EXECUSCOPE September 1991

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Industry Looks to Academia

To strengthen the faltering competitiveness of U.S. firms, private industry is collaborating with research universities. This cooperation of industry, academia, and even government labs provides exciting long range opportunities, according to MIT professor John Deutch.

Some universities are changing their curriculums to help students translate new technology into quality products. New programs, often underwritten by industry, prepare students to address major technology applications and manufacturing issues. In one program, MIT's schools of engineering and management collaborate with 12 companies to improve the use of technology.

Unfortunately, much of the public and Congressional debate centers on protectionism and potential conflicts of interest rather than on expanding cooperation, says Deutch.--Technology Review, May/June 1991, p. 65.

Measuring Job Candidates

The financial impact of hiring the right person for the job, especially at a senior level, can be profound. The right person could save millions, depending on the job. A mismatch can bring turnover and reduce productivity.

The traditional hiring interview has only a 15 to 20 percent chance of accurately predicting job performance. A system called Structured Behavior Interviewing is 55 to 70 percent accurate. Here is its five-step process:

1) Identify factors and criteria critical to success.

2) Identify activities leading to success and the percent of time to be spent on them.

3) Identify critical knowledge, skills, and values.

4) Identify key incidents and the actions of ineffective, average, and exemplary performers.

5) Design appropriate interview and reference check questions.--Business Horizons, March-April 1991, p. 51.

Bridging the Trust Gap

An atmosphere of mutual trust between upper and middle managers is essential to being competitive in the 1990s.

Poorly executed downsizing has brought mistrust and weakened America's competitiveness, according to Thomas Horton. CEO of the American Management Association, he says "the tyranny of the quarterly report" causes many poorly planned downsizings. Downsizing may result in:

* Loss of seasoned and skilled employees

* Mistrust, cynicism and fear among survivors

* Understaffing of essential functions

* Erosion of organizational performance

* Neglect of training, research, and development.

In his book, Beyond the Trust Gap, Horton gives this advice for planning successful restructuring:

* Determine corporate goals before downsizing.

* Keep communication believable and honest.

* Practice, don't just preach, corporate values.

* End the isolation of the executive suite.

* Motivate managers with challenge and reward.

* Treat terminated employees humanely.-- Soundview

Executive Book Summaries, May 1991, p. 2.

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Creative Tax Strategies Save Money

Tired of taxes? Taking advantage of some often overlooked tax opportunities can boost cash flow and improve bottom-line results. Here's a sample.

For operations savings, you can:

* Accelerate deductions and delay expenditures by declaring bonuses in one tax year and distributing them in the next.

* Maximize the research and development tax credit extended through 1991.

* Segregate certain construction costs into categories that qualify for earlier write-offs than core structural costs.

* Keep a log of mileage expenses. The IRS recently raised allowances.

For executive compensation, consider these tax provisions:

* Medical and life insurance packages that now can be designed to reward top level managers. Their costs are offset by corporate tax deductions.

* Secular trusts for supplemental pensions and deferred compensation.

An important employee benefit through 1991 is the deduction for education expenses. The $5,250 deduction per employee applies to any course work.

For business owners ready to tackle estate planning, here's good news:

* The estate freeze is back. Owners can now give away future growth in their businesses without paying gift or estate taxes.

* Grantor retained income trusts (GRITs) can still be used to pass on ownership of a residence, artwork, and other tangible property.

* Charitable remainder trusts help sellers avoid capital gains taxes.

For your personal portfolio, consider setting up an insurance trust to avoid estate taxes on the payouts from life insurance policies.

You might also want to give away part of your art collection now. In 1991, appreciated tangible personal property can be donated without hefty tax penalties.--Inc., May 1991, p. 68.

Identifying Top Salespeople

High volume doesn't always indicate top sales performance. One high volume salesperson may spend too much money on each call. Another may sell lots of low profit items. Another may have only a few high volume customers.

An effective evaluation system can increase profits and improve morale, according to author and consultant Bill Stiles. He suggests getting a clearer view of sales performance by developing general criteria for evaluating salespeople. Important concerns about the salesperson include: 1) relationships with customers, 2) ability to organize, 3) selling skills, 4) product knowledge, 5) program knowledge, 6) and personal qualities.

Stiles recommends developing job descriptions that are appropriate for each salesperson's circumstance. Take into consideration a depressed industry, new competition, and changes in your firm's product lines. Work with each salesperson to establish goals. Maintain monthly or quarterly files to use in a face-to-face review. Here are some tips for the review:

* Approach the process with a balanced, unbiased perspective.

* To set the proper tone, put aside other work and avoid interruptions.

* Sandwich criticism between complimentary remarks.

* Never make comparisons between two salespeople on your staff.

* Ask questions and make suggestions to lead the discussion.

* Let the salesperson do most of the talking. Be a good listener.

* Be alert for "yes people" who may care little about improvement.

* If there's a problem, offer several solutions to the salesperson. --Small Business Reports, April 1991, p. 20.

Controlling the Paper Chase

Whether you use pen and paper or the latest electronic modes, prudent records management is vital. It begins when a document is generated and continues through active and inactive storage, and, finally, destruction.

Our service-oriented economy still depends largely on paper. Of the million documents created each minute, 95 percent are stored on paper. Microfilm, at four percent, is second, with one percent stored on tape or disk. Offices also use a complex mix of developing storage technologies.

Barcoded labels on file folders, with the code stored in the computer, can speed access to paper files. Computer-accessed data bases can signal retrieval of overdue documents or outdated files.

Computerization can also enhance micrographics storage. Computer assisted retrieval and computer output microfiche speeds micrographics storage and improves retrieval accuracy. Micrographics is also making advances with computerized, source document rotary cameras.

As paper proliferates, the use of optical disks is increasing. Although slow to input, they have the storage advantages of film plus the immediate-view feature of paper. Computer assisted retrieval speeds the process.

Computer-based systems also reflect an integration of technologies. These systems use electronic documents or digitized images. They feature automated data entry, high capacity storage, video-screen display, laser printer output, networking capability, and specialized software.

Computers and laser printers can help achieve fast and accurate indexing in any mode.--Office Systems '91, April 1991, p. 44.

Stemming Lateniks and No-Shows

Employee tardiness and absenteeism are perpetual and costly problems. Although most efforts do not solve the problems, they at least help make a dent in them. Here are some ideas tried by companies:

* Flextime. Tardiness caused by employee scheduling problems such as childcare and transportation may be solved by allowing more flexible hours.

* Pay forfeiture. Many firms dock employees for unexcused absences. One found that its plan backfired, however. When workers made considerable overtime pay one week, many didn't bother to show up the next.

* Punishment. Many firms dock and suspend workers absent a certain number of days. If the absences continue, they fire the workers.

* Reward. Employees who do not take time off are compensated or rewarded. Studies show, however, that the winners would have been there anyway.

* Finding the reason. Sometimes special accommodations, counseling, or an employee assistance program can resolve personal problems that lead to absenteeism or tardiness.--Dale Carnegie & Associates, Inc., 1991.

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Value Those Hidden Assets

Whether you're buying, selling, or simply running a business, valuing intangible assets is vital to success.

Some intangibles are obvious: patents, copyrights, registered trademarks, and goodwill. Others are hidden: market research, customer and supplier lists, specialized employee training, logos, software, formulas, and key pricing and purchasing information not readily available on the open market. Fair pricing of goods and services, as well as of the business itself, reflects these assets.

If you're buying a business, make sure the intangible assets are included with the business. Here are some tips for the purchaser:

1. Ask the current owner for a listing of all known intangibles and confidential information critical to the business.

2. Talk to employees about the firm's processes and procedures. Keep a checklist of anything unique to the business.

3. Review the firm's legal documents and contracts, including the number of years left to run on a patent or copyright.

4. Ask about nondisclosure agreements with third parties.

5. Find out who owns the assets--the business or its owner.

Sellers also need to accurately account for intangibles. Keep in mind that the cost of creating an intangible only establishes a minimum value. The value of the asset itself plus compensation for its future earning power can be far more.--Entrepreneur, April 1991, p. 42.

FORECASTS

Graphics workstation sales are expected to grow by 172 percent in the next five years. A Frost & Sullivan report predicted sales will reach $28 billion by 1995. Rapid advances in semiconductor technology allow more computer power at a low cost. New user groups will be drawn into the marketplace. A replacement market for older low-performance workstations also is building. The file server sector is expected to show the fastest growth. Computer platform sales will also be strong. In consumer groups, the commercial market will grow the fastest. The report predicts that the bulk of the future domestic market will be built around an open systems architecture concept. Foreign producers won't offer significant competition in the U.S.

Fares may rise to pay for mandated improvements in bus, subway, train, and airport facilities beginning in 1992. Older stations need remodeling to accommodate disabled travelers. New buses are to be wheelchair accessible. Transit systems will provide door-to-door rides for the disabled. Little federal money is available to help.

Reinvesting profits will fuel business growth over the next three to five years, say nearly two-thirds of firms polled. Only one in three expects to expand through a joint venture, acquisition, or strategic alliance.

FINDINGS

White Collar Productivity

White collar workers are just as productive as manufacturing workers, claim 40 percent of the executives polled by Fortune. This finding contradicts government data showing that workers on the factory floor far outstrip office workers in productivity. A clear majority (57 percent) of top executives believe white collar staffing at their companies is just about right. Only 16 percent said their firm's white collar productivity efforts put them a disadvantage to foreign firms. Nearly half (43 percent) said they're even with foreign competition; 35 percent said they've pushed ahead. The leaders admitted it's hard to improve white collar productivity because it's hard to measure office workers' output.

Frantic About Leisure

Do you worry about what to do in your free time? Do you rush from one activity to the next during off hours? You'd feel right at home in Germany. A poll there concluded that Germans are increasingly suffering from leisure-time stress. It found that excessive consumer attitudes about leisure don't allow time for reflection and doing one's own thing.

Less Is Still More

Raises for top industrial firm executives averaged only 7.5 percent in 1990, down from 9.5 percent the year before. Their salary and bonus increases still topped inflation, however, unlike those for lower-level workers.

In the Minority

Minorities are not faring well in the newspaper world. A survey showed that minorities account for less than 0.5 percent of all editors. Only 10 percent of the nation's 1,625 daily newspapers employ minority editors.

BRIEFS

Acting experience is a plus in the workplace. When you're evaluating resumes, look for candidates with theatrical backgrounds. They handle deadlines, adapt to last-minute changes, and live by the motto, "The show must go on." They also appreciate humor, team building, and taking direction.

A college degree is no guarantee of employment. Job offers are scarce for graduates of the class of 1991. Recruiting is down on campus. New grads will compete with laid-off workers.

Women in the U.S. labor force numbered 57 million in 1990 while men numbered 68 million. More than 90 percent of men but only 75 percent of women between 25 and 49 were in the regular labor force, reports the Bureau of Labor Statistics.