According to projections by the Gartner Group Inc., more than half of all companies worldwide won’t be prepared for the Year 2000 computer problem. Companies which have started work on the problem are finding out that it’s more than they bargained for.
“I’m surprised at the systems I thought would be compliant which aren’t, or we haven’t figured it out yet,” says John Schwarz, director of Y2K compliance for Aurora Health Care. “It’s a lot bigger than I anticipated, and I think most companies will find this to be the case.”
Compared to six months ago when Aurora was first wading into its Y2K project, the project cost has taken what Schwarz will only describe as “a quantum leap.”
Many in-state manufacturers are already butting up against the Year 2000 as they make future projections for materials handling requirements.
At Appleton Papers, a material requirements application is used to plan for paper production at least 18 months in advance. That’s how long it can take to line up the sophisticated equipment required to produce the thousands of products made by the $1.3 billion Fox River Valley papermaker.
Because building a new paper machine is a complex effort involving a variety of vendors, if the material requirements application was not working by July 1998, there would be no way Appleton Papers could meet customer demands in the Year 2000, says Mike Pratt, the Y2K project manager.
“If the material requirements planning application was not working, our shop floor would simply shut down,” Pratt says.
Appleton Papers got started on the problem as early as 1995. With the help of Y2K consultant Compuware, the Fox River Valley papermaker launched a $3 million effort to convert 5.5 million lines of code. The project was completed in February, five months ahead of schedule.
Insurance companies and banks have been out ahead of the pack in dealing with the Year 2000 problem. That’s because much of the information those institutions handle is based on calculations that use dates as the basis for many of their applications. Last year, Allstate Insurance Co. estimated the cost of its Y2K fix at $40 million.
Like Allstate, Northwestern Mutual Life Insurance Co. has been actively working on the problem for two years, and has a targeted completion date of November of this year, says Kathy Oman, NML’s Year 2000 project director.
NML has 40 people working full-time on the project at its Milwaukee headquarters, and another 40 to 50 consultants from Infosys Technologies are attacking the problem offsite.
Infosys, an offshore company based in India, uses an automated tool to scan NML’s code and find out where the date hits are. Once they find the problem, they set about the task of “renovation.” Altogether, NML has about 150 different applications and 20 million lines of code to sort through, Oman says.
“Right now, only about 20% of our code remains to be looked at, so we should easily make our target date,” Oman says.
NML’s corporate service department is responsible for looking at the company’s embedded systems, which include elevators, security systems and anything else that is run by microchips. In addition, the insurer is analyzing the Y2K readiness of all of its electronic vendors, both hardware and software.
Don’t forget to
check the phone system
Most businesses will be affected in their accounting systems and also their telephone systems, says Tony Ollman, an information systems consultant with Virchow, Krause & Co. in Madison. In a survey of 200 Wisconsin manufacturers and distributors by Virchow, Krause revealed that 45% of the firms had not considered their phone systems as part of their Year 2000 planning.
“You can’t do business without a telephone, and that’s the most expensive system to repair,” Ollman says.
If your company has “homemade” programs from an outside programer, the best alternative may be to simply replace the application, says Steven J. Hyde, an information technology consultant with Kolb Lauwasser & Co. in West Allis.
That’s what Milwaukee Public Schools opted for in replacing its payroll system which was not Y2K compliant. While the new systems developed by Oracle and PeopleSoft are costly, it represents a good opportunity to do away with outdated code and upgrade with new software that should result in economies of scale, says Jim Bloom, a resource specialist with MPS.
Most companies will find it less costly and more timely to replace their systems with new packaged software that is Y2K-compliant, says Hyde, rather than continue to pay expensive
“My biggest concern is
that small businesses just aren’t getting it.”
– Carl Gerlach,
Apex Information Systems
programer wages which nationally average $90,000 per year.
Philipp Lithographing Co. in Grafton realized a tenfold increase in the speed of its IBM mid-range computer when it replaced it as part of Y2K compliance, says controller Dave Kaehny. After the computer upgrade in 1996, Kaehny had an outside consultant go through and work out the bugs in the company’s software in 1997.
Kaehny’s foresight resulted in a substantial savings for the company. From the time Philipp Lithographing got its Y2K problem out of the way, the cost of qualified programers has more than doubled, according to Carl Gerlach of Apex Information Systems in Cudahy, who performed the work.
“My biggest concern is that small businesses just aren’t getting it,” Gerlach says. “We have done a lot of public education through speaking at Rotary and Lions meetings, and have called on people who know for a fact that they’ve got a problem, but they just refuse to acknowledge it.”
Amid all the gloom, there are some positives that come out of a Year 2000 project.
By unbuttoning applications, businesses can create new processes designed to adapt to future changes, says Ernst & Young’s Lorne Richardson. Maintenance activities can be better organized, and systems can be made more flexible.
Simply eliminating dead computer code and multiple applications may generate substantial savings, Richardson says.
Each process that can be made more flexible and adaptive will add to the bonus. Also, data collected during your Y2K project can serve as a repository of application data which may prove invaluable when it’s time for upgrades and platform migrations.
“If you look at every program that you have and every date, it’s an overwhelming task,” MPS’ Bloom says. “But if you triage your systems and determine what’s going to fail, then it becomes doable.”
All Y2K consultants recommend that you identify your mission-critical applications first when you go about developing a plan of attack.
Also, remember to build in enough time to test your Year 2000 fix. Give yourself six months to a year to do all the testing, Aurora Health Care’s Schwarz advises.
“So you don’t have until next year to do it,” Schwarz says. “You should be doing it this year.”
By summer, companies that have not started the process of code conversion are probably not going to make it in time for the Year 2000, and could face potentially crippling systems failures, warns Y2K guru Peter de Jager.
“The companies who know that their very survival depends on their computers have already started making their systems Year 2000-compliant,” de Jager says. “For those who have not even begun to assess the extent of the problem, it’s too late. They won’t be ready by the Year 2000.”
April 1998 Small Business Times, Milwaukee

Employers enlist trainers to boost staff capabilities
Imagine yourself as the president of a manufacturing company. Your largest customer notified you that beginning in the Year 2000 all of its vendors must be ISO 9000 certified.
No one in your company, including your top manufacturing people, has the experience necessary to implement such a quality control program.
Do you hire somebody with ISO 9000 experience, or seek help in training your own people?
Every day, employers make these decisions. Faced with the current manpower situation, more businesses lean toward educating and training their own people.
At Park Bank, which has more than 150 employees, president and chairman of the board P. Michael Mahoney gets involved with the progress of his bank’s workers.
“I’d rather bet on an internal person than hire someone from the outside,” Mahoney said, referring to the bank’s policy of seeking to promote from within. “Education is critical with the growing focus on retaining employees.”
Not long ago, Mahoney engaged the assistance of Dr. Margo Frey to provide one-on-one coaching in management skills to an employee being considered for promotion.
A noted columnist and speaker, Frey is one of a half-dozen people in Wisconsin to achieve the status of National Board Certified Career Counselor. Her company, Career Development Services, charges about $150 an hour for services.
Individuals such as Frey and organizations which coach and train employees are finding that businesses are willing to make a significant financial investment in training.
Premier Aluminum, an 80-employee firm with plants in Allenton and Racine, engages the services of MRA-The Management Association, spending thousands of dollars for employee training.
Chuck O’Connor, Premier’s corporate production manager, sends his supervisors to MRA headquarters once a month for 10 months to a course on principles of management.
“It costs us about $2,000 a person,” O’Connor said. “After each class, I get together with them to discuss issues covered and to see how we can apply them in our plants.”
O’Connor admits it’s a gamble on whether or not they lose people after the training. “We try to impress on our people the opportunities here. We encourage them to take on more responsibilities.”
Larger corporations such as International Flavors and Fragrances, with a division in Menomonee Falls, find MRA’s training services convenient and affordable.
“We have 22 divisions, so our corporate training staff is kept busy with on-going safety and management training programs in all those locations,” says Jessie Core in the firm’s human resources department.
International Flavors and Fragrances brought in MRA to introduce senior management to team-building concepts during five half-day meetings. Each session costs approximately $1,500.
With more than 1,700 member companies, MRA-The Management Association, conducts more than 600 seminars and on-site programs each year at its Brookfield headquarters. Trainers such as Bill Bonham have job descriptions as “employee involvement facilitators.”
Founded in 1901, MRA functions as a non-profit management association. Over half of its members have fewer than 250 employees. In addition to providing human resource data and temporary on-site HR assistance, it offers a wide range of workshops and customized training programs. Sixty-five percent of its members are manufacturers.
Human resource people have developed a jargon of their own. They talk about “hard skills” and “soft skills” like computer junkies discussing hard drives and software. For example, Allen-Edmonds teaches newly-employed workers at its Milwaukee plant how to sew leather; that’s a hard skill. After work, the company offers soft-skill training – language classes to teach English to Spanish-speaking workers.
“A-E offers two-day classes in English,” says Cathy Jones, director of human resources for the operation. Over half of the workers attend, while a few of them attend both sessions. The in-plant classes are conducted by UW-Milwaukee faculty. For its workers in Ozaukee County, Allen-Edmonds offers Spanish language classes taught at Port Washington High School by instructors from MATC-North.
Hard skills such as basic mathematics, micrometer reading, and product knowledge receive special attention at R&B Wagner and at Advance Stamping in Butler. Both companies share the presidential skills of Robert Wagner, who encourages his workers to teach each other. Mike Kerney, a former shop manager with a background in tool-and-die making, teaches basic math and instrument reading to plant personnel who need it to perform their jobs. Two instructors, Mark Wojtycski and Jay Krickeberg, conduct 20 hours of product awareness classes to everyone who has customer contact.
Krickeberg conceived the idea and everyone from sales to shipping takes the training, Wagner said.
More employers measure their effectiveness against employee retention records because they recognize employee turnover is a loss of valuable company assets. What’s it worth to salvage a skilled employee, one who may have some deficiencies in an area human resource people call soft skills?
“The focus today is on behavioral competencies like critical thinking, problem solving, how to ask questions, and getting along with fellow employees,” says Dr. Daniel Schroeder of Organization Development Consultants in Brookfield. “Attitudinal problems may not show up on the bottom line, but they’re hidden contributors to the company’s P&L statements.”
Schroeder’s staff of 10 people offers dozens of soft-skill training programs under a franchise arrangement with WorkSmart. The cost for services from professionals like Schroeder will vary from $1,500 to $2,500 a day.
Today’s corporate structure is moving away from middle managers to self-directed work teams, Schroeder adds.
April 1998 Small Business Times, Milwaukee

A business man was to give a presentation in China. His advisor and translator on the trip had warned him not to include any jokes in his talk since the Chinese don’t use humor in business presentations, as the humor could easily be misinterpreted.
But when he gave his talk, he included two jokes in the introduction. The crowd seemed to laugh at the right parts so he thought everything had gone very well.
At the end of the talk, as he took his seat, he noticed that his translator was fuming.
“What’s your problem?” he asked. “The jokes went over very well. Don’t be mad at me because I proved you wrong.”
“They weren’t laughing at your jokes,” his translator said. “When you started telling your stories, the Chinese translator for the group told them, ‘The American is telling a joke now. Please laugh when I give you the signal.’ ”
I embellished this story a little to make a point – that cultural differences are real. Ignorance of those differences, or failure to respect them, can be costly in international business.
The situation mentioned above is not uncommon in the world of international business.
From my own experience I have observed a lack of appreciation on the part of many US management teams of how different business styles in other cultures influence the way business is carried out. Many US managers going overseas for the first time do their normal preparation, but take no time to consider the potential problems that could be caused by misunderstandings over cultural differences.
Training programs on cultural differences are starting to gain the attention of business owners. However, even in places that you would not expect, there seems to be a belief that cultural differences are not an issue because of the use of English in most international business settings.
Recently I attended a one-day conference on international business at a leading university. One of the professors from the business school was asked if he did anything differently when he was overseas. His answer was, “No. I’ve found that if you treat everybody the same and be fair that things will go smoothly.” I later discovered that he had never in his career entered into any difficult cross-cultural business negotiations.
The problem with what he said is that even a slight gesture made in a complimentary way may be interpreted by the another culture as a gross insult.
A phrase or word common in American talk may be interpreted with the exact opposite meaning in a different country.
A forceful style which in the US would convey passion and conviction would in another culture convey deception and trickery.
So a businessman with the best of intentions can fail in an international setting and never know why.
No wonder that some studies show a 60%-70% failure rate of cross-cultural projects by Americans. A lack of attention to the cultural issues is a primary cause of those failures.
So even with the probability of failure high, there are still attempts at global projects without taking into account the need for bridging the cultural barriers. With all the information available today there is really no excuse to go into those situations unprepared. Even if there is no time to take a training course in a particular culture, there are books that focus on a number of countries. A good book that can give an introduction to 60 countries, and I stress the word introduction, is Kiss, Bow, or Shake Hands by Morrison, Conaway, and Borden. Also in the area of gestures there is Roger Axtell’s Gestures: The Do’s and Taboos of Body Language Around the World. I use both those books as well as many others as sources in my training courses, and the books are excellent.
The point is there are three levels of communication: language, body language, and actions. All three are heavily influenced by the culture a person has grown up in, and in turn they strongly influence business processes.
Most people go through life completely unaware of potential miscommunications that can occur when their words, gestures, and actions are interpreted by a person from another culture. For the business person embarking on an international business venture, awareness of the impact on business practices of culture can mean the difference between success and failure.
Don’t ignore the signs
About 10 years ago there was a new manager assigned to the marketing group I was working in. At that time in my career I had already established a reputation for being very interested in the Japanese, having studied the language and designed a course for doing business with Japan.
The manager, whom we’ll call “Jeff,” impressed me at first with his thoroughness of preparation. Whenever he didn’t know someone with whom he was going to meet, Jeff would come over and ask one of us about the person. Jeff would ask questions about the person’s style and the way he handled problems in the workplace.
When a video conference was scheduled with a group from Japan, I had expected Jeff to come ask me about the Japanese we would be meeting with. When the meeting date was approaching and no Jeff appeared, I went to his office to volunteer the information he always seemed so careful about acquiring.
“Don’t worry,” he told me. “This is just a preliminary meeting. Nothing important will be decided.”
He was right on that point, although I don’t think looking back on it that he knew why.
“Besides,” he said, “You’ll be there to signal me if I start getting into trouble.”
Knowing Jeff’s ability to communicate and knowing that he was acutely aware of how even in this country differences in a person’s style required different strategies of communication, I assumed Jeff would be sensitive enough to stay out of trouble in the video conference.
But when the meeting came, he started getting himself into trouble immediately. And he never looked over to me for advice as I tried to signal him. In the end, after a number of miscommunications, he was annoyed with an issue that the Japanese side did not even understand.
The video conference, which cost a lot of money, turned out to be a complete waste of time.
Joseph Geck is president of Accelerated Solutions Consulting in Waukesha. He can be reached at 650-1818 or via e-mail at geckj@execpc.com.

Re-spider – Registering your Website with various search engines to get your address to the top of the listing. When people search for information for services like those you offer, you want your name to be among the first they see.
Search engine – Databases on the Internet such as Alta Vista, Yahoo! and Infoseek, that call up Web addresses that match the criteria of the user’s word search.
Hyperlinks – A Website can actually contain multiple pages. Hyperlinks connect all the pages of a Website to the home page and to each other.
Home page -The first page that comes up when someone brings up your Website.
Browser – A software package that allows you to navigate the Web (Netscape and Microsoft Explorer are the two dominant browsers).
Reciprocal Links – A link on your site to a complementary business and a link on their site back to your site
HTML – HyperText Markup Language. The method is used to create Web pages so that they can be viewed.
URL – Uniform Resource Locator. Identifies your address or location on the Web.
WWW – World Wide Web.
ISP – Internet Service Provider. Companies that provide e-mail services and connection to the Web and the Internet
Domain name – Part of your Website address (www.yourcompanyname.com). A specialized domain name is not necessary for the operation of your Web page, but most companies desire the prestige of having their own.

E-commerce opening a world of opportunities
Value Computer spent years unsuccessfully using telemarketing and cold-calling to gain the attention of a certain company.
But once the Waukesha-based distributor and manufacturer of computer cables and connection products developed a site on the World Wide Web, the company it had worked so hard to attract found Value Computer on its own. That company has been a customer ever since.
Unlike the experience of others, Value Computer’s try at e-commerce was an instant success. According to president Jenni DeGlopper, Value has twice as many new customers as last year – 75% of which found the business via the Internet – equaling more than 90 new customers.
Additionally, the World Wide Web has taken Value business worldwide. The company’s Website accounts for 80% of international sales, along with providing leads in Saudi Arabia, London and Pakistan.
“We thought there was no demand for our products internationally,” DeGlopper says, “but our international customers found us through the Internet.”
The Internet is growing in acceptance as a legitimate medium through which to do business. Forrester Research, Inc., in Cambridge, Mass., estimates that business-to-business Internet transactions increased 1,000% in 1997 to $8 billion.
Revenues are expected to reach $327 billion – equivalent to 2.3% of total US economic activity – in 2002. Wholesale and business retail companies are expected to benefit the most, as sales in those areas are forecast to grow from $2 billion in 1997 to $168 billion in 2002.
Gregg Tushaus, president of Tushaus Computer Services in Wauwatosa, says it is to the advantage of small businesses to sell on the Internet because of the exposure a Website can give a business. Tushaus offers a service called Salessite Internet Sites, a section of the Tushaus Website which features customers’ sites. Tushaus aids in all aspects of developing a site, from building a marketing plan to designing the site to registering the site with search engines, and in return receives a commission from what is sold through the Website.
“Salessite takes the e-commerce concept and turns it into a partnership between the Internet provider and the seller,” Tushaus says.
But as more companies enter the realm of electronic or “e-commerce,” businesses realize that there is more to e-commerce than having a place on the World Wide Web.
Elliott Erickson, owner of Pro Golf of Wisconsin, a Salessite customer, decided to try e-commerce because he thought it would provide an extra opportunity for sales volume. He chose to work with Tushaus because the Pro Golf staff did not have the expertise to design and develop a Website internally. The results, says Erickson, have been modest thus far.
“We get a lot of inquiries but not a lot of buys,” Erickson says. “People are shopping but not buying. I don’t know why that is. It could be our prices, it could be the fact that people fear the security risks involved in purchasing over the Internet.”
Tushaus maintains that Salessites are secure. Information sent through Salessites is encrypted, and digital identification numbers are used so that the chance of someone capturing credit card information from the sites is slim to none.
“It’s much easier for someone to take your credit card slip from the garbage and copy your number off that than to get it through the Internet,” Tushaus says.
John Orth, president of CyberZonics in Mequon, agrees, calling Internet transactions “more secure than any other place you use your credit card.”
Orth adds that “the sense that e-commerce is less secure than other credit card transactions is false.”
With encryption, a credit card number is encoded, just as messages an army might send in war would be encoded. Only someone with the key can read the code. And it generally would take a very large computer, such as a supercomputer, to break a code, industry insiders say.
They also note that merchants you’re buying from on the Web usually don’t even see your actual credit card number; only the bank does.
Sales Concepts, a Brookfield-based company and Salessite customer that provides various staff training programs, uses its Website in place of mail-order catalogs, which are more expensive than a Website, according to company president Melissa Blair.
“Websites are cheaper and easier to update than four-color catalogs,” Blair says. “Websites are very cost-effective for small businesses because you can put online what you would normally send via regular mail as part of media kits and other mailings. Four-color printing gets very expensive.”
Which is not to say that a business should do away with the use of regular mail altogether in favor of Internet promotion. Sales Concepts still does some mailings but has found the Internet to be a viable marketing tool.
“We send out postcards with our Internet address on them and encourage customers to see our Website or call us,” Blair says. “This is much cheaper for us than printing catalogs. And it works.”
Although Blair has received no purchases via the Internet yet since going online in January, she is not disillusioned by the e-commerce boom.
“Our Website is more a marketing tool for the business than strictly a sales tool,” Blair says. “If people simply get in touch with me because they’ve visited the site or if I generate good leads from the site, then it’s worth it. The Website is great visibility for the business even if people aren’t necessarily buying. Don’t get upset or give up if you don’t make a sale online right away.”
As far as perceived security risks are concerned, Blair also holds that Internet purchasing presents no more risk than does giving your credit card over the phone.
Whether Internet sites actually boost sales is still open to debate.
But DeGlopper says the key to a successful Website is successful marketing. Register your site with as many search engines as you can. There’s no cost involved, but it might take more than one try before your site is actually registered because the search engines receive thousands of entries daily and choose which ones they will add to their database. DeGlopper had to send Value’s information 16 times before it was registered with Yahoo!. And there are companies which will submit your Website to search engines for you. For instance, Submit-It.com does the job for $70.
“Marketing is vitally important,” DeGlopper says. “If you build it, they will not always come. People have to be able to find you through search engines.”
Naturally, there are legal issues involved in Internet commerce. Laws governing ownership, security, interstate commerce and privacy all apply to e-commerce.
According to Mark Foley, a partner with the Foley & Lardner law firm, if you hire an outside Web developer to design your site, make sure you determine, in a contract, who owns the source code used to create the site. Also, make sure you take the required steps to protect your customers from hackers. Furthermore, Foley advises, keep in mind that Internet business is a form of interstate commerce and that different laws may apply as transactions travel from one state to another.
“The Internet can be a very effective sales tool, but there are so many issues to address that you really need to work with someone who is used to dealing with these issues,” Foley says. “Small business people often try to avoid spending money on legal help in the beginning, but they end up spending more money in the end dealing with legal problems.”
Foley says it isn’t that expensive to have an attorney draw up an ownership contract.
April 1998 Small Business Times, Milwaukee

before you sign on the dotted line:
? Will the vendor install and configure the firewall? You typically have to pay extra, but paying a vendor or the vendor’s authorized reseller to install the firewall may save you the headache of dealing with complex setup procedures.
? What is included in the software maintenance program, and how much is it? With innovations being discovered regularly, you’ll want to ensure the firewall vendor offers updates on a regular basis.
? Are references available? A firewall vendor should be able to provide you with examples of previous customers who are satisfied with the product and have configurations similar to your own environment. Integrity is important.
? Does the firewall support open standards? A firewall solution that doesn’t implement open standards like IPSEC and RADIUS will inevitably come back to haunt you. Many solutions support open standards for a variety of features. If the firewall doesn’t have support for these standards, you may not want to implement it as a solution.

Tick, tick, tick.
That’s the sound of the doomsday clock counting down to the turn of the century. Fewer than 640 days remain until every machine with a computer chip inside it rolls over to the Year 2000.
Doomsday prophets predict nuclear Armageddon – the end of the world as we know it.
Apocalyptic predictions aside, what’s looming is catastrophe that will most certainly happen. And it could spell the end of your business as you know it, unless you are taking steps right now to defuse the year 2000 computer bug, say Milwaukee-area computer consultants.
Simply put, the Y2K bug arises from the fact that most existing computer code was written in six digits instead of eight, meaning that date fields which end in “00” are read by most computer systems as the year 1900. That causes computer systems to spit out erroneous data or shut down entirely.
Already, problems are cropping up. Holders of credit cards which expire in the year 2000 are seeing their transactions declined, as routine processing reads the card as expired. Two years ago, 200 customers of a Midwestern Fortune 500 financial services company received bills showing 96 years worth of interest after the company’s consumer loan system encountered the 00 date. As far back as five years ago, a 104-year-old Winona, Minn., woman received a notice telling her it was time to enroll in kindergarten when a computer misread her birthdate which ended in 88.
“Anyone who works with computers should assume they have a problem,” warns Jeff Ray, vice president of emerging technologies for Detroit-based Compuware.
If you accept the premise that rewriting a line of code costs between 80 cents to $1.50 per line, it’s a foregone conclusion that fixing the Y2K bug is going to take a bite out of profits. All told, the Y2K bug is expected to deliver as much as a $1.5 trillion hit to the world economy, according to Peter de Jager, an independent analyst and commentator who is considered a leading authority on the subject.
The price for delaying a Y2K fix is steep. Consider the case of a small Georgia bank which had done nothing to de-bug its system: The Georgia state banking commission revoked the bank’s charter, putting it out of business.
Then there’s the Federal Aviation Administration and its outdated air traffic control system, which contains more than 23 million lines of code written in 50 different languages.
Officials from the General Accounting Office warn that only 30% of the FAA’s critical 430 computer systems have been fully de-bugged. And only a small number of specialists are equipped to decipher the code. The potential impact is interruption of air travel for the first days, weeks and months of the Year 2000. Compuware’s Ray unequivocally states that he is not flying several days before the turn of the century or for several weeks thereafter.
If it weren’t for bad news
The Y2K bug lives everywhere, not just in your computer system. Virtually anything which contains a computer chip needs to be checked out, says Tony Ollman, an information systems consultant with Virchow, Krause & Co. in Madison. That includes machines on the shop floor system, the elevator and HVAC systems in your building – not to mention your telephone and security systems. These so-called embedded systems are just as likely to fail unless you take steps now to ensure that they are Y2K compliant.
“We’re quite sure that business is behind,” says Ollmann, whose firm conducted a statewide poll on Y2K readiness. “In the companies we’ve talked to, there’s a very high recognition of the impact on computer systems. But there appear to be a significant number who are overlooking embedded systems.”
The statewide survey of 200 manufacturing and distribution companies with revenues over $5 million revealed that approximately 49% had not considered their shop floor systems as vulnerable to the bug, even though 95% of respondents said they felt they were on top of the problem.
When it comes to embedded systems, ask yourself what you need to replace versus repair, Ollman says. What you decide to do will depend on your company’s overall structure.
Computers and embedded systems aren’t the only places you need to look for the Y2K bug. You also need to look beyond your own four walls at your customers and your suppliers to determine if they are Y2K compliant.
“Take the manufacturing process,” Ollman says. “You could have all of your own internal systems working fine, but if you don’t have the raw materials to produce your product, you go out of business.”
Or say your small business supplies a critical part to a much larger manufacturing concern. If you have a contract which requires you to supply a certain product or service to a company over a period of time, and the Y2K bug shuts you down, that could potentially slam the brakes on your larger customer’s manufacturing process. If you have a requirements contract with that manufacturer, you could be staring down
“Businesses need to realize that it’s just not a matter of losing customers or convenience…. People might sue.”
– Derek Stettner, Godfrey & Kahn
the barrel of a lawsuit, says Derek Stettner, an intellectual property lawyer with Godfrey & Kahn.
“Businesses need to realize that it’s not just a matter of losing customers or convenience,” Stettner says. “They could be held liable by other parties such as customers, shareholders or other vendors. People might sue.”
Stettner cautions that the amount of time and money spent defending a lawsuit is potentially devastating to a small business. In other words, on top of lost production and profits, the Y2K bug could deliver a knockout blow to a business that is not prepared.
Already, legal pundits are predicting that Y2K-related litigation will far surpass anything that has come before it.
And it only gets worse.
According to virtually anyone familiar with the subject, if you haven’t already taken steps to get your Y2K bug problem straightened out, you’re in trouble – big trouble.
Carl Gerlach, president of Apex Information Systems in Cudahy, says businesses which have done nothing to date about Y2K can expect to pay 25% more for every quarter they put off the problem.
“What we are seeing is that people are looking for an easy way out,” Gerlach says. “It’s not going to add any value to your business, other than to keep it going.”
Not only is time running out to get the problem identified and fixed, but qualified computer programmers available to fix the problem are in short supply. Unless you’re well on your way to a Y2K fix or are a major player, you are not going to get the attention that you deserve, adds Kelly Hansen, a principal with Sun Tzu Security, Ltd. in Milwaukee.
“Right now, there is a huge shortage of talented programmers who are capable of going through and doing the necessary code changes,” Hansen says. “So people are dealing with the leftovers. They are getting the engineers who weren’t picked up – the second and third-stringers, the benchwarmers. Small companies who are coming late to the party, who are just getting started now, this is who they’re left to deal with.”
The consensus among local computer consultants is that most large firms seem to have a handle on the problem, and expect to make their systems free of the Y2K bug well in advance of the deadline. However, the outlook for small business is not nearly as encouraging.
“When you get to the small to medium-sized companies, somewhere between 20 to 30 percent have some kind of a plan in place,” estimates Robert Krouze, a programmer for Entré PC Solutions, Inc., in Brookfield. “The rest are in denial or disbelief.”
Krouze says he is aware of several marginal businesses which plan to close up shop rather than deal with Y2K.
Most small businesses are reliant on pre-packaged software to run their accounting, inventory and data processing functions. So it is incumbent on businesses to ask if their software is Y2K compliant. Even then, there’s an element of uncertainty, acknowledges Dave Herrmann, manager of information technology for Grande Cheese Co. in Lomira.
“We’re relying, to a great extent, on the assurance of our software vendor,” Herrmann says. “So, you’re relying on people outside the company to make sure that your business is going to continue functioning, and that’s a difficult thing.”
Time to get going
If you haven’t already done so, now is the time to address your Y2K problem. The only way to make sure it gets addressed is if the directive comes from the highest level within the organization, Ollman says.
“This has to be the person that runs the company, and who can keep the project manager’s feet to the fire,” Ollman says. “There needs to be a recognition that this is a companywide project, and not just another information technology event.”
Determine the extent of your information technology problem by contacting your information technology manager (if you have one). If not, contact whoever is responsible for managing and maintaining your computer software. Your specialist needs to develop a plan of action which involves pinpointing the problem, advises Compuware’s Ray.
Write a letter to your software or outside services provider asking for certification that the software they are providing will work beyond the Year 2000, Ray says. Get them to sign on the dotted line.
“We pretty much know what small businesses are going through,” says Mary Bennett, an operations officer for Park Bank, a Milwaukee-based bank holding company with $400 million in assets. “Without a major corporation to take care of you, you really have to rise up and get this done on your own.
“It’s not a good thing to wait until 1999 to try to do this.”
April 1998 Small Business Times, Milwaukee

Be selective in trade shows you attend
Question:
During the spring, we attend quite a few trade shows. I’m not really sure what we gain from the shows that we attend. Are trade shows effective?
Answer: If good exposure and sore feet are all that you expect to gain from your trade show exhibits, you’re missing the boat. While name recognition is certainly important, it’s only a small part of an effective trade show marketing plan.
I recently attended a trade show in search of specific products and services for a new home that I am building. I was appalled to find that very few exhibitors asked about my current situation. None asked for my name and phone number for a follow-up.
Should you attend trade shows?
Let’s look at a few statistics about trade show attendance that may surprise you. First, the attendees are mostly empowered and motivated buyers. According to recent surveys, the percentage of trade show attendees who have final say, specify suppliers, or recommend for purchase ranges from 77% to 90% of all attendees. And 59% of those trade show attendees plan to purchase within 12 months of the show.
Trade shows can certainly be effective, but only with the right planning.
In preparing for your exhibits, be sure to address the following key points:
Deciding which shows to attend Choose shows that are targeted to your potential client base. Exposure is great, but exposure to the wrong audience is a waste of time and money.
What is the expected attendance? Just because a show is targeted doesn’t necessarily mean it will be well attended. As an exhibitor you have a right to know and definitely should ask how the show will be promoted. Will it be through direct mail? Radio? And how much?
What is the expected traffic flow?
Will lists of participants be provided for follow-up? Before? After?
If you’re unsure of the show, contact some past exhibitors to see how the show was for them.
Planning for the show Be certain to set goals prior to attending the show. How many people do you plan to talk to? What dollar amount do you expect in sales from the show? (Be sure to allow for follow-up time).
Capturing leads Shows are a great way to create exposure for your business. It’s important that this is not the main goal, however. Prospects are talking to hundreds of vendors, possibly thousands. They probably won’t take action on your product or service until you follow up. Be sure to have an accurate means of capturing leads.
Luring prospects to your booth Pre-convention mailings give prospects a reason to seek out your booth.
Lists of all attendees might be available from the convention organizers. But don’t solely rely on such contact lists. It’s still most effective to generate your own leads. Be sure to talk to your prospects about their specific needs and interests and jot down notes for follow-up.
Setup and display Practice setting up your booth prior to attending the show. That will give you an opportunity to make adjustments.
Don’t take too much with you. Limit your handouts to those pieces that will make the most impact.
Choose your best people to work your booth. Make sure your people are knowledgeable about your products and services.
Make sure that your booth is open and inviting. Don’t place a table in the front like a barrier. Make it easy for potential prospects to feel at ease and walk into your booth.
A plan for follow-up is as important to the show as any initial planning. Through proper follow-up, you will realize the financial goals that you have set for the show.
Set a date for follow-up to be complete.
Determine the method of follow-up.
Prepare a return-on-investment report detailing exact expenses and income.
Keep a show summary for future reference; that will help you decide if the show will be worthwhile attending in future years.
Marcia Gauger is president of Impact Sales in New Berlin. Small Business Times readers with a sales or marketing issue they’d like discussed in this column can contact Gauger at 524-1144 or via e-mail at Impacttrng@aol.com.
April 1998 Small Business Times, Milwaukee

Young entrepreneur builds on winning design
Rick Guerra had already redesigned his exercise machine eight times when the notice came from the QVC television shopping network.
If he wanted to sell the product via QVC, another revision would be needed. But this time, it was just the shipping box that needed a change.
It was a minor item, Guerra notes, but one that points out the delays that entrepreneurs can face when trying to bring a new product to market.
Television shopping shows can offer a great boost for new product developers. A huge audience of willing buyers is virtually assured -QVC received more than 84 million phone calls and shipped more than 50 million packages in 1996 and says it averages 113,000 orders per day. And the entrepreneur can get by with little overhead as no physical retail outlet is needed.
But as the 41-year-old Guerra has learned, acceptance by an operation such as QVC comes with a price. For example, his desire to have his Simpleflex made in America was thwarted by a need to lower the price. The product is now made in China, although an American-made version is available – for a higher price.
The product also had to be redesigned to fit in a UPS shipping box, Guerra says. Guerra did that. But then QVC submitted the product-in-box to its drop test.
“They lift the box a foot off the ground and drop it 11 times,” Guerra notes. If the product is damaged, a box redesign is required. “Mine scratched,” he notes. And thus the box had to be redesigned.
Further, it turned out that the Simpleflex labeling didn’t meet QVC’s requirements – another item for Guerra to address.
But he views all those matters as minor compared to the market position QVC will offer him. The network was ready to cut him a check for $15,000 once the Simpleflex and its shipping box met its specifications. If the initial run sells well, QVC could take the next step and buy $40,000 worth of product and then $60,000, based on a 40% margin it retains.
“They like to work in baby steps,” says Guerra, adding that he views the deal he’s been offered as fair.
As part of the deal, Guerra would have to buy back product that doesn’t sell.
Product evaluation takes about three weeks. Then, it typically takes three months for a product to go from purchase order to on-air appearance, according to QVC.
QVC would also like exclusivity for a year, but Guerra hopes to sideline that requirement; he has the product available at several retail outlets.The Simpleflex system is being sold at Fitness Works in Brookfield and Mequon, Wheel & Sprocket in Hales Corners, Baker’s Fitness in Franklin and Play It Again Sports in Brown Deer. Its $199 selling price will be the same on QVC as it is in local stores, although for QVC sales a shipping and handling charge will be added.
He also donated four of the units to the Milwaukee County Parks Department, which placed them at Veterans Park on the lakefront.
Guerra, a model and personal trainer who hails from Hartland, knew he was on to something when his original plans for a simple exercise product were copied and the resulting product sold. To protect himself this time, Guerra has worked under a patent-pending status.
Guerra has worked on marketing and stress tests for the product with UW-Whitewater, UW-Milwaukee and the National Sporting Goods Association.
The main selling point, Guerra says, is the product’s simplicity.
“I pursued developing Simpleflex to offer a home fitness unit to families looking to acquire endurance, muscle tone and flexibility without having to readjust the unit each time someone performs an exercise.”
He also sees the product as an alternative to lifting heavy weights. Simpleflex lives up to its name; it has no moving parts, although its platform can be adjusted.
If all goes well, within five years Guerra hopes to sell the Simpleflex through his own television infomercial. He’s aiming for sales of 10,000 units per month and has plans for other fitness and health-related products to be offered by his IAF Corp.
So far, the business has been financed with about $75,000 – $50,000 of that from a private investor and $10,000 from local government economic development programs. His minority status and his business location – 14th Street on the Marquette University campus – qualified the firm for the development funds.
While the product has been in development, Guerra has continued his personal training and modeling to generate income.
April 1998 Small Business Times, Milwaukee

A company moving from Illinois to Whitewater will receive $150,000 in financing through the state, the Wisconsin Department of Commerce announced.
Ecological Concepts, (Eco-Tech), a manufacturer of recycled-plastic lumber and other products, will get the loan through the Community Development Block Grant – Economic Development Program.
The loan will help the company buy new equipment and is expected to help the company add 97 jobs over three years. An additional $600,000 in other investment is involved.
Racine County has received a $1 million grant from the Community Development Block Grant-Economic Development (CDBG-ED) Program. Racine County will lend the funds to Golden Books Family Entertainment, Inc./ Golden Books Publishing Company, Inc. (Golden Books), Sturtevant, a leader in publishing children’s books.
The project will retain 600 jobs, create 300 jobs over two years, and leverage $16,549,000 in additional investment.
The CDBG-ED Program is administered by the Department of Commerce using funds from the U.S. Department of Housing and Urban Development.
The Department of Commerce has approved the allocation of $62,375,000 in financing for 24 municipalities to help local business recruitment and expansion projects.
Together, the projects are expected to create 1,354 family-supporting jobs and generate $45,262,000 in new investment.
The financing, through the Volume Cap Allocation Council, goes to municipalities in the form of tax-free industrial reveune bonds. The interest rate on the loans is generally about 6.25% – or about 75% of the going prime rate.
The following summarizes the successful proposals in southeastern Wisconsin:
Southwest Metal Finishing, Inc., New Berlin, $4.75 million.
This company polishes and plates metals. It is purchasing land and rehabilitating an existing 55,000-sq.-ft. building in the New Berlin Industrial Park that has been vacant for two years. This will be the company’s third facility in New Berlin. The expansion will create 125 new jobs at an average starting wage of $14.85/hour. The total project cost is $7,654,600.
Vita Food Products, Inc., Pleasant Prairie, $8 million.
The company is one of the nation’s leading processors of herring and smoked salmon products. It is relocating to Pleasant Prairie from Chicago, and will construct a new manufacturing facility. The expansion will create 134 jobs at an average starting wage of $12/hour. The total project cost is $13.13 million.
Electronic Cable Systems, Inc., Franklin, $2 million.
This company’s chief product is avionics systems for aircraft. It will construct and equip a 40,000-sq.-ft. addition to its Franklin facility. The expansion will create 100 jobs at an average starting wage of $13.02/hour. The total project cost is $2 million.
Pope Scientific, Inc., Saukville, $1.9 million.
The company manufactures custom cryogenic research vessels, portable pressure vessels, and distillation equipment. It is moving its manufacturing facility from Menomonee Falls to a new 53,000-sq.-ft. facility in Saukville, and retaining its entire workforce. The expansion will create 27 jobs at an average starting wage of $18.08/hour. The total project cost is $3.5 million.
Wisconsin Plastic Products, Inc., Plymouth, $2.5 million.
This firm manufactures high-quality plastic extrusions, particularly for the furniture industry. It is consolidating three leased operations in Sheboygan Falls to a new 80,000-sq.-ft. plant in Plymouth. All present employees will be retained. The expansion will create 42 jobs at an average starting wage of $15.57/hour. The total project cost is $5 million.
Troyk, LLC, Franklin, $2 million.
This printing firm is moving from Milwaukee to a 40,000-sq.-ft. facility in Franklin. All current employees will be retained. The expansion will create 21 jobs at an average starting wage of $13.07/hour. The total project cost is $3.4 million.
Polyfab Corp., Sheboygan, $2 million.
This custom plastic injection molder serves a variety of industries. It also offers engineering assistance so that customers can design their own molds. The company will construct a 32,000-sq.-ft. addition to its existing facility. The expansion will create 36 jobs at an average starting wage of $14.68/hour. The total project cost is $3.5 million.
Weldall Manufacturing, Inc., Waukesha, $4 million.
This metal fabricator is replacing its existing Waukesha plant with a 98,500-sq.-ft. facility and associated equipment. The expansion will create 50 jobs at an average starting wage of $15.67/hour. The total project cost is $6.6 million.
Service Heat Treating, Inc., Milwaukee, $3 million.
The company heat-treats and brazes steel products, primarily machined parts and fasteners. It will expand and improve its existing facility, and purchase new equipment. The expansion will create 118 jobs at an average starting wage of $20.37/hour. The total project cost is $5.7 million.
Toolrite Manufacturing Company, Inc., New Berlin, $1.15 million.
The company manufactures tools and dies, special machines, cutting tools, and production parts. It is constructing a 20,000-sq.-ft. addition to its existing plant. The expansion will create 45 jobs at an average starting wage of $14.72/hour. The total project cost is $2.250 million.
Quest Technologies, Oconomowoc, $1.6 million.
The company is an ISO 9001-certified manufacturer of health-care industry hygiene instruments. It is constructing and equipping a new manufacturing facility. The expansion will create 18 jobs at an average starting wage of $12.89/hour. The total project cost is $2.8 million.
April 1998 Small Business Times, Milwaukee

In the late 1960s, Harry Dennis was a distinguished Vietnam combat pilot, flying people, supplies and ammunition in C-130 cargo planes.
The military relied on Dennis to fly the difficult transport missions. And it relied on him to teach others how to pilot the C-130s in his other role as an Air Force pilot instructor.
Today, almost 30 years later, Dennis is still calling the shots, but under less stressful conditions as the head of The Executive Committee (TEC), a Brookfield-based organization which allows company executives to share ideas and advice in a non-competitive setting.
TEC member groups meet nine times a year for a full day with up to 16 other CEOs from non-competing industries. In those confidential settings, members exchange ideas and opinions, providing one another with the kind of direct, honest feedback they rarely receive within their own companies. The no-holds-barred discussions among TEC members require a thick skin; but it’s the kind of feedback they won’t get from senior managers, boards of directors or even family members.
The 550 CEOs who belong to 27 TEC chapters in Wisconsin and Michigan are like pilots in their own right, as they are responsible for getting their companies off the ground to reach their destination. And as Dennis did in Vietnam, he helps them get there, albeit in an entirely different manner.
As the head of TEC, Dennis is responsible for appointing chairmen to run the roundtable groups, and to give them the service and the tools they require to be successful. Each TEC group is run by an experienced business professional who ensures that the group functions smoothly, and that members receive full value for their annual investment of $6,180.
“Harry just has a passion for running a first-class organization,” says Jim Quinn, a Milwaukee psychotherapist who serves as a TEC chairman. “Everyone talks about good customer service, but I think Harry believes it right down to the soles of his feet. When you talk to Harry, one of things that always comes to the fore is ‘Are we providing the best possible service that we can to our TEC members?'”
The TEC chair also meets individually with each member for up to two hours prior to each TEC meeting to help explore problems and other issues. In effect, the chair serves as coach, confidant and personal advisor, and holds members accountable for plans and actions needed to move their companies forward. (Dennis also chairs his own TEC group.)
“One thing that I appreciate about Harry is that he’s got so many good contacts,” Quinn says. “If a TEC member has a need in a given area, he always knows the right person to talk to. He’s just dead-on with the leads he gives us.”
Since it was started here in Milwaukee in 1957, TEC has grown to become a worldwide organization with 5,500 members. The Wisconsin and Michigan TEC groups are separately owned by Dennis. TEC also has a division for smaller companies, which costs $350 per month instead of the standard rate of $515. Dennis also has a controlling interest in Executive Agenda, which is similar to TEC but has 250 managers who are not heads of companies. Based on the executive roundtable concept it originated, TEC has spawned a host of imitators.
The Milwaukee Road
How Dennis got to Milwaukee is a story in itself.
As the son of a career military man, Dennis was essentially following in his father’s footsteps. When he reported to Vietnam, by a twist of fate he served in the same squadron his father commanded in the late 1950s in Nashville, Tenn. But Dennis’ experience in Vietnam soured him on the military.
“It was a terrible war, and poorly executed,” says the 53-year-old Dennis. “My eyes opened up once I got there, and that clinched my decision to get out.”
Dennis enrolled in a doctorate program at Purdue University. General Motors Corp. agreed to pay for his education if he would perform a study of the automaker’s factory management styles.
Dennis’ doctoral thesis was based on the premise that if managers operated in archaic, outmoded ways, it would lead to higher employee turnover and poorer operating results. Dennis was able to prove in his thesis that those managers who used positive, enlightened management practices got better results for GM.
That led to a full-time job with GM upon graduation in 1974. But when he reported for his first day of work, he learned that his department had been eliminated. Fortunately for Dennis, he befriended Purdue business dean Frank Sturner, who was an original partner in TEC. Sturner recommended the out-of-work graduate student to TEC’s founder, Robert Nourse, who said that if Dennis wanted to come up to Milwaukee and start his own TEC group, he could.
That was 25 years ago, when TEC had 35 members. Today, the roster has grown to 550 members largely under Dennis’ stewardship. A separate worldwide TEC organization boasts more than 4,000 members. Yet, the concentration of TEC groups here is twice that of anyplace else in the world, with the strongest concentration in the Milwaukee area, points out Stan Grabarek, who chairs three TEC groups.
Dennis and another partner bought the business from Nourse in 1977. Twelve years later, in 1989, the original TEC split with the larger organization, and Dennis took over sole ownership in the two-state region. The concept remains the same.
“Even though we have some premier companies like Harley-Davidson and Briggs & Stratton, TEC really serves the small to mid-sized companies,” Dennis says. “If you are a manager and a CEO and you would like to know about virtually anything, one way or another, there is someone on the TEC circuit who knows about it.”
The model CEO
Dennis says today’s CEO needs to understand the difference between leadership and managing a business, and knowing when he or she needs to do one or the other. Dennis sees today’s CEO as more general in his or her approach, and less a linear thinker than the business owner of the past who was a tinkerer-craftsman first, and a manager second or third.
Dennis recalls that, in the 1970s, many heads of companies were not familiar with some basic management theories. They ran their companies by the book. That often meant that businesses were run with little or no flexibility.
“The autocratic way of running a business is definitely outdated,” Dennis says. “I think the younger, talented employee is not going to put up with an autocratic CEO or supervisor. The pasture is green – there are too many jobs out there.”
Today’s CEO must have a grasp of how to build and sustain a corporate culture, Dennis says. It also requires the ability to think “outside the box,” which is where a group like TEC comes in.
“The CEO of today is much more capable of getting out of the box,” Dennis says. “What it means is deviating from what you ordinarily think you should do to examine your business, its problems and opportunities, and how to better work with customers and vendors.”
Unless the business is highly technical, today’s CEO must have the ability to motivate his employees and to get them to work in a team environment, Dennis says. Today’s CEO needs to remain impartial, whether it’s in his dealings with his own employees or with outside vendors.
“I would say that integrity and personal business ethics and having strong character is number one,” Dennis says of the ideal traits a CEO should possess. “Next come excellent listening skills.”
Dennis’ management instincts were honed through his military experience which he says, makes it sometimes difficult to practice the egalitarian management style he preaches to his own TEC members. For that reason, he has a vice president of operations who has all TEC functions reporting to her.
“That’s my way of making sure that I get out of the way,” Dennis says. “I think that a lot of good TEC presidents do that. They surround themselves with people who can offset their own weaknesses. That’s the opposite of the way things used to be.”
One trend Dennis sees is that of the hands-on company owner who is strangling the life out of the business, who can’t let go and won’t delegate his authority.
“I’ve been approached by the kids,” Dennis says. “They say, ‘You’ve got to get my Dad to TEC, he’s holding us back. He thinks if he’s not doing everything, we’re going to fail.'”
Some business owners, Dennis says, don’t see the warning signs that they are losing their effectiveness. Those signs include a lower energy level than an owner once had. The danger is that the rest of the organization will pick up on the owner’s sagging energy level, and the business suffers. Other signs include flat or declining sales, key people leaving, high employee turnover and losing customers. These are all signs that a company needs a change in leadership or direction, Dennis says.
But fortunately for TEC and its members, Dennis remains solidly in control.
“He never gets involved with individual differences,” Grabarek says. “He just makes sure that people are being served. I’ve seen many instances where Harry will bend over backwards to help if someone is in need, even if it means taking extra time and money out of his own pocket.”
Adds Quinn: “He’s always looking for a way people can win in a situation instead of resorting to fingerpointing. He’s got a real sense of making sure everyone is as happy as they can be.”
April 1998 Small Business Times, Milwaukee

Do your employees know the game plan?
In most businesses the majority of employees don’t have a clear knowledge of the “game plan,” which is the annual business plan and/or the strategic plan.
In an equally large number of companies, they have little or no idea of the “score” – the financial and operating data the company uses to measure its results.
If you want to test your own company, try asking several employees what the objectives are for the company this year. If your company is like most, you will get a broad range of vague answers. Worse yet, in many companies even upper management can’t answer the question clearly and succinctly. What are the consequences of this situation and how can it be remedied?
Consequences
Every day we ask each of our employees to process work and make decisions that move in the direction of the company’s objectives and goals. How well will they make those decisions if those goals are vague?
A set of well-defined and articulated goals is necessary to motivate employees at a level that has impact. Those goals should encompass company, department, and work-team focuses.
Employees are motivated by their view of the overall vision and purpose of the company. Also, they are motivated by how they see their efforts contributing to the achievement of those goals.
Goal setting
Before goals and objectives can be communicated to employees, they must first be formulated and recorded. Those goals can encompass one or several years.
The preparation of an annual operating plan is the process by which one-year goals are developed. The company goals generally are formulated by using a structured process in which the top management team discusses and agrees upon the goals for the year.
Multiple-year goals are usually formulated using a process called strategic planning. Again, the top management spends concentrated time developing those goals and objectives.
Once company goals have been formulated, the next task is to communicate them to those responsible for helping to achieve the goals. There are many ways to accomplish this communication. However, the key is to make sure that they are communicated clearly and concisely.
Then, after the company goals are established, department and work-team goals can be formulated.
Goal formulation at each level should include in the process those employees who can help to effect the achievement of the goals. This includes employees down to the lowest level in the organization. The lower the level, the more specific and narrow the goals become.
Motivating employees
The reason for including all levels in goal setting is one of motivation. The best way to motivate employees to achieve the goals is to include those same employees in the formulation of those goals.
Once the goals and objectives have been formulated and recorded, the next step is to establish timetables and reporting mechanisms, which will enable the tracking of progress toward accomplishing the goals.
That will provide the basis for the next step in the process, which is feedback. In order to maintain motivation, employees must know that progress is being made toward achieving the goals. Feedback frequency should be more often for the lower-level goals and less frequent for the higher-level goals. For example, progress on individual or work-team goals can be reported daily or weekly; department goals monthly; and company goals quarterly.
One of the great fears in planning is that once goals are set, they must be adhered to unswervingly. Goals can be changed if there is good reason for the change.
The fact that the goal isn’t being met is not of itself a valid reason to change it. The reasons for not meeting the goal need to be examined and, if necessary, corrective action initiated. Nevertheless, goals that aren’t being met should also be part of the feedback process, along with the corrective action or the revised goal.
Planning, goal setting, communication and feedback are essential to managing your company’s progress. The lack of those exacts a high price in terms of unproductive, counterproductive, or aimless decisions and work by employees.
Planning system
The first step in establishing a system of planning and goal setting is making a commitment to the continual process of planning. Planning is a never-ending cycle of planning, communicating, measuring results, taking corrective action, and then starting the cycle again.
The planning portion is a process type of activity. Here the need is to establish a time to do it, decide who will participate, and how the process will work. Large benefits can be gained from using an outside facilitator for this process. The facilitator can keep the planning team on task and bring an outside objective view to the situation.
Keeping score
The communication portion involves deciding what, when, and how to communicate with various groups of stakeholders (managers, employees, board members, shareholders, bankers, vendors, etc.). Again, there is a need for commitment to establish and stick to a schedule. First you communicate the plan. Then, you communicate the score – how you are doing compared to the plan.
Jack Stack at Springfield Remanufacturing Corp. has had notable success and has written about his experiences in using financial measures to focus and motivate employees. He uses what he calls Open Book Management, which he defines as communicating with people via the numbers. His book, “The Great Game of Business,” details how he and his fellow employees turned an unprofitable, highly-leveraged management-buyout of an unglamorous business into a highly successful business using a system of goal setting and scorekeeping to motivate and lead the employees.
Measuring results can be as simple as comparing actual sales to the goal (often called the plan or the budget). However, sometimes it requires establishing new measurement and tracking systems. Each goal must be analyzed to determine what must be done to track results.
Corrective action
If we are accountable to somebody or some group, we will be more likely to take corrective action.
The CEO of a highly successful regional distributor reports: “When I purchased the company, I had a nagging concern that maybe too little accountability could be a problem. I’d be able to rationalize poor results and discount their implications. I could easily fall into a pattern of denying things with no fear of repercussions. I had certainly seen that happen in other privately held companies, and there was no reason to think I’d be immune to the practice myself.”
Your communication system can be part of the accountability and corrective action process. Just the fact that you must report to some stakeholder group on why a goal was missed will generally force you to take some sort of corrective action so that you are able to report what you are doing to the group. If your employees know the game plan and the score, they can be part of the team that helps to keep you on track to reaching your goals.
Michael Devitt is president of Devitt Consulting Group in Shorewood. Small Business Times readers who would like to see a business financing issue discussed in this column can contact Devitt at 962-4414, or via e-mail at Devitt@execpc.com.
April 1998 Small Business Times, Milwaukee