The Mheda Journal

While doing some research for an article I’m working on for the April issue of The MHEDA Journal, I stumbled across a blog entry in The New York Times that I found to be quite an interesting topic. The basis of the entry focuses on the answer to the question: Does higher pay make employees more loyal?

At least according to this writer, the answer is (as with most complex questions), “It depends.” The author, the owner of a cabinet business outside Philadelphia, describes giving his employees a pay cut in 2008 and not having any people leave. He concluded that he had been paying them all too much, and had been for a long time. While he acknowledges that there are many more factors at play than just salary and benefits, arriving at this conclusion has made him a better business owner in the long run. When it comes to offering proper compensation, he says, “There’s got to be a sweet spot in the middle where you pay enough to prevent defections but no more. Additional wages and benefits, beyond your employee’s next best choice, are paying extra for something you have already bought.”

This may seem like common sense, but what a great way of explaining it. That comment really struck me. Of course, the trick is determining what that sweet spot is and being disciplined to stick to it. I’d recommend the read in the Times’ “You’re the Boss” blog. It’s a short article, and I’d love to hear if you found it as interesting as I did!

As was prominently featured on the news this week, much of the United States was hit by a winter storm on Tuesday and Wednesday. Here in Syracuse, NY, we were spared (for once!) with only a few inches. Other parts of the world, most notably Dallas (where preparations for that big football game this weekend were interrupted) and Chicago (whenever The Weather Channel’s live remote is set up in your town, something bad is about to happen), were hit much worse. The combination of ice, sleet and snow throughout much of the Eastern part of the country made travel and commuting difficult, if not impossible.

Here in Syracuse, where we annually receive an average of about 120 inches of snow, dozens of snowplows, salt trucks and emergency crews are always on standby and ready to jump into action. In places like Texas, where such storms are rare, it made for a disaster. No matter how much advance notice there is, if you don’t have the materials to clear the snow then there’s not much you can do. All of this is common sense, but what really struck me is how natural events like this can have such a major impact on business for companies located in the heart of the storm.

I know of multiple companies, in this and other industries, that were closed yesterday because workers couldn’t make it to the office. In some places, the unplanned closure extended into today as cleanup is still underway. Some businesses with delivery vehicles couldn’t make their usual rounds. Those lost hours and routes don’t even count any storm-related damage resulting from power outages, icy roads, collapsed buildings and the like. Particularly for small companies, these events can prove catastrophic.

So anytime something like this happens, be it a hurricane, mudslide, wildfire, snow storm, flood, or what have you, the impact on the affected businesses can be huge. I’d be curious to know how some MHEDA Members who were in the path of the worst of the storm were impacted. Did you close? Were you open but not busy? Working from home? Did you have a disaster plan in place beforehand or just take it as it comes? I’d love to hear some stories from the members out there.

I’m starting to dive into the 2q issue of The MHEDA Journal, which is all about the customer. As part of my research, I came across what I thought was an interesting article about new customers. Or more accurately, when a buiness should pass on an opportunity to find a new customer. The article, appeared in the “Business Resources” section of nfib.com, the website for the National Federation of Independent Business.

Here’s a link to the full article, but I’ll hit the highlights here. The gist of the article is “knowing when to say no without burning bridges.” It’s a skill that many businesspeople often talk about but few execute properly. According to the article, there are five reasons a company should turn down a new business opportunity:

• The reward isn’t worth the effort.
• The opportunity doesn’t fill any gaps in your business plan.
• You don’t have the human resources.
• It’s not your area of expertise.
• The new opportunity presents an ethical dilemma.

Of course, there’s more to each of these topics, but those are the main points. What got me thinking was, how to execute “saying no” in practice. When the economy was good a few years ago, I often used to hear from MHEDA members how they were looking to grow but how they also wouldn’t just go after any business. “Some business is better for us not to get,” the line would go, or some similar variation thereof. Now, however,  with customers and sales harder to come by, I wonder how many of those people would relax their standards to get a sale. Is some business still better not to get, or is any business good business? When survival is on the line, I’m sure that line gets blurred from time to time.

What do you think? As a practical matter, how difficult is it to pass up business opportunities, even if it falls into one of the five categories outlined above? Is it worth the risk?

I received a press release today titled, “’Tis the Season for P#ss@d off Customers.” (I did not change any characters. It actually was written that way.) How could I not read that?

The press release was a promotion for a new book focused on retailers, but it actually had some interesting customer service tips that will work for any business—at all times of year. Here’s the list:

• Learn to recognize (and truly understand) your customers’ situations.
• Make sure you always follow through.
• Be very specific with customers. (Vagueness is a sure path to lost business.)
• Extend a peace offering.
• Have a standard service protocol, and some key “recovery phrases,” at the ready.
• Give frontline employees more power.
• Look for ways to reward employees for saying “yes.”
• Don’t assume your customers will give you a second chance.
• Remember, your clients can be your best (or your worst!) marketing tool.
• Ask for feedback.

Each one has a more lengthy explanation, but they’re pretty self-explanatory. As the year comes to a close, be mindful that while people look forward to the holidays, it’s also a very stressful time of year. As the release says, “It’s that special season again: the season of crowded stores, whiny kids, irritable customers, and stressed-out employees. If you’re a business owner, the holidays are a precarious time. When fuses are short and wallets are shrinking, customers expect great service. Fail to provide it, or fail to instantly implement a recovery plan on those occasions when you do drop the ball, and you may find yourself experiencing a not-so-merry 2011. People have higher expectations and a lower tolerance for mistakes. Without a good service recovery plan, you can easily lose the disgruntled customer, everyone she knows, and possibly a lot of people she doesn’t know if she takes her tale to cyberspace.”

Seems like good advice to reiterate. Best of luck and happy holidays!

While I was getting ready for work this morning, I happened upon The Early Show on CBS. Their correspondent was in a FedEx distribution center with boxes whipping by on conveyors in the background. It’s rare that I remember statistics from stories like this, particularly at 7:30 in the morning, but for some reason the particulars of this story stuck with me.

Today is Monday, December 13. It is the Monday before the last weekend before Christmas, which historically is the day of the year on which more packages are shipped than on any other day. This year, according to The Early Show reporter, 16 million packages are expected to be shipped today, a 12% increase above last year. (I tried to find a video clip to make sure my groggy mind remembered these numbers correctly, but I was unable to find it.)

This is good news for material handlers for two reasons. One, if you supply or integrate for logistics companies like FedEx, UPS, the postal service, or basically any retailer, it’s going to be a busy couple of weeks. You may want to make yourself available as downtime will come at a high cost to such companies. Quick response and availability will go a long way to solidifying your relationships with such customers.

Two, the increase over last year seems to indicate a return of consumer spending and consumer confidence. Those are good signs for general economic recovery, something that we all can support and are all looking forward to.  I already touched on this subject in an earlier blog entry, but it seems worth noting again, particularly in light of the economic doldrums that we’ve all suffered through for the last few years. Any chance to point out good news, I’m taking the bait. Happy holidays, everyone!

I was reading an article today about what I thought was going to be an topic not related to my blog at all. It was all about legal risks of new technology. One particular section of the article, though, grabbed my attention. When I sat back to think about it for a minute, I realized it was something that may have implications for MHEDA members and business owners of all kinds.

The section of the article that got me interested says, “Courts have regularly held employers liable for their employees’ inappropriate use of employer-provided mobile devices. For example, in Ellender v. Neff Rental, Inc., an employer was held vicariously liable for the negligence of an employee who caused an accident in his personal vehicle while conducting business on his employer-provided cell phone. Therefore, associations should establish written policies that work to monitor and deter inappropriate use of association-related devices both in and outside of the office.”

While this article was specific to associations, the general principle is applicable to employers in general, including businesses. Over the last several years, it has become more and more common for businesses to provide smartphones and mobile devices to employees. But what’s less clear is what the employers tell the employees about their use. Is there a defined policy at your company about using cell phones? If so, does it include specific information about when it’s OK to use them? Much has been made in recent months about the dangers of phoning and texting while driving, but that is really only a small piece of a more general usage policy. If an employee takes a business call at home on an employer’s phone after hours, is that considered work? If an employee makes a personal call at home on an employer’s phone, is that allowed? It really opens some interesting legal loopholes if you sit and think about it.

Has your company addressed these issues? If so, how? What advice would you have for others? I’d love to get a discussion started about these issues. Leave a comment to let me know what you think!

Amid all the talk about health insurance costs and the expense of steel and raw materials in our industry, another rising cost is quietly lurking. This one is certainly not a new concern. In fact, some MHEDA members say it’s not a concern at all. I’m talking about fuel prices.

A recent newspaper article here in Syracuse mentioned that the average price for a gallon of unleaded gasoline locally hit $3.10 about a week ago. So I posted a query in MHEDA’s LinkedIn group to find out what the prices were like around the country and how big a concern the rising prices pose.

The results were actually more varied than I thought. Prices range from about $2.65 in Texas to $2.85 in Baltimore, to around $3 in the Allentown/Philadelphia area. In Canada, prices were even higher, all the way up to about $3.25 per gallon (85 cents per liter) in Alberta and $4 per gallon (about $1.07 per liter) in Ontario. I expected to hear that the rising costs were a major concern and one more problem to worry about. Some people did, in fact, say that. One Maryland-based distributor says, “We have 12 company vans for service and it is a major concern.” Another group member said, “Higher fuel prices are always a concern.”

However, I was surprised to find those companies in the minority. Most people simply shrug off the higher costs as just a cost of doing business. One manufacturer says the cost is not yet a major concern. “Until we have a better alternative, we need it,” he says. “Even if fuel increases by 20 cents per gallon, we are spending about an extra $500 per year.” (120 miles a day, six days per week, 52 weeks a year at 15 miles per gallon equals  $499). “It does not compare to the increasing costs of other expenses such as labor, materials and taxes.”

When it’s broken down like that, it makes sense. I’d still love to hear some more opinions on this matter. Leave a comment here or in MHEDA’s LinkedIn group to share your feedback.

During my extended Thanksgiving weekend, I went to a local theater to see “The Social Network,” a.k.a., the Facebook movie. I wasn’t sure what to expect, as, frankly, I didn’t find the previews to be all that compelling, but I’m glad to report that I was pleasantly surprised. It’s a very well-written script and performed well by the actors, and it gets into a lot of the positive and negative history of the company that I don’t think is common knowledge. I’d give it a thumbs-up.

You’re probably saying, “Why should I care?” Good question. The easy answer is to say that when you’re studying a company that was recently valuated at $25 billion, we all should care. But the real answer is that there are enough business themes in there to make it worth a screening for a business owner. For instance, whether or not Mark Zuckerberg stole the idea for Facebook or not (the central theme of the movie), his formula for building the company would translate to any business. Good Idea + Good Timing + Lots of Hours + Networking = Billions of Dollars. Granted, there’s never been a company like Facebook before, and that formula might not work quite to the extent it’s worked out for Zuckerberg, but you get the point.

One of the parts of the movie I found most interesting was how they decided to raise money for the company. It started with a little seed money from a friend’s family but eventually Zuckerberg and another partner were able to secure venture capital to support the burgeoning company. A key was moving the company from Cambridge, Massachusetts (where Harvard is) to California (where the VCs are). So lesson #2 might be to “follow the money.” It turns out to be a major plot line of the movie, so I won’t ruin for you here, but they do talk quite a bit about the business side, beyond the programming.

Finally, the film gives good insight to what the consumer of the future will look like. Many people, and in some cases rightly so, still dismiss social media like Facebook as gimmicks or trends. They’re not. They are here to stay. The rapidity with which things spread over Facebook (or Twitter or LinkedIn) can make it and its brethren a valuable tool if used properly. I know I’ve said it before, but now you don’t have to take it from me. Check out “The Social Network” and see for yourself.

Photo is from the official movie site at 500millionfriends.com.

We’re still in the process of putting our Annual Industry Forecast together, so complete results are not yet available. But I can at least report that, if nothing else, the uncertainty and “doom-and-gloom” mentality that was a staple of the material handling industry in 2009 & 2010 has dissipated.

Most of the distributors interviewed for this year’s story are expecting sales increases of anywhere from 3% to 60%. Granted, many of those same people shrug off those projections with some version of the justification that “our business was down so far that X% doesn’t even get us back to where we started.” That may be true, but we have to start somewhere. I think most everyone would agree that we’ve reached the bottom and are beginning the ascent back to respectability.

Now, of course, the rate of that ascent is what is up for debate, but it’s clear that the ascent is about to occur if it hasn’t done so already.

Mike Burskey, president of Shelving + Rack Systems (Walled Lake, MI), sums up the general feeling of most of the MHEDA Members interviewed for the forecast when he says, “I’m excited about next year. It’s up to us. We’ve got a couple of choices. We can sit back and say, oh the economy’s bad and my paycheck isn’t as big as it used to be oh what am I going to do or we can get off our duffs and go do something about it. We’re choosing to go do something about it.”

That’s great perspective and one that has served a lot of diligent members well over the past few years. What do you think? Are we on the right track?

October 16 is National Boss Day, a holiday started in 1958 when Patricia Bays Haroski, an State Farm Insurance employee in Deerfield, IL, registered the day with the Chamber of Commerce of the United States. According to www.calendar-updates.com, her purpose was to”designate a day to improve the relationship between employees and supervisors. She believed young employees often do not realize the challenges bosses face in running a business.”

That’s probably true and it should serve as a reminder that as much communication that occurs between all levels of an organization is always a good thing. In the spirit of Ms. Haroski, bosses and staffers should make it a point to ask and answer questions of each other. Learn as much as you can about the others’ plight and it may everyone’s workdays a lot smoother.

To all the underlings out there, take a few moments to say thanks to the one who signs your paychecks. To all the bosses out there, it’s a tough job. Thanks for doing it the best you can.