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Wednesday, 02 January 2013 13:41

Should you be friends with your employees?

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What is the best way to motivate employees? Some successful CEOs treat employees as friends, while other equally high-achieving leaders regard employees as merely hired hands, giving them a day’s pay for a day’s work and nothing more.

What’s the best approach to produce the best results for the company, the employee and the employer? Much of the issue lies with one’s definition of a friend and the culture of the organization. Many companies boast that their employees are like family. This sounds great, but can it work?

If either party crosses the fine line that separates the difficult-to-define business and personal space, both employer and employee can become disenchanted or worse. One way to think of it is that friendship is more unconditional. We accept a friend for what he or she is or isn’t. On the flip side, the reality is that most bosses embrace or reject employees for what they do on a consistent basis.

The military has its own way of handling fraternization between officers and the enlisted by making it a possible court martial offense. This stance is predicated on the belief that socializing between these two levels is “prejudicial to good order, discipline and partiality.” It is well recognized that business relationships without boundaries can produce too much drama.

Perhaps what we need is a new definition for a nonemotional, congenial, enjoyable and productive day-to-day relationship between leader and follower. This moniker could be employee-friend, or “e-friend” for short. “E-friend” isn’t an app but would describe an employer/employee relationship where there is mutual respect and a genuine appreciation of one another, underscored by an understanding, albeit perhaps unspoken, that when the time for talking is done, the boss has the final word on matters that occur between 9 a.m. and 5 p.m. Using these ground rules, both sides can have it both ways by using good judgment and treating each other as they would want to be treated if their roles were reversed.

The employee should expect from the boss that, when the chips are down, either on a business basis or when the employee has a personal problem, he or she knows that the boss will be there for him or her, providing understanding and advice and, when requested, helping the employee maneuver through rough patches. From the employer’s perspective, the employee would be someone who, through thick and thin, is there for the company and can temporarily put personal needs aside when there is a business issue that can’t be postponed.

The e-friend boss should know as much about the employee as the employee wants the boss to know, which can include sensitive professional problems or even family or medical issues. In a good relationship, the boss could certainly know, as one example, what the subordinate’s kids are up to in their lives and be the first to say to the employee that it’s more important for him or her to go to an offspring’s ballgame or play, rather than putting in extra time on the business project du jour.

Instinctively, employees know if a boss truly cares or is just going through the motions to be politically correct. They know if the head honcho is sincerely concerned about them as a person, not just another set of hands.

Not everything and everyone in the workplace are created equal. There will always be a pecking order; however, there is nothing wrong with truly enjoying the people with whom you work every day and sharing meaningful experiences, all of which lead to a more fulfilling role for both the employer and the employee. The best criterion to avoiding problems is using generous doses of plain common sense. There is a much-quoted line from the 1987 movie “Wall Street,” starring Michael Douglas as the ruthless tycoon Gordon Gekko, who proclaimed, “If you want a friend, get a dog.” This provoked both laughs and sighs, but in the real world, this attitude makes for a very lonely Ebenezer Scrooge-type life for the boss and a shallow existence for employees who must spend more than half, at the very least, of their Monday through Friday waking hours working.

At times, people can be difficult, both to work for and with. However, it’s the people who make the company and relationships that combine respect and a form of e-friendship that can make the real difference.

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.

A unique new book with an unorthodox, yet proven approach to achieving extraordinary success.

What does it take to grow rapidly and effectively from mind to market?

This book offers an unconventional philosophy for starting and building a business that exceeds your own expectations.

Beating the competition is never easy. That’s why it requires a benevolent dictator.

Published by John Wiley & Sons. AVAILABLE NOW! Order online now at: www.thebenevolentdictator.biz

Also available wherever books and eBooks are sold, and from Smart Business Magazine and www.SBNOnline.com. Contact Dustin S. Klein of Smart Business at (800) 988-4726 for bulk order special pricing.

Richard Branson is full of big ideas. The man who founded six companies that each rake in more than $1 billion annually dares to think big. For him, it’s all about the experience, making a difference and not doing things the same way as the competition. An idea captures his imagination and he sets out to turn it into reality.

For him, it’s not about the money. It never has been.

When he sees a situation where he thinks he can make a difference in people’s lives, he looks for a way to make a difference. He understands that “why” he is doing it is more important than the “what” or the “how.”

Author and consultant Simon Sinek agrees (see video link). He explains that Apple is wildly successful at what it does not because it can build computers better than anyone else but because it understands “why” it is doing so. It’s not that the competition doesn’t know what it is doing or that it doesn’t have talented people creating good products. It’s just that Apple understands why it is in business and focuses its message on that instead of what it does — which is build electronic devices.

Sinek says that people like to do business with people who believe what they believe, so they buy more on the “why you do it” rather than what you are actually doing. Notice that profits are secondary. If you do things the right way for the right reasons, profits come naturally.

You might already have a big idea for your business, but it will most likely never reach its full potential unless you understand why you are doing it. Have you ever stopped to think about why you are in business or why you are doing what you are doing? It can be an enlightening exercise.

With the demands of daily business, we seldom stop to think about the reasons behind our actions, and if we do think about it, the answer is often “to turn a profit.” But to what end?

When you understand why you are trying to make a profit and the answer goes beyond simple wealth, then you are getting to the heart of what differentiates a good business from a great one. Maybe the reason why is a social issue, such as eliminating hunger, or maybe it’s a medical issue, such as curing a disease. But it doesn’t have to be grand. The “why” can be something like “making computers easy for everyone to use.” The important part isn’t the scope; it’s understanding your business’s basic reason for existence.

When you’ve taken the time to understand that, your business will have the potential to do great things because employees and customers alike can unite around a common understanding.

It’s why Apple is a great company and it’s why Richard Branson is wildly successful. If you’re already doing it, you’re on your way. If not, take the time to think about it.

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

Tuesday, 25 December 2012 11:29

4 necessary skills for managing people

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According to Merriam-Webster, management is “the process of dealing with or controlling things or people.” While “controlling” is a bit harsh in my book, the definition is correct in it's focus on management of people. To be a good manager or team leader, you have to have an above average interest in people. Success in management is found in the relationship developed between leader and team.

The best managers see themselves as catalysts. They become that agent or force that provokes or speeds significant change or action. These managers get things done quickly by leading with solid people skills.

Here are 4 people skills that every good manager must possess:

1. Understanding the right way to give a critique.

The worst thing you can do if you want to get someone to listen to you is to criticize.

As human beings, we hate to be criticized. When we feel attacked, we usually attack back – even when we are in the wrong. Many of us fall into the trap of thinking “I know I am right and I am going to prove it to you.”

Over the years I have learned that this way of thinking simply does not work.

A good manager has the self-control and presence of mind to put aside the needs of his own ego and say “I've got a problem, will you help me?” Enlisting cooperation in this manner will always lead to better results.

2. Understanding the need to help.

If someone comes in to criticize you or to raise your game, under what circumstances would you be willing to accept the critique?

The answer for me is simple. If I think someone is really trying to help me, then I'll engage and listen.

On the other hand, if I feel that the person is just trying to get the job done or make himself look good, I may listen, but my heart will not be in it. My interest and creative energies will be lost.

The truth of the matter is: Managers will only have influence over their people to the extent that their people think they are sincerely trying to help them. It is simply the way human beings work. Good managers truly care about their team and work hard to help them.

3. Understanding no two people are the same.

As a manager, you do not influence everybody the same way. People do things for their own reasons – not for others and not for you.

Inspiring people to your company vision happens best when you help them to see what's in it for them. This varies from person to person. It is your job to discover what things motivate each member of your team.

Some people are motivated by a challenge, some by money and others by recognition.

It is about reading their needs, desires and wants and then leading in such a way that ensures their success at obtaining them.

4, Understanding the best way to get tasks completed.

An effective manager realizes that each time he has an interaction with someone about a task, there are two things going on:

a. A discussion about the task and how to get it done.

b. The way in which the interaction affects the managers relationship with the collegue.

The first is pretty straightforward, but it's success is determined by the tenor of the second.

It must be said that the task should not be sacrificed for the relationship at all costs. It must also be said that winning on the task is not good if the manager ruins the relationship. Both are important and the manager must do well in each area.

I refer again to the need for the manager to develop relationships with the team in order to understand the best way to get things done according to individual members needs, desires and strengths.

In the end, good managers know how to use their influence and power to help others achieve beyond their wildest dreams.

I like management guru Tom Peters' definition of power:

“My definition of power is understanding that all of managing — and this comes out of the old grade school book — is the notion of doing more than you and I can do by ourselves; that is, doing things through other people.”

He goes on to say:

“If you are interested in getting things done effectively and imaginatively through other people then what you're trying to do in the workplace is exactly what you're trying to do on the football field – which is to get people who work with you to achieve beyong their wildest dreams.”

Workplace managers understand that good people skills determine their success. They work hard to develop the skills needed to lead in ways that shows their interest in people.

DeLores Pressleymotivational speaker and personal power expert, is one of the most respected and sought-after experts on success, motivation, confidence and personal power. She is an international keynote speaker, author, life coach and the founder of the Born Successful Institute and DeLores Pressley Worldwide. She helps individuals utilize personal power, increase confidence and live a life of significance. Her story has been touted in The Washington Post, Black Enterprise, First for Women, Essence, New York Daily News, Ebony and Marie Claire. She is a frequent media guest and has been interviewed on every major network – ABC, NBC, CBS and FOX – including America’s top rated shows OPRAH and Entertainment Tonight.

She is the author of “Oh Yes You Can,” “Clean Out the Closet of Your Life” and “Believe in the Power of You.” To book her as a speaker or coach, contact her office at 330.649.9809 or via email atinfo@delorespressley.com or visit her website at www.delorespressley.com.

Stop-loss or reinsurance is a “backup” policy designed to limit claim coverage or losses to a specific amount. This type of coverage ensures catastrophic (specific stop-loss) claims or numerous (aggregate stop-loss) claims don’t deplete your reserves in a self-funded arrangement.

“There are a lot of companies in this stop-loss space, and there are more and more getting into it because the health care law eliminated lifetime limits, and health care costs are driving employers into self-funding,” says Mark Haegele, director, sales and account management at HealthLink.

Smart Business spoke with Haegele about what employers should look for when shopping for reinsurance.

What should employers know about the fixed cost of reinsurance?

The main components of a partially self-funded model are the third-party administrator (TPA) that pays claims; pharmacy benefit manager (PBM) network that contracts with doctors and hospitals for discounts; and the reinsurance carrier, which has the highest cost.

Stop-loss represents a disproportionate amount of the fixed costs for an employer. The smaller the employer, the less risk they’re willing to take, the more stop-loss they’ll need to buy and the more expensive it is. For smaller employers, the reinsurance purchasing decision becomes more relative and important. For example, a self-funded employer with a 500-life health policy might purchase specific stop-loss, paying $200,000 in claims for every member before the insurance kicks in. However, if a 20-life employer purchases $10,000 specific stop-loss, the stop-loss cost will be higher.

How can employers and brokers negotiate with stop-loss carriers?

In the eyes of the reinsurance carriers, there is no perfect model of self-funding components. This opens the door for the employer and broker to play a vital role in controlling the premium and overall stop-loss cost. If you can sell the reinsurance carrier on your vendor alignment — your TPA, network and PBM — you can decrease the premium.

Don’t go to the stop-loss carrier and say ‘I’m a 300-life employer and I want to buy $125,000 specific stop-loss,’ while providing your claims experience. Instead, demonstrate, in a refined and focused way, how you are working to lower the impact of large claims. Your premium might have been X, but you could now get X minus 20 percent. Employers and brokers don’t realize how much negotiation room is available.

How can you demonstrate your management of large claims?

Some ways to control large claim costs are having a dialysis or transplant carve out. You pay a small premium for a transplant insurance policy where any transplant will be completely covered, and then the reinsurance carrier gives you a credit, which often pays for the transplant policy premium.

Another option is working with your PBM. For one reinsurance carrier, more than 25 percent of all of the large claims is represented by prescription drugs. For instance, J-codes — high-cost injectable drugs used for hormone therapy or to treat cancer — often run through the medical plan. Finding a PBM that will further negotiate these J-codes while having a focused managed program can reduce that expense by upward of 30 percent.

When you follow these practices, it helps you when you’re paying your premium upfront with the stop loss carrier and downstream by controlling your overall claims.

How should employers and brokers examine stop-loss carriers to find the best price?

It’s important to know how reinsurance carriers have networks rated. If your network is that stop-loss carrier’s best-rated network, the premium will be lower. Reinsurance carriers evaluate networks with different levels of intensity, and therefore get wide ranging results.

Also, carriers give networks different levels of credibility with respect to discounts. For example, if your network gets a 52 percent discount in metro St. Louis, but the carrier only gives 60 percent credibility to that, that’s only a 31 percent discount. Some carriers give 100 percent credibility to the network.

Mark Haegele, director, sales and account management HealthLink. Reach him at (314) 753-2100 or mark.haegele@healthlink.com

Insights Health Care is brought to you by HealthLink

Monday, 31 December 2012 20:01

Benchmarking your 401(k) plan

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Many executives only think of their 401(k) when receiving a plan financial statement. They don’t consider plan operations, potential pitfalls or their basic duties in operating plans. A set of recently released regulations is systematically forcing that mindset to change.

Plan sponsors’ and fiduciaries’ duties to a plan and its participants were clarified by the new regulations. Patrick M. Shelton, GBA, managing member of Benefit Plans Plus, LLC, says, “Legally, plan sponsors are now required to have intimate knowledge of and communicate specific plan information to participants. If they fail to do so, they could face regulatory penalties, legal action from employees or get embroiled in class-action lawsuits.” He says most information must be communicated at least annually to participants, even those who have left the company but still have plan balances.

Smart Business spoke with Shelton about plan regulations and the critical importance of “benchmarking.”

What is the key determination?

Under federal law, plan fiduciaries must act ‘prudently’ and ‘solely in the interest of plan participants and beneficiaries’ to ensure a plan pays covered service providers (CSP) no more than ‘reasonable’ fees. Sponsors must review and understand all plan fees and then formally communicate them. While costs are important, they are not the only consideration. Lowest cost is rarely a determination of a well-run and effective 401(k) plan.

What are the new regulations?

Regulations are under section 408(b)(2) of the Employee Retirement Income Security Act (ERISA) and are designed to help plan fiduciaries ensure that plan service arrangements are ‘reasonable.’

The regulations impose a duty on every plan CSP to provide information to plan fiduciaries necessary for them to assess the reasonableness of CSP compensation, identify potential conflicts of interest, and satisfy reporting and disclosure requirements.

ERISA section 404(a)(5) regulations require fiduciaries — of plans allowing participant directed investments — to provide specific information designed to enable participants to make informed investment decisions. General plan and administrative and individual expense information are required.

What is benchmarking and how can it help determine ‘reasonableness’?

Benchmarking is a process for compiling and comparing plan data to plans with similar design and demographics. Data might include plan design, including its underlying details, eligibility requirements, benefit or contribution formulas; assets; direct and indirect administrative costs; investment choices; compliance; and performance.

Benchmarking simply assists fiduciaries in determining a basis for reasonable fees. If fees are higher than average for similar-sized plans, there should be a clear explanation of why more is being paid.

What are some best practices?

You should benchmark your plan every three to four years, recognizing that the costs of professional reviews vary widely from $1,500 to $25,000. You should use benchmarking services that provide relevant data and rotate service providers to vary the results and avoid biases. You should also ask about the methodology to ensure you get valid information. In addition, you should maintain results in a file where all 401(k)-related information is readily accessible and periodically review the results and form an action plan to bring your plan in line with company philosophy and values.

Most benchmarking providers don’t adjust their comparisons by region and often extract unfiltered data from public sources. Further, while more plan data is becoming available, currently there’s not strong benchmarking data for small plans, or those with fewer than 100 participants.

What happens if you’re out of compliance?

Plan sponsors and fiduciaries are personally liable for any failure to procure the required information from CSPs. However, the regulations contain a ‘safe harbor’ method of complying — shifting responsibility to non-compliant CSPs and notifying authorities. In most cases, CSPs provide disclosures on a quarterly and annual basis that are designed to be compliant with all of the rules.

Patrick M. Shelton, GBA, is managing member at Benefit Plans Plus, LLC Reach him at (314) 824-5252 or pshelton@bpp401k.com

For more information regarding fiduciary responsibilities, visit www.bpp401k.com/fiduciary-health-check.

Insights Accounting is brought to you by Brown Smith Wallace LLC

Companies typically want to do what’s right for those they serve. Key priorities should be customers, investors, employees and the communities in which the company is located — but not necessarily always in this order. The dilemma, however, is that many times short-term decisions can prove to be long-term problems that cause more pain than the initial gain.

It’s difficult to make all constituents happy every time. As a result, management must prioritize decisions with a clear understanding that each action has ramifications, which could manifest themselves in the short, intermediate or long term. Seldom does a single decision serve all of the same timelines. There are no easy answers and anyone who has spent even a short amount of time running a business has already learned this fact of life. So what’s a leader to do?

It’s a sure bet that investors want a better return, employees want more money and benefits, and customers want better quality products, higher levels of service and, oh yes, lower prices. This simply all goes with the territory and is a part of the game. The problem can be that, most times, it’s hard to give without taking something away from someone else. Here are a couple of examples.

Take the case of deciding to improve employee compensation packages. Ask the auto companies what happened when they added a multitude of perks over the years, as demanded by the unions? The auto titans thought they didn’t have much choice, lest they run the risk of alienating their gigantic workforces. History has shown us the ramifications of their actions as the majority of these manufacturers came close to going belly up, which would have resulted in huge job losses and an economic tsunami.

Basic math caused the problems. The prices charged for cars could not cover all of the legacy costs that accrued over the years, much like barnacles building up on the bottom of a ship to the point where the ship could sink from the weight. Hindsight is 20/20, and, of course, the auto companies should have been more circumspect about creating benefit packages that could not be sustained. Yes, the employees received an increase to their standard of living for a time anyway, but at the end of the day, a company cannot spend more than it takes in and stay in business for long.

Investors in public companies can present a different set of problems because they can have divergent objectives. There are the buy-and-hold investors, albeit a shrinking breed, who understand that for a company to have long-term success, it must invest in the present to build for the future. The term “immediate gratification” is not in their lexicon; they’re in it for the long haul. Another type of investor might know or care little about a company’s future, other than whether its earnings per share beat Wall Street estimates. These investors buy low and sell high, sometimes flipping the stock in hours or days. And, actually, both types are doing what’s right for them. The issue becomes how to serve the needs and goals of both groups. When a company effectively articulates its strategy, it tends to attract the right type of investors who are buying in for the right reason. This will avoid enticing the wrong investors who turn hostile because they want something that the company won’t deliver.

When interviewing and before hiring employees, it is imperative that candidates know where the company wants to go and how it plans to get there. Many times, this means telling the prospective newbie that the short-term compensation and benefits may not be as good as the competitors’ down the street, but in the longer term, the company anticipates being able to significantly enhance employee packages, with the objective of eventually outmatching the best payers because of the investments in equipment being made today.

The key to satisfying employees (present and prospective), investors, et al, is communicating the types of decisions a company will make over a specific period of time. Communication from the get-go is integral to the rules of engagement and can alleviate huge problems that can otherwise lead to dissatisfaction.

Knowing what is right for your company, based on your stated plan that has been well-communicated, will help ensure that you do the right thing, at the right time, for the right reasons.

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.

A unique new book with an unorthodox, yet proven approach to achieving extraordinary success.

What does it take to grow rapidly and effectively from mind to market?

This book offers an unconventional philosophy for starting and building a business that exceeds your own expectations.

Beating the competition is never easy. That’s why it requires a benevolent dictator.

Published by John Wiley & Sons. AVAILABLE NOW! Order online now at: www.thebenevolentdictator.biz

Also available wherever books and eBooks are sold, and from Smart Business Magazine and www.SBNOnline.com. Contact Dustin S. Klein of Smart Business at (800) 988-4726 for bulk order special pricing.

Monday, 03 December 2012 17:04

8 bad work habits to avoid

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In our world of quick text missives, sharing the daily joke via inner office email, and generally more relaxed workplaces, informality can become a workplace hazard. Studies show that employers and managers often assess an employee’s career potential based on how that employee carries himself or herself in the workplace. None of us wants to be judged by the externals, but our respective “book covers” matter.

Poor manners at work – however unintentional - can lead to workplace conflict because they distract fellow employees from working or, in the worst cases, offend co-workers who have differing viewpoints and cause potential legal liability for the employer.

Therefore, it’s ideal to avoid these 8 bad work habits:

  1. Talking loudly on telephones and in person in common areas.
  2. Interjecting comments into conversations between other employees, unless your opinion is solicited.
  3. Taking supplies – even if they were bought by the office – from other employee’s work areas without getting prior approval.
  4. Wearing perfume that can be smelled even after you leave an area.
  5. Gossiping about co-workers or people outside the workplace.
  6. Sharing racial, religious or sexual jokes in any format.
  7. Arriving late to meetings.
  8. Regularly using large chunks of work time to resolve personal and family matters.

Most employees want to be viewed as valuable, contributing members of the company team. Thus, it’s worthwhile to periodically assess our workplace demeanor and, perhaps, adjust our behaviors, to help convey that image. Your future with your employer likely depends on it.

Patricia Adams is the CEO of Zeitgeist Expressions and the author of “ABCs of Change: Three Building Blocks to Happy Relationships.” In 2011, she was named one of Ernst & Young LLP’s Entrepreneurial Winning Women, one of Enterprising Women Magazine’s Enterprising Women of the Year Award and the SBA’s Small Business Person of the Year for Region VI. Her company, Zeitgeist Wellness Group, offers a full-service Employee Assistance Program to businesses in the San Antonio region. For more information, visit www.zwgroup.net.

One of the signs of a boom — or at least a boomlet — is that companies start wanting to drive their competition crazy. This occurs when “survival” is no longer an issue and optimization or maximization can become a goal. However, the desire to do things to the competition can lead a company astray — or drive it to even greater heights.

Companies go astray when defeating the competition becomes more important than taking care of customers. When companies become obsessed with the pursuit of excellence, by contrast, they often reach new levels of greatness. Here’s how to avoid the former and achieve the latter.

1. Know thyself. Before you can drive your competition crazy, you have to understand what your company stands for. Otherwise, you’ll succeed only in driving yourself crazy. For example, Apple stands for cool technology. It will never represent a CIO’s safe bet, an “enterprise software company,” or service and support. If it decided it wanted to drive Microsoft crazy by sucking up to CIOs, it would drive itself crazy — that is, if it didn’t perish trying.

2. Know thy customer. The second step is to truly understand what your customer wants from you — and, for that matter, what it doesn’t want from you. One thing that your customer seldom wants to do is to help you drive your competition crazy. That’s in your head, not your customer’s. One more thing: A good company listens to what a customer says it wants. A great company anticipates what a customer needs — even before the customer knows it wants it.

3. Know thy enemy. You cannot drive your competition crazy unless you understand your competition’s strengths and weaknesses. You should become your competition’s customer by buying its products and services. I never truly understood what it was like to be a customer of Microsoft until I bought a Sony Vaio and used Windows. Sure, I had read many comparisons and competitive analyses, but they were nothing compared with hands-on usage.

4. Focus on the customer. Here’s what most people find surprising: The best way to drive your competition crazy is to succeed because your success, more than any action, will drive your competition crazy. And the way you become successful is not by figuring out what you can do to the competition but for the customer. You succeed at doing things for the customer by using the knowledge that you’ve gained in the first three steps: understanding what you do, what your customer wants and needs and what your competition doesn’t do. At the intersection of these three factors lies the holy grail of driving your competition crazy. For most companies, the key to driving the competition crazy is out-innovating, out-servicing or out-pricing it.

5. Turn customers into evangelists. There are few things that drive a competitor more crazy than unpaid customers who are evangelists for a company. Create a great product or service, put it out there (“let a hundred flowers blossom”), see who falls in love with it, open up your arms to them (they will come running to you), and then take care of them. It’s that simple.

6. Make good by doing good. Doing good has its own, very sufficient rewards, but sometimes you can make good and do good at the same time. For example, if you own a chain of hardware stores, you can help rebuild a community after a natural disaster. You’re bound to get a lot of publicity and create bonds with the community — this will drive your competition crazy. And you’ll be doing something good!

7. Turn the competition into allies. One way to get rid of your competition is to drive it out of business. I suppose this might be attractive to you, but a better way is to turn your competition into allies. My favorite author of children’s books is Tomie DePaola. My favorite DePaola book is “The Knight and the Dragon.” This is the story of a knight and a dragon that train to slay each other. They are smashingly unsuccessful at doing battle and eventually decide to go into business together. Using the dragon’s fire-breathing ability and the knight’s salesmanship, they create the K & D Bar-B-Q. For example, if a Home Depot opens up next to your hardware store, let it sell the gas barbecues, and you refill people’s propane tanks.

8. Play with their minds. If you’re doing all this positive, good stuff, then it’s OK to have some fun with your competition — that is, to intentionally play with their minds. Here are some examples to inspire you:

  • Hannibal once had his soldiers tie bundles of brush to the horns of cattle. At night, his soldiers lit the brushwood on fire, and Hannibal’s Roman enemies thought that thousands of soldiers were marching towards them.
  • A pizza company that was entering the Denver market for the first time ran a promotion offering two pizzas for the price of one if customers brought in the torn-out phone directory ad of its competition.
  • A national hardware store chain opened up right next to a longtime community hardware store. After a period of depression and panic, the store owner came up with a very clever ploy. He put up a sign on the front of his store that said, “Main Entrance.”

Guy Kawasaki is the co-founder of Alltop.com, an “online magazine rack” of popular topics on the web, and a founding partner at Garage Technology Ventures. Previously, he was the chief evangelist of Apple. Kawasaki is the author of ten books including Enchantment, Reality Check, and The Art of the Start. He appears courtesy of a partnership with HVACR Business, where this column was originally published. Reach Kawasaki through www.guykawasaki.com or at kawasaki@garage.com.

Monday, 03 December 2012 16:28

Giving back: How much charity is enough?

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While attending an event we put on with a local charity, I was impressed with the difference that seemingly minor things can make in someone’s life. I was proud of the contribution and effort that our employees put into the event and the dedication the nonprofit showed for its mission.

The event made me think about the business community and all of the wonderful things companies do for those in need. Take the recent destruction from Hurricane Sandy as an example. Businesses have pledged more than $90 million in assistance, two-thirds of which was monetary donations to organizations like the American Red Cross.

While companies give back in as many ways as possible, even during these difficult economic times, I was wondering if there wasn’t more that could be done in our local communities. Not every effort has to always include a financial component.

Here are some nonfinancial ways to give back in addition to what you already do for the community:

  • Give more time. Some organizations have a greater need for man-hours in addition to financial backing. Your business may already give generously on the financial side, but maybe your favorite charity could use a labor boost as well. Nationally, about 35 percent of companies have some sort of formal volunteer program. Consider donating employee time to help out with a big project or basic cleaning and organizing.
  • Offer advice. You probably already serve on one or more boards for a nonprofit, but there is always another charity out there that could use your help. You don’t have to become a full-fledged board member, but you can offer advice as needed to help the existing members navigate through a problem that plays to your strengths. If the nonprofit is looking for a board member and you don’t have the time, help it find the right person by making a recommendation or referral.
  • Hire nontraditional employees. One way of giving back to the community is helping others help themselves. There are many skilled employees with either physical or mental disabilities that could be a great addition to your company if given the chance. When you have a job opening, make sure you are considering all candidates, including those from nontraditional backgrounds.
  • Do pro bono work. If you can provide a service that a nonprofit needs, consider donating it. Marketing, printing, IT services — basically anything an office needs is probably something a charity could use. Find out what the nonprofit could use, then figure out a way to help out. Even if your company can’t help, maybe you know someone else who can.

In this season of giving, it’s not hard to find a worthy cause. There’s also no question that you and your company have most likely already given a lot, assuming you are in a position to do so. But there’s an old question that asks, “How much charity is enough?” The answer is easy: Just a little more.

Take the time to evaluate whether you can do just a little more than what you are already doing to make an even bigger difference.

If you are in search of a worthy cause, consider donating to The Pillar Fund, a donor-advised fund administered through the Cleveland Foundation. For more information, contact Dustin Klein at dsklein@sbnonline.com.

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

[caption id="attachment_59634" align="alignright" width="200"] Artur Wagrodzki, president, Artur Express Inc.

Tomasz Tokarczyk, president, Artur Express Inc.[/caption]

Artur Wagrodzki and Tomasz Tokarczyk were surprised at what they found upon arriving in the United States from their native Poland. They were just teenagers, but they still had an image of what America was like, and Brooklyn wasn’t really matching up with what they had envisioned it to be.

“I thought it was going to be palm trees everywhere,” Tokarczyk says. “In Brooklyn, you have concrete going all over. That was my first impression.”

The childhood friends and future presidents of Artur Express Inc. grew up as neighbors and eventually went to work for a limousine company in the New York City borough. It was there that they found their love for the transportation industry.

“It was a black car service and they took bankers and people like that around the city,” Wagrodzki says. “We worked in different departments, but we basically were dispatching drivers, picking up phone calls and doing customer service. In some respects, it was a little bit similar to what we do now. We just move freight instead of people.”

The numbers show Artur Express Inc. does a very good job moving that freight. The transportation and logistics company was founded in 1998 and grew to $28.1 million in 2008 revenue. Revenue reached $54.9 million in 2011.

“When we started this business, we were really young,” says Tokarczyk, who serves as president along with Wagrodzki of the 50-employee company. “So maybe that gave us a big advantage. We took it upon ourselves to build the business, and we just did what we felt was right. We ran with it and did everything in our power to make it work and help the company grow.”

The business partners have led with a mix of instinct and collaboration. They don’t worry so much about what the leadership textbooks say you’re supposed to do. But they understand the importance of building a strong culture where employees are committed to doing their job to the best of their ability in order to satisfy the customer.

“A lot of the loads that we haul are for very important customers and it’s very time-sensitive,” Wagrodzki says. “You can give a driver the wrong ZIP code and he’s going to end up in a different state. It’s that crucial. So we need very accurate data and we need everybody to do their job.”

Here’s a look at how Wagrodzki and Tokarczyk work together to lead Artur Express and make sure their employees know exactly what needs to be done to keep the company on top of its game.

Share your responsibilities

One of the biggest changes at Artur Express in recent years has been the influx of technology into every aspect of the company’s business. Whether it’s tracking loads or the drivers who deliver them, technology has led to a different way of doing things in the company and throughout the entire transportation industry.

“The main key for our operation is to develop and use all the different technology that is out there to be able to perform and control the different problems that we have and give that information to the customer,” Wagrodzki says.

Everybody can benefit from technology, of course, but you’ve got to know how it can help you. To just implement something because everybody else is doing it or because it’s shiny and new is asking for trouble.

Wagrodzki says they are careful to incorporate technology that helps them and helps their customers. They have the advantage of having been with the company since the beginning.

“We’ve worked hands-on in the business from day one and we know the ins and outs of it,” Wagrodzki says. “We know exactly what we do on paper and then we just convert all those different ideas to our computer system. It’s not just bells and whistles. It’s something we can really use.”

That conversion process is handled by an IT department that is usually pretty tuned into what Wagrodzki and Tokarczyk are looking for. That type of connection is obviously important.

“All they need is an idea of what we want,” Wagrodzki says. “It takes a while to put it together, but once it’s in place, it becomes a very easy process that you can access any time, which helps gets us get the information to the people it needs to go to.”

It’s those connections that you have with your IT team and with your employees that make or break the integration of things such as technological tools to help you track volume and the status of deliveries.

If you’re not speaking the same language, you’re not going to get what you want or what your company needs.

So Wagrodzki and Tokarczyk make sure they are accessible.

“Employees know if they have an idea, they don’t have to put it out to us or management in some fancy form,” Tokarczyk says. “They can just shoot us a quick email and we react instantly. Every idea they send to us, we try to make it better. Some of the good things we’ve done, that’s how they have been developed.”

It’s that partnership that makes the difference between a business that can grow and one that is limited by the capacity of the entrepreneur. Wagrodzki says he and his partner knew enough to hand off some of their work as they grew to allow the company to gain more customers and take on more work.

“When we started the company, we did it all from accounting to billing to dispatching,” Wagrodzki says. “You name it, we did it. It’s helping us now to be able to meet up with the managers, meet up with the staff and give good pointers on how we used to do it. Maybe it was on a smaller scale, but the factors are still the same.

“If you have 50 trucks or 500 trucks, you have to apply those same rules. We try to treat our employees and our independent contractors on a very personal level. That definitely helps.”

Keep looking for talent

Hiring is always a challenge for any business because you just never know exactly what you’re going to get, Wagrodzki says.

“You’re going to take a gamble when you hire somebody,” Wagrodzki says. “They try to be perfect in the interview and you follow the rules and follow your steps of having them interview with multiple people. I would say 85 percent of the people we hire turn out pretty good.”

But it’s that other 15 percent that can cause a problem. It’s why Artur Express is always in recruiting mode to some degree. With the growth that the company has been experiencing, Tokarczyk says they can afford to bring in talent that has untapped potential.

“We try to find people who can grow with us and are motivated,” Tokarczyk says. “They do have management potential, but maybe that potential needs to be discovered a year or two years from now.”

If you’re looking for more experience in your new hires, it pays to keep tabs on others in your industry. In these difficult economic times, there are often companies that don’t make it or have to let people go whom they otherwise would prefer to keep.

“Sometimes we’re able to get those good people from different companies that were bought out or are no longer in business, “Tokarczyk says. “These people have been there for 15 or 20 years and they’re looking for another strong company where they can set their roots for a while. That’s how we were able to get a lot of the good people that we have.”

Whatever way you go, when you do bring someone in, give strong consideration to having more than one person interview the candidate if you don’t already do that. It will give you a variety of perspective that can help guide your decision.

“We try to have them interview with at least three or four different people,” Tokarczyk says. “This way, we have an idea where they would best fit in the company.”

One thing that Tokarczyk always asks candidates when he interviews them is why they like transportation.

“You can get all kinds of answers,” Tokarczyk says. “Sometimes, you get an answer like, ‘Hey, my father used to drive and he took me on a trip.’ Some of the customer service girls that we hire, those were the answers we got. So there’s always an aspect of transportation in our employees’ lives, one way or the other. That’s always good to hear. You have to be in it to love it.”

Manage your relationships

Artur Express relies on about 400 independent contractors to deliver freight for clients rather than its own employees.

“They are our partners in this business,” Wagrodzki says. “It’s a 50/50 responsibility. If they don’t make the delivery or if they don’t deliver on time, we’re not going to be able to use them again with this customer. They know it’s a one-time shot.”

One of the things Wagrodzki looks at to determine whether the company is doing well or trending in the wrong direction is the fleet of independent contractors.

“There are always guys who come and leave,” he says. “That’s normal. But once you see that nobody has left for a month or two, you can feel good that the company is doing well. We are providing the service that our customers need.

“You might have other times where something is not working and all of those independent contractors are leaving. Now there is something you need to react to.”

In an attempt to be proactive about relations with the contractors, Artur Express has created a team of people who check in regularly to address questions and concerns before they become a big problem.

“They are constantly on the phone with those contractors asking questions,” Wagrodzki says. “What are we doing wrong? What can we do better for you? That’s a key in this business. We match up contractors and customers, and we manage the process of them picking up the load on time and delivering it on time. Once we have those two parties happy, we’re happy.”

The recession has provided a bit of a challenge in this area as Artur Express has worked hard to help both parties understand what the other is dealing with.

“In some cases, customers don’t want to pay too much and drivers want a lot,” Wagrodzki says. “You have to talk to drivers. ‘Hey, this is the industry right now, this is the market.’ And if the market goes up, you have to go to customers and say, ‘We bid this business for the last two years, but we need an increase now.’ Most of the time they do understand because we move a lot of freight and we know from one customer to another there’s not that big of a difference.”

The key is approaching all relationships with a good attitude and not being afraid of a little conflict that is always going to come up from time to time.

“We never look for a perfect project or for a bulletproof opportunity,” Tokarczyk says. “We’re always looking to take some type of risk. But we’ve learned over the years that you can sit on the sidelines and play it safe or you can play the game. If you play it right, you usually end up on the good side.” <<

How to reach: Artur Express Inc., (800) 487-4339 or

www.arturexpress.com

 

The Tokarczyk and Wagrodzki Files

Tomasz Tokarczyk, president, Artur Express Inc.

Born: Kamienna Góra, Poland

Artur Wagrodzki, president, Artur Express Inc.

Born: Zielona Góra, Poland

Wagrodzki on managing through the recession: If we had to give customers little breaks on the business, we did it. We were able to convince our drivers that we will have the business, and it will be steady. We were lucky enough to make sure our business was diversified. We were working with retail, home goods and a lot of food companies.

Wagrodzki on word-of-mouth recruiting: We were able to hire more independent contractors because the contractors that we had, they talk a lot out on the road. Word-of-mouth is a big deal for transportation. The drivers drive and they talk and if you have good customers and you pay the drivers on time, they can’t ask for more. They just want to join your team and haul your freight.

Wagrodzki on bonuses: We have all different bonus programs set up for our employees and they are revenue-driven bonuses. Retention is a big factor in our business, so we have customized bonus programs for dispatchers and for load planners and all different types of tiers in our operation. Our employees feel that they own a piece of this company. If the company succeeds, we’re going to succeed as well.

Takeaways:

Let your people help you run your business.

Don’t ever stop looking for talent.

Make managing relationships a constant priority.