Small Business Will Regain Consumers' Trust

FRESNO, Calif -- FRESNO, Calif. - Ponzi schemes, bank and auto-industry bailouts and exorbitant Wall Street salaries have diminished the public's trust in corporate America to new lows - but examples of integrity can be found among local businesses.

That was the message the president of the Council of Better Business Bureaus brought to Visalia, Calif., on Wednesday. "You don't have to look very far to recognize we are in a trust deficit," said Steve Cox, president of the organization that represents the nation's better business bureaus. "It is lower now than it was at the time of the Enron scandal and dot-com crash."

In an interview before his speech at the annual Torch Awards for Marketplace Ethics in Visalia, Cox said the distrust is reflected in a boost in calls for service at 110 better business bureaus in the United States and 14 in Canada.

Cox said the number of people who file complaints against a business, access reliability reports online or make other calls for service climbed from 100 million nationwide in 2006 to about 130 million in 2009. "You can spend five minutes watching 'Headline News' and scan headlines and see any number of issues that cause you to be cynical to business," Cox said.

As evidence, he cites the 2009 Edelman Trust Barometer, which has been ranking public trust globally for a decade. Only 38 percent of 25- to 64-year-olds surveyed in 20 nations trust corporations to do the right thing. In 2008, it was 58 percent. Corporations must put customer focus and trust at the forefront of their efforts, Cox said.

"Trust is manifested day-by-day by the front-line employees," he said. "Businesses have to deliver on their promises and do what they say they are going to do. Act quickly, be transparent and be fair in resolving the issue."

The Torch Awards are presented annually by the Central Valley chapter of the BBB to businesses with strong ethical policies. Willey Tile of Fresno and the temporary-employment agency Spherion were honored.

In Visalia, Cox honored two businesses that officials with the Better Business Bureau Serving Central California selected as worthy. Willey Tile was selected because it has a 30-year history of strong customer service, said Vickie Sanders, assistant director of business services at the bureau. "If you don't stand behind your work, you won't have customers," Sanders said.

The local franchise of Spherion was selected in part because of its dispute-resolution policy. The business will mediate any problems that arise between businesses and temporary employees.

"It all goes back to their standards for their management practices," Sanders said.

Innovation Training & Coaching - Overlooked?

by Robert F. Brands of Brands & Company...

Smart companies often pride themselves on training programs that introduce or enhance employees' knowledge of corporate business practices. They promote mentoring initiatives that pair seasoned execs with rising talent. They create booklets or PDFs on corporate policy - and implore staff to read them.But introduce a business innovation initiative, and those involved are expected to just know how things are done.

They're supposed to possess some innate awareness of the concepts, the best practices, the goals, milestones and targeted end-game.It doesn't work that way.Innovation is a learned concept. Training and coaching is the forgotten imperative in the process of innovation. For best practices in the pursuit of innovation have to be shared to be learned - and mastered.

From the Chief Innovation Officer (CIO) to the innovation team to rank-and-file employees who will implement, follow through or carry forth on the fruits of innovation, people don't just know. They're taught.Organizations whose teams are not trained and coached in its unique approach to the imperatives of innovation are destined to amass a litany of failed projects.

For example, a major multinational launched a new Innovation initiative with the hopes of turn-around renewed profitability and growth. After much initial excitement and visibility, expected results did not materialize - and in the turn-around world, false starts are more costly for an organization than starts or restarts.What happened?

The team involved basic project management training. After a course of such training and coaching, associates had gained a common language and understanding. Progress was realized, and the company today remains on a growth path.Training and coaching is vital to transmitting the organization's unique approach to innovation - and ensuring people adhere to its practices. Proper hiring, training and coaching is the way to create, reinforce and enhance company culture and mindset.

At its root, training and coaching introduces people to the organization's vision, mission, strategy and objectives, and points everyone's compass toward True North.Training and coaching should cover the lot - from the unique way ideation is treated, to the unique way ideas are cataloged and approached; teams are inspired, formed and managed; risk is assessed; new product development is explored; ownership is encouraged; value is created; accountability is attached; metrics are observed and measured; net results are rewarded; and yes, how teams are trained and coached.

Training and coaching is developed and delivered on a continuum. No sooner are existing policies and best practices discussed, then new procedures are introduced to further the organization's pursuit of innovation.Continuity is the key. Training helps your team constantly improve its skill set, through new techniques in ideation, process experience and intra-organizational communication of best practices.

Ongoing reinforcement helps employees understand their place and aspire to greatness on the New Product Development team (whether that "product" is a product, a service or an internal practice). This goes beyond the team. Trainers and coaches need continuous training and coaching, as well. Even the CIO at times requires training and coaching on evolving corporate innovation practices.

Alas, training and coaching often is lost or last as companies often believe they have little time and money to fund these efforts. Best of breed companies have earmarked a dedicated budget to training and coaching.Why? Because they realize the downside of not training - and retraining - their people in the process of innovation is to be mired in mediocrity.

Purchasing Compensation Continues to Grow!

By Susan Avery -- Purchasing, 12/17/2009 2:00:00 AM

Results of Purchasing's 29th annual salary survey show that compensation rose 6.9% to $94,317 in 2009, up from $88,206 a year ago.

These findings reflect top management's recognition of purchasing's leadership role in controlling costs, and increasingly, at initiating activities that help add to the bottom line.
They also demonstrate that purchasing continues to draw professionals to the field who are experienced, well-educated and aren't hesitant about taking on increasing responsibilities, traits that tend to command higher levels of compensation.

Purchasing is not alone in reporting such spectacular results for the profession, despite the recession and an unemployment rate that has topped 10%. The Institute for Supply Management (ISM) conducted a survey of its members earlier this year that also shows salaries climbing—6.8%.

Compared to their peers in other related professions, purchasers are faring well. They are better compensated than engineers and logistics managers and are enjoying salaries that are growing at a faster pace. Results of a reader survey by Design News magazine shows compensation growing 4.5% to $89,748, while a Logistics Management survey finds its readers finally saw salaries grow 5.9% to $85,000, after falling in 2005, then remaining stagnant for two years. These magazines, along with Purchasing, are all published by Reed Business Information.

"Purchasing is doing all the right things to position itself," says Phil Krotz, director of supply chain services at Rockwell Collins in Cedar Rapids, Iowa, and a survey respondent. He says that the supply operation at his company, which received Purchasing's Medal of Professional Excellence in 2005, is meeting more often with president and CEO Clay Jones as the economy recovers and is now involved in new initiatives that help the company improve inventory levels and cash flow.

"More CEOs are bringing purchasing to the table, asking, 'where can you help us?'" says Russ Boyd, senior procurement and contracts specialist with Perot Systems in Plano Texas, and a survey respondent. He sees purchasing taking on a bigger role in such non-traditional areas as risk mitigation at their companies. "We've always been involved to a degree in supplier risk, but now we are paying more attention to the financial aspects of risk."

Purchasing professionals responding to Purchasing's salary survey this year fall into a demographic profile of professionals who earn salaries generally higher than the average. Survey respondents work for big companies (with over $500 million in annual sales), have many years of experience and manage larger spend categories (over $50 million). For the most part, they have supervisory responsibility and work in senior management positions in corporate purchasing operations. They have graduate degrees and hold professional certifications.

One respondent, for example, is the CPO (corporate procurement officer) at an energy company with more than $3 billion in annual sales. With 30 years of experience, he holds a technical degree and is responsible for more than $500 million in annual spend; one of the more important categories he manages is services. He earns a salary of $700,000, with bonus.

More respondents work in the process and energy/mining and utilities industry sectors than in previous years. These sectors tend to provide purchasing pros with positions that are well paid. On average, those working in the process industries earn $109,687, with those in energy/mining and utilities seeing yearly paychecks of $107,750.

Purchasing professionals who toil in manufacturing, an industry particularly hard hit by the recession and the high unemployment rate, on the other hand, saw average annual compensation fall in 2009. Purchasing salaries in the wholesale/durable goods industry sector declined $4,042, while compensation decreased $1,830 for purchasers in the automotive/transportation sector.

"Purchasing has been able to increase salaries significantly over the past 20 years because they've made the function a core part of the business," says Tonia Deal, president of Tonia Deal Consultants in Hudson, Ohio. "Still, there is some great talent on the market because of the economy and all that has happened. For instance, in the auto industry, there are people who were earning more than $100,000 taking positions paying in the 90s and looking to make up the difference with bonuses."

Deal says purchasing operations became leaner this year with companies hesitant to move on higher level director and CPO posts, opting instead to fill the roles internally. "And there are purchasing professionals who were managing $100 million in spend now responsible for spends of $300 million," she says.

Kevin Rohan, director of procurement recruiting at J.P. Canon Associates in New York, says that while hiring was down considerably in 2009 compared to previous years, there were companies that were hiring selectively. "In the beginning of the year, we saw companies freeze merit increases and annual reviews, eliminate bonuses or reduce them significantly and suspend pension and 401K contributions," he says. "Layoffs and hiring freezes meant longer hours and heavier workloads for employees.

Retention of top performers was a priority for many clients who found it more cost effective to give pre-emptive increases or promotions, but to fewer employees." But many companies also took the opportunity to strengthen and improve their purchasing operations, with hiring occurring in the pharmaceutical/healthcare, consumer products and financial services industries.

Positions Rohan worked to help fill in the past year include those with responsibility for these spend categories: raw materials (chemicals), packaging, technology (IT hardware/software/services), contract manufacturing and MRO/facilities/capital equipment.
Even with the recession, he says there were some roles that were difficult to fill, especially those that require chemical engineering or technical backgrounds.

Coincidentally, salaries for purchasing professionals with degrees in these areas saw some of the greatest increases in compensation, according to results of Purchasing's salary survey.

Bargaining for bonuses...
Bonuses have always been an important part of compensation packages earned by purchasing professionals responding to the salary survey. This year, a slightly smaller percentage of respondents (62%) got bonuses compared with last year (64%). Still, the amount of bonus is the same (14% of salary).

The bonuses are based on meeting company financial goals for 66% of survey respondents. Other criteria for receiving a bonus include progress toward product development cost targets (for 21% of respondents), cost targets for purchased parts (for 18%), supplier quality improvements (8%) and cycle time improvements (6%).

Rohan at J.P. Canon reports that companies in the pharmaceutical/healthcare, food and beverage and financial services industries all paid bonuses in 2009. Bonuses, he says, "are especially important now as they are a good sign of a company's financial health."
Respondents to the salary survey also receive stock options (17%), with a median value of $11,000. Last year, 16% got stock options, with a median value of $9,000.

While the percentage of salary survey respondents receiving bonuses as well as the amount of the bonus has changed little in the past year, purchasing still is doing better than other professionals. Results of a recent survey of 1,156 large organizations by Hewitt Associates, a human resources consulting and outsourcing company in Lincolnshire, Ill., show spending on variable pay (bonuses) as a percentage of payroll for salaried exempt employees in general was 12% in 2009. For 2010, companies are budgeting variable pay bonuses at 11.8%.

"Even in the toughest economies, companies are willing to reserve money for top-performing employees as a way to reward performance and ensure they retain these employees after the job market rebounds," says Ken Abosch, leader of Hewitt's North American broad-based compensation consulting business.

Data from the Hewitt survey show base salary increases for all professionals averaged in 2009 were just 1.8% and are expected to rise to 2.7% in 2010. Industry sectors expecting above-average salary increases in 2010 include energy (3.7%) and food/beverage/tobacco (3.1%). Industry sectors with the lowest expected increases are industrial machinery/equipment (1.2%) and automotive/vehicle manufacturing (1.2%).

2010 outlook...
Already Deal at Deal Consultants sees some pick up in hiring among companies, especially in the consumer products goods industry. "These are companies that had positions on hold for over a year that are finally moving forward," she says, adding that purchasing professionals looking for work will see more activity starting up after the holidays.

Rohan at J.P. Canon notes an uptick in hiring of purchasing and supply chain professionals since August, especially for temporary positions. He also sees increased activity from management consulting companies. "We anticipate that hiring will continue to improve in the first and second quarters of next year and that hiring criteria will continue to be comprehensive," he says.
"The expectation of most hiring managers we have worked with this year is that the selected individual will have prior industry experience, expertise in the managed supplier base, appropriate systems knowledge, and be able to deliver a result right away," he says.

Echoing these thoughts on qualities companies look for in purchasing professionals is Brent Shinall, vice president, global supply chain, at Helix Energy Solutions Group in Houston, who says that negotiation skills are always at the top of the list of what he looks for when hiring an individual for his team. "But I would take it a step further than that," he says. "At Helix, we are leaders of projects and sourcing initiatives, so we like individuals who are not afraid of that role." Many of the purchasing pros on his team have technical degrees.

According to the Bureau of Labor Statistics Occupational Outlook Handbook, 2008–09 Edition, a bachelor's degree, combined with industry experience and knowledge of a technical field will be an advantage for those interested in working in purchasing at a manufacturing or industrial company through 2016. It reads, "Demand will be stronger for purchasing in the services sector as it grows more rapidly than manufacturing."

Still, the BLS shows employment for purchasing growing more slowly than average for other functions. Work purchasing has done over the past few years to automate processes has helped to take the function from tactical to strategic—and raise compensation levels, but it has also put a damper on demand for new hires, because it now takes fewer people to do the work.

Trade Deficit Narrowing!

The trade deficit narrowed in October, suggesting that an export-powered U.S. economy could expand at a faster pace in the fourth quarter. The trade gap fell to $32.9 billion as exports rose 2.6% -- the sixth straight monthly gain -- with trade activity continuing to recover from deep declines seen during the financial crisis.

Imports rose 0.4%, partly reflecting lower oil imports.

"U.S. exports appear to be improving much faster than the domestic economy, suggesting that much of the improvement seen in the manufacturing sector reflects strengthening economic conditions abroad and the impact of the weaker dollar," said Nomura Securities economist David Resler.

Stronger-than-expected net exports lifted growth prospects for the current quarter. The forecasting firm Macroeconomic Advisers raised its estimate for fourth-quarter growth to 3.8% from 3.4%.

“A narrowing of something as fundamental as the trade deficit is indeed good news. It seems too much to hope for, but with a little luck, and restraint among US consumers, it will continue to close”, relates Vincent P. Emmer.

Exports appeared to have hit their bottom during the spring, but they remain 8.6% below their level of a year ago and substantially below their peak in the summer of 2008. The weak dollar and a rebound in global demand are boosting U.S. exporters' activity, offering some hope amid lackluster demand at home.

For instance, U.S. coal companies that export metallurgical coal used in steelmaking are seeing an upswing in interest from European buyers, as China's appetite for coal is eating into more of the world's coal supplies.

Alpha Natural Resources Inc. of Abingdon, Va., expects its exports of such coal to Eastern and Western Europe to rise to between 10 million tons and 12 million tons next year from seven million tons this year.

Other companies said they were seeing more export opportunities. "We continue to see genuine interest primarily into the export market," said Deck Slone, vice president of investor relations at Arch Coal Inc. of St. Louis. "There are indications that deals are getting done in Asia for U.S. metallurgical coal."

In October manufactured-goods exports were 2.8% higher than in September, with capital-goods exports rising 3.7% over the month, according to the National Association of Manufacturers.
"The fact that 21 of the 32 capital goods categories showed growth indicates that the export recovery is broadening," Frank Vargo, a vice president at the trade group, said in a statement Thursday.

States Friendly to "Small Business"!

A new ranking of state public policy climates for small business and entrepreneurship by the Small Business & Entrepreneurship Council (SBE Council).

The 14th annual report, the "Small Business Survival Index 2009: Ranking the Policy Environment for Entrepreneurship Across the Nation,” is intended to measure which states are “friendly” to small business, and which are not, in terms of public policy decisions.

The index takes into account taxes, regulatory costs, government spending, property rights, health-care costs and energy costs. The SBE Council said this year’s index was expanded to include 36 major, government-imposed or government-related costs affecting small businesses and entrepreneurs. Measurements are added together for an overall rating.

In terms of their policy environments, the top entrepreneur-friendly states in the 2009 index were: 1) South Dakota, 2) Nevada, 3) Texas, 4) Wyoming, and 5) Washington. At the bottom were: 45) Rhode Island, 46) Maine, 47) Vermont, 48) New York, 49) California, 50) New Jersey, and 51) District of Columbia.

The full report is available here.
The Oakton, Va.-based Small Business & Entrepreneurship Council is a nonpartisan, nonprofit small-business and entrepreneurship advocacy group.

Business Conditions Improve in Electrical Sector

Makers of electrical products and equipment cite better business conditions in November, as NEMA's EBCI climbs 2.1 points.

Industrial Distribution Staff -- Industrial Distribution, 11/25/2009

Business conditions improved in the electrical product manufacturing sector in November, according to the latest Electroindustry Business Confidence Index published by NEMA-The Assn. for Electrical and Medical Imaging Equipment Manufacturers.

NEMA's North American EBCI for November climbed 2.1 points to 54, topping the 50-point threshold indicating growth for the fourth straight month and indicating that the "electroindustry" has slowly begun to climb out of its steep downturn, NEMA said.

The North American future conditions index was less optimistic, slipping in November for the second straight month, although still above the 50-point threshold for growth. November's future conditions index registered 58, falling 3.5 points from its October reading. The future conditions index gauges NEMA members' business confidence over the next six months.

"...the index, and by implication the degree of anticipated improvement in conditions, slipped to its lowest level in eight months," NEMA said.

U.S. Leading Economic Index Rose 0.6% in July!

By Bob Willis

Aug. 20 (Bloomberg) -- The index of U.S. leading economic indicators rose in July for a fourth consecutive month, another sign the worst recession in seven decades is almost over.
The Conference Board’s gauge of the economic outlook for the next three to six months rose 0.6 percent, less than forecast, after a revised 0.8 percent increase in June, the New York-based group said today. The coincident indicators index, a gauge of current economic activity, was unchanged after falling every month since October.

Fewer job losses, rising stock prices and a renewal of factory output all indicate government efforts to stem the financial crisis and revive the economy are paying off. Even so, a jobless rate forecast to reach 10 percent and falling home values are a reminder that any expansion will be muted as consumers rein in spending and boost savings.

“Overall this is pretty good news, suggesting the recession is coming to an end,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “The stabilization in the coincident index is a strong signal that activity is now leveling out.”

The main index was forecast to rise 0.7 percent, according to the median of 52 economists in a Bloomberg News survey, after an originally reported increase of 0.7 percent in June. Estimates ranged from gains of 0.1 percent to 1 percent.

Philadelphia Fed
A separate report today showed manufacturing in the Philadelphia region unexpectedly expanded in August for the first time in almost a year. The Federal Reserve Bank of Philadelphia’s general economic index climbed to 4.2, the highest level since November 2007, from minus 7.5 in July, the bank said today. Figures from the Labor Department, meanwhile, showed jobless claims unexpectedly rose last week.

Six of the 10 indicators in today’s leading index report added to the index, three subtracted and one was neutral. The biggest lift came from a positive spread between long- and short-term interest rates, followed by drops in jobless claims, a longer factory workweek, rising industrial supplier deliveries, stock prices and orders for capital goods. Weaker consumer expectations, declining money supply and falling building permits pulled it down. A gauge of new orders for consumer goods and materials held steady.

New applications for unemployment benefits fell to an average of 559,000 in July from 616,000 in June. They rose to 576,000 last week from 561,000 the week before, the Labor Department said today.

Factory Workweek
The factory workweek rose to 39.8 hours in July, the highest since January, from 39.5 in June, the Labor Department said Aug. 7. Automotive plants are boosting output in response to signs that demand is recovering as they benefit from government incentives of up to $4,500 for consumers who trade in gas guzzlers for fuel-efficient vehicles.

General Motors Co. this week called back 1,350 union workers, its biggest one-time gain in jobs since 2006, as it boosts second-half production, partly in response to demand from the Obama administration’s “cash for clunkers” program. Ford Motor Co. last week said it is boosting factory output by 26 percent in the second half of the year to meet rising demand created by the trade-in program.

A 1 percent gain in the average level of the Standard & Poor’s 500 Index in July from the prior month contributed to the leading index. The S&P 500 has soared 48 percent since March 9, when it reached its lowest level in more than 12 years, as data signaled the economy may be turning around.

Consumer Expectations
Meanwhile, consumer expectations for the next six months fell in July and continued falling this month, according to the Reuters/University of Michigan survey of sentiment released last week.
Seven of the 10 indicators for the leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times.

The Conference Board estimates new orders for consumer goods, bookings for capital goods, and the money supply adjusted for inflation.
The National Bureau of Economic Research, the arbiter of when recessions begin and end, follows the coincident index to help it time downturns. The index tracks payrolls, incomes, sales and production.

The gauge of lagging indicators fell 0.3 percent following a 0.7 percent decrease in the prior month. The index measures business lending, length of unemployment, service prices and ratios of labor costs, inventories and consumer credit.