The UMass “Stacked” for Success in the Game of...

Winter 2002

continued on page 8

The UMass

Family Business CenterFamily Business

Contents

“Dear Ira...” ...................................... 2

Grow Your Business withStrategic Questions ............................3

Protect Against Ex-EmployeeLawsuits ............................................ 5

Phantom Stock Plans .........................6

SWOT Your Way to Success ................ 7

Deferrred Compensation .....................9

Finding and Keeping Good People ..... 11

Position Your Company for Sale ........ 13

Bwww.umass.edu/fambiz

“Stacked” for Successin the Game of Business

By Shel Horowitz.............................................................................................

USINESS IS A GAME to Jack Stack; he calls it the Great Game ofBusiness. But what high stakes!

On September 5 the Family Business Center kicked off its 8th yearof programs with keynote speaker Jack Stack, CEO of SRC Holdings Cor-poration.

Stack worked for many years as a plant manager for International Har-vester, a company mired in bureaucracy andstagnant in thinking. “We had 670 pages ofregulations before we could talk to anybody.We had to make the one rule apply to 17 plants.And the work was boring; we never engagedemployee’s minds. There was no camaraderie,no loyalty.”

Partly through luck, Stack climbed the lad-der very quickly at Harvester, becoming a man-ager at age 20. “I had a $243 million budgetand I couldn’t buy a beer! Harvester believedtheir management was too old, so they broughtin all the kids. I was good at my job; I madeeveryone fill out 15 forms to get a part off ofthe shelf. But I was not connected with the re-ality that the assembly line was shutting downbecause I wouldn’t give them the parts.”

Then, in the face of foreign competition anda slumping heavy equipment market, Harvesterdecided it didn’t need the Springfield, Missouri, plant anymore. The Japa-nese heavy equipment manufacturers had started to “take the Americanmarket” from the 17 U.S. tractor manufacturers. They gained market share

Jack Stack

Related Matters • Winter 2002 The UMass Family Business Center

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By Ira Bryck

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Dear Ira:I am president of a family owned subchapter S Corpora-

tion. I own 30%, my brother owns 30% and my sister owns40%. We inherited this company 15 years ago. My brotherand I manage the business and make all the decisions. Mysister, who lives 400 miles away, has no involvement in thecompany. My brother and I are paid a salary plus some ben-efits. All the profits are distributed each year. These distri-butions have been substantial until business year 2000 whena combination of events caused us to distribute only about15% of the usual amount. My sister came home to see whythe money was short and while looking at the financial state-ments, discovered our salaries. (This should have been nosurprise to her as we mail financials to her each year). Shehas gone back to her home and talked to her “financial ad-viser” who suggests that she draw a salary also! I need someadvice how to handle this situation because I don’t think weshould pay her a salary.

Thank you,Subchapter Sibling

Dear Subchapter Sibling:Your family finds itself in a classic struggle, and there is

hardly ever one “right answer” for these dilemmas. My mottoin thinking about this type of issue is “treat the business likea business and the family like a family.” This is easier to dowhen you are proactively building the policies and objec-tives of a business; harder when trying to unravel a confu-sion, to separate appreciation from compensation, and wheneach family member collects their own “expert testimony”to support a position. You don’t state why the shares were

Subject: Sister Wants a Salarydistributed the way they were, with your sister owning morethan the two working siblings. This split may have itself beenthe result of a well meaning but unclear intention of yourparents; or maybe a method to justify her not drawing asalary (though salaried employees- family or not- presum-ably earn their keep in the company). In any event, yoursister is the major shareholder.

So your sister is somewhat correct when she feels entitledto a return on investment, though the diligent manager -and owner- will understand that the company has financialneeds for reinvestment. Rather than resort to paying for No-Show jobs, it’s time for the family to sit down and discusssome large issues. The complex, conflicting relationships thatthreaten a family business are often represented by threepartially overlapping circles, indicating the family, owner-ship, and management spheres. Where they overlap, there isconfusion about roles and rules, so it’s very important tounderstand “what hat you’re wearing.” With a talented andknowledgeable facilitator to mediate, you should have ameeting of all owners to discuss what are the reasonable ex-pectations of owners (a fair return, that the company be runresponsibly and sustainably, that there might be lean yearsand fat years, and owners will notice those phases in theirbank account). Owners need to realize that they do not havethe right to get paid as managers; so in my opinion, it isinappropriate for your sister to draw a salary. Her goldeneggs are dividend checks.

At the same time, you should be discussing the properunderstanding of the role of management. In your case, someresearch into building a compensation policy based on (1)

• Do your kids want your business for nothing,but encourage you to enjoy your retirement inhigh style?

• Did Mom always like you best, and now yoursiblings aren’t speaking to you, and worse, notdoing what you tell them to?

• Are your family members charging theirvacations to the company card?

EMAIL Ira Bryck at [email protected] describe your Family Business tumult.

Ira’s best advice will appear in a future issue ofRelated Matters, & on www.umass.edu/fambiz

FINE PRINT: •Your identity will be kept private•questions may be edited for clarity and brevity•not intended as legal or accounting advice; seekprofessional counsel before acting upon informationin this column

“Dear Ira . . .”

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The UMass Family Business Center Related Matters • Winter 2002

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F.B.C. Membership Benefits

continued on next page

Participation in the Full Series of Seven Dinner Forumsthrough the year for all family members in the business. Atthe discretion of members, family not in the business is in-vited to the meeting. Other topics might be appropriate for anonfamily, key employee. The maximum value of member-ship in the program is reached when all relevant parties par-take of our interactive learning environment.

Roundtable Discussion Groups The UMass Family Busi-ness Center offers the opportunity for members to participatein peer roundtable discussions. Groups divided loosely alonggenerational lines (Seniors/Founders and Adult Children andKey Non-Family Managers) meet regularly in an informal, fa-cilitated “affinity group” with others in the same position inthe family business. The groups, a member benefit at no extracharge, are confidential and intimate forums that you mayview as your outside board of advisors on both family andbusiness issues.

Opportunity to Network and Confer with intimacy andconfidentiality with business owning family members, withspeakers who are leaders in the field of family business con-sulting, and noncommercial contact with the center’s spon-sors, representing the fields of law, insurance, banking, andaccounting. This interaction will be invaluable in providing asounding board, a second opinion, an empathic and experi-enced listener, and honest and direct feedback for the familybusiness member.

A Subscription to our Educational Newsletter RelatedMatters: Treat Your Business Like a Business and Your Fam-ily Like a Family, featuring advice on the issues relevant tofamily business, such as succession planning, ownership andmanagement, and family relationships, as well as coverage ofthe activities of the Family Business Center and profiles ofits members.

Related Matters • Winter 2002 • Treat Your Business Like aBusiness and Your Family Like a Family

Ira Bryck, Editor • Shel Horowitz, Staff Writer •Gloria Fisher, Coordinator, Communications &Public Relations • Jack Cavacco, Graphic Designer

Family Business Center, Division of Continuing Education,University of Massachusetts, 358 N. Pleasant St., Amherst,MA 01003-9296

Telephone: 413-545-1537 • Fax: 413-545-3351e-mail: [email protected] • web: www.umass.edu/fambiz/

Copyright © 2002 Division of Continuing Education,University of Massachusetts Amherst

Related Matters is provided for general information purposesonly. It is not intended as legal or accounting advice. Accord-ingly, readers should not act upon information in this publica-tion without seeking professional advice. Copyrights to thearticles in this newsletter remain with the authors and theUMass Family Business Center.

The University of Massachusetts is an equal opportunity,affirmative action institution.

Paul Lipke

P

Grow Your Businesswith Strategic Questions.............................................................................................

AUL LIPKE knows how to ask good questions– questions whose an-swers can change the entire shape of a business. Those who came tohis presentation to the Family Business Center October 2 at the Tekoa

Country Club in Westfield came away with a whole new arsenal of tech-niques to analyze challenges and convertthem to opportunities.

Lipke calls these kinds of questions“strategic questions.” What makes aquestion strategic? To quote from Lipke’sslide show, these questions…

• Are open, engaging and invitefurther learning

• Create a sense of options, spur newthinking

• Create movement, or conditionsconducive to it

• Dislodge old thought patterns, revealprofound uncertainties, and helpaddress our ‘change logic.’

• Never include a conclusion orsolution

• Tend to evoke a deep response,often months later

Strategic questions (a technique first developed by author Fran Peavey)are focused on the positive possibilities: not “why isn’t this working?” but“how do we do when we’re at our best?” looking at how to take the energyand creative thinking in a peak performance and apply it to the everydayworld of an existing business (or interpersonal situation, for that matter).

“The first question drives the direction” of any analysis, Lipke says. Byfocusing on the positive, on the encompassing, broad-based “how” ratherthan on the narrower, more defensive “why,” strategic questions uncovernew opportunities that might otherwise have stayed hidden. Think of themas “long-lever” questions, where the force of a small question can be multi-plied to have a great impact.

Quoting the slide show again, typical strategic questions might be framedin ways like:

• How might we..?• What would it take..?• What might shift our situation for the better?• What in the past leads you to think as you do?


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Grow Your Businesscontinued from previous page

• How has change happened here inthe past?

• How did the issue of… first get onyour radar screen?

Lipke points out that you may get dif-ferent results depending on who is ask-ing, who is being asked, when the ques-tions are raised, and how much the re-spondent feels you’re really listening andplanning to use the information. In otherwords, power relationships matter. If youremployee perceives you as an autocraticboss, don’t try to ask for answers at a staffmeeting. Instead, get a manager withstrong people skills to ask in a more pri-vate setting.

Strategic questions can help your busi-ness last through the ages. Lipke cited aRoyal Dutch Shell study of 40 companiesthat were hundreds of years old (the old-est was a 700 year old Scottish firm). Theresearchers identified four common char-acteristics: fiscal conservatism, includinglarge cash reserves; a strong sense of or-ganization, community, and eachindividual’s role; seeking outside influ-ences “for example– ongoing conversa-tions with the most radical thinkers theycould find;” and active encouragementof unconventional experimentation.Clearly, the second two hinge heavily onasking strategic questions. But they haveto be asked in the right way. “Questionsshould align with how the hearer believeschange happens.” You need buy-in, whichyou won’t get unless you understand yourrespondents’ ideas about how changehappens. So have meaningfulconversation(s) first; only when you un-derstand their “change logic” should youmove to the next phase: designing a stra-tegic questions program that is in keep-ing with the participants change logic.

After dinner, Lipke showed us how toput strategic questioning into real-worldbusiness situations. Three FBC memberswho had volunteered ahead of time went

through a mini-version of what Lipkecalls “virtual Kaizen.” [Kaizen, as long-time FBC attenders know, is the Japaneseprocess of continuous improvement.] Be-lieving that large-group brainstorms canbe more effective than one or two peoplesolving complex business problems alone,Lipke had each business owner outlinethe problem, answer clarifying questions,and receive a barrage of suggestions fromthe audience.

First up was Skip Matthews of Louis& Clark, a seven unit Western Mass phar-macy chain. He was facing the challengesof rapid growth: trying to integrate sys-tems from several stores that all do thingstheir own way, and at the same time, cost-cutting pressure from insurance compa-nies.

Some of the group’s suggestions: Iden-tify the most profitable customers andwork to meet their needs; empower theindividual stores to brainstorm and imple-ment solutions; leverage the brand (sev-eral specific suggestions) and create a cli-mate that is so attractive, pharmacists aredesperate to work there; free up pharma-cists to fill prescriptions through severalspecific methods, including:

• Shift prescription checkouts to themain register

• Answer customers’ questionsthrough in-store computer kiosksand/or a centralized phone help deskserving all stores.

Deborah Kruger’s billing service,PsychBilling, suffers when dealing withdifficult clients. Among the suggestions:“graduate” the tough clients to a com-petitor; set up a formal psychologicalscreening process including applicationforms and interviews (not only with theowner of the firm, but also the person who

will be the day-to-day contact); duringscreening, establish the client’s goals forthe future and then evaluate whetherthose goals are being met.

Nan Hulbert of Design Works wantedintelligence about the market and how hercompetitors are faring. Several attendeesquestioned whether she actually needsthis information to achieve her expansiongoals, and suggested she focus on doingthe best job she can for her new and ex-isting customers.

Turning back to her immediate objec-tive, ideas included: putting competitorson her board; extracting information frombankers, customers and other sources; hir-ing a survey company; organizing througha trade association, which she could formand head, to put on educational seminarsduring which attendees could share mar-ket information; interview competitors’former employees; create a special eventsmarketing program that would provideso much cachet that competitors’ marketpositions would be irrelevant.

For all three participants, there was alot more. And there was much more inthe first half, when participants practicedstrategic questioning. Like all FBC semi-nars, this one is available on videotape ifyou’d like to see what you missed. ■

By Shel Horowitz

Paul Lipke is founder and proprietorof Room To Maneuver where he serves

business not so much as a consultant(telling people what to do), but as a

resource (helping clients to understandwhat they and their co-workers

already know deep inside and to buildtheir capacity to act on it). He is

reachable at [email protected]

“Everything should be made

as simple as possible,

but not simpler.”

-Albert Einstein

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Director

....................................................

Ira Bryck

Board of

Advisors

....................................................

Kevin Aiken, Director,UMass Division of Continuing Education

Charles Epstein, CLU, ChFC,MassMutual/Epstein Financial Services

Ken Furst, President,Momentum Group

Rick Giombetti, President,Giombetti Associates

Larry Grenier, President,The Greniers Family of Photographers

Kris Drzal Houghton, CPA, Partner,Meyers Bros., PC

Dave Hobert, Sr. Vice President,Sovereign Bank

Cindy Johnson, President,Fran Johnson’s Golf and Tennis

Steve Neveu, President,Notch Mechanical Constructors

Thomas O’Brien, Dean,Isenberg School of Management/UMass

Leslie Schaefer, Vice President, Marketing/Principal, October Company and Chemetal

Ronald P. Weiss, Esq.Bulkley, Richardson and Gelinas, LLP

K

Katherine Robertson

Protect AgainstEx-Employee Lawsuits!............................................................................................

ATHERINE ROBERTSON has some advice for employers: watchyour mouth!

And Robertson would know. As an employment lawyer with FBCsponsor Bulkley, Richardson and Gelinas LLP, she’s seen a lot of employersand managers shoot themselves in the foot– as their former employees scarf up largesettlements in court.

While nothing is ironclad– a recentcase substantially weakened employerprotection through “fine print” on em-ployee handbooks– employers can takesteps to lower their risk:

1. Train your managers in antidis-crimination and sexual harassment lawsand policies– including what they can andcannot ask about health and wellness, andwhat jokes are or are not acceptable.

2. Be consistent. “If Jim steals com-pany property and you don’t take disci-plinary action, when Jane steals and youdo take action, you’re going to have aproblem. The foundation of any claim likethat is ‘I was treated differently.’”

3. Be honest about why you’re terminating, especially if it’s a perfor-mance issue, “If there’s a suit and you come back and say I’ve got a list of thetimes I had to reprimand this employee, but you told him on the day you lethim go, ‘business is slacking off and I don’t need this position,’ all thatperson has to prove is that you lied. Don’t spare them but be courteous andprofessional about why this relationship is gong to end.”

4. Document consistently. Put a brief note in the file as soon as therebegin to be problems. “Keep a record and if it’s a performance-based termi-nation—if it’s a reduction in force that you can document, you’re probablysafe—it’s best if the bad performance doesn’t come as a total surprise to theemployee.” She noted that employees will get a lot of free help from Massa-chusetts Commission Against Discrimination, including translators.

5. “If you’re dealing with someone in a protected category, talk to themabout their performance. Don’t talk about their health, but that their pro-ductivity is down. Don’t explore why, but explore what is happening.”

6. If you become aware of problem behavior, for instance, circulatingoffensive jokes by e-mail, take action as soon as it comes to your attention,and document your response. ■

By Shel Horowitz

About Our Staff Writer

SHEL HOROWITZ has been covering

Family Business Center conferences for

Related Matters since 1994. The latest

of his five book is Grassroots Marketing:Getting Noticed in a Noisy World(Chelsea Green, May 2000). Shel also

edits Down to Business magazine at

http://www.frugalfun.com, offering over

100 articles to grow your business. An

internationally known copywriter, Shel is

happy to discuss affordable marketing

and writing for your business. He can

be reached at 800-683-WORD,

[email protected]


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The Use of Phantom Stock Plansis a Growing Compensation TrendBy Kris Houghton, CPA.....................................................................................................

N TODAY’S HIGHLY COMPETITIVE labor market, the total compensationpackage that an employer offers to key personnel can make the difference in acompany’s ability to attract and retain the type of employees needed to run a

successful business. Providing employees withcash salaries alone often just does not do enoughto enable an employer to pick and choose fromthe best and brightest available employees. Em-ployers must offer a full panoply of benefits tobe able to recruit and retain employees.

The hottest compensation trends include notonly ESOPs and other stock plans but also eq-uity like incentive compensation programs.This article will discuss the latest trend and taxissues involved in one such plan: phantom stockplans.

The name “phantom stock” plan denotesthat the employee participant does not receiveactual stock, just phantom stock, which is abookkeeping entry in an account kept for theemployee under the plan. The employee, there-fore, is not actually granted equity in the com-pany. As a result, the employee does not attain the rights of a minority shareholder,such as the right to receive notice of shareholder meetings, the right to vote, and theright to inspect the books and records.

Although the features of phantom stock plans vary, there are some features thatare common to most of these plans. Generally, a company establishes a phantomstock account for the employee and credits the account with fictional shares as theyare granted or purchased. Sometimes phantom stock plans credit employees with anamount of deferred compensation each year, which the plan converts into an equiva-lent number of shares of phantom stock, which are credited to the employee’s ac-count. The employee’s account avoids current taxation since it is merely a book-keeping device.

In some plans, at the end of the deferral period the employee is paid an amountequal to the market value at that time of the shares credited to his account. If thephantom stock plan is structured in this manner, then the value of each unit ofphantom stock equals the appreciation in fair market value of the stock between thedate the unit is granted and the date the unit is paid. Some phantom stock planscredit to the employee’s account the value of dividends as they are declared, so thatthe position of the employee even more closely resembles that of a shareholder. Inthis case, the phantom dividends are taxable as ordinary income to the employees

and are deductible to the company. Theseplans are provided primarily as a form ofincentive compensation, because theamount of the employee’s deferred com-pensation increases with the value of theemployer’s stock.

Tax Treatment of Phantom StockPlans.

The employees are taxed at ordinaryincome rates on the phantom stock awardsat the time the awards are actually or con-structively received in stock, cash, or both.The employer is generally entitled to adeduction in the year that the employeereports income. The income is reportedon the employees W-2 and is also subjectto withholding requirements.

Advantages and Disadvantages ofPhantom Stock Plans.

For closely held companies that wantto offer employees the ability to share inthe company’s success without giving theemployee an actual equity stake in thebusiness, phantom stock plans provideideal flexibility. The company can utilizecreative measuring criteria and vestingschedules that act as golden handcuffs toretain valued key employees and to alignthe employees’ interests with those of thecompany. Furthermore, the company canoffer economic compensation to its keyemployees without the burden of the ob-ligations owed to actual shareholders.

The potential negatives that exist withthis type of plan are (1) the employeeknows that they are not getting an actualownership stake in the company, (2) thecompensation leads to ordinary income,whereas it could lead to capital gain if truestock options were provided, and (3) anagreement regarding actual shareholdercompensation is generally desirable sincethe amount withdrawn as salary effectsthe income available for dividends or eq-uity growth. ■

Kris Houghton, Tax Partner,Meyers Bros. PC, can be reached at

[email protected]

Kris Houghton

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Dear Iracontinued from page 2

continued on page 13

SWOT Your Way to Success................................................................................................

N A RETURN VISIT to the Family Business Center, Lyne Kendall ledbusiness owners through a mini-evaluation process to begin developing aSWOT analysis: strengths, weaknesses, opportunities, and threats. Kendall

says it’s crucial to do this not only for your own business, but also for yourcompetitors. And she challenged every attender to be thorough: “Can you writea profile of your customer, the demographics, the psychographics of all of yourcompetitors?”

Kendall is not afraid to be outrageous; asa student in a graduate marketing course,she developed a perfume named “Sex” -because she understood, as a purchaser ofcosmetics, that this is what her customerswere really after. “ You’re not selling a prod-uct, a service—you’re selling benefits, andthey turn into hotspots. Why do women goto cosmetic stores and buy cosmetics? I gobecause I see these gorgeous women behindthe counters. If I bought that makeup, couldI look like that?

“There are probably only 10 or 15 peoplein the room who could clearly give me a de-scription of their market, in two minutes.Whether we are or are not in a recession, thekey to running a business is to understandyour market and have some sort of man-aged growth. Understanding your marketleads you to be conservative, to say how many people do I need, can I do it in-house?”

Two entrepreneurs volunteered as her guinea pigs, showing how their com-panies had used the SWOT process: Fred Filios of WGI, Inc (which manufac-tures parts for jet engines); and Nan Hurlburt of Designworks, a dance andathletic apparel company. Both face the challenge of needing to diversify in achanging marketplace

For Filios, his major market– commercial aircraft– has been in decline for awhile, and after September 11th, the entire industry was paralyzed. Three yearsago, the company went through the SWOT process and identified several newpossible product lines. “We have plans to diversify, but the industry changes sorapidly that we are like a cockroach scurrying to the next bit of food. So whilewe have pursued some ideas such as ground engines (power generation), otherideas such as fuel pumps and military work had not gotten enough develop-ment attention.”

As his industry began to recover from the shock of 9/11, Filios noted that hiscustomers’ needs had changed. Whereas in the past, the market put price first,

Lyne Kendall

industry standards as reported in surveysavailable from universities and industrygroups, including Society for Human Re-source Management (www.shrm.com) (2)Merit Pay, where a percentage of profitsare pooled, and distributed to employeesand managers based on PerformanceEvaluations, and (3) Return on Invest-ment for Owners.

And then there is family, where yourfamily makes some effort to build goodwill and momentum with all the normalsort of activities that families enjoy. Thismay sound unnecessary for the business,but important ingredients of the healthyfamily business include trust, generosity,and an “all for one, one for all” attitude-easier to build where work and money isnot involved. Back to business: the ROIissue is important, but widely ignored.One compensation expert pointed out howmany business owners know more aboutthe 5-10% of their assets tied up in thestock market than the 90% tied up in theirbusiness. Owners need to set a goal forthe ROI, which would include, pre-emptively, how much reinvesting wouldbe necessary that year.

I don’t know what sort of communica-tion goes along with your annual distri-bution of financials, but a more elabo-rate annual report– better yet, an annualmeeting where all these issues are dis-cussed cleanly and with an eye to youragreed upon goals and principles.

This is a general answer, and withoutknowing more and hearing the variouspoints of view, difficult to fit perfectly. Butit sounds like you are in a situation wheremoney talks louder than family members,and that you have to change.

Hope this is helpful. Feel free to writeagain.


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SWOT Your Waycontinued from previous page

delivery time next, and quality last, nowhe sees an emphasis on quality, followedby delivery schedule.

Hurlburt’s issue was how to maintainyear-round sales in a seasonal business.Staff retention is a big motivator for her;she doesn’t want her highly skilled arti-sans to find work elsewhere during herslow periods. Working in the dance cos-tume industry keeps her shop busy in thefall and winter, but “Memorial Day, wefall off the planet.”

After extensive research, she settled ona high-end niche within the girls’ socceruniform market. Hurlburt already knewhow to work with girls’s sizes and shapes,the fabrics and specifications were simi-lar, and she could use her existing equip-ment. And the timing worked: soccer uni-forms are made during the summer andsold in the early fall.

The part that didn’t transfer well wasthe marketing strategy. “You have to findthe buyer for the league. Most of themdon’t have offices or full-time people. DoI want to call people at 9:00 at night tofind out if they’re making buying deci-sions? There’s no formalized plan for howyou bid and when you bid.”

One audience suggestion: build stra-tegic alliances with noncompeting mer-chants working the same space (such astrophy manufacturers),

Kendall’s advice to all entrepreneurs:“After you do all this research, you shouldbe able to answer these questions: Whoare we? What is our product, our mar-ket, our sales growth plan, our competi-tion?

“Who are your target customers, wheredo they live, how much do they earn,where do they spend their income, dur-ing what time of year do they buy? Whatare their leisure activities? Family struc-ture? Numbers by city, country, state?Amount they buy annually? A lot of thisinfo you have in-house– analyze it! You’d

be surprised about the amount youknow.” ■

By Shel Horowitz

quickly by listening to their customers,instituting rapid shifts, slashing the timefor a new model introduction by two-thirds, from 18 months to 6, and by pay-ing attention to the line workers.

“The Japanese had one simple philoso-phy: who knows how to do the job betterthan the one doing it? We did not trusthourly employees. We had seven layersof overhead, all doing the same job. Wedidn’t trust the crankshaft grinder to callthe forge and say, ‘deliver me 10 units.”

When Harvester’s debt climbed past 6billion, the company was laying off 1000people a week. That’s when Stack offeredto buy the Springfield plant; and got somehard lessons. “The quickest way to learnabout business is to try to borrow mil-lions of dollars when you don’t have anyof it. I wanted to borrow $9 million.” Itwould have been much easier, Stack said,to borrow many times that amount.

Meanwhile this was 1983 and interestrates were at a record high. Venture capi-talists were looking for 40% return. “Iwent to 54 financial institutions; by the17th I could write a business plan in a taxi.Then I went to a bank in trouble: ‘I hearyou’re looking for bad loans; I’ve got adoozy!’ If you have a bad loan, go to badbanks first; safe banks don’t give badloans.”

Of course, bad banks making badloans demand horrible terms. “We bor-rowed $8.9 million and collected$100,000 in equity. The interest was18%: $96,000 a month in interest pay-ments.” That is an 89:1 debt-to-equityratio.

Stack, along with 12 other managers,purchased the Springfield plant, nowknown as Springfield ReManufacturing

“Stacked” for Successcontinued from page 1

Corporation, brought it back from death’sdoor, made it profitable, and spun offbusiness after successful business by re-thinking every assumption, involving theemployees in running the company (in-cluding open-book management on anunprecedented scale) and by making ev-ery one of his employees a player in theGreat Game of Business.

Stack started giving his employees acrash course in economics and finance.“I gave them a financial literacy test; theywere all wrong. Nobody ever told themhow the business is run, but they hadthese perceptions. We had to trick theminto learning with a metaphor, the GreatGame of Business.

To do this, Stack not only opened thebooks, but also asked every single em-ployee to look at productivity, efficiencyand cost control by taking in both the bigpicture and the individual trees in the for-est. He achieved quite a bit through stra-tegically designed incentives and bonuses,but also by simply keeping all lines ofcommunication open. “A janitor told me,‘this open book stuff is baloney; have youlooked at your balance sheet? Do youknow 76% of your receivables are in thetruck market? You have all your eggs inone basket. They have a recession everysix years. You’re going to lay us all off.’Then he went back to pushing hisbroom.”

Stack discovered the janitor, a formerWall Street analyst on hiatus, was right—and started diversifying. He and his em-ployees looked for markets that would bestrong when the truck market was weak.Auto parts was one success; in a reces-sion, people keep their vehicles longer andneed replacement parts. “Most recessionsoccur because of bad management; theydon’t just happen. We’re still going strongbecause we prepared from day one for arecession. Everyone in all of our 22 orga-nizations knows the contingency plans.When you set standards of this nature,its amazing what people come up with.”


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Charles Epstein

Nonqualified Deferred Compensationand Your Family BusinessBy Charles Epstein, CLU, ChFC..............................................................................................

HE MOST COMMON TYPE of deferred compensation is the typicalpension or profit sharing plan, including 401(k) plans. These aremost often qualified plans, which

means that the Internal Revenue Service(IRS) reviews them to make sure they meetall of the requirements for favorable taxtreatment.

These requirements include:• Most nonowner employees must be

covered by the plan,• Benefits cannot take unreasonably

long to vest,• Contributions cannot be too favor-

able to the company’s owners, and• Deferred compensation earned can-

not be taken away from employees.Meeting these requirements increases

costs for sponsoring qualified plans.In exchange for this cost, the employer

gets a current deduction for money orproperty used to fund the deferred com-pensation, the funds grow tax-deferred and the plan’s payout may be rolledover to another tax-deferred vehicle, like an individual retirement account(IRA), or may be taken out over a long period of time to lessen the employee’stax burden.

Some family businesses find qualified plans to be too costly or too cum-bersome to sponsor. Others may sponsor such plans but also want to offerkey employees and owners additional benefits that are not allowed by theplan’s rules. This is where nonqualified deferred compensation plans maycome into play. But, they are not for everyone.

Why Offer a Nonqualified Plan?A nonqualified deferred compensation plan is typically only for owners

and key management employees. If it also covers nonmanagement employ-ees, it will unwittingly fall under the same requirements as qualified plans,adding cost, complexity and reporting requirements. When the nonqualifiedplan covers only key management employees, it’s called a “top-hat” planand is exempt from almost all ERISA requirements. A top-hat plan still has

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................................................................................................................................................................10

Deferred Compensationcontinued from previous page



to file information forms (the same Form5500 series as qualified plans). However,if the employer notifies the U.S. Depart-ment of Labor by letter of the existenceof the plan, no further filing is required.The IRS has no reporting requirement fortop-hat plans.

Because nonqualified deferred com-pensation does not have to comply withERISA requirements, it can be designedto be flexible. The plan may cover or ex-clude any key management employee orowner, which means it can provide greaterbenefits for some employees than for oth-ers. Vesting times may vary for employ-ees and the plan may be designed to in-clude measurements other than compen-sation. One example is where an execu-tive is in charge of a division; the deferredcompensation program can be based onthe division’s performance rather than onthe employees’ compensation. A differentexecutive can be compensated based ona different division or measuring stick.

Tax and Funding IssuesBecause a nonqualified deferred com-

pensation program does not have to com-ply with ERISA requirements, it also getsless favorable tax treatment. The mostimportant difference is that the qualifiedplan allows the family business to deductcontributions made to the plan before theemployee has to recognize them as in-come. If you sponsor a nonqualified plan,your family business cannot deduct theemployee’s contributions to the plan un-til the year in which the employee recog-nizes income. For this reason, manynonqualified plans are not currentlyfunded and amount only to a contract oragreement to pay the compensation later.Even if the nonqualified deferred com-pensation is funded, the key employeemust hope that the employer will be ableto pay the benefit in the future, becausethe money set aside to pay the promised

benefits also must be available to pay thecompany’s general creditors.

For widely held or publicly traded fam-ily businesses, it’s common to usenonqualified deferred compensation as anincentive for key employees. In thesecases, taxes are less important becausethey are spread out over many owners.Since the company will not get a currentdeduction for amounts set aside to fundthe benefit, the owner (if the business isan S corporation or limited liability com-pany) must bear the current tax on theseincentives. When the company pays theincentives to the key employee, whichcould be many years later, it can then takethe deduction.

If deferred compensation is still attrac-tive to you, you may consider using aninsurance policy to fund the promisedbenefit. This will give you the tax-deferredbuildup similar to a qualified plan, thatis not available to a nonqualified plan in-vested in other nontax-favored invest-ments. When the employer must pay thebenefit, the employer can cash in thepolicy, borrow on the policy or distributethe policy to the employee.

If the family business is a C corpora-tion, the tax burden will fall on the com-pany, not the owner. Later, when the ben-efits are paid out, the corporation willhave a deduction that may cause a netoperating loss or may not be as advanta-geous as the company would have liked.If the company is relatively small, thismay have a big effect on the corporation’stax position.

Consider CarefullyRegardless of whether the family busi-

ness pays its own tax or the owners paytax on the company’s earnings,nonqualified deferred compensation usu-ally does not make sense for the ownersof a small closely held family business. Itmay make sense, however, if the plan isunfunded and is used to recognize cer-tain owners’ efforts that are dispropor-tionate to their ownership interest. Also,if the owners have been underpaid for

many years and the deferred compensa-tion would help reduce tax on the sale ofthe business, an unfunded nonqualifieddeferred compensation arrangementcould make sense. In most cases though,these types of plans are best used for non-owner, key management personnel. Prop-erly communicated and structured, a de-ferred compensation plan can provide aperfect incentive to keep good people. ■

Charles Epstein can be reached [email protected]

Stack shared two more anecdotes fromthe early days of his company: A woman,at an employee meeting about the needto be more efficient in producing engines,said, “I don’t like engines. I like nozzles.I build 6000 nozzles a month.” He gaveher some authority in the department. “Icame back a month later and she hadmade the most incredible transformationin her department. She painted the floorto eliminate contaminants; saved $12 perunit through process improvements andcreativity, bought department t-shirtswith her own money…I saw the owner-ship, the pride.”

“There are 750 parts in an engine; wehad to duplicate her success. I gave alldepartments the information a CEO has.Then we’d sit down and figure out howto make it better. We took half the savedinterest and put it in a bonus pool.”

And then there was the person whodreamed up a five-year dealership incen-tive program tied to a bass fishing derby,with escalating prizes. “The dealers arekilling each other to get in. They wantthe five-year megabucks $25,000 prize.We’ve run it for 10 years; I run seven fish-ing tournaments a year because of thisguy!”

11


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T

Finding and Keeping Good People:Still a Challenge for Employersin 2002 and BeyondBy Mary Fitzer.............................................................................................

HE BAD NEWS: even with in-creased unemployment numbersand a down economy, it’s still a

challenge to find job candidates with theright skills and expertise. The good news:there are indeed things that all compa-nies, including family-owned businesses,can do in order to minimize the problemin finding and keeping good people. Andin today’s information and technology-based economy, people are increasinglythe key to competitive advantage andbottom-line success, no matter what kindof product or service we are talking about.

The short version goes like this: striveto be an “employer of choice”. One thingthat the baby boomers, generation X-ers and generation Y-ers readily agreeon is that a well-run company with a commitment to interesting and mean-ingful work, open communication, fairness, flexibility and continuous learningis a good place to work... for at least a few years.

Here are ten things companies can do to manage and meet the labormarket challenge successfully:

1. Change your expectations re: the employer/employee “contract.” I stillhear too many company owners looking for “the loyal employee who willstay here till retirement.” Do such employees still exist? Of course, but in-creasingly as the exception and not the norm. Nonfamily employees cannotbe expected to have the same commitment to the business as do family mem-bers. It is more realistic to expect a mutual employer/employee commitmentso long as it is perceived as beneficial by both.

2. Listen to your employees and job applicants. In most cases, it is theboomers who are in ownership and management positions, and are largelyunaware of what truly drives and motivates the up-coming generations ofworkers. Don’t assume you know what’s valued: ask and involve those whomyou are looking to attract and retain.

Mary Fitzer

N AMERICAN BUSINESSMAN was at the pierof a small coastal Mexican village when a small

A Fable{ }Aboat with just one fisherman docked. Inside the smallboat were several large Yellow-fin tuna. The Americancomplimented the Mexican on the quality of his fishand asked how long it took to catch them.

The Mexican replied only a little while.The American then asked why didn't he stay out

longer and catch more fish?The Mexican said he had enough to support his

family's immediate needs.The American then asked, but what do you do with

the rest of your time?The Mexican fisherman said, “I sleep late, fish a

little, play with my children, take siesta with my wife,Maria, stroll into the village each evening where I sipwine and play guitar with my amigos. I have a full andbusy life, señor.”

The American scoffed, “I am a Harvard MBA andcould help you. You should spend more time fishingand, with the proceeds, buy a bigger boat. With theproceeds from the bigger boat, you could buy severalboats. Eventually, you would have a fleet of fishingboats. Instead of selling your catch to a middlemanyou would sell directly to the processor, eventuallyopening your own cannery. You would control theproduct, processing and distribution. You would needto leave this small coastal fishing village and move toMexico City, then LA and eventually NYC where youwill run your expanding enterprise.”

The Mexican fisherman asked, “But señor, howlong will this all take?”

To which the American replied, “15-20 years.”“But what then, señor?”The American laughed and said that’s the best part.

When the time is right you would announce an IPOand sell your company stock to the public and becomevery rich, you would make millions.

“Millions, señor? Then what?”The American said, “Then you would retire. Move

to a small coastal fishing village where you would sleeplate, fish a little, play with your kids, take siesta withyour wife, stroll to the village in the evenings whereyou could sip wine and play your guitar with youramigos.”■


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Finding and Keepingcontinued from previous page


3. Insist on and develop genuine lead-ership within your company. A true leaderwill inspire enthusiasm and commitmentaround his or her vision for the future.The leader will keep employees focusedand on course, and informed about thecompany’s progress. If you and your man-agement are not born leaders, considermaking the investment in executivecoaching to develop leadership skills.

4. Make flexibility a hallmark of youremployment practices. Social and culturalnorms have shifted in recent decades to apoint where time often outweighs moneyin the worker’s decision to accept a spe-cific job offer. No given company has amonolithic group of individuals all valu-ing the same things. The more choicepeople have, the more they will value theirworking conditions. Note that this is nota prescription for making “special deals”.Truly effective flexibility will allow choiceswithin broadly but clearly-defined andconsistent parameters.

5. Treat your current employees at leastas well as you treat newcomers... at least,those you truly want to keep. Too manyemployees feel the only way to earn acompetitive salary is to leave and be re-hired, because pay administration locksthem into a level no longer competitivewith current hiring rates. Unfortunately,traditional compensation practices createand exacerbate this problem. Examineyour pay practices and outcomes, andconsider placing more emphasis on per-formance-based incentive programs. Payis usually neither the sole nor the mostimportant reason for turnover. But payneeds to be in the competitive ballparkfor employees to both stay and perform.

6. Emphasize employee communica-tion. Recent surveys indicate that mostemployees who leave their employer citethe same reason: “no-one ever told mewhat I was really expected to do.” A lackof performance feedback is another as-

pect of the tendency to “mushroom man-age” (i.e., keep employees in the dark).Train your supervisors to maintain ongo-ing communication with their employees.

7. Learn to use technology to createtrue advantage. It is the companies thatreegineer old processes and truly restruc-ture work that reap the benefits of tech-nology as a tool. It does no good to sim-ply automate old ways of doing things.In many cases, it is possible to get moreaccomplished with fewer but higher-levelemployees.

8. Make a real commitment to diver-sity. This goes well beyond racial and gen-der differences, and recognizes that thereare many individuals who might be quali-fied and willing to work for your com-pany if you went beyond the traditionalfull-time, five-day-per-week worker pro-file. There are, in fact, largely-untappedlabor market resources for companieswho’ve learned to be flexible. These in-clude people with physical or develop-mental disabilities, older workers or re-tirees, those wishing to work either part-time or part of the year. Another resourceexperiencing a phenomenal growththroughout the country is prison work-ers, with the dual benefit of getting workdone, and providing successful employ-ment opportunities that contribute to alower rate of repeat offenders.

9. Use a comprehensive approach torecruiting needed employees. The Internetis fast becoming an important resourcefor workers, particularly those in highly-skilled professions. But there are otherthings that employers need to do beyondtraditional advertising, including substan-tive employee referral bonuses to currentstaff for new people who come and stay,using internships, developing relation-ships with high schools, colleges andgraduate schools, collaborating with otheremployers for job fairs.

10. Once you’ve found the right can-didate, pay attention to what happensnext! Act quickly. Companies with toomuch bureaucracy and delay in makingjob offers run the risk of losing applicants

to employers who’ve learned to actquickly and decisively. And treat the newemployee as a valued resource. Providean orientation and provide a mentor. Giveconstant feedback and listen. And makea true commitment to the career devel-opment of your workers. They may notstay with you till retirement, but they willbe more productive while they are there.■

Mary Fitzer is a human resourcesconsultant located in West Springfield.

She can be reached [email protected]

In SRC’s climate that rewards internalentrepreneurship with instant recognition,celebrations, career opportunities andeven ownership, 80% of the new busi-nesses succeed. Sometimes the success isdramatic: one player, a furniture companyin Denver applied the game and gener-ated an increase in sales of 220%, profitsof 540%, a decrease in returns of 18%and a 19% gross margin.

Bonus programs are an important partof the success. Stack looks carefully tofind places where incentives will producelarge gains. “Every year, we identify dif-ferent weaknesses. Every time we’ve cre-ated a bonus around a benchmark, thegain has maintained.”

Meanwhile, Stack appears to have theMidas touch at SRC. “We’ve made moneyfor 18 consecutive years, with no layoffs.”

Currently, Stack oversees an empire of22 companies, all aiming for 15% annualgrowth. A share of stock worth 10 centsin 1983 at the company’s founding is nowworth $81.60. And now he consults withcompanies around the world, even wholecountries, such as Zambia.

For more on the Great Game of Busi-ness, visit www.greatgame.com or get acopy of Stack’s book called (surprise!)The Great Game of Business. ■

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A

Phil Steckler


Position Your Company for SaleBy Philip H. Steckler,Certified Business Intermediary..............................................................................................

S A BUSINESS OWNER, you’ve devoted time and effort to achievesuccess in your business. You’ve met and overcome many challenges.Yet, most owners are not prepared for the once in a lifetime experi-

ence—selling their business.It is best to begin thinking about a suc-

cession plan well before a transition.Properly planning and positioning thebusiness will facilitate the process and canenable the owner to realize the best pos-sible price.

Business ValuationA business valuation identifies the re-

alistic market value of a business. Thisinformation enables an owner to deter-mine if financial and personal goals canbe achieved through the sale of the busi-ness.

Historical operating statements andrealistic future projections are important(but not the only) factors in determiningvalue. Often the valuation process will identify specific areas for improve-ment; which, if implemented, can increase the value of the business.

Properly priced businesses enable the owner to achieve a relatively quick(6-18 months) sale at or near the price and terms suggested.

It is useful to view the opportunity as a prospective purchaser. As such,the price and terms must usually meet “4 Golden Rules:”

1. Debt.The income from the business must be sufficient to pay theanticipated debt structure.

2. Owner’s Salary.The purchaser/owner of the business should be adequatelycompensated.

3. Reserve for Replacement.An adequate reserve should be made to replace assets whichwear out.

4. Return on Invested Capital.A reasonable return on investment should be available.

The above criteria is a good method of testing the price and terms beingoffered.

Dear Iracontinued from page 7

Here is a follow-up report. My brother,sister and I met yesterday and the followingwas presented to my sister: I told her thatwhen wearing my “family hat,” I wanted tofind any way to accommodate her with moreincome but when I put on my “business hat,”I saw many warnings about paying her asalary. My brother and I then offered for thecorporation to loan her some money on ademand note with a very low interest ratefor her to live comfortably for the next 18months until the Sub S business returns agood distribution. My sister would be puton the Board of Directors of the Sub S andwe would commence to pay a board fee thatshe could use to repay interest and principalon her note. At least 2 meetings will be sched-uled with one requiring her attendance atdistribution time (pick up her check in per-son) and the other meeting could be pre-sented in a conference call. Furthermore, mybrother and I would cease drawing a salaryand take our income as distributions. Wewould keep our medical insurance and ve-hicles in the company. This arrangementseems to be very satisfactory to my sister andmy brother and I are also pleased. Let meknow what you think and if you have anyquestions. Thank you for your reply,

from Ira: I’m glad to see that you wereable to come up with a creative scheme todeal with your issues that satisfy all sidesfinancially and in terms of treating the busi-ness with professionalism and respect. WhatI would add to the mix is an ongoing discus-sion that is provoked by the right questions.A few examples: What are reasonable ex-pectations of a stakeholder of this company?What sort of objectivity do we need from aboard of directors? What is the philosophyguiding compensation, both for family andnon family employees? What ongoing top-ics need discussion and clarification amongfamily members, so that decisions are madewisely? ■

Ira Bryck can be reached [email protected]


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Position Your Companycontinued from previous page

Only 1 out of every 5 businesses areactually sold. While this statistic includesbusinesses that are not profitable, it em-phasizes the need of offering the businesscorrectly in order to realize a sale. Prof-itable, properly priced businesses sell.

Prepare a Business PlanThe most successful businesses often

utilize a business plan to establish goals,measure progress and guide the business.A plan can assist a prospective purchaserto understand the business, and measureinterim performance against projections.

Maximize ProfitA variety of criteria often enter into a

decision to purchase a business. Yet theultimate driving decision—whether anindividual or corporate purchaser—is theability to make money. More profitablebusiness generate a higher price, and sellmore quickly, than a similar, less profit-able business.

Maximizing profit on the surface mayseem to counter another common goal—minimizing taxes. However, many per-sonal benefits, often expensed by the busi-ness reduce taxable income; yet these of-ten accrue to the owner as a benefit.Automobile expenses, travel and enter-tainment, personal retirement plans, pay-ments to children are typical examples.In positioning a business for sale, these“owner perks” should be identified to re-state the income statements, conveyingthe real profitability of the business.

Reduce Unnecessary AssetsBusinesses tend to accumulate assets

over the years. Inventory should be cleanand current. Older, slower moving inven-tory should be sold.

Machinery, equipment, display fixturesand other assets no longer utilized should

be identified, and if possible, sold priorto the sale of the business.

Present your business as a clean, lean,and productive enterprise.

Personnel—AllocateResponsibility

Personnel in key positions, enhance thedesirability of a business. Acquiring abusiness with key operating and manage-ment personnel in place makes the busi-ness more appealing to a broader buyerbase.

Environmental and RegulatoryConsidrations

Where pertinent, appropriate site testsand inspections should be made to insurethe business conforms to regulatory andenvironmental codes. Taking care of theseissues in advance will maintain a desir-able ingredient in any transaction—mo-mentum.

The Selling ProcessSelling a business is time consuming

and complex. In order realize a sale andmaximize value, the process should becarefully planned and implemented.

Occasionally owners attempt to sell abusiness on their own. Yet the requiredtime and effort involved in selling oftendetracts from the day-to-day operationof the business, reducing value, and of-ten ending in frustration. A qualifiedbusiness intermediary seeks a broad baseof qualified purchasers and assists in ev-ery aspect of the selling process. Thisincludes properly pricing and establish-ing terms, preparing a comprehensivemarketing prospectus, attracting andscreening qualified prospective purchas-ers, maintaining confidentiality, negotia-tions, assist in obtaining financing, work-ing with other professional advisors, andguide the transaction through closing.

In addition to the business intermedi-ary, a competent transaction based ac-countant and attorney, are important pro-fessionals to include on your team.

Other Considerations Terms. The terms of a transaction

are often important. The equity invest-ment from a purchaser should be signifi-cant—20% to 35% of the sales price is areasonable range. While cash flow is criti-cal, most banks lend based on a percent-age of the value of the assets. Therefore,in order to receive full value for the busi-ness, it may be necessary for the seller tofinance a portion of the transaction. Prof-itability and desirability of the business,tax implications, the lending environ-ment, and buyer demand influence terms.

Choosing an Advisor. Your businessmay well be your most valuable financialasset. Choosing the right firm—a firmwith proven ability and track record torepresent you well, is essential. Refer-ences—former clients (sellers) as well asbuyers and professional will provide thevaluable information. Leading interme-diary firms are members of the The In-ternational Business Brokers Association,and experienced intermediaries haveearned the Certified Business Intermedi-ary designation.

Asset or stock sale. Most businesssales are “asset sales”. Yet some profit-able mid-sized businesses are transferredby the sale of stock. Marketability, legaland tax implications influence the finalform of a sale.

SummarySelling a successful business is the cul-

mination of years of hard work. The saleof your business should be a continua-tion of this success. Planning, and fol-lowing the above steps will enhance thisfinal success. ■

Philip H Steckler is a principal ofCBI, Inc., New England’s largest

privately held business brokerage andacquisition firm, located in

Brattleboro, VT. He can be reached [email protected]

15


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Please send me more information on the UMass Family Business Center and its benefits

Name: __________________________________________ Title: ________________________________________________

Company: _______________________________________________________________________________________________

Type of Business: _________________________________________________________________________________________

Address: _________________________________________________________________________________________________

City: ____________________________________________________ State: _______________ Zip: ________________

Phone: ______________________________________________ Fax: _____________________________________________

❑ Yes, I want to take advantage of your $80.00 trial session. (Three from the same firm for $200)Deducted from membership fee if company joins the Center within one month.

UMass Family Business Center, Division of Continuing Education, University of Massachusetts, 358 N. Pleasant St.,Amherst, MA 01003-9296 • phone: 413-545-1537 • fax: 413-545-3351 • email: [email protected]

Schedule of Upcoming Events“All You Can Eat!!”“All You Can Learn!!”

March 5, 2002Tuesday, 5:00-9:00 pmClarion Conf. Ctr. and Hotel,(formerly Inn at Northampton)Northampton, Mass.

NEGOTIATING DISPUTES SO EVERYONE WINSGood negotiating is a must not only when itgets nasty: it is a crucial skill to get the bestdeal on equipment, discuss salary and perks,mediate between employees, and maintaingood relations with suppliers when you see thesituation differently. This session will give youa leg up in Reaching a Durable Agreement; Un-derstanding the "Dance" of Positional Bargain-ing; Dealing With the Tough Negotiator; Pro-tecting Yourself from Dirty Tricks

WHAT EVERY BUSINESS OWNER SHOULD BEASKING THEMSELVES ABOUT MARKETINGAND SALESWhat’s more dangerous than not knowing? Notknowing what you don’t know. And how can abusiness owner know everything? This sessionwill show you what you should be asking yoursales and marketing group, so that they cancreate a more reliable sales and marketing pro-cess. Presented by our newest sponsor, Momen-tum Group/Strategic Market Planning Institute.

SEVERAL WAYS TO BUY OUT YOUR PARENTSIF YOU’RE NOT ROLLING IN DOUGHThis session will explore various creative solu-tions so that when you’re told "One Day ThisWill All Be Yours," you’ll actually be able tomake it happen. Presented by our accountingsponsor, Meyers Brothers PC.

April 9, 2002Tuesday, 5:00-9:00 pmLog Cabin, Holyoke, Mass.

LEAD WITH YOUR STRENGTHS(NOT WITH YOUR WEAKNESSES)You don’t have to be depressed or pessimisticto over-focus on your weak points, and desper-ately attempt to improve yourself. As a result,the stage- fraught continue to get in front ofaudiences, the introverted torture themselveswith jobs requiring great social skills, the en-trepreneur - great at start ups- grinds away atdaily management responsibilities. Based uponthe findings of 2 million Gallup interviews, wewill help you identify your unique talents anddevelop them into strengths. Which of the 34types among them: Achiever, Command, Delib-erative, Fairness, Futuristic- are you? and whatshould you do about it?

WHAT’S AUTHORITY, RESPONSIBILITY &ACCOUNTABILITY GOT TO DO WITH IT?Your business can’t grow if you can’t go beyondyour control issues. You need to give responsi-bility and authority so people can do their jobs.But will you recognize good results withoutaccountability? How can you teach managersto motivate more with a carrot than a stick. Wewill discuss these issues facing the effectiveleader, and stifling the ineffective leader.

HOW TO IDENTIFY, MANAGE, AND RETAINTHE RENAISSANCE SOULS YOUR BUSINESSNEEDSThis talk will identify characteristics of multi-faceted employees who thrive on change. It will

show how businesses may miss out on the BenFranklins of the world, and offer concrete, spe-cific interviewing strategies, management ap-proaches, and reward systems for bringing outthe best in the "dilettantes" in your organiza-tion (even if he/she is you!)

May 22, 2002Wednesday, 5:00-9:00 pmLog Cabin, Holyoke, Mass.

MANAGING WORK EXPECTATIONS ANDTRANSFORMING ATTITUDESCommitted, productive employees are key toany organization’s success. The session will dem-onstrate how you can help your employeesunderstand and manage their work expecta-tions. Why? Because people who have clearlydefined, well-communicated expectations havebetter attitudes and enjoy greater job satisfac-tion than people whose expectations go unspo-ken or unrealized. In this session you will learnto identify and communicate expectations, re-ducing discord and enhancing organizationalhealth.

"I WANT TO DO BUSINESS WITH YOU!"If a cast-in-stone first impression is formedwithin seconds, how many sales have beensabotaged by the boring, automatic way youdescribe yourself and that doohickey youpeddle?! By harnessing the purpose and pas-sion that powered the first "AHA!" that con-ceived your company, you can turn any boothshow or Arrive at Five into an exciting relation-ship and business building extravaganza!!

FULL SCHEDULE AT WWW.UMASS.EDU/FAMBIZ


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Bulkley, Richardson and Gelinas is a full service lawfirm located in Springfield, Massachusetts. The firmhas extensive experience in advising family busi-nesses and in planning for the transfer, manage-ment, and conservation of family wealth. Since itsfounding in the 1920s, the firm has grown to be thelargest in western Massachusetts. However, withfewer than 40 lawyers, it remains a mid-sized, com-munity-based law firm whose lawyers emphasizepersonal contact with clients. Ronald P. Weiss,Martin D. Turpie, David A. Parke, Scott Foster, andMark D. Cress are available at (413) 781-2820.

GiombettiAssociates

In business for 10 years with over 200 clients in 25states, Giombetti Associates is a management con-sulting firm known for increasing productivity andprofit through people. Specialties include Pre-em-ployment Assessment, Team Building, ManagementTraining, Conflict Resolution, and Leadership De-velopment. Hiring the “right” person is assured withthe Giombetti’s trademarked assessment process,Performance Dynamics. Giombetti is resolute aboutits highest credo: “Within each individual lies un-tapped potential. Our job is to identify and developthis hidden talent. Once leaders emerge, effectiveteams evolve. Challenges become accomplishmentsand profitability grows.” Paul Alves, Rick Giombetti,and Rich Frigon are available at (413) 566-3863.

MassMutualThe Blue Chip CompanySM

Established in 1851, MassMutual - The Blue ChipCompany is one of the nation’s premier life insur-ance companies and among the 100 largest corpo-rations in the U.S.

With over $52 billion in life insurance companyassets, $104 billion in total assets under manage-ment, and 2.5 million policy owners. MassMutualis a leading provider of individual life insurance,annuities, disability income protection, pension, andinvestment services. Charles Epstein (413-734-6418), and Pete Novak (413-781-6850) are avail-able to answer your questions.

MeyersBrothers,

P.C.Meyers Brothers, P.C. known for its “CreativeSolutions....Trusted Advice”, is a regional account-ing and consulting firm with its office inLongmeadow, Massachusetts. Founded in 1948,Meyers Brothers has grown to be the largest inde-pendently owned and operated CPA firm in West-ern Massachusetts. As a member of the private Com-panies Practice Section of the American Institute ofCertified Public Accountants, the firm specializesin serving closely-held family owned businesses.Stuart Meyers, Kris Houghton and Rudy D’Agostinoare avaiable at (413) 567-6101.

Related Matters 3-06320The UMass Family Business CenterDivision of Continuing EducationUniversity of Massachusetts358 N. Pleasant St.Amherst, MA 01003-9296

The UMass Family Business CenterCorporate Partners

Nonprofit OrganizationU.S. Postage

PAIDPermit Number 2

Amherst, MA

Sovereign Bancorp is a $30 billion plus financialinstitution with 278 community banking offices, andsmall business and middle market loan portfoliosin New Hampshire, Massachusetts, Connecticut, andRhode Island. Headquartered in Boston with re-gional offices in Hartford, Springfield, Worcester,and Providence, SBNE is the third largest bank inNew England. Dave Hobert is the Senior Vice Presi-dent for Connecticut and western Massachusetts.Dave can be reached at (413) 858-8909.

With Momentum, you can “plan to grow.” The Mo-mentum Group is a full-service marketing and ad-vertising firm known nationally for its special ex-pertise on market planning for growth. Regionally,the firm is better known for its high-visibility printand broadcast services for some of the area’s lead-ership brands. Specialties include team market plan-ning, marketing audits, market evaluations for ac-quisitions, web site management and online pro-grams, sales counsel and sales lead generation.Emphasis is on measurable profitable results. Thefirm’s sister company, the Strategic Market Plan-ning Institute, has sponsored workshops coast-to-coast, teaching over 250 companies its copyrightedplanning method. Ken Furst and Karen Wilson areavailable at 413-525-1700.

For over 25 years, the UMass Division of Continu-ing Education has provided a pathway into the Uni-versity for local and national businesses,for the general community, and for adult, nontra-ditional students in a variety of credit and degreeprograms and professional development courses.

With a strong committment to lifelong learning andthe belief that education is the key to keeping the

local economy healthy, the Division of ContinuingEducation supports the UMass Family Business Cen-ter both in theory and in practice, continuing itstradition of bringing the University to the commu-nity. For information on Continuing Education pro-grams and courses, please call: (413) 545-0107,fax: (413) 545-3351, e-mail: [email protected] • www.umass.edu/contined

Division ofContinuing Education

University ofMassachusetts Amherst

The UMass “Stacked” for Success in the Game of...

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