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Accounting systems capture information that can lead to more profit. Ted Flom and Tony Caleca from Brown Smith Wallace LLC discuss some issues about how your accountant can help your company’s bottom line.

Q. What accounting missteps might lead to decreased profitability? A. The biggest mistakes are made when organizations don’t embrace the importance of timely and meaningful reporting to make informed decisions. Maintain accounting information in a way that gives management a clear picture of how different aspects of the company are doing.

Q. What accounting tools could prove most valuable to business owners? A. The key is having an accounting system that adequately supports the critical areas of your company. Capture information at a level of detail that supports management decision-making. Define what five key metrics are critical to your success and track them daily.

Q. How can accounting help identify growth areas? A. Accounting information can show trends that provide insight into efforts the company should focus on or de-emphasize, particularly if systems are aligned with your strategy or key growth areas. Today, companies are more focused on information that helps them better predict the future rather than understand the past, as has traditionally been the case.

Q. How does risk affect company value? A. Entities failing to recognize the risks they face from external or internal sources and not managing them effectively can destroy value for shareholders and stakeholders. Enterprise risk management (ERM) supports value creation by enabling management to deal effectively with potential events that create uncertainty. You can use ERM to respond to those risks in a way that reduces the likelihood of downside outcomes and increases the upside.

Q. What do businesses commonly overlook that can pose problems? A. Businesses go through the exercise of keeping accounting information, but they don’t give it sufficient review. It’s always healthy to ask, ‘Where did this number come from?’

Ted Flom, CPA, CISA, CIA, is a member in charge of Risk Advisory Services for Brown Smith Wallace LLC. Reach him at (314) 983-1294 or tflom@bswllc.com.

Tony Caleca, CPA, is a member in charge of Audit Services. Reach him at (314) 983-1267 or tcaleca@bswllc.com.

Tuesday, 30 April 2013 20:00

Effective leadership

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As leaders, we understand that our actions, whether good, bad, positive or negative, are being continually examined. Our job as leaders is to create a vision, develop and execute strategic plans, define goals, and set objectives aimed at creating excellence through products and services that address the needs of the customers and markets we serve.

Accomplishing these tasks cannot be done in a vacuum; a team of highly skilled and dedicated leaders is needed to accomplish these goals. CEOs and business owners are constantly challenged to seek out the talent needed to build an effective leadership team. Though difficult, it is paramount to find talent that has a keen understanding of your organization’s market, vision, mission and objectives.

Building a team of talented leaders that share similar capabilities, traits, ambitions, and that are qualified to lead an organization is one thing, but getting this group to function together to lead a business effectively and efficiently requires special attention.

It is vital to have a leadership team that consists not only of highly skilled, functional leaders but also those who possess the ability to understand the broader picture. Members of this team must be willing to contribute, provide productive opinions and work as a team to reach consensus, and then collectively execute these decisions throughout the organization.

Leading strong leaders requires managing egos, resolving conflicts, balancing power and integrating opinions in a way that ultimately fosters a team that is aligned with your organization’s vision, goals and objectives.

Reflect for a minute on the qualities that have brought you to your leadership position. You are a visionary and you’re high on confidence. You likely have charisma and years of experience. You have a wealth of important contacts and you are a person that most would consider to be “plugged in.”

Now assume that those in your organization, technically your subordinates, share many of those same qualities that you possess. The possibility and likelihood of friction in these relationships is high if you don’t manage these relationships carefully.

Below are some action steps to take to enhance your leadership within your organization.

1. Set the expectation that leaders actually lead, be accountable, take risks and don’t wait for direction. If those around you are not willing to do the same, then maybe it’s time to make a change.

2. Spend quality time with leaders individually to understand their views on their role and their vision of how their functional area contributes to the mission of the organization. Are they thinking big, stretching their direct reports and delivering the results you expect?

3. Challenge the team and individuals to stretch their thinking and share their “big ideas.” Be clear and concise. Put things into context so they understand the meaning and possible outcomes of decisions.

4. Set clear expectations of leaders and the leadership team. Expect individuals to know the overall business and be able to separate themselves from their functional role and contribute to the enterprise by tackling complex issues.

5. Mandate open and frank dialogue between leaders while reiterating that these discussions remain confidential.

6. Expand their role by asking them to contribute by taking lead roles on enterprisewide matters.

7. Allow leaders to lead so they own their actions and decisions. It is your responsibility to identify and select high-quality talent with the knowledge and experience needed in order to contribute to the organization.

These steps are the beginning to a harmonious relationship with your top team members. Remember, the goal is the respect that you earn along the journey, not friendships or three people to round out a great foursome on the links. Your energy, vision, determination and drive are the active ingredients in leading by example. ?

Tony Arnold is founder and principal of Upfront Management, a St. Louis-based management and executive consulting firm. He can be reached at (314) 825-9525 or tony@upfrontmgmt.com.

Tuesday, 30 April 2013 22:38

How to protect your company from cybercriminals

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Data breaches are becoming more commonplace, causing millions of dollars in damages for companies that have personally identifiable information (PII) hacked by cybercriminals.

“Think about all of the losses you can incur. Not only do you have to hire a security expert to find what happened, you may be assessed fines or penalties by the merchant’s acquiring bank or payment card brand. In addition, you could be responsible for credit card charges made by the criminals and lose business because no one trusts you anymore,” says William M. Goddard, CPCU, principal, Insurance Advisory Services at Brown Smith Wallace.

Smart Business spoke with Goddard and Lawrence J. Newell, CISA, CISM, QSA, CBRM, security and privacy manager, about protecting companies from cybercrime.

How do cybercriminals access networks?  

One typical method is spear phishing. Unlike traditional phishing attempts, which are fraudulent emails sent at random claiming to be from a reputable organization like a bank or eBay, spear phishing emails are sent to targeted employees or customers of a company.

The email appears to be coming from the company and requests that the recipient click on a link, which then goes to a fraudulent website. They may ask for personal information or they may launch a virus they’ll use to get into your network.

If you click on the link, it launches a program in the background that goes onto your workstation and canvasses the network for other vulnerabilities. The program collects data, whether that’s credit card information or other PII, and uploads it to the cybercriminal.

How can you reduce cyberattack risk?

The first thing to do is develop an information security policy, document it and disseminate it throughout the organization.

Other protective measures are:

  • Conduct an inventory of authorized devices on your network. Guests can come into your place of business with a laptop and leave a device on your network that goes undetected. That device could have Trojan horses or viruses that, when executed, plant a program on your network.
  • List an inventory of software allowed to run on workstations or servers. That helps when looking for rogue programs or software installations.
  • Install an anti-virus program to detect malware. Anti-virus protection also needs to be maintained and updated for the latest definitions.
  • Run vulnerability and penetration tests on servers and networking equipment to make sure you don’t have unnecessary services running that could lead to a vulnerability and potential unauthorized access.
  • Prevent data loss by running programs to detect outbound calls or connectivity to remote sites that are not authorized to receive data output.
  • Create security awareness within your company to ensure that people who have access to information are not sharing anything that is confidential or private.
  • Develop an incident response plan to react to a breach and quarantine activity before it spreads throughout the network.

Companies think they’re protected because they are compliant with some standard such as PCI, but that’s no guarantee their systems will not be compromised. Your security program needs to go beyond PCI and focus on more than credit card information. Cybercriminals go after the easiest target along with whatever PII is available that has value. For instance, not-for-profit organizations may have names, addresses and checks with banking information; all of that information is valuable to somebody. For similar reasons, credit cards are often targeted because they’re so widespread and it’s the easiest information to sell.

What can companies do to protect against losses if they are hacked?

A variety of insurance policies cover things like the cost of fines, notification that PII has been compromised, liability and business interruption. All cyber policies are slightly different, and you have to be careful to buy the right coverage.

Businesses are smart enough to buy fire insurance in case a building burns down. Cyberattacks can be just as damaging, depending upon what happens and what information has been compromised.

William M. Goddard, CPCU, is principal, Insurance Advisory Services, at Brown Smith Wallace. Reach him at (314) 983-1253 or bgoddard@bswllc.com.

Lawrence J. Newell, CISA, CISM, QSA, CBRM, is manager, Risk Advisory Services, at Brown Smith Wallace. Reach him at (314) 983-1218 or lnewell@bswllc.com.

Brown Smith Wallace can help you with cybersecurity. Visit them here to learn more.

Insights Accounting is brought to you by Brown Smith Wallace

A fully insured business will shop around with different health insurance companies for the best value, including a good network. However, self-funded health plans — which are growing in popularity — contract with a rental network that administers benefits with the help of a third-party administrator.

Smart network provider contracting will maintain lower costs and access to care for members. Many employers only look at the discounts for services in the contract, but there are other methods just as important when evaluating a network.

“There are always some things out of your control, but you try to manage the network and build in predictability to make sure you have control over it rather than the providers,” says Jamie Huether, regional vice president, Network Management, at HealthLink, which rents its network to self-funded entities.

Smart Business spoke with Huether about what to consider when evaluating a network contractor.

How can a network provider maintain lower costs?

A network provider employs a number of contracting methodologies to help health plan clients achieve the best rates. One is having as many fixed rates and as much charge master protection as possible, which limits exposure to provider changes. So, for instance, if a health care provider bills $3,000 for a procedure, and then increases it to $4,000, the network provider’s fixed charge of, say, $900 remains the same.

The alternative is reimbursement methodologies that pay a percentage of the billed charge, which rise as the bill increases. This fully exposes whoever is paying the claim to whatever the providers want to bill.

Why is the network with the highest discount not always the best option?

When evaluating networks, focus not only on the network discount but also the unit of cost, or what the service actually costs. Although the discount can look good, it doesn’t tell the whole story because providers don’t bill the same. Typically, hospitals owned by for-profit entities have a higher billed charge structure than not-for-profit hospitals. So, an appendectomy at a for-profit hospital may have a 75 percent discount for a final procedure cost of $15,000. However, the same appendectomy at a not-for-profit hospital might only have a 30 percent discount but just cost $9,000.

In addition, facilities make charge master — the master list of what they bill for services — changes throughout the year, depending on financial goals. These increases aren’t across the board because some service lines are bigger revenue drivers.

How does the network contractor work with self-funded businesses?

A self-funded plan sponsor contracts with a rental network to help manage costs and plan ahead. For example, one rental network used multi-year contracts to limit uncertainty and keep costs low. By offering stability to the health care providers, who also are trying to budget, it could mean a cost break.

A network contractor shares management reports with self-funded entities to show what they are spending at each facility and the average cost per day. The rental network also can report upcoming negotiations and cost increases that are locked in, giving businesses greater control.

When looking for a health network, what should you ask?

Health plan sponsors need to look for stable, broad networks with good geographic coverage. You don’t want to contract with a network where providers are coming in or out, or that doesn’t include one of the area hospitals. Businesses should ask:

  • How much turnover is there in your network?
  • Do you anticipate any major provider terminations in the next 12 months?
  • What is the network doing with respect to transparency around costs for certain procedures, as well as being able to provide answers about quality?

Another factor is size — a network provider that does a lot of business can use that to leverage better rates from health care providers. Ask about additional services, such as customized directories, and how much help the network will provide to resolve issues related to the pricing of claims. Finally, determine how flexible the network is in addressing issues important to you.

Jamie Huether is regional vice president, network management at HealthLink. Reach her at (314) 923-6756 or jhuether@healthlink.com.

Learn more about HealthLink's broad network of contracted physicians, hospitals and other health care professionals on their website.

Insights Health Care is brought to you by HealthLink

 

Ronald Reagan was well known for not only his confidence but also his positive outlook and sense of humor. He had a way of never taking himself seriously and always found a way to find humor even during the direst times.

In fact, following the assassination attempt, he told his wife, “Honey, I forgot to duck.”

His constant positive outlook made him appealing to voters and is one of the reasons he continues to score high in polls ranking presidents.

Do we approach life and leadership the same way that Reagan did? Do we always take a positive outlook into the start of each day?

Some CEOs act as if being in charge makes them a victim and complain of the burden. Leadership is a privilege that all of us should learn to enjoy. We have to train ourselves to enjoy the process, not just the end result.

Let’s take some time to reflect on the victories, no matter how small, and celebrate them. Learn to reflect on the great clients we have and the great people who work for us instead of focusing on the one unhappy customer or an employee with a bad attitude. But most importantly, we shouldn’t take ourselves too seriously.

Each day that passes is a day that we do not get back. We have to look at each day as a series of moments and find the happy things that put joy in our life.

These can be simple things — a funny comment from your child, something silly you heard on the radio or a bright, sunny day. When we start focusing on these small joys in life and start stringing them together, we’ll find that an entire day has become joyous. Enjoy the time you are in now and don’t spend so much time fretting about tomorrow. Be intentional: Start by writing down four little things a day at work that bring you joy on a daily basis and build from there. This can even be a conversation around the watercooler that makes you laugh. String together a few days like this, and we are well on our way to a more joyous life.

By developing this habit, we will be more inclined to treat people better, and they, in turn, will treat others better, which will increase the overall positive culture of our workforce. The work environment is a bigger factor in why employees leave than money is, so focusing on providing a more joyful environment will also help your business in the end.

Whether in business or in life, it all comes down to being joyful. Happiness is fleeting based on circumstances, but joy becomes permanent once we have cultivated it. Start by focusing on the little joys and build from there. Remember, people won’t remember what you said, but they will remember how you treated them.

Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or fkoury@sbnonline.com.

The more there is available of something, the less it costs. Conversely, when there’s a limited quantity of that same something, the more it’s coveted and the more expensive it is. This is a rudimentary concept, but few companies know how to effectively manage the process to ensure they balance supply with demand in order to maintain or improve the profitability of a product or service. Of course, before you can maximize profitability, you must have something customers want, sometimes even before they know they need it.

Think about precious metals, fine diamonds and even stocks. The beauty and a portion of the intrinsic value of these things are effectively in the eyes of the beholder. In reality, much of their value or price is determined by the ease or difficulty of obtaining them.

As for equities, as soon as everyone who can own a given stock has bought it, then, in many cases, the only direction that stock can take is down because there are simply more sellers than buyers. On the flip side, when few people own a stock but everybody decides they want it, for whatever the reason, that stock may take a precipitous upward trajectory.

A case in point is Apple. At one time, when its per-share price was more than $400, $500 and even $600, everyone thought the sky was the limit and the majority of institutional funds and many home gamers, aka small individual investors, jumped on the bandwagon. The stock reached $705 a share in the fall of 2012, and just when all of the market prognosticators were screaming, “Buy, buy, buy,” there were too few buyers left (because everyone already owned it) and the stock fell out of bed. In many respects, Apple was still the same great company with world-class products, but there were simply more sellers than buyers and — poof — the share price evaporated, sending this once high-flying growth stock to the woodshed for a real thrashing.

The question for your business is how can you manage the availability of your goods or services to maximize profit margins? The oversimplified answer is once you have something of value, make sure that you create the appropriate amount of tension, be it requiring a waiting list to obtain the product or service or underproducing the item to create a backlog. However, this is a delicate balancing act, because if it’s too hard to get, then customers will quickly find an alternative, and your product will become yesterday’s news.

Some very high-end fashion houses, such as Chanel, have it down to a science. It can be very difficult to walk into a marquis retailer today and obtain one of its satchels without being made to jump through waiting-game hoops, just for the privilege of giving the store your money in exchange for the fancy schmancy bag. That stimulates demand and keeps the price up because customers tend to want something they can’t seem to get.

Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at mfeuer@max-wellness.com.

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Companies are being challenged to protect vast amounts of proprietary and confidential information. And now, many are being held to an even higher standard when it comes to protected health information (PHI).

“The Health Insurance Portability and Accountability Act (HIPAA) has existed since 1996. It’s well established that covered entities — health care providers, benefit plans and clearinghouses — have a responsibility to ensure the privacy and security of PHI. Recently, the rules have been tightened to also cover business associates — organizations with which a covered entity shares PHI. These changes mean that business associates now have to fully comply and be accountable under the HIPAA security rule,” says Tony Munns, member, Risk Advisory Services, at Brown Smith Wallace.

Smart Business spoke with Munns about the final omnibus rule and what actions businesses should take.

What prompted the new rule?

A significant number of data breaches were from business associates who were not as diligent as they should have been, and covered entities were not selecting business associates with the appropriate rigor. A notable example involved an insurance company that had a business associate who was responsible for off-site storage of sensitive data. The business associate was using a garage, which was left unlocked and wasn’t climate-controlled. That contracting choice has led to separate investigations by both California and federal regulators.

What action should companies be taking?

The Department of Health and Human Services said that it’s not sufficient to just have an agreement, there needs to be satisfactory assurance that the business associate can and does follow proper procedure. Entities covered by HIPAA have until Sept. 23, 2013, to update their business associate agreements. Current agreements do not have to be changed until they’re up for renewal, but in any case all agreements have to be updated by Sept. 22, 2014.

What steps should companies take to comply with the legislation?

  • Understand the new requirements and the impact on the business.

  • Update business associate agreements.

  • Apply the satisfactory assurance mandate.

Review existing agreements and perform due diligence to get comfortable with the practices of your business associates. This might involve requesting that audits be performed, such as Statement on Standards for Attestation Engagements No. 16 reports. In the insurance company example, no one examined whether the person contracted to provide off-site storage was capable of providing it to the level expected.

What are other requirements of the final omnibus rule?

The new rule requires that individuals be informed that their information has been breached. Managing breaches is no longer sufficient. Meanwhile, business associates are not required to provide a notice of privacy practices or designate a privacy official; they only need to comply with the general privacy requirements and all security measures, much like covered entities.

The definition of a breach was also changed from ‘a significant risk of financial, reputational or other harm to an individual’ to ‘an acquisition, use or disclosure of PHI in a manner not permitted.’ Under the old rule, companies that didn’t believe information was compromised didn’t need to classify it as a breach. Now they have to report the breach, but can apply mitigation to demonstrate there was a low probability of harm.

What are the penalties?

There are four categories:

  • Ordinary breaches, such as an error or lost equipment — $100 to $50,000 per violation.

  • If reasonable due diligence would have revealed the violation — $1,000 to $50,000 per violation.

  • Conscious, intentional failure or reckless indifference, but the breach was corrected — $10,000 to $50,000 per violation.

  • Conscious, intentional failure or reckless indifference and the breach was not corrected — $50,000 per violation.

For all violations, the cap is $1.5 million. And there will be more enforcement.

Tony Munns is a member, Risk Advisory Services at Brown Smith Wallace. Reach him at (314) 983-1297 or amunns@bswllc.com.

 

We can help you with HIPAA compliance.

 

Insights Accounting is brought to you by Brown Smith Wallace LLC

With employers facing ever-rising health insurance premiums, most are looking to control costs.

They may increase co-pays and deductibles, or decrease benefits. But there are other steps to accomplish that goal without impacting benefits or increasing employees’ costs, says Mark Haegele, director, sales and account management at HealthLink.

“Lowering the cost of health care is driven by managing utilization,” Haegele says. “There are a number of things in your data covering members’ use that you can address to help control costs. Too often, people are not educated about alternatives to the emergency room.”

Smart Business spoke with Haegele about how to lower the cost of health care without modifying benefits.

Where should employers start?

From 1996 to 2006, the annual number of U.S. emergency room visits grew from 90.3 million to 119.2 million, and from 34.2 to 40.5 visits per 100 residents. So, look at emergency room usage and other high utilization data points to identify trends. By focusing on those areas, you can ultimately have an impact.

Identify if overuse of the ER is an issue, and, if it is, what is driving it. Then you can implement action plans to lower costs for that high-cost category.

What should an employer be looking for?

Over the last three years, has the number of visits per member per month gone up year after year? And, has the cost per member per month gone up year after year? If yes, ask why.

Look at frequency of visits per person to identify whether a subset is going to the ER 10 or more times a year. If yes, determine how to address those people. Do you need case management nurses to help them find a better path to care? Do they need help finding a primary care physician? Can you educate them on alternatives?

Also, look at the reasons for ER visits. There are two categories — symptom, injury or poisoning, and disease and virus. If someone breaks an ankle, that person is going to the ER. But the disease and virus category is a different story. More than 60 percent of ER visits are for things such as sinusitis, flu, cough, headache, etc. This category can be managed.

Twenty-four hour nurse lines, urgent care clinics and clinics in pharmacies all are lower-cost alternatives. The cost of the ER averages $800 to $900, versus $65 to $150 for the alternatives. If more than 50 percent of ER visits fall into disease and virus, you know where to focus your energy to modify utilization and create awareness.

Emergency room management: Getting care when you need it quickly. Learn when to use the ER, or not.

How can employers create that awareness?

Education is No. 1. Post information, do emails blasts, distribute articles, do payroll stuffers, anything you can to get the word out.

Many employers have penalties, so if an ER visit is not a true emergency under the plan design, it doesn’t pay. But hospitals have ways of getting around that. Typical plan designs waive that penalty if a patient is admitted. Guess what? Now your admissions just went up.

A better approach is to educate people. And explain that if the ER coinsurance is $150, that’s $150 out of their pocket, whereas at an urgent care center the cost is much less. And often the wait is shorter. Sell your members on appropriate lower levels of care that are more easily accessible, less expensive and more convenient.

How do hospitals play into the equation?

Hospitals code ER visits from one to five, with five being the most severe, but some hospitals never code lower than three. As a result, if employers identify overcharging for ER visits, address the issue with the hospital.

The employer, with the insurance company, can co-write a letter with the high coding data, while asking the hospital to reconsider the way it’s coding ER visits and to consider establishing an urgent care center for lower level visits to the facility. One letter isn’t going to result in a new facility, but it does create awareness, and often coding starts to be more appropriate. The employer, the hospital, the member and the insurance company have to work together, as they all have a stake in the game. Everyone shares equal responsibility in managing this.

Mark Haegele is a director, sales and account management, at HealthLink. Reach him at (314) 925-6310 or Mark.Haegele@healthlink.com.

Insights Health Care is brought to you by HealthLink

It would have been easy to hold off on salary raises just a little longer and wait for a clearer sign that the economy had turned a corner.

But Joe McKee and Keith Wolkoff were unwilling to wait. They believed that their employees had worked hard to help Paric Corp. through the recession, and they deserved to be recognized for it.

“The questions do get asked,” says Wolkoff, president at the 234-employee design-build firm. “Is it prudent? Or should we continue to invest in the business? We asked a lot of our people during the very difficult times. It’s just as important to reward those people when you’re starting to see a little more fluidity in the marketplace. It’s the right thing to do.”

The decision was based on the leadership team’s commitment over the past two years to a long-term view and a belief that you can’t let fear guide your decisions, says McKee, Paric’s CEO.

“When you have a crisis, you can circle the wagons or you can choose to move forward,” McKee says. “Most of the times I know when people have circled the wagons; it hasn’t really worked out well for them. Our attitude was to keep moving and be nimble and quick.”

Both leaders wanted to focus on the core things that Paric did well, believing that those skills would be desired by customers even in a tough economy. As they developed a strategy to maximize those qualities and began to see the potential become reality, it became an easy decision to reward the team.

“It was a very painful period in the industry,” Wolkoff says. “But as odd as it is to say, we’re a lot stronger for having gone through it.”

The numbers reflect that assessment. Paric’s revenue grew from $200 million in 2010 to $240 million in 2012. Here’s a look at how the company bounced back so strongly from the recession.

 

Recalibrate your position

The path to Paric’s better future began with a blunt assessment of what the recession had done to the economy.

“What many people try to do in that environment is to get up and ignore the reality of what’s happening around them, and they don’t speak frankly,” McKee says. “It’s a little bit like what happens when a dog senses your fear. You lose all credibility and bad things happen. So it starts by being brutally honest and by making tough decisions.”

McKee and Wolkoff didn’t hold back in talking about the difficulties the company was facing. They also talked about those opportunities that they believed they could take advantage of. The key is they talked and kept talking to their teams whether the news was good or bad.

“In the absence of us communicating what actions we were taking and how we were addressing the economy, people were going to come to their own conclusions,” Wolkoff says. “We just refused to allow that. We were meeting if not every six weeks, then every eight weeks to give everybody a debrief on, ‘Here’s where we’re headed, here’s what we see and here’s what we’re doing about it.’

“Maybe all the information wasn’t pleasant. But at least everybody knew what was going on. There wasn’t all that chatter that can just be counterproductive.”

The crux of the new plan was to focus on the strengths and stop doing the things that weren’t making the company any money.

“When you have limited resources, there are some things you’ve always done because that’s the way you did it,” McKee says. “You need to figure out what those things are and quit doing them. What do we need to work on to move the organization forward?”

Preconstruction services were going to be a big part of Paric’s offerings to customers. Another was going to be the core markets that the company worked in, such as historic renovation, urban development, senior living and interior construction.

“We don’t service everybody,” Wolkoff says. “We go where we can bring value to our customers. Even in bad times, that’s going to prevail.

“It took a little bit of reinforcing from leadership to say, ‘Let’s hunker down, let’s pick our spots, let’s be smart, and let’s continue to invest, and we’ll be fine when we come out the other end.’ Are you going to cover 10 opportunities with your limited resources or are you going to cover three opportunities and increase your hit rate?”

McKee says you go with the three.

“You get two out of those three versus focusing on 10 and you only get two,” McKee says.

Know who you are

In working through the plan and defining what set Paric apart from the competition, Wolkoff says the company’s leadership unearthed a problem that they felt needed to be addressed.

“We started to ask ourselves, how do we define our business as it looked at that point in time,” Wolkoff says. “While we all had great things to say about ourselves, none of us were telling the story exactly the same way. And it really caused us to question, ‘Well, if we’re having that much trouble defining who we are, what are our customers saying?’”

It was with that thought in mind that Paric’s leadership team set out to interview customers, vendors and employees. The goal was to hit on a theme that would accurately and clearly define what the company is all about.

“In everything we do, every opportunity we have to touch each other, at a meeting, even if it’s an outside social event, there needs to be a consistent theme in how we talk to each other,” Wolkoff says. “Every company meeting we have, it has to be the central talking point over and over again.”

After talking to people at all these levels, the theme they arrived at was “Experience Excellence.”

“It doesn’t mean we’re perfect, but we strive for perfection, and that’s the piece we hit on,” Wolkoff says. “At every station we touch, whether it’s a client, vendor or internal employee, we have to strive for that perfection and that excellence.”

When money is tight with customers, the key to making a sale can be the perceived extra value that the customers believe they are getting with your business.

“You could say on the one hand that a building project is a very daunting task,” Wolkoff says. “But it shouldn’t be. If you have the right partner, it should be something that is exciting. It’s changing your organization. So we have to make sure that everybody who touches it from our end makes it the most satisfying experience it can be.”

The goal was to take these words that could easily become a cliché or something that is forgotten soon after it is brought up and embed it into the company’s culture.

McKee compares it to a quote he remembers from retired Denver Broncos quarterback and NFL Hall of Famer John Elway.

“He said on a Super Bowl winning team, they hold each other accountable,” McKee says. “If the guy next to you wasn’t doing his job, the guy to the right of him would say, ‘You better get with it and do your job.’ The coaches weren’t telling him. The players were doing that. We work really hard to try to create that kind of culture with people to where it’s a real team environment.”

When you’re just trying to get a motto or slogan like that to sink in, you can just ask the question.

“With a younger person, you might say, ‘What have you done today to create experience excellence?’” McKee says. “They’ll look at you the first couple of times like you have two heads. But after a while, they’ll begin to understand what you’re getting at. It’s about that discipline to do it right every day.”

 

Keep talking

One of the things that Paric began during its battle through the recession and has continued to this day is a weekly senior leadership team meeting. It consists of five people: Wolkoff, McKee, the company’s CFO and the senior vice presidents of sales and operations.

“That’s the one meeting that doesn’t get moved off people’s calendars,” Wolkoff says. “It’s the most important meeting we have in a given week.”

The challenging of opinions and belief is not only accepted, it’s encouraged, says Wolkoff.

“There are five people sitting in that room and if one of the five is not voicing an opinion and challenging something, you need to consider, ‘Do they need to be in the room?’” he says. “We’ve been fortunate that there are five very strong leaders in the room.”

The idea isn’t to create tension but to make sure every angle is being explored so the company can make an informed decision. Once the meeting is over, the conflict, if there is any left, must stay in the room.

“Once we leave the room, we’re unified,” Wolkoff says.

McKee says the elimination of secrets and unspoken concerns is one of the keys to success in any business.

“If you’re going to lose, lose doing the things you think you need to do rather than getting to the end and thinking, ‘I wish I would have done that,’” McKee says. ?

How to reach: Paric Corp., (800) 500-4320 or www.paric.com

 

 

The McKee and Wolkoff Files

 

Joe McKee, CEO, Paric Corp.

 

Born: St. Louis

Education: Bachelor of science degree, civil and environmental engineering from Vanderbilt University; MBA, Washington University, St. Louis.

 

Did you think about becoming a CEO some day?

I always knew I wanted to build, so that much I knew. But I’ve succeeded well beyond my wildest dreams. I was the kid who designed the clubhouse and treehouse and built go-carts. That’s what I love doing, besides hunting.

 

Who has been your biggest influence?

It starts with good parents. My parents were absolutely amazing. After that, Rick Jordan helped me a great deal and the current chair of our board, Larry Young. They are both on our board and have been good mentors to me through the years.

 

Keith Wolkoff, president, Paric Corp.

 

Born: St. Charles, Mo.

 

Education: Bachelor’s degree in architecture, Washington University, St. Louis.

 

Did you think about becoming a company president some day?

No way; it was the furthest thing from my thoughts. I thought more in the now and whatever I was doing, I wanted to do it to the best of my ability. When I saw an opportunity, I had the mindset that I’d rather try and fail than not try at all. By some good luck and some hard work, I find myself where I am today.

 

Who has been your biggest influence?

Very early on I had an English teacher. Maybe my spelling wasn’t always the best, maybe my attention wasn’t always the best, but I was always a good writer, and I enjoyed it. That particular teacher focused on what I was good at and that empowered me to excel in other areas.

 

Takeaways:

Don’t sugarcoat your problems.

Know what you stand for.

Keep looking to do it better.

A colleague of mine used to live in Russia and was stuck in more than a few traffic jams on those rare occasions when he wasn’t on the subway or a bus. Moscow, a city of more than 10 million people, had a highway system built for fewer cars.

The Russian word for traffic jam is probka — which also refers to a “cork,” which one might encounter in a bottle. When you think about it, that’s an apt description for a traffic jam.

In a similar way, our thinking and the organizations we lead can get “bottled up” too if we don’t have an effective system for reining in our attention and focus.

Thinking can be a bottleneck

One type of bottleneck that can occur is with our thinking. We have all experienced what one psychologist calls a “response selection bottleneck.” This happens when our brains try to react to multiple stimuli at the same time. For example, the “multitasking” CEO allows bottlenecks to occur when he or she believes that it’s possible to effectively tackle two conscious tasks at once.

We know, of course, that most of us can walk and chew gum at the same time. But, as John Medina states in “Brain Rules,” we are “biologically incapable of processing attention-rich inputs simultaneously.” Medina suggests that we really can’t listen effectively to the conference call and respond to email at the same time.

What is actually happening when we think we’re multitasking is that we’re doing what some call “switch tasking” — we’re switching our attention from one task to another. Some of us may do it more quickly than others, but our brain isn’t really processing two tasks at once.

The most common contemporary example of this fight for attention in our everyday lives is — you guessed it — talking on a cell phone while driving. Medina points out that those talking on the phone are a “half-second slower to hit the brakes in emergencies” because our brains have to switch tasks, and this eats up critical time. He adds that “50 percent of the visual cues spotted by attentive drivers are missed by cell-phone talkers.”

Not only are there limits for individuals, but the organizations we lead have similar limits. Are there organizational decisions stuck at a bottleneck because you have too many competing priorities?

Our organizations are often very complex, which makes it hard for employees to focus on what will lead to individual, team and organizational success. We’re all working longer hours, often feeling like we’re moving from treading water to drowning.

How do we distinguish the imperative from the important?

Here are five tips to get started:

?  Identify what you’re best at.

?  Figure out what your key stakeholders value and need most.

?  Identify where your answers to 1 and 2 intersect.

?  Define how you deliver value differently than your competition.

?  Develop a clear and authentic way to communicate your value.

As one psychology professor puts it, “We’re really built to focus.” What are you giving your organization to focus on?

P.S. As a bonus tip, when meeting with your senior team to discuss the tips above, are there at least portions of your meetings when everyone’s smartphone can go into a black box until you’re finished? ?

Andy Kanefield is the founder of Dialect Inc. and co-author of “Uncommon Sense:  One CEO’s Tale of Getting in Sync.” To explore how to promote organizational sync through greater focus, you may reach Kanefield at (314) 863-4400 or andy@dialect.com.