer in 1965, growing it from $1 million in sales and 12 employees to three companies today with sales of more than $100 million and nearly 600 employees.

R.W. Beckett commands approximately 75 percent of the North American market -- about 12 million homes -- which was once split among several hundred manufacturers.

"It's a very gradually decreasing base, which is not inconsequential," says Beckett, a successful business owner, published author and speaker. "That's why we began diversifying our programs about 15 years ago."

The company began diversification in the early 1980s, but was not always successful, and a few ventures falling flat.

"We wanted to and tried to bring diversity to our core business," he says, which they with Beckett Air, a blower wheel manufacturer, and Beckett Gas, a gas appliance manufacturer, both founded in 1988. "But the real breakthrough came when we set them up as separate companies with their own management and board of directors. The key was that each company had to make it on their own."

Now Beckett and his staff are aggressively searching for new ideas and products that are aligned with the markets they already serve. One venture is a low-emissions heating device.

"We are trying to cut nitrous oxide emission in half," says Beckett. "We feel the future of the company and industry depends on having combustible technology that is every bit as clean and good as natural gas, and we have invested in that new technology."

Sustainability is a driving force for Beckett. Faith is another. And he attempts to link his faith and work together in his companies.

"We have three values that we live by," says Beckett. "The three values are integrity, excellence and profound respect for the individual. Other companies have similar values, but we are meeting the challenge of embedding those values in our organization." How to reach: R.W. Beckett: (440) 353-6203 or beckettcorp.com

 

 

Friday, 30 May 2003 06:18

Office shocker

It used to be that smelling salts were the most powerful thing in any first aid kit. But those days are over.

With advances in technology and increased awareness of sudden cardiac arrest mortality rates, some companies are going well beyond stocking a bottle of aspirin and an Ace bandage. They're providing automated external defibrillators (AEDs).

"Companies are concerned with emergency medical preparedness," says Patty Owens, marketing and communication manager at Complient Corp., which installs public defibrillators and sets up emergency response systems. "It's not just AEDs, you want to be prepared for anything if someone goes down."

Sixty-one million Americans have cardiovascular disease, resulting in approximately 1 million deaths each year. One-third of these deaths are due to cardiac arrest -- the sudden and unexpected loss of heart function. And survival rates for out-of-hospital incidents of sudden cardiac arrest are only 1 percent to 5 percent.

The AEDs available to the public administer an electric shock through the chest wall to the heart and have built-in computers to assess the patient's heart rhythm and determine whether defibrillation is needed. With audio and visual prompts to guide the user through the process, a few hours of training can ready an employee to use the device.

AEDs are gaining in popularity, especially with transportation companies and in places where the public gathers.

"We see a trend where public casinos, Amtrak and airlines are stocking AEDs," Owens says.

AEDs are definitely costlier than a first aid kit -- approximately $3,000 to $4,500 with maintenance and instruction --- but with approximately 400 workplace deaths attributed to sudden cardiac arrest each year, and with heart disease on the rise, more and more companies are considering installation.

For many employers, it's not only a public health issue but a risk management issue as well.

"It's a liability issue," Owens says. "We live in a litigious society."

Of course it is not as simple as just hanging an AED by the reception desk. In many states, including Ohio, the apparatus requires a prescription, not to mention staff training, maintenance and proper placement in compliance with a total emergency plan.

And large offices may require multiple, strategically placed AEDs.

"The drop to shock ratio, as we call it, is three to five minutes. After that, you have significant brain [function] loss," Owens says.

As usual, the federal government is on the forefront, stocking federal buildings and offices with AEDs. Also, the Public Improvement Act of 2000 provides immunity from civil liability for anyone using a defibrillator in a federal building. And Good Samaritan laws cover those using AEDs in other buildings.

"Ohio, like most states, requires training," Owens says. "We try to train at least 10 people in an office per AED, but some companies want everyone trained."

With an average EMT response time of eight to 11 minutes, and the survival rate of someone suffering from sudden cardiac arrest decreasing 7 percent to 10 percent with every minute that passes, Owens stresses the need for companies to be prepared for the worst.

"There are no laws yet requiring AEDs," she says. "But unless you work next door to a fire station, there's a always a risk." How to reach: Complient Corp., (800) 757-2929 or www.complient.com


Blame game

Who is to blame for the ever-growing surge in health care costs? Just about everyone, according to a survey conducted by the Managed Care Information Center (MCIC).

MCIC received almost 100 responses to the question, "Who is to blame for soaring health care costs?"

Respondents included consulting firms, 39.6 percent; managed care organizations, 20.8 percent; other health care providers, 15.6 percent; physician organizations (independent practice associations, physician practice management companies, physician organizations, management services organizations), 11.5 percent; and hospitals/medical centers, 10.4 percent.

For the most part, respondents in each category placed the blame on a variety of factors rather than on any one cause. Consultants faulted consumers and managed care plans frequently, while MCOs tended to blame doctors, drug companies and hospitals.

According to the survey, the five top culprits in rising health care costs are:

* Consumers -- 12.5 percent

* Physicians -- 10.4 percent

* Drug costs, pharmaceutical companies -- 8.3 percent

* Everyone -- 7.29 percent

* Government -- 5.2 percent

Other culprits named included an aging population, health maintenance organizations, inefficient hospital management, high liability insurance, expensive technology, lawyers, poor reimbursements, the Health Insurance Portability and Accountability Act (HIPAA), drug manufacturers and drug company advertising costs. Source: Managed Care Information Center, (888) 843-6242.