So it comes as little surprise that Quality Life Services, a 500-employee family-owned and operated company that provides nursing care and personal care to residents at its five facilities-three of them acquired since 2002-was having difficulty filling its ranks with qualified nursing talent.
"Not only were we trying to fill additional positions as quickly as possible," says Susan Tack Beardsley, recruitment and retention director for Quality Life Services, "but we were also trying to keep the existing ones."
Nursing staff turnover at Quality Life Services was increasing costs for the company and taxing its ability to meet state-mandated staffing requirements.
"Any time you have turnover, it costs the company money and becomes a vicious cycle," Beardsley says, "and it's tough on the residents, as well."
Identifying the problems
Quality Life Services enlisted the help of The Family Business Center at Citizens National Bank, a consulting group that specializes in helping family businesses resolve their management issues, to remedy the situation. A team from The Family Business Center, led by co-founder Rich Snebold and its human resources consultant, tackled the problem by first collecting information about retention and recruitment concerns.
Anonymous surveys were sent to employees with questions about their jobs and work environment. They also formed focus groups comprised of employees selected randomly from each department and representing workers at all levels, from entry level to supervisory. The focus groups addressed workers' perceptions of their peers and their work environment. Exit interviews were conducted by telephone with employees who had resigned from Quality Life Services.
The information collected in the exit interviews was consistent with that gathered in the focus groups and employee surveys. The vast majority of Quality Life Services' employees are women, and the research revealed that some of them struggled with life-work balance, while others felt that they didn't receive recognition that was consistent with job performance.
Task forces were assembled at each facility, which included a mix of workers based on job function, and department and facility administrators. Beardsley met with each task force to develop solutions to address the needs of the staff.
The Family Business Center recommended several tools to increase employee satisfaction and reduce turnover. Some of the strategies include employee newsletters, alternative and flexible work schedules and employee recognition programs, including employee-of-the-month awards.
The measures have resulted in a reduction of employee turnover and an increase in employee satisfaction and morale, Beardsley says, and have enabled Quality Life Services to gain a reputation as a desirable place to work. And those actions combined have resulted in enhanced resident care.
Beardsley emphasizes the value of bringing employees into the process to develop the solutions. Identifying the problem is relatively easy, she says, but coming up with the right solutions that will gain employee buy-in is critical.
Says Beardsley: "Getting the employees to help develop the solution via the task force enabled us to avoid a solution being implemented directly from administration where the workers had no say."
One of Fragasso's clients, a closely held corporation, had a 401(k) plan in which only 30 percent of the employees participated, one senior company member decided on all of the investment allocations for all employees and the plan provider was lax in providing information to participants.
Even more, as fiduciaries, the company owner and senior managers were assuming too much liability for the plan. And low participation by employees could be costing owners and senior managers by limiting their own contributions to the plan.
The scenario isn't all that unusual.
"That, frankly, is rampant," says Fragasso.
To improve this particular client's plan, The Fragasso Group advised the following changes.
* The company's management was removed from the liability of managing the investments. This freed up management to concentrate on the company's business and lessened company liability.
* The company's contribution, formerly going to the profit-sharing plan, now would be deposited into each employee's individual 401(k) account. This would allow each participant to manage the total of his or her retirement assets in keeping with the investment model that best suits that person's and their family's circumstance and risk tolerance level.
Also, the employer would be protected, as the employer contribution would retain the former vesting schedule.
* The employees, now managing the total of the employer and the employee contributions, would have 10 times the number of investment choices as previously. They also would have a 16-hour per day help desk and 24-hour Internet connection.
* The human resource administrative personnel of the company would be freed from the routine and time-consuming tasks of granting retirement plan loans, creating amortization schedules and answering administrative questions. This would all be accomplished via the plan provider Internet Web site and help desk.
* The employees and owners gain the employee financial education that the consultant provides so that they can fashion a cogent financial plan and implement it via their newly merged 401(k)/profit sharing plan. They also utilize that plan in making better fringe benefit program selections regarding insurance and discretionary deductions for their cafeteria plan.
The client adopted the recommendations, and Fragasso says the solution resulted in a 100 percent 401(k) plan participation rate immediately upon its implementation and the first financial education class presented to the employees.
For company owners and senior managers -- typically the highest-paid employees in the business -- low participation rates by employees put limits on the their own contributions because of nondiscrimination rules, which can cost them thousands of dollars over their careers. And with a properly devised plan, business owners can sock away a large chunk of money that won't be on the table when they want to sell their company.
"I can come away with hundreds of thousands, if not major seven figures in my retirement plan if I do it right," says Fragasso.
Fragasso suggests that business owners front-load time to put the right systems in place for their plan. Establish investment policy statements and guidelines, hire the right management for the plan and put in the right monitoring and communications systems. And, of course, hold people accountable for results, just as you would in any part of your business.
Says Fragasso: "It's a division of the business."
How to reach: The Fragasso Group, www.fragassogroup.com
Schell, a Carnegie Mellon University professor of entertainment technology, landed a six-month, six-figure deal with a Fortune 500 company in the games industry. And, he was savvy enough to convince that first customer to advance some of the deal money to Schell Games, allowing him to hire staff and move into a South Side office.
Schell's story isn't an isolated incident. When banks aren't amenable to lending money for a new business, and venture capitalists or angel investors want too high a percentage of your business in return for money, asking your customers to provide advance payment is another way to collect enough operating capital to get your operations off the ground.
And, while Schell may be a player in the games industry -- he headed up the Walt Disney Imagineering Studio before moving to CMU, and he's well-known in the games industry -- tapping your customers for financing isn't just for All Stars.
But, says serial entrepreneur Jack Roseman, you do need to offer something of significant value
"The real issue is how much do they want you," says Roseman, who also serves as director of the Roseman Institute, a consulting firm that counsels fast-growth businesses.
Roseman recounts the tale two other CMU grads who came up with an accounting software package for car rental companies. A major rental firm wanted the software company to customize it for their particular use. The software company agreed, but insisted on payment up front. The rental company balked at first, not because it couldn't afford it, but because its usual practice was to pay after delivery.
The rental company ultimately relented, Roseman says, because of the software's value to its business.
From the other side of the table, a business considering fronting the money to a vendor because it wants to take advantage of a product or service that the vendor is offering must keep several factors in mind, Roseman says.
Most important, determine whether or not you can trust that vendor. That can be determined to some degree by asking for references from other customers. And, says Roseman, you can mitigate some of the risk by doling out the funds in stages rather than all at once.
"Establish milestones," he says. "And pay as they reach each one."
And don't just go through the motions, he advises. Use the plan as a tool to improve the performance of your business.
"Planning shouldn't be an annual exercise that sits on the shelf and collects dust the remainder of the year," says H. Richard Howie, director of CFO Services and the Technology Industry Group at accounting firm KFMR Katz Ferraro McMurtry. "Sometimes we make planning an esoteric exercise and we lose sight of its real value."
Howie suggests a few fundamental concepts that can make business planning valuable to your organization.
* Focus on the areas that create value for your organization. Measures of performance may be expressed in terms of an income statement and balance sheet. They can also be expressed in nonfinancial terms, such as number of sales calls, machine cycles or customer service calls.
Measures of performance can be lagging indicators, such as whether you made money last month, or leading indicators, such as a backlog of orders. By choosing a manageable number of performance indicators as well as the proper balance between leading and lagging indicators, managers can identify where they want to spend their time and money.
It might be time to consider adding a salesperson or purchasing that new piece of equipment.
* Involve the collective wisdom. "Business plans should not be the realm of a few people in the executive suite," says Howie.
Involving employees at all levels not only allows you to access information regarding what is happening now, it also creates buy-in for employees. In any size organization, employees who are meeting with customers or processing transactions have first-hand knowledge of what it takes to do the work. Allowing their input allows the company to maximize value.
"Not everyone in the company has to be involved, but managers should strike a balance between accessing these people and completing the plan in an efficient, effective manner. Perhaps division heads or managers become directly involved in the process. A collective work product generally has more value than the sum of its parts," Howie says.
* Learn by measuring results. This is where having the ability to report actual performance in comparison to the plan is critical. Whether it is a financial or nonfinancial, lagging or leading, being able to measure and ask, "Why is it different" is an enlightening business exercise.
"This is where the part about not being a dust collector comes into play," Howie says.
The sooner you are aware of the outcome, the sooner you can make adjustments, if necessary. Depending on the issue, measurement may be a daily, weekly or monthly exercise, but knowing how your results compare with what you anticipate gives you a leg up on making timely improvements to your business.
* React to changes. Business conditions are constantly changing. The profitable sales territory or product line last quarter may no longer have the same economics this quarter. By identifying value drivers, engaging the organization and reporting results on a timely basis, you have the opportunity to react faster than your competitors.
* Pay for performance. One of the most significant motivators of employee performance is compensation. Says Howie: "Pay for performance isn't appropriate in all areas of the business, but for those areas where managers have had input into designing the business plan and been instrumental in corporate performance, compensation can be a strong motivator."
Rates have risen so much that she chose a less comprehensive plan than she's had in the past but she still faces a $50 a month increase. She has to come up with $415 a month just to cover herself, and pass the increase on to her clients or absorb it.
She's experienced increases before, "but this time, I'm really concerned," she tells me.
For businesses, the health cost spiral is a huge problem. In a global economy, it is a competitive issue. One expert told me recently that he wouldn't be surprised if employers begin to offer to cover annual health care cost increases in lieu of raises.
The solution? There's no magic bullet. Market-based remedies don't work, so don't expect an entrepreneur to come up with one. Because the problem is so pervasive, it requires that government take the leadership role to solve, or at least ease, the situation.
The obstacle there is that few politicians are willing to risk a career to do it. Whoever takes the lead will face brickbats from every powerful constituency with an interest in the outcome. Everyone will find an element they don't like in any viable plan.
I don't have the answer, and you probably don't, either, but it's certain that the Band-Aid approach we've taken until now won't work forever. I do know that if this problem isn't addressed, business people like you and my friend are going to be saddled with bills that threaten the very viability of their enterprises. My concern is that action will come only when the system is so broken that there isn't a bandage big enough to keep it from bleeding to death.
Some people look at the Canadian model or the British model, figure that those solutions are the only alternatives to what exists, and say, "Boy, aren't those lousy choices." But aren't we the smartest and most enterprising people in the world when it comes to devising solutions, and shouldn't we be setting our sights higher when it comes to solving any problem? Who says we have to be satisfied with accepting what someone else has devised?
We can do better. And we have to.
In the late 1980s and into the 1990s, managed care was ballyhooed as the mechanism that would hold down spiraling health care costs. Now, Highmark and other plans are turning back the clock and moving away from managed care plans.
"We really thought we had the solution in the 1990s with managed care, this whole concept of a gatekeeper, a primary care physician who would make sure people have access to high-cost services ... only as needed and appropriate," says Ken Melani, president and CEO of Highmark Inc.
Highmark has opted to eliminate the requirement for a referral by a primary care physician for all of its plans by 2005. Last month, it decided to discontinue its HMO and point-of-service products in Central Pennsylvania and the Lehigh Valley.
Jim Godfrey, president of HealthGuard of Lancaster Inc., the Highmark subsidiary that offers the managed care products, cites consumer preferences for more freedom in choosing their health care providers and forecasts of declining managed care enrollments as reasons for phasing out the products.
Insurers began to use managed care strategies widely to curb the use of expensive technologies and specialist care. Such plans generally employ a gatekeeper, usually a primary care physician who is responsible for referring patients to specialists and, more often than not, incentives to limit those referrals. There were variations of the managed care plans, but the essential feature is the gatekeeper who decides when it is appropriate to make a referral.
In some cases, patients can opt out and visit a specialist without a referral, but usually find themselves paying a higher co-payment or with no coverage at all. By 1996, 71 percent of employees in companies with fewer than 200 employees were enrolled in managed care plans. In 2003, of the total enrollment in commercial insurance plans nationally, 59 percent of employees were enrolled in managed care plans.
Managed care did cut costs -- for awhile. For a few years during the 1990s, increases slowed and insurance purchasers got a respite from runaway cost inflation. But rates began to rise again in the late 1990s, and Melani says the savings came not so much because of managed care measures but from deep discounts that doctors and hospitals agreed to because they didn't want to get left out of provider networks.
Says Melani: "That looked good in theory, but what we found out was it really didn't work to the degree that we had anticipated."
"The Web has leveled the playing field for small companies," says Karen Puchalsky, CEO of Innovate E-Commerce Inc., an e-commerce consultant.
But the advantages that smaller companies stand to gain can be squandered by offering an ineffective Web site. Few successful businesses would provide their existing or prospective clients and customers with outdated information about their products or services, yet many company Web sites display data that is old or of little value.
"This is your image," Puchalsky points out.
In some cases, a view of your Web site may be the first look that a prospective customer takes at your business. That first impression could mean the difference between acquiring a new client or losing it to a competitor.
Some of the key considerations, Puchalsky says, are how easy your site is to find, how quickly it downloads, how soon you respond to requests and your domain name. A successful Web site, she adds, will provide current, accurate and complete information that is easy to find.
One key factor to take into account when developing an Internet strategy is the nature of your business. If you have products that can be sold online, you need to make sure that you have the infrastructure to support Internet sales. Without adequate customer support and product fulfillment capabilities, you can do yourself more harm than good. If you can't make timely responses to customer inquiries, you risk losing future sales.
Sam Shaaban, CEO of NuRelm Inc., suggests that businesses with tight budgets build a site incrementally, adding capabilities over time. You may want to build an informational Web site first, then add e-commerce capabilities over time as you build your infrastructure.
More complex sites will be more costly, but it is possible to build an effective site on a budget. Shaaban estimates that a basic five-page Web site can be developed for less than $1,000. A NuRelm subsidiary, NuHost, offers what it calls a "value-oriented" Web hosting service that manages every aspect of a business Web site, from design to hosting, and allows businesses to easily update its content. How to reach: Innovate E-Commerce, www.innovateec.com; NuRelm, www.nurelm.com; NuHost, www.nuhost.com
Still, the operators apparently find enough use for duct tape to keep a roll handy.
I've used it for many purposes, from blocking a hole in my minivan where the rear windshield wiper motor used to be to securing a microphone to a stand when the mounting bracket broke. I've patched a vacuum cleaner hose with it and used it to close a tear in my car upholstery.
Here are a few other things that have myriad uses beyond the original intent of their inventors.
Sticky notes. I use them as temporary labels on tape cassettes to keep track of interviews, as appointment reminders, even notes on other notes.
The paper clip. Right now, an unwound paper clip is in use in my office as a hanger for my wall calendar and the company phone directory.
The rubber band. It holds things together long after they should have been discarded.
Cellophane tape. I have 30 yards of it holding together 16 panels of a road map.
Super glue. Everyone has a story about the holding power of this stuff. I fixed a switch knob on a car once, and it held for five years, maybe longer. It was still attached when I sold the car.
Spray lubricant. I have been using this stuff for years for everything from drying out alternators and distributors to flushing cola out of keyboards and printed circuits after a clumsy spill. I've used it to clean tar from fenders and doors, loosen rusted bolts and stop the control knobs on electronic equipment from making scratchy noises when they're turned. And, it loosens the gummy residue left on anything that you fixed with duct tape.
There are others, like the bungee cord, and most share a single important characteristic: They're simple. And that's the secret of their success.
So instead of putting together a task force to solve those knotty problems in your business, make sure that everyone has a box of sticky notes, paper clips, rubber bands, super glue, spray lubricant and, of course, duct tape. And tell them to keep it simple.
That was a record, says Kubicek, principal in Global Learning Corp., a company that helps clients with work force development and training, but it points out a valuable lesson when it comes to dealing with government agencies and bureaucracies.
"Persistence absolutely works," says Kubicek. "All you have to do is be patient."
The payoff for patience and persistence can be considerable. One of Kubicek's clients, a Pittsburgh bank, landed $225,000 in work force training funds. Another clipped $1,000 per employee off its tax bill with a tax credit earned for training its employees.
Kubicek points out that the Workforce Education and Development Network of Pennsylvania, part of the Pennsylvania Department of Community Development, gives out $22 million a year to businesses for work force training in the state. Millions more are available through federal programs that are charged with responsibility for economic development. Corporate and private foundations also make money available to for-profit enterprises for their work force development efforts.
The perception that getting a government grant or loan is like finding a needle in a haystack is erroneous, Kubicek contends. He says that two-thirds of submissions that are properly completed and that meet a funding agency's requirements get funded, and that 82 percent of applicants who alter their applications, based on advice from the agency or changes to meet the specifications, get funded on a subsequent try.
The trick, says Kubicek, is to know where to look and how to apply. Government agencies are eager to award money, because their future budgets are contingent on their past performance. If they don't give away the money budgeted to them by the legislature or Congress in one year, they're likely to have their appropriation cut in their next budget.
The factor to keep in mind is that they have very specific guidelines for their programs, whether they are grants, loans or tax credits. Generally, they are looking for opportunities to provide the maximum benefit to the largest number of people and the community. And they will want to see your plan for implementing the project and assurance that you have the resources to carry it out.
Kubicek says one company lost out on getting funding for some very specific technical training for its workers through a university-sponsored program. The application asked if the company had a training instructor. The company met all of the requirements except that one, and so was turned down.
Kubicek later advised that it might have been able to get the money had it simply given someone in the company -- the human resources director, for instance -- the additional title of training instructor and made that person responsible for training.
If you get turned down, Kubicek says funding sources will often provide feedback about your application, giving you valuable information to help in a second try. He also recommends that whether you are successful or not, you write a letter to the contact person in the agency or foundation to keep the relationship open.
People in bureaucracies, he says, aren't different in most regards from those who work in the private sector. Once you've made contact with someone in the agency, keep yourself in front of them.
Says Kubicek: "Whether you got funding or not, you've got an ally in the agency." How to reach: Global Learning Corp., www.GLCinc.net
It's not that unusual, says Stanasolovich, president and CEO of Legend Financial Advisors Inc., that a business owner doesn't know whether his business is a sole proprietorship or an S corporation, whether it has adequate insurance to cover its liabilities or that he or she doesn't talk to an accountant on any other occasion except tax time. He gets a few clucks and chuckles from his audience, some, perhaps, nervous laughs from business owners guilty of just the kind of oversights that the financial adviser is citing.
Stanasolovich, like lots of business owners in advisory professions, spends plenty of time simply educating existing and prospective clients. That's just part of the job. And Stanasolovich's talk is enough to make even the most vigilant entrepreneurs double-check their business practices.
While formal education cannot be dismissed as preparation for an entrepreneur, among the most valuable training for confronting the challenge of running a business is contact and interaction with peers, whether it's at a seminar or at a business conference.
Business owners have an interest in gaining hands-on, nuts-and-bolts information that they can apply immediately to their enterprises.
"We see a keen interest in gaining knowledge on technical subjects that will assist the firm in either improving productivity or making sales," says Mary McKinney, director of the Chrysler Corporation Small Business Development Center at Duquesne University.
It's little surprise that McKinney finds that executives are seeking ways to increase productivity, reduce costs and improve their bottom lines through seminars, conferences and workshops. And they look for guidance from their peers to solve their business problems.
"They like to be able to talk to someone in their shoes and learn 'how do you ... '" says Ann Dugan, executive director of the Institute for Entrepreneurial Excellence at the University of Pittsburgh's Katz Graduate School of Business.
Dugan says the topics most popular among executives are leadership, managing a diverse work force and building a high-performance team.
What to look for
With myriad seminars, conferences and speakers' programs available, finding the ones that can benefit you most can be a challenge. It would be easy to squander time and money attending programs designed more as sales pitches for the sponsoring organizations and speakers than educational experiences for attendees.
McKinney says executives should look for take-home ideas that they can implement and opportunities to network with both speakers and fellow attendees.
"We find this is critical," McKinney says. "They want to hear peers as speakers and interact with other peers who are also attendees. Many attendees get both ideas and make contacts for business."
Ultimately, executives find that such meetings, like the lunch gathering where Stanasolovich spoke, put them in touch with their peers, the people whom they believe can genuinely understand their situation.
Says Dugan: "It is very lonely at the top, and having someone who you can share with and talk to in a confidential manner is important and soothing." How to reach: Legend Financial, www.legend-financial.com; Duquesne University Chrysler Corporation Small Business Development Center, www.duq.edu/sbdc; Joseph M. Katz Graduate School of Business, www.katz.pitt.edu