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IN THIS ISSUE:
DRIVING CORPORATE GROWTH
SHOULD WE OUTSOURSE HR?
TOP 10 LEASE NEGOTIATION
AND SITE SELCTION MISTAKES
Many CFO’s ask me how to increase their job longevity.
There is only one answer to this question. Expand job
responsibilities beyond assuring the financial statements
are presented on time. The senior financial executive
has to be actively involved in the growth of his or
Through my CFO and Controller Roundtables and direct
communication with many senior financial executives,
I’ve learned about ways financial executives are
driving the growth of their companies. Examples that
fuel the internal corporate growth engine include:
Utilizing a variety of financing vehicles to
obtain additional liquidity.
||Working with the executive team to develop sales
professional compensation, which rewards salesmen
for focusing on sales with greater profitability.
||Working with sales reps in the field when they
encounter perceived internal corporate “red
tape”. In many cases, there are opportunities
to streamline processes by easing overly restrictive
controls or eliminating previously unidentified
||Initiating meetings with industry specific business
strategists to provide guidance for growth.
||Evaluating and improving health and other corporate
insurance policies to attract and retain employees.
||Developing tax strategies, which produce significant
savings to free up cash for other productive uses.
||Finding value in liabilities by taking aggressive
stance on discounts by vendors, and getting rebates
on credit cards, all of which provide cash for growth.
|| Relocating plant controllers to the factory floor
vs. ‘ivory tower’ offices. This allows
them to better see what is going on in real time.
They are part of the floor team and therefore are
more accessible to concerns which otherwise would
not be communicated to the proper parties for action.
||Negotiating with banks to reduce account and credit
||Doing homework on competitive vendors and using
information to achieve best pricing without necessity
of changing vendors.
||Securing State tax credits for software installation
(training credit) and Federal Income payroll tax
credits for certain geographic areas.
||Developing strategies on timing of inventory purchases
to balance tax reduction, holding costs, and pricing
||Working with the purchasing department to develop
policies and procedures for inventory, supplies,
and even capital expenditures to eliminate waste
and maximize rebates.
||Analyzing sales profitability by vendor, and subsequent
||Analyzing sales profitability by customer, and
subsequent ‘firing’ of certain customers.
||Implementing travel and entertainment policy to
maximize cash flow and eliminate waste.
Several CFOs are taking an outward focus and evaluating
business opportunities that create competitive advantages.
Expanding current business territory to increase
profitability with limited investment.
||Creating a strategy and business plan to enter
a new business sector.
||Going on sales calls to better understand challenges
being faced by sales reps in the field. One such
sales call resulted in development of a customer
financing plan with an independent financing company
which allows the customer to make payments over
time, and also mitigates corporate A/R exposure,
helps collect past due accounts and allows company
to increase the size of customer orders. As a result,
finance is viewed as an asset to the sales team
rather than an adversary.
||Investing strategically in IT (Information Technology)
to improve customer experience when interacting
with the company website, providing easy product
catalog access, allowing customers to efficiently
perform their own inquiries on product features,
appearance, availability and secure order status
||Creating online E-Commerce solution allowing customers
to purchase directly online which provides for cost
savings in customer service areas and improvement
of customer satisfaction at the same time.
||Selecting facility sites for maximum strategic
By taking on responsibilities that improve profitability
and growth of the company, the senior financial executive
should be able to better position his or herself for
a long term relationship with their current employer.
Come to one of the roundtable meetings and learn about
what your peers are doing to drive growth in their companies.
Also, contact me with other questions or ideas at
Michael.Levine@rhmr.com or 404-261-3229.
Outsource HR? What are Other Companies
Should we outsource our human resource functions partially,
or totally? Should we retain these services in-house?
As any consultant would answer, “It depends.”
First, what are we talking about? Using large companies
as a gage, the list includes managing payroll, employee
health and disability insurances, worker’s compensation,
pension and/or 401(k), governmental compliance and reporting,
safety and risk compliance, employee help desk services,
human resource services, training and development, recruiting,
background checks, and testing of new hires.
Large companies often decide to outsource non-core
areas such as payroll, employee benefits and administration,
recruiting, and new hire testing. Even though some functions
are frequently outsourced, large companies rarely outsource
Managing human capital is considered a critical key
to company success. However, many outsourcing decisions
are made by functional experts who lack the strengths
in financial, business, or sourcing skills which are
essential for outsourcing success.
Medium size companies tend to be hybrids in outsourcing.
Most prefer in-house management, but some mirror larger
companies in outsourcing some of their human resource
requirements, such as governmental compliance, safety
and risk compliance, employee help desk services, basic
human resource services, training and development, recruiting,
and new hire testing. Payroll companies have extended
their offerings to cover many of these areas and call
them an Administrative Services Only solution, or “ASO.”
A number of medium sized companies prefer to outsource
everything, including transferring their employees to
become legal employees of the payroll company, which,
in turn will provide employee benefits. Again, payroll
companies offer this co-employment option and call the
service a Professional Employer Organization, or “PEO”.
Selection of In-House, ASO, or PEO alternatives in a
medium sized company tends to depend on risk factors,
company culture, but mostly economics. We observe that
most medium size companies prefer In-House management.
Smaller companies, particularly high growth companies,
often lean toward the ASO or PEO models. Frequently
they begin with the PEO model and gradually pull in-house
functions that can be handled better or more economically
in-house. Here the primary decision factors are time,
internal resources, risk, and economics.
In making most of these decisions, companies often
don’t have the time, resources, experience, or
knowledge of what to do, whom to select, or how much
should be paid. To make matters worse, companies often
ask for advice from their PEO/ASO vendors and go with
the best sales story or sales personality!
Whether a large, medium, or small company, we recommend
you hire an independent trusted advisor to help determine
what is right for you, which provider offers the lowest
total cost, and who will optimize your needs both now
and in the future. Your selections should depend on
your strategic needs, optimized cost, and company culture.
IEM Group, Inc.
The Top Ten
Lease Negotiation and Site Selection Mistakes
The following list of common mistakes is the result
of a survey taken. Participants drew from an average
of well over 15 years of Tenant Representation experience,
representing and advising national and local commercial
tenants with hundreds of leases totaling millions of
square feet. Most major U.S. markets were included.
The main risks to consider when commencing the Facilities
Acquisition Process (Lease or Purchase) can be broken
down to the following three categories:
MONEY – Were the best possible
rate and terms achieved?
Today with record high vacancies and low interest rates
we have been able to achieve incredible savings for
our clients both economically and in other areas of
the lease itself.
RISK – This includes the risk
of making a bad location or operational decision, and
whether you have the right lease clauses, which prepare
for future, unknowable requirements such as business
expansion, contraction or relocation needs.
TIME – How much time is going
to be spent on the Facilities Search and Acquisition
process, and what will it cost the company in terms
of lost productivity?
The process of determining ones needs and the site
selection and lease or purchase process can take up
much of your valuable time if you don’t have the
right team in place!
Most Common Mistakes
#1 Most Common Mistake: NOT ALLOWING ENOUGH
Facility research, property inspections and comparison
analysis can usually be completed in a week or so by
motivated companies already familiar with the local
market. However, those tasks are only the tip of the
“time drain” iceberg, and several commonly
overlooked complications needing to be factored into
the relocation timeline:*
Negotiations with the Landlord and preparation
of the lease can take weeks, (even months).
||Once the Lease is signed the interior usually
needs to be finished or renovated, which can take
one to three months depending on size.
||Before renovations can begin, building permits
need to be obtained which can take one to two months.
||Before permits can be obtained, architectural
plans must be completed, and may take one to two
If existing facilities cannot be found which are acceptable,
new construction can easily take 9 to 12 months or longer.
Bottom line: 6 - 12 months is a good time frame to
use when looking for new facilities, even longer if
experienced professionals are not used to guide the
process. Today we have renewed tenants up to two years
early with the high vacancies in the market so it’s
never too early to start your strategic plan.
* This assumes the space is not going to be taken
as-is, which is possible, but unlikely.