A 2010 global survey of more than 1,500 CEOs conducted by IBM revealed that 60 percent of top executives face an increased amount of complexity in their business. Seventy-nine percent of them expect an even greater level of complexity over the next five years and only 49 percent of them estimate that they will be ready for it.
The questions then become: Are you ready to face more complexity? How good are you at managing complexity? Can you leverage this complexity to create differentiation and competitive advantage?
Complexity can be good and bad at the same time. There are four types of complexity in business and it is important to break them down to be able to understand them and eventually address them:
Imposed complexity is coming from regulations and mandatory compliance guidelines both at industry and governmental levels. It is typically not controllable and manageable so it is best to prepare for it and find a way to minimize its impact on the business.
Inherent complexity is structural complexity, which is inherited and well rooted in the business. It can be addressed by making deep structural changes that might be painful but beneficial to the future of the business.
Designed complexity is based on purposefully designed strategies and programs to support the long-term vision for the firm. This complexity is based on managerial choices aimed at creating competitive advantage.
Unnecessary complexity is the result of legacy management design and structure that might not have been updated, eliminated or refreshed. It is unnecessary because it brings no value to the business and it solely exists because no one is paying attention to it.
As a leader of your organization and in the face of resource constraints, I highly recommend you start paying attention to these four types of complexity. Assemble a process and team to review complexity and engage in the design of strategies that will leverage complexity to bring differentiation to the market. Here are some quick tips on how to do this:
Design positive complexity to create differentiation.
This should be the main focus of your critical actions and priorities. Can you create complexity that differentiates your supply chain processes, your customer service experience levels and your digital marketing strategies without overwhelming your customers? Can you create unique value selling propositions based on unique internal designs and systems?
Quickly kill unnecessary complexity while reassigning resources and skills.
Unnecessary complexity might be inherited from legacy management designs or decisions. They might bring zero business value and need eradication. Be decisive and free up resources for something else.
Transform internal complexity into simple value propositions.
Remember that internal complexity has to be transformed into simple offerings for customers. If you propose something to your customers, do it by absorbing complexity and acting as a consultant for your customers.
Focus on pockets of value-creating complexity for customers.
It is all about value. Complex designs have to bring value to customers. If not, they should not be implemented. As a leader, make sure value is real and can be monetized through pricing. You might have the best supply chain management process, but will customers see the value in it and be willing to pay for some of the services?
Assign your best talent to manage complex problems and initiatives. Complex problems need mindful problem-solving.
The business world is changing in front of our eyes. What are you doing to change with it while remaining nimble, easy to do business with and focused on value? Are you leveraging complexity to create sustainable competitive advantage?
Stephan Liozu is the founder of Value Innoruption Advisors and specializes in disruptive approaches in innovation, pricing and value management. He earned a doctorate in management at Case Western Reserve University and can be reached at email@example.com. For more information, visit www.stephanliozu.com.
Many CEOs, CFOs, investors and executives do not realize the impact federal, state and local government have on their organization, or the importance of maintaining a comprehensive government affairs strategy as part of their annual business planning process.
As a lobbyist, I act as a professional guide for my clients to a variety of federal, state and local elected officials. When businesses choose to interface with the government, many consider hiring a lobbying professional who can help develop a government affairs plan — just as you would hire an accountant for an Internal Revenue Service audit or a lawyer for a court case.
If you choose to start the process on your own, it is imperative that you determine what you want to accomplish as a business. Do you want to become an eligible vendor with a specific government agency? Are you looking to expand your business or are you seeking public incentives to help you with hiring new employees or training your workforce?
Maybe you just want government “not” to do something that may negatively impact your day-to-day operations. You must identify what it is that you want and be clear about it when meeting with agents of government.
Here are some tips for lobbying the government:
Identify your targets
First, make a list of legislators who could aid in your effort. Start by looking at the local officials who represent you, your business and your business’ employees geographically. They have the greatest reason for supporting your requests. They want to see your business succeed and hire more of their constituents as you grow, so they should be your Tier 1 targets.
Your Tier 2 targets should include legislators who are on the committees that have oversight of your issues, legislators who are in leadership positions and who may have a little more political gravity than most, and legislators who have expressed a public interest in your activities.
These champions will help augment your efforts with letters of support, calls into agencies to help arrange meetings, and inquiries to secretaries and agency directors when you are not getting the answers you want from government.
Arrange a meeting
Once you have a meeting with a legislator, arrive prepared and practiced. Usually, meetings only last between 10 and 20 minutes, so make sure you and your group are aware of the issues you need to cover and stick to them. Know your facts.
However, if a legislator or their staff asks a question for which you do not have the answer, don’t make something up on the fly. Take note of it and get back to them. And, if a legislator challenges you on something, answer the question honestly, but not argumentatively.
Know who you are meeting with, their goals and where they stand on the issues before your meeting.
For example, not all legislators support drilling for Marcellus Shale gas and if you are a driller walking into their office, you may be in for a hard time. Make sure your requests are realistic for each of your visits and always remain professional.
Lobbying is a contact sport. The more you contact a legislator and develop a rapport with them, the more inclined they will be to help. Realize that in doing this you are not working alone.
At the end of the day, the lobbying industry acts as a forum for conflict resolution among divergent interests. Whether you decided to go it alone, or hire a firm, know that an honest, succinct, positive and respectful approach will be effective. And remember that a successful lobbying effort takes time, resources and preparation.
Joe Kuklis is a political lobbyist and head of Duane Morris Government Strategies. He has built a successful career lobbying for organizations and businesses of all sizes and has helped raise $500 million for clients ranging from Fortune 500 corporations to one-person startups. His book, “The Robin Hood of D.C.,” is an insider’s guide to the government marketplace for small, mid-sized and large businesses. Visit www.robinhoodofdc.com for more information.
Imagine it’s a hot day. You’re thirsty and hungry, but don’t want anything unhealthy. There aren’t many options available to meet all those needs. In the early ’70s, the concept of the smoothie was born out of this unmet need. Opened in 1973, Smoothie King Franchises Inc. was the original smoothie brand.
In 2001, Wan Kim had this same urge to find a healthy option to quench his thirst and satisfy his hunger. He had his first experience with a Smoothie King smoothie while studying at University of California at Irvine. The high quality, healthy product had him hooked immediately.
Kim was so impacted by the product that he became a Smoothie King franchisee in South Korea. Since 2003 he has owned several Smoothie King franchises, and in 2012 when the opportunity came about to own the brand, he jumped at the chance.
“I bought the company in July 2012,” says Kim, Global CEO. “I really love this brand. It’s not because I’m the owner, but because we have great products. There are a lot of changes still happening, but it’s exciting.”
Smoothie King, a 300-employee, more than $230 million organization, is now 40 years old. The brand has more than 700 stores and a presence in the United States, Korea and Singapore. Despite the company’s established age and fairly big size, a new owner and plenty of potential market opportunity leave the brand in growth mode today.
“Our next five-year growth plan is to open 1,000 stores in the U.S. and 500 outside the U.S.,” Kim says. “Last year the company did about 26 franchise openings. This year in the first quarter the company has done 40 to 45 signings.”
Kim’s experience as a franchisee and now a franchisor has given the company new life and Kim is excited about where he can bring the brand and its smoothies in the near future.
Here’s how Kim is spreading the word about Smoothie King in the U.S. and overseas.
Understand all areas of your business
Kim was a franchisee for nearly a decade in South Korea. His stores were some of the highest grossing for Smoothie King before he became CEO.
“Obviously franchisees and franchisors have some different views, but eventually the bottom line is to make a better brand,” Kim says. “The path they take can be different, so you have to keep communicating to each other and look at the bigger picture.”
Kim has a very unique advantage over numerous other franchise CEOs. He now has experience as a franchisee and a franchisor.
“I have both aspects and know what a franchise wants and needs, and I know how I need to communicate,” he says. “In any kind of business, sometimes people forget why we do it. So that’s why I keep communicating and keep telling our people why we do this business. We have a great mission and a great vision. We just have to talk about it.
“A lot of people want to make money and be comfortable and I get that and that’s very, very important, but there has to be another reason why we do this. Smoothie King is a healthy choice and our mission is to help people live a better lifestyle.”
While the company’s mission is to help people live a healthier lifestyle, Kim wanted to make sure that the company’s franchises were in good health also.
“As soon as I bought the company I looked at how many single franchisees we have, because when I was a franchisee I thought becoming a multi-unit franchisee was actually very challenging,” he says. “As a franchisor, they don’t understand what kind of challenges franchisees have when they have a second or third location.
“I started to visit some multi-unit franchisees that we have to look at what kind of system they have in place. Today, we are assembling all those systems so that whenever we have a single franchisee try to become a multi-unit franchisee we have some system to help them grow.”
Having those systems in place will become very beneficial as Kim continues to look at ways he can expand the brand.
“Right now we are in growth mode and are opening a lot of stores and also expanding into other countries,” Kim says. “When you grow, you are hiring a lot of people and when you’re expanding outside the United States you encounter different cultures. In order for me to assemble all those differences I need a really strong mission for why we do this business so that it doesn’t matter what kind of culture or background you’re from.”
Prepare for growth mode
Today, Kim is focused on growing the Smoothie King brand outside the U.S. and in the Southern parts of the U.S. where the company has a strong presence, but a lot of potential still remains.
“We want to make sure that we secure our market before we expand to a different part of the U.S.,” Kim says. “That expansion is happening in Florida, Texas, Georgia and other southern parts of the U.S. Going outside the United States we are looking at Malaysia, Indonesia, Thailand, Taiwan, Japan and the Middle East. Our goal is to open two markets this year and two more markets next year.”
Fast-paced growth like Smoothie King is expecting requires a strong culture and mission that make the company attractive anywhere it goes.
“When you are in growth mode I would advise that you want to have a really strong culture in your organization, so that whomever you hire can be blended into your culture,” he says. “You have to set up a strong mission, vision and keep communicating with your employees.”
When you take your company outside of the United States you will experience a lot of cultural difference, and you have to be prepared for it.
“A lot of times when people don’t have any experience with different cultures they will think it’s wrong, but in fact it’s different,” Kim says. “In order for you to go to other countries and do business you have to learn how to respect their culture. If you don’t respect their culture they will know immediately. You have to educate your employees.”
The vast cultural differences Smoothie King employees will experience as the brand continues to expand isn’t the only change they’ll have to accept, they’ll also have to buy into the sheer amount of growth that Kim sees in the company’s future.
“A lot of times when companies grow employees don’t really see how far we can go,” he says. “When we start to grow there is a lot of work coming in and a lot of things are changing. It is very important that I need to keep communicating with employees that we can get there, because if you don’t believe we can get there, then it’s not going to happen.”
One of the first things Kim did when he bought the company was to tell the employees about the growth plan and a lot of people didn’t buy in.
“They were thinking, ‘Oh, it’s a new owner; of course he’s going to be thinking of growth, but it’s not possible,’” he says. “So I had to keep communicating that it’s going to happen and one by one, I started to show them that this would happen and then it really happened and people believed in the plan. I know there are still people who don’t believe where we can go, so I still have to communicate.”
Kim bought the company a little more than a year ago and he is having a blast seeing the company succeed little by little.
“I tell my employees to imagine if we were the size of any big fast food company, the world could be a different place,” he says. “It’s not just about making money and having success. It’s also about influencing more and more people to live a healthier lifestyle.”
How to reach: Smoothie King Franchises Inc., (985) 635-6973 or www.smoothieking.com
Recently, I had the privilege of attending the EY World Entrepreneur Of The Year conference in Monte Carlo. I’m back to report that entrepreneurship is alive and thriving around the globe!
It was a whirlwind of a trip, packed with networking, thought-provoking panel discussions and personal interviews. We heard from a remarkable panel of speakers including Kofi Annan, former Secretary General of the United Nations and Nobel Peace Prize recipient; Sir Timothy Berners-Lee, inventor of the World Wide Web; John Cleese, award-winning actor, author, humorist and Monty Python legend; and many more.
I also had the opportunity to sit down with some of the world’s most accomplished entrepreneurs. These business leaders come from more than 60 countries that combined represent a staggering 94 percent of the global economy.
In this issue and in the months to come, you’ll learn what the world’s greatest entrepreneurs have to say about leadership, innovation, overcoming challenges, bringing their visions to life and much, much more. You’ll also hear from the leadership at EY as to the importance of celebrating entrepreneurship.
Transforming vision into reality
“Be careful about making assumptions. Those assumptions can lead you down a pretty dangerous path. It is OK to make assumptions and have confidence but you had better do your due diligence as well. An assumption is having those critical for the business make sure it is happening. I am very trusting of people and in the past have had some unfortunate instances where I did make assumptions about something and they were completely the wrong assumptions.”
Dr. Alan Ulsifer, CEO, president and chair of FYidoctors
“Growth obviously continues to be a challenge. The markets demand growth if you are a publicly traded company, and growth is a metric of how the business is doing. If you want to continue to attract the best people, attract the right sources of capital to your business, you have to demonstrate that things are going well and growth is one measure that people look to. I think that if you are a business in an established market, growth can be a challenge because those markets by and large are growing more slowly. So in order to get more rapid growth, many companies are looking at emerging markets and trying to figure out what their strategy should be for emerging markets, those that have double-digit growth potential.”
Bryan Pearce, Americas Director, Entrepreneur Of The Year and Venture Capital Advisory Group EY
“One of the toughest things for me was that people have a certain image of my country, Colombia. They don’t trust a company there to have good quality and do good work, but I am very proud to offer those qualities from Colombia. It is not easy but it is something that you can accomplish. I have been down a lot of times, but the good thing I have noticed is that every time something like that happened, I have been able to obtain positive things out of it. I have been broke multiple times, but from being broke I have been able to learn from it and rebuild.
Mario Hernandez, founder and president, Mario Hernandez
Jim Turley leaves his post as Global Chairman and CEO for EY with deep admiration for the entrepreneurs who continue to use their vision and spirit of innovation to change the world.
“They have got this wonderful ability to think outside themselves, to look at the world outside these windows and see the needs that exist out there,” says Turley, who officially retired on July 1.
“Then they’ve got a vision to create a product or service or an idea to meet the need they have seen. They have got the courage to risk everything and they are as persistent as can be. Most of them fail the first time out. But they get up, clean themselves off and do it again.”
“Work carefully with a few people who get a twinkle in their eye. If you talk about your idea, some people will respond with excitement because they get it, but not everybody. Maybe you talk to 300 people and three people will get it. Work with those three people. The web took off because a few people all over the world got it. You get the support from a few people who get it and then it builds from there.”
Sir Tim Berners-Lee, creator of the World Wide Web
Corey Shapoff has a job that many would envy, booking well-known musical acts such as Maroon 5, Katy Perry, Christina Aguilera and Kelly Clarkson for live concerts and private corporate events. But he doesn’t take much time to stop and think about all the famous people on his call list.
“I’m a grinder,” says Shapoff, president and founder of SME Entertainment Group. “I’m the kind of guy who is always looking to what’s next. You’re only as good to me as your last deal.”
It’s that instinctual drive to always try to do it better that is embedded in the true entrepreneur and allows the next vision to become a reality.
“It’s hard for me to turn it off and say, ‘That’s great,’” Shapoff says. “I’m always thinking about tomorrow. You just can’t take things for granted in our business.”
“The skill sets of an entrepreneur involve understanding how to create business. So if you’re going to give back, why not work with kids who need it the most and actually teach them and help them to be entrepreneurs. That’s what is going to grow our economy and create stability where otherwise we’re going to have a lot of social unrest.”
Amy Rosen, president and CEO, Network for Teaching Entrepreneurship
“When you’re an entrepreneur you feel like you have never met a deal that you didn’t like. You only have limited resources and limited time to be successful. You have to stay disciplined and focused and being able to say what we are not is every bit as important as being able to say what we are.”
Jim Davis, president, Chevron Energy Solutions
“It’s important that you have teamwork and all your top players are well motivated with passion, principles and values. We make sure that people know where we are going and what our main objective is for that year. We promote teamwork inside and outside the company. Our directors have to make sure they are sharing our company values and principles with each of their team members.”
Lorenzo Barrera Segovia, founder and CEO, Banco Base
“For entrepreneurs you get a great idea, you start your business and then you have to keep focused. Keep executing that idea if that idea is big enough. Never fall into the temptation of getting out of your business or change it unless it’s strategic. Secondly, try to get financing as late as you can. Never get financing as soon as you can. Thirdly, create a great team and culture, because that’s what will prevail and create value for shareholders and your community. That’s how you scale your business. The last one is to dream big.”
Martin Migoya, CEO, Globant
“It was nothing but a gut feeling. The only thing I knew was there was a big opportunity in yogurt. I grew up with yogurt. Being from Turkey yogurt was a big part of our diet. I wasn’t sure if I could do it – break through in the world of yogurt in retail.
The category was owned by two major companies; Dannon and Yopliat owned about 70 percent of the market, and they had been there for years. As a startup you go to the specialty stores first. That’s how you start and you grow and once you reach a certain level then you go to the big retailers.
I didn’t want to do that. I wanted to go to the big retailers and be in the regular dairy aisle. That was a crazy idea and nobody thought that would go, but at least we tried. When we tried, we convinced one retailer in New York, ShopRite. The result from that was we were able to expand to a couple of other retailers. After the second or third customer that we had success with for our yogurt, I knew it wasn’t going to be about selling, it was about making enough.”
Hamdi Ulukaya, founder, president and CEO, Chobani Inc.
One of my favorite business books, which also made it as a Broadway play and a big-screen movie, is “The Wonderful Wizard of Oz,” written by L. Frank Baum in 1900. My hero in this story is not the young orphaned Dorothy, nor the Cowardly Lion, the desperately in-need-of-some WD-40 Tin Man, nor even the Scarecrow in search of a brain.
Instead it is the Wizard. To understand why the dubious Wizard is my favorite character, one must get past the portrayal of him as scheming, phony and at times nasty.
To appreciate the man behind the curtain, recognize that he is a very effective presenter, though at times this ex-circus performer behaved a bit threatening. OK, he was a jerk, but the point of this column is to take you down the yellow brick road on the way to the enchanted Emerald City and corporate success.
From this tale there is a lesson that one can say all sorts of things, not be visible, and yet still have a meaningful impact.
Another takeaway is that playing this role provides plausible deniability. This absence of visual recognition is particularly beneficial in negotiating when you, as the boss, use a vicar, aka a mouthpiece, to speak on your behalf. This allows you to have things said to others that you as the head honcho could never utter without backing yourself into a corner.
Another plus is you can always throw your mouthpiece under the bus if necessary, of course, with his or her upfront understanding that sometimes there must be a sacrificial lamb. This is not only character-building for your stand-in, but also many times presents an unprecedented opportunity for him or her to learn in real time.
Perhaps the Wizard was the first behind-the-curtain decision-maker, but today this role is used frequently in business and government. In a similar vein, the “voice” of Charlie from the well-known 1970s TV series “Charlie’s Angels” was always heard, but he was never seen.
Frequently there is much to be said for using anonymity to float a trial balloon just to get a reaction. Think about a son having his mom test the waters by talking to dad before the son tells him he wants to drop out of junior high school to join the circus. Maybe that’s even how our former circus-drifter-turned-Wizard-of-Oz got his start.
In the negotiating process it is important to have a fallback when the talks hit a rough patch by instructing your vicar to backpedal, saying that he or she has just talked to the chief and the benevolent boss said, “I was overreaching with my request.”
This also serves to build a persona for the boss-behind-the-curtain as someone who is fair-minded and flexible. All the while, of course, it’s the boss who is calling the shots and maneuvering through the process without getting his or her hands dirty.
The value of using this clean-hands technique is that it enables the real decision-maker to come in as the closer who projects the voice of reason, instead of the overeager hard charger who at times seems to have gone rogue.
It actually takes a bigger person to play a secondary role behind the curtain rather than always be in the limelight. It also takes a hands-on coach and counselor to maneuver a protégé through the minefields to achieve the objective.
However, accomplishing the difficult tasks through others is true management and the No. 1 job of a leader who must be a master teacher.
After you have guided a handful of up-and-comers a few times through thorny negotiations, you will gain much more satisfaction than if you had done it yourself, while engendering the respect and gratitude of your pupils. They in turn will have learned by doing, even though they were not really steering the ship alone.
The final step is to let the subordinate take credit for getting the big job done. This will also elevate you to rock star status, at least in his or her eyes. Soon those who you’ve taught will emerge as teachers too, and the big benefit is that you will populate your organization with a stellar team of doers, not just watchers.
So, forget about the Wicked Witch of the West and move backstage for the greater good of the organization.
A few years ago, one of my friends embarked on what he deemed an ambitious, yet simple plan: Write a New York Times Best Seller.
“Ed” had reason to be optimistic: His first two books had sold well and he had successfully leveraged them to launch a burgeoning consulting practice. Ed also had a nationally known book publisher to handle distribution for this book, and he had developed a comprehensive marketing and promotions plan for the launch.
Ed felt all the pieces were in place and was sure he would succeed. His goals were two-fold: break out from the pack and grow his business, and hit the New York Times Best Seller’s list. While his head told him the first goal was more realistic, his heart was set on the second — publicly claiming it was his only true benchmark of success.
Needless to say, Ed’s book didn’t make the list. Few books do. That doesn’t mean Ed’s book was a failure. Quite the contrary, it was a huge success.
As a result of Ed’s book, he landed numerous speaking engagements with organizations and companies around the world. He began to command four- and five-figure speaking fees from those engagements, and his book was purchased and distributed to every attendee.
Further, Ed’s speaking engagements lead to dozens of private companies hiring him to provide one- and two-day seminars, where he taught executive teams how to implement the ideas he espoused in the book. Ed was also presented with numerous business opportunities for new and existing clients to tackle initiatives beyond the book’s subject matter that he had not previously considered but were related to his expertise.
Finally, Ed did sell thousands upon thousands of copies of his book in bookstores nationwide and online through booksellers like Amazon.com and BarnesAndNoble.com. His book was in the hands of the right people — and lots of them — and he had established a national profile.
Viewed through this lens, there is little doubt that Ed’s book was wildly successful — even if it wasn’t a New York Times Best Seller and even if it didn’t stack up to his primary benchmark.
This is the reality of book publishing. Each month, I speak with dozens of entrepreneurs and CEOs about their nascent book ideas and the possibility of having Smart Business Books handle development and publication of their stories and manuscripts. I begin every conversation the exact same way: “If your goal is to have a New York Times Best Seller, we’re not the right option for you.”
That’s because you should write books for the right reasons. If your only goal is getting on a best-seller’s list, then your ambitions are off the mark. Writing and publishing a book is not like a professional sports team’s season — there isn’t one winner who takes the championship and a bunch of losers who fall short. Publishing a book is not an all-or-nothing proposition.
This isn’t to say you shouldn’t aim high with your goals, and having your book become a best-seller is certainly one way to measure success. Setting reasonable expectations, however, is essential.
So why write a book?
One of the most important questions you should be able to answer when thinking about writing a book is, “Who is going to read it and why?”
As Ed’s story demonstrates, a book is a very useful business development tool. It is an immediate conversation starter, an excellent credibility builder and one heck of a leave-behind. If you’re engaged in marketing, why not capture your expertise through a book?
Another reason is to celebrate a milestone or establish a legacy piece. It could be for a 50th or 100th anniversary, or to recognize the history of an organization upon the founder’s retirement or death.
And, if you are interested in helping others succeed, a book is a great way to share your expertise or what makes you and your organization special. For example, if you’ve built an amazing corporate culture where productivity blossoms and innovation flourishes, the “how” and “why” are good subjects for a book. And if you’ve been involved with several mergers and acquisitions, consider sharing what worked and what didn’t, and the lessons learned along the way.
Whatever your story, the key is having a reason to share it with others. The bottom line: It’s your story. Make it count.
Economic hardships, the sluggish job market and continued uncertainty surrounding the future of health care reform have taken a toll on employees. Now is the time to demonstrate your commitment to your workforce and boost morale by finding ways to effectively communicate your organization’s employee benefits package.
“Employers in the United States spend nearly 40 percent of payroll on benefits. That being said, a strategic approach to benefits communication is no longer a business tactic geared toward only large organizations; it is a necessity for employers of all sizes,” says Jessica Galardini, chief operating officer at JRG Advisors, the management arm of ChamberChoice.
Smart Business spoke with Galardini about taking a strategic approach to benefits communication.
Why should employers be taking a strategic approach to benefits communication?
A strategic approach can boost employee appreciation and comprehension. Maximize your annual open enrollment period by reiterating the positive aspects of what your company offers. ‘Value-adds’ such as paid holidays, vacation time or paid time off, and profit-sharing plans should not be overlooked.
Remind employees about the relevance of the financial contributions made on their behalf. Employers often pay a significant portion of the premiums for medical, dental and vision benefits, and full premium for life and disability insurance benefits. It’s not uncommon for employees to overlook how much employers pay for all components of the benefits package, which is why personalized benefit statements can be powerful communication tools. Referred to as the ‘hidden paycheck,’ these statements incorporate annual salary, the total value of all employee benefits, paid time off, etc.
What should be considered when preparing a benefits communication strategy?
A variety of factors should be considered, including life stages. In what stage of life are your employees? Are they single? Newly married? Ready for retirement? Employees have different needs from their benefits packages at different stages of their lives.
Employees respond differently to technology, which also should be taken into consideration. Email communications, a company intranet site and/or webinars might be well received by some, while others will benefit more from group forum discussions and presentations. Technology creates greater efficiencies and a new approach to benefits communication, but it should not be substituted for face-to-face and ongoing personal communication.
Another challenge is communicating with employees working remotely or in other locations, as well as those working weekends and/or shifts other than 8 a.m. to 5 p.m. Monday through Friday. You also are faced with new employees entering your workforce and older employees who might retire. People get promoted, married, divorced and have children. All of these life stages and factors can present challenges to effective communication if not taken into consideration upfront.
How do employers develop a benefits communication strategy?
Utilize your benefits advisor to help develop the communication strategy that will work for your organization. Ongoing education and communication are critical since the benefits needs of employees change throughout the year. So, provide employees with instruction and access to make needed changes. Effective programs work best when communication is employee friendly. Employees need to be shown how benefits work together, and they need guidance in order to make the best decisions.
If your organization is facing a change in benefit or contribution structure, make sure to plan how it will be communicated. Be honest, accurate and concise when delivering any message that relates to change. Your advisor can provide benchmarking data to compare your package to others in your industry, geography, etc., to help keep changes in perspective.
Because benefits have a profound impact on job satisfaction, effective benefits communication is one of the most challenging responsibilities facing employers today. The right approach and techniques can put some control back in the hands of employers, and boost employee morale.
Jessica Galardini is the chief operating officer of JRG Advisors, the management arm of ChamberChoice. Reach her at (412) 456-7231 or firstname.lastname@example.org.
Insights Employee Benefits is brought to you by ChamberChoice
A space plan is a made-to-order layout of your office space. If well designed, it will be flexible enough to accommodate future changes in your organization, such as staffing additions or managerial promotions, without the need for major interior renovation.
“An efficient space plan will increase productivity, efficiency and employee morale by maximizing the capabilities of your space,” says Sam McWilliams, managing partner at SMC Consulting, LLC.
As companies grow and reorganize, space can become fragmented, which challenges departmental and personnel adjacencies.
“These are common challenges that come with organizational change and growth, but can be addressed with proper planning,” says McWilliams.
Smart Business spoke with McWilliams about how a space plan can help you get the most out of your office space.
How is a space plan developed?
Determine what your current and future needs are, then reach out to a professional space planner or designer. He or she can evaluate your existing space plan and determine whether it can be reconfigured to accommodate those needs, or requires additional space.
Architects are not always required for interior planning. By hiring a designer/space planner, you will be able to keep your professional fees to a minimum.
What should be expected from a designer?
The interior design professional should be knowledgeable about building codes and Americans with Disabilities Act requirements to ensure that your space is properly designed.
Expect the designer to conduct site surveys and perform employee interviews to identify company goals. It is important to understand what challenges employees and companies are facing with their current space to understand why a company is looking to make a change. This process is called programming and is a critical step in developing a space plan that will make the best use of the space available.
What are the next steps?
The designer will generate a space plan that reflects the compilation of details gathered from programming. Generating these drawings should be a collaborative effort between you and your designer.
Departmental adjacencies and alignments will be identified, that can create ‘neighborhoods’ of groups that need to collaborate and interact with one another on a daily basis. Workspaces will be designed to accommodate work processes that allow daily activities to be performed more efficiently. By developing a standard footprint for an open plan environment, your new space plan can promote collaboration, increase productivity and reduce real estate costs.
How much flexibility does a space plan offer?
A flexible space plan allows companies to preserve space for future use by utilizing temporary space via ‘hotelling,’ a method that allocates unassigned space for visitors, field personnel or huddle rooms for small meetings. These temporary areas can be easily converted to more permanent workspaces without interruption or loss of existing space allocations.
Incorporating an open environment in your space plan can increase space allocation. Designing workstations in modular size will allow for easy reconfiguration in the future. Workstation ‘typicals’ can be easily reconfigured using the same panels to create smaller or larger workstations depending on your needs.
How will implementing this space plan render measurable results?
By utilizing the appropriate square footage, you can reduce overhead costs and increase workplace efficiency and productivity by:
- Implementing company standards.
- Workstation and office design.
- Defining and improving adjacencies.
- Reducing or eliminating architectural fees.
- Proper allocation of square footage.
- Eliminating wasted space.
- Alternative work solutions.
- Improving IT infrastructure.
Change can be a challenging but rewarding process. Developing your space plan may take time, but the effort is worthwhile when you see the impact it has on your company.
Sam McWilliams is a managing partner at SMC Consulting, LLC. Reach her at (724) 728-8625 or email@example.com.
Insights Furnishings is brought to you by SMC Consulting, LLC
Business owners and corporate executives tend to overinvest in their businesses, often ending up with a large portion of their wealth at risk to the fortunes of one company. However difficult, these owners need to diversify their financial assets to better survive periods of stress. The rules of prudent investing tell us that any more than 10 percent of one’s wealth invested in any one company is too much.
“Diversifying is not natural to individuals so closely connected to one business, but it can be a serious risk to their underlying wealth and the financial health of their entire family,” says Nina M. Baranchuk, CFA, Senior Vice President and Chief Investment Officer at First Commonwealth Advisors.
Smart Business spoke with Baranchuk about how to structure portfolios to diversify or offset these concentrated risks.
Why do corporate executives or business owners need to diversify?
Even regular employees get a company paycheck and buy company stock in the 401(k) or the employee stock purchase plan, so the concentration risks for all employees can be severe. Senior executives often accumulate additional large holdings of company stock and options as part of their compensation.
A business owner’s company may also be a disproportionately large part of his or her portfolio as well. An owner bears the risk of the entity and any economic, competitive or regulatory forces that might impact it. Like putting all your chips on red, there are serious consequences to holding so much ‘concentrated’ wealth if things don’t go well. In addition, these holdings can be illiquid — there is no easy exit under times of stress.
How should business owners construct their passive investment portfolios?
In some cases, it may not be possible to diversify much. If an owner can take cash out of the business, he or she should work with a qualified portfolio adviser to ensure that all of his or her passive investments are built to complement or offset the risk. A qualified adviser can craft a portfolio that helps to mitigate your specific concentration risks and manage your overall exposures.
For example, a local Pittsburgh businessperson might be concentrated in a steel or metal fabrication business. So, he or she would share exposure to the fates of this or other industries as well their end markets in the U.S. or overseas. He or she also may have significant risks to things like geography, interest rates, significant product input costs, etc.
You can easily have issues of exposure based on subtle or indirect connections. Some risks to a firm are really in your supply chain or the financial health of a customer’s industry. Maybe you have one or two dominant clients that represent a large percentage of your revenue stream. Geographical risks loom large for some companies as well.
A portfolio built to offset these risks might exclude many other holdings in the industrial arena and overinvest in industries that often do well when industrials/metals do not — think consumer-purchase staples like food and household products or utilities.
What’s another example of offsetting your risk?
One family we worked with had made its wealth in the real estate business — owning everything from apartment complexes to high-rises. Our analytic work found that two good offsets for these holdings were private equity and financial stocks. Thus invested, whatever happens to interest rates, private equity and financials will react in opposition to the direction of real estate, counteracting one of its most impactful environmental factors.
What should executives consider?
While many executives have limited ability to divest their options or stock, they should certainly not invest their 401(k) in the company stock or buy additional shares. Remember that the executives at Enron and WorldCom went down together, along with their options, pensions, paychecks and other compensation.
In this world of heightened competitive and financial risks, no business is immune from potentially negative outcomes. We urge our clients to make sure they have done everything possible to ensure their family’s financial health by planning for worst-case scenarios.
Nina M. Baranchuk, CFA, is a senior vice president and chief investment officer at First Commonwealth Advisors. Reach her at (412) 690-4596 or firstname.lastname@example.org.
To learn more, call (855) ASK-4-FCA, or visit ask4fca.com.
Insights Wealth Management is brought to you by First Commonwealth Bank