Keep Key Employees during a Merger/Acquisition

Many companies involved in mergers and acquisitions offer retention bonuses to key employees to ensure they stay put.  But consultancy McKinsey & Company has learned many would have stayed without bonuses. A better approach? Customizing packages of financial and non-monetary incentives to each crucial staffer’s goals. A European firm using this strategy slashed its former cash-based retention budget by 75 percent. IStock-695603474

It’s natural for key employees to feel fearful after a merger or acquisition. It’s also natural for them to consider taking their talents elsewhere. A study two years ago found just 45 percent of companies successfully retained employees through a transition. To help ensure your organization fares better, focus on the following strategies.

  • Don’t rush the process. Taking time to understand the corporate culture, values and talent base of the other company helps in retaining key employees. Why are the other company’s employees happy with their job situations? What makes the company successful? These are keys to creating a retention strategy.
  • Communicate clearly. Open lines of communication are critical to building trust among key employees in the conjoined team. Broadly conveying your company philosophy and goals represents one step, and meeting one on one to communicate on a personal level with important staff about their concerns is another.
  • Identify cultural similarities, differences. Where do the two companies find common ground? Where are the important differences that must be bridged? Knowing the similarities and differences can help you avoid key staff defections.
  • Invest in your employees. Career development initiatives reflective of the newly-constituted company’s goals impart a message to critical staff that the company cares about their professional growth and wants them to stay.

A cohesive, well-orchestrated blueprint for the transition, and full participation by the united HR team in making the transition work can help companies overcome talent defections following a merger or acquisition.

How has your company managed to keep employees during mergers and acquisitions?

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Evaluating Community Banks? See What Their Customers Have to Say

Are you considering taking your company’s banking business to a community bank? If so, you’ll need to weigh a number of


considerations about the bank before making that move. Don’t overlook one of the most important criteria. That of course is
how current customers view – and what they say about -- the quality of service they receive.

IStock-517491962Banks differ widely in their levels of personal service, from standpoints of both one-to-one personal attention and technological capabilities. No one is better equipped to discuss those service levels than their own business customers. Those customers can speak from personal experience about lending ease, attention to detail and business banker accessibility, experience and expertise, among other criteria.

Here are three best practices you can use to determine how current customers view a bank’s service.

  • Review customer testimonials. Many community banks have a testimonial page featuring customer comments about the bank and its services. For instance, on Leaders Bank’s Testimonials page, one customer lauds the bank for its “level of attention and personal service,” another for “always-personal contact.”
  • Network with current customers. It’s likely you’ll meet current customers of the bank at regular meetings of the local chamber of commerce or other business organizations. Don’t hesitate to ask these customers how well the bank measures up on various yardsticks, including loan availability, mobile banking services, knowledge of the local business environment and simple friendliness.
  • Call current customers. Many banks list some of their more prominent business customers on their websites. Call these customers, ask if they can spare a couple minutes and directly ask if their bank’s service meets their expectations.

In addition to other measuring sticks you use, the views of a bank’s current customer base offer essential insights. Seek these expert views early, to aid in your evaluation.

What methods do you find helpful in evaluating community banks? 

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Show Customers Appreciation with Warm, Friendly Holiday Traditions

One Ontario, Canada home supply products company conceived an inventive approach to remembering customers each holiday season. The company gives favored wholesaler and contractor customers business tools they know will not only be used, but will remind them of the gift giver. One season, the company provided an iPad featuring installed programs likely to help in the wholesalers’ and contractors’ businesses. The tool makes recipients’ day-to-day operations easier, while reinforcing their brand loyalty. 18-LB-563 stock photo

As this example shows, signaling appreciation to customers with friendly holiday traditions remains important. Just as key: Really thinking about how the gift or gesture can have lasting, post-holiday significance.  Consider some of the following ideas.

  • Holiday direct mail. Send a holiday-oriented direct mail piece to thank customers for their business.  It might be a discount off a purchase or offer redeemable in the New Year. It’s a holiday greeting, an advertisement and a business promotion, all in one.
  • One for the books. Each year, your customers work on growing their companies and make them more profitable. Every year, business books debut that provide excellent guidance in doing precisely that. Pick one from the best-reviewed titles, include a personal holiday message in the fly leaf and send to customers with your compliments.
  • Brand your gift. Customers love free items, and could even love them more when your brand’s logo is discreetly sewn onto the gift. A holiday gift of a warm item of clothing such as a cap or scarf is always appreciated. And each time your customers don the items, your logo will remind them of the giver.

Keep your theme consistent year after year, and you may find customers will look forward to your warm, friendly holiday tradition as much as they do egg nog, sleigh rides and tree trimming.

What is the most memorable holiday tradition with customers that you recall? 

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Sneak Preview of 2019 Commercial Loan Trends

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Next year, your company may need a commercial loan for a new facility or equipment, expanding inventory, or possibly a lucrative growth opportunity. You’ll have many options including large multi-national banks, as well as local banks with deep roots in the communities they serve. 

 

Before you make that important decision, keep in mind that in the most recent bank customer satisfaction survey, community banks gained the highest scores.  The following trends will also influence small and mid-size companies’ borrowing decisions in 2019.

·         Both mid-size and small companies have become increasingly disenchanted with multi-national banks’ impersonal nature. Result: They are seeking alternatives such as progressive community banks which place a strong emphasis on personal banking relationships. The banks’ decision makers live in the same community as their customers, and focus their attention on meeting local needs.

·         In this digital age, large multi-national banks’ substantial bricks-and-mortar presence carries less weight than it once did. Most community banks possess the mobile capabilities and digital banking prowess of their larger brethren. In addition, they provide a high level of responsiveness, transparency and local commitment.

·         While big and small banks have both grown their percentages of loan applications approved, look for small banks to approve a higher percentage of applicants in 2019. Big banks currently grant new business loans to about 25.3 percent of small business applicants; small banks approve about 49.1 percent. 

In today’s expanding business climate, you can expect proactive companies to take advantage of these trends to maximize growth in the upcoming year.

What business goals will drive your quest for commercial loans in 2019?

For related content, check these articles:

·         What’s the Best Debt-Equity Ratio for Your Company?

·         The Commercial Loan Term Sheet: An Important Step Before Getting a Loan

·         Debt Ratio’s Crucial Role in Landing Business Loans


How to Forge Rewarding Relationships with Your Community

Providing good products or services was once all B2B companies needed do to earn the respect of their local 18-LB-561 stock photo

business communities.  Today, that’s no longer sufficient. In this era, companies are expected to engage in business-oriented outreach that enhances the business and economic climate in the communities where they operate. Tackling causes at the grassroots level can deliver a timely and substantive business payback.

B2B companies may strive to help “at risk” teen-agers gain skills they need to find jobs. They may pitch in to help revitalize and beautify their area’s central business district. They may partner with non-profit groups addressing environmental issues impacting the area’s desirability as a place to do business. Here are several ways to cultivate a rewarding relationship with your community that helps you gain business customers.

  • Build mutually-beneficial relationships with the companies comprising your customer base. Sound out their leaders on local issues of concern to the business community, while sharing your sensitivity to community concerns.
  • Design your own company program aimed at tackling community issues. It may involve volunteerism from your team, or a collaboration between your company and a not-for-profit partner. Its objective should be to boost the business climate for all companies, and also align with your company’s own business strategy.
  • Make the initiative a central component of your company culture, one that’s part of business decisions. Reward employee participation and volunteerism. Create metrics to help gauge the program’s success and fine tune its ongoing progress.

Establishing and cultivating a rapport with your community from a business standpoint can result in a true “win-win.” It can build a stronger, more vibrant business climate for all companies in your community. At the same time, it can help your company gain the respect, trust and patronage of the very B2B customers and prospects it avidly targets.

What’s your company’s approach to business-oriented outreach in its community? 

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Why Start Now on 2019 Business Planning?

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According to business statistics, only one company in two stays in existence five years, and just one in three remains operational 10 years. The failure to plan ahead for business growth remains a prime reason for failure.  In contrast to basic business plans, growth plans examine opportunities for new business or expansion. A growth plan may, among other goals, explore ways to expand facilities, add equipment or acquire resources to meet increasing demand.

It's not always easy to create growth plans while attending to all the responsibilities of a business owner or CEO. But beating the competition requires grabbing a headstart on growth planning, such as starting to plan now for 2019.  Here are several steps to help you begin.

  • Examine revenue sources. Look at your current revenue streams and determine which additional ones you could add to make 2019 more profitable. Focus on new-revenue-building strategies that are sustainable over time, as opposed to short-lived.
  • Align with your community bank. Because your community bank works closely with you throughout the year, it can help you plan now for growth in 2019. The bank can play an advisory or mentoring role to assist in pinpointing growth opportunities and ensuring your company is prepared to take full advantage.
  • Select opportunities carefully. By starting early on your business growth plan for 2019, you will have the time to carefully sift through available opportunities to select the ones best suited to your company. This selection process is essential, because taking on too many growth opportunities can leave company resources overextended.

As in any other areas of business, starting early and getting a jump on rivals is imperative. Your early planning for 2019 can set the stage for proactive growth planning – and subsequent robust growth – in the years to come.

 

What areas will you focus on in this year's business growth planning?

 

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How Millennials’ Money Views Can Impact Your Business

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Some employers are convinced Millennials view money differently than their older counterparts. There’s strong evidence to support this belief. To a greater extent than earlier generations, Millennials appear to be more motivated by purpose than money or material goods. They may be content to earn less income and own fewer possessions, if that means they can live according to values deeply important to them.

Since Millennials now outnumber Baby Boomers as the largest living generation in the USA (Pew Research Center), smart employers keep these divergent views about money in mind when shaping their workplace culture, and when approaching compensation, benefits and 401k plans.   

  • According to a recent Fidelity study, Millennial workers will sacrifice an average $7,600 in yearly compensation, provided it enhances their career development, allows them to gain more purposeful employment, enables them to find a better corporate culture or lets them realize greater work-life balance.
  • When asked whether financial gain or a better quality work life would spur them to accept a new job offer, almost 6 in 10 (58 percent) Millennials surveyed by Fidelity preferred better work life. Many were attracted more to work settings promoting personal growth and well-being than they were to money.
  • Millennials also place a high value on vacation time. In fact, they’re three times likelier than older workers to justify large expenditures when they result in enjoyable memories, according to a Merrill Lynch study.
  • If financial planning is an indication, Millennials may be more likely to focus on details of employers’ 401k plans. Schwab found 34 percent of Millennials have written financial plans, vis-à-vis 21 and 18 percent for GenXers and Boomers.

It pays to recognize millennials’ distinctive perspectives on money. The more companies understand those views, the better able they will be to attract, retain and gain the most from Millennial employees.

What’s the most valuable insight you’ve recognized about Millennial’s monetary views?

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Community Banks Help Students Improve Their Financial Literacy

More than a decade ago, a Montecito, Calif. community bank began participating in a yearly tradition called Teach Children to Save Day. In partnership with schools, the institution helps ground pupils in money-saving habits. The bank later built on this success, launching a new year-round program called Banking on Our Youth.  The bank tea18-LB-556 blog photoms with schools and area non-profits to present economics and marketing classes, a Get Smart About Credit program, and bilingual instruction for parents.

This serves as but one example of community banks nationwide “going the extra mile” to help grade and high school students begin preparing for the increasingly complex financial world they will enter. Those efforts pay off. In two Arizona towns, a bank's financial literacy work helped student assessment test scores soar 70 percent.

Here are four additional examples of community banks teaming with area schools and other stakeholders to enhance the financial literacy of today’s youth. 

  • Allison Bartels, compliance officer at Leaders Bank in Oak Brook, Ill., teaches money management fundamentals, including saving, banking and budgeting for the future to students at many Chicago-area schools.
  • CCB Community Bank in Andalusia, Ala. has brought an online financial literacy program to area grade and high schools. Called Bonzai, the program replicates a video game, delivering budgeting and saving lessons in fun, interactive ways.
  • Nicholl Doggett, AVP Mortgage Lending at Leaders Bank, works with the organization Empowerment through Education and Exposure (EEE) to help Chicago high school students better grasp concepts like loans, types of bank accounts and the reasons for saving money.
  • Massachusetts-based Blue Hills Bank produced a musical play that travels to area K-5 classrooms, teaching kids about sticking to a money management plan.

By imparting financial skills to grade and high school youngsters today, community banks are helping forge a more financially literate society for tomorrow.

What one financial skill do you wish you had mastered back in grade or high school?

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What’s the Best Debt-Equity Ratio for Your Company?

Debt means different things to different people.  Most entrepreneurs and company owners view debt as an exceptionally valuable tool. However, they may struggle with the question of how much debt they should prudently absorb, relative to equity. 

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That relationship is called the debt-equity ratio. To determine your company’s debt-equity ratio, divide the amount of debt owed by company book value, or assets minus liabilities. A low debt-equity ratio of, for instance, 1, suggests your company is not fully leveraging the lower-cost financing tool of debt. A high debt-to-equity ratio of, say, 10, suggests the company is at risk from shouldering too much debt. Happy mediums between these extremes vary, depending on the type of company and its industry.

 Here are a few rules of thumb to help you determine the optimal debt-equity ratio to fund your company’s operations.

·     If your company is operating in an unsettled, even volatile business climate, it should aim at a lower debt-equity ratio. That’s because a sudden upheaval in the business environment could jeopardize ability to service debt.

·     If your company enjoys the benefit of holding long-term assets not susceptible to unpredictable value fluctuations, it can take on a higher debt-equity ratio. Examples of such assets include buildings and heavy equipment.

·     Your industry also can affect optimal ratios. If yours is a technology firm that invests in research, a ratio of 2 or lower is advised. Ratios between 2 and 5 are acceptable for manufacturing and publicly-traded firms.  Ratios higher than 6 are usually acceptable for banks and other types of financial companies.

 In general, getting debt and equity in optimal balance can help you gain needed loans, because bankers carefully review debt-equity ratios.

Would you like any additional information on the optimal debt-equity ratio?

For related content, check these articles:

·     The Commercial Loan Term Sheet: An Important Step Before Getting a Loan 

·     Signs It’s Time to Invest for Business Growth


Don’t Let Security Measures Vacation While You Do.

The weeks before Labor Day are peak times of the entire year for family vacations. For many, that means taking along a laptop or notebook computer, and perhaps leaving behind an unattended computer back in the office.   18-LB-555 blog photo

Unfortunately, while businesspeople nationwide savor late-summer vacations, hackers work overtime to steal their data, infect their computers with malware and access their private information over public Wi-Fi networks. If like many workers you intend to tackle even limited company business while traveling, these threats can result in sensitive company data falling prey to the schemes of the unscrupulous.

Happily, a few simple travel security tips can help ensure your security doesn’t embark on holiday at precisely the same time you do.  Use these strategies to protect all the mobile devices you take with you from encroachment via cybernetic subterfuge.

  • Use your devices’ locking mechanisms. Locks available on most mobile devices allow you to remotely disable them by using a PIN code. Make sure this lock is enabled, in case you misplace or lose your device.  
  • Lock your computer at work to prevent unauthorized access. Ask a fellow employee to occasionally check your computer to assure it’s not being used.
  • Practice Wi-Fi Wariness. Free Wi-Fi provided by a hotel or restaurant can tempt business or pleasure travelers.  Too often, though, hackers closely monitor the networks hoping to hack into sensitive company or personal data. Never use public Wi-Fi to work on your company’s business.
  • Avoid social sharing of location. Many people like to post photos and reviews on social media as they travel domestically and internationally. Hackers keep their eyes glued to these types of social media updates, enabling them to know when you’re away from the office or that a hotel room is unoccupied and ripe for invasion.

Along with updating passwords, operating systems and using the latest anti-virus protection, these steps can help ensure you savor a safe, secure summer sabbatical. 

What’s your favorite security step while traveling on business or pleasure? 

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