AWT 2020 Business Supplement

Issue 9

1300 Piccard Drive, Suite LL 14 • Rockville, MD 20850

Spring 2020

Business Supplement

What Business Opportunities Arise From WMPs to Reduce Legionella Risk? What Legendary Companies Do (and You Can, Too) Don’t Just Tell Employees Organizational Changes Are Coming—Explain Why How Can Multi-Generational Water Treatment Companies Leave a Lasting Impact? Creating Championship Culture 5 Things Leaders Do That Stifle Innovation Estate Planning and Business Succession Planning How the Best Managers Identify and Develop Talent Are All of Your Customers Profitable for Your Business?

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Table of Contents

Business Supplement 2020

Features 8 What Business Opportunities Arise From WMPs to Reduce Legionella Risk?

32 Creating Championship Culture By Alan Stein Jr.

Your culture is the difference between what you know you are supposed to do and what you actually do. The narrower that gap, the stronger the culture. In essence, your culture is the collective values, beliefs, behaviors, decisions, and environment of your organization. It’s what the team does every single day … during the seen and unseen hours.

By Patsy Root, Kristin Majeska, and Jeff Bates, IDEXX Laboratories, Inc.

This article focuses on potential business opportunities available to water treaters through water management plans associated with the control of Legionella in cooling water and other types of water systems.

16 What Legendary Companies Do (and You Can, Too) By Dennis Snow

Every industry has companies that have stepped up and decided to deliver legendary customer experiences, regardless of the challenges. Publix Supermarkets and Wegmans Food Markets, operating in the notoriously low margin grocery business, have both done it. Chick-fil-A has done it for quick-serve restaurants, and Southwest has done it for discount airlines. No matter the industry, it can be done.

18 Don’t Just Tell Employees Organizational Changes Are Coming—Explain Why

38 How the Best Managers Identify and Develop Talent

24 How Can a Multi-Generational Water Treatment Company Leave a Lasting Impact?

By Tomas Chamorro-Premuzic

By Tom Hutchison, HOH Water Technology

HOH Water Technology Inc. is a 51-year-old, three-generation water treatment company. As we celebrated our 50th anniversary in 2018, we took the opportunity to think about what the next 50 years could be. This led us to a strategic planning process that we found useful for communicating to all current and future employees about who we are and what we aspire to be. This article reflects some of what we learned from our research and going through this process.

Departments 6

President’s Message

To be a serious competitor in the international market, companies must hire emotionally intelligent leaders who have the ability to look ahead and develop strategies that will help them collaborate with their teams and adapt quickly to change. Many leaders have a natural inclination to hire employees who demonstrate characteristics that they associate with entrepreneurship, such as creativity and resourcefulness. But our research shows that it’s far more crucial for managers to focus on what we call “derailers” when selecting and coaching their teams. For many business owners, estate planning and succession planning go hand in hand. If you’re the owner of a closely held business, you likely have a significant portion of your wealth tied up in the business. If you don’t take the proper estate planning steps to ensure that the business lives on after you’re gone, you may be placing your family at risk.

Executives and those responsible for leading change cannot assume that employees understand the reasoning behind them. You must spend time explaining the changes and why they are important. Based on experience supporting organizational change initiatives, there are four key aspects to helping employees understand change, drive commitment, and ultimately contribute to your success.

Calendar of Events

By Kerry Goyette

36 Estate Planning and Business Succession Planning

By Morgan Galbraith

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33 5 Things Leaders Do That Stifle Innovation

Great managers are typically experts in their fields, with a strong performance history and an interest in being in charge. But to lead effectively they need to develop another skill, one that is often overlooked: talent management.

40 Are All of Your Customers Profitable for Your Business?

Every business needs customers to survive. Owners typically spend a lot of time and energy trying to attract customers to their businesses and then keep them, while rarely asking whether those customers are actually desirable ones. But if you want your company to truly thrive, you may need to evaluate whether your customers are raising your business—or dragging it down. It may make financial sense to drop those that fall into the latter group.

41 Advertisement Index

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1300 Piccard Drive, Suite LL 14 • Rockville, MD 20850 (301) 740-1421 • (301) 990-9771 (fax) • www.awt.org

2020 AWT Board of Directors

President Thomas Brandvold, CWT President-Elect Michael Bourgeois, CWT Secretary Matt Jensen, CWT Treasurer Steven Hallier, CWT Immediate Past President David Wagenfuhr Directors Noah Baskin Stephanie Keck, CWT Mark Coldren, CWT Andy Kruck, CWT Ex-Officio Supplier Representative Garrett S. Garcia Past Presidents Bruce T. Ketrick Jr., CWT Jack Altschuler Bruce T. Ketrick Sr., CWT John Baum, CWT R. Trace Blackmore, CWT, LEED AP Ron Knestaut D.C. “Chuck” Brandvold, CWT Robert D. Lee, CWT Mark T. Lewis, CWT Brent W. Chettle, CWT Steven MacCarthy, CWT Dennis Clayton Bernadette Combs, CWT, LEED AP Anthony J. McNamara, CWT James Mulloy Matt Copthorne, CWT Alfred Nickels James R. Datesh Scott W. Olson, CWT John E. Davies, CWT William E. Pearson II, CWT Jay Farmerie, CWT William C. Smith Gary Glenna Marc Vermeulen, CWT Charles D. Hamrick Jr., CWT Joseph M. Hannigan Jr., CWT David Wagenfuhr Casey Walton, B.Ch.E, CWT Mark R. Juhl Brian Jutzi, CWT Larry A. Webb

Staff

Executive Director Heidi J. Zimmerman, CAE Deputy Executive Director Sara L. Wood, MBA, CAE Senior Member Services Manager Angela Pike Vice President, Meetings Grace L. Jan, CMP, CAE Meetings Manager Morgan Prior Exhibits and Sponsorship Manager Barbara Bienkowski, CMP Senior Marketing Director Julie Hill Marketing Director Jennifer Olivares Technical Writer/Copy Editor Lynne Agoston Accountant Dawn Rosenfeld

The Analyst Staff

Publisher Heidi J. Zimmerman, CAE Managing Editor Lynne Agoston Production Manager Maryia Alenchyk Technical Editor Michael Henley, mdhenleywater@gmail.com (303) 324-9507 Advertising Sales Heather Prichard, advertising@awt.org

The Analyst is published quarterly as the official publication of the Association of Water Technologies. Copyright 2020 by the Association of Water Technologies. Materials may not be reproduced without written permission. Contents of the articles are the sole opinions of the author and do not necessarily express the policies and opinions of the publisher, editor or AWT. Authors are responsible for assuring that the articles are properly released for classification and proprietary information. All advertising will be subject to publisher’s approval, and advertisers will agree to indemnify and relieve publisher of loss or claims resulting from advertising contents. Editorial material in The Analyst may be reproduced in whole or part with prior written permission. Request permission by writing to: Editor, The Analyst, 1300 Piccard Drive, Suite LL 14, Rockville, MD 20850, USA. Annual subscription rate is $100 per year in the U.S. (4 issues). Please add $25 for Canada and Mexico. International subscriptions are $200 in U.S. funds.

Calendar of Events Association Events 2020 Annual Convention & Exposition

September 30–October 3, 2020 Louisville Convention Center and Omni Hotel Louisville, Kentucky

2021 Technical Training (West) February 24–27, 2021 Doubletree Mission Valley San Diego, California

2021 Technical Training (East) March 17–20, 2021 Graduate Annapolis Annapolis, Maryland

2021 Annual Convention & Exposition

September 22–25, 2021 Providence Convention Center and Omni Hotel Providence, Rhode Island

2022 Annual Convention & Exposition September 21–24, 2022 Vancouver Convention Centre Vancouver, Canada

2023 Annual Convention & Exposition

October 4–7, 2023 Amway Grand Hotel and Grand Rapids Convention Center Grand Rapids, Michigan Also, please note that the following AWT committees meet on a monthly basis. All times shown are Eastern Time. To become active in one of these committees, please contact us at (301) 740-1421. Second Tuesday of each month, 11:00 am – Legislative/Regulatory Committee
 Second Tuesday of each month, 2:30 pm – Convention Committee Second Wednesday of each month, 11:00 am – Business Resources Committee Second Friday of each month, 10:00 am – Special Projects Subcommittee
 Second Friday of each month, 11:00 am – Cooling Subcommittee
 Second Friday of each month, 2:00 am – Pretreatment Subcommittee
 Third Monday of each month, 9:00 am – Certification Committee
 Third Monday of each month, 3:30 pm – Young Professionals Task Force Third Tuesday of each month, 3:00 pm – Education Subcommittee
 Third Friday of each month, 9:00 am – Boiler Subcommittee
 Third Friday of each month, 10:00 am – Technical Committee Quarterly (call for meeting dates), 11:00 am – Wastewater Subcommittee

Other Industry Events

ASHRAE, Annual Meeting, Virtual Conference, June 29–July 2, 2020 BOMA, International Conference & Expo, Live via Webcast, July 7–9, 2020 ACS, Fall National Meeting & Expo, August 23–27, 2020, San Francisco, California NACE, Corrosion Technology Week, September 13–17, 2020, Houston, Texas WEFTEC, Annual Technical Exhibition and Conference, October 3–7, 2020, New Orleans, Louisiana

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President’s Message

By Tom Brandvold, CWT

The last few months have been challenging times for everyone, including those of us in the water treatment industry. All of us have seen business disruptions in our customer portfolios. Through all of this, your association has remained a resource unlike any other for our industry. As a clearinghouse for information and a platform that allows members to share with our peers and suppliers, AWT has been invaluable to our members. If you weren’t able to join us in Florida for the Business Owners Meeting that took place in February, I encourage you to consider it for 2021. We are still finalizing the date and location for next year, but the meeting gives you concentrated time to focus on your business and network with your fellow water treatment company owners and suppliers. Some topics this year included creating champion teams, innovation, a review of financial benchmarking data, and a legal roundtable covering topics such as cybersecurity and HR issues. In the meantime, please enjoy this Business Supplement. You’ll find articles in this issue about developing water management plans, customer service excellence, organizational change, and succession planning. In addition, there are articles on innovation, culture, identifying talent, and multi-generational water treatment companies. We hope you find the articles in the Supplement helpful. As always, I welcome your feedback and can be reached at carmac@premierwater.com.

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Save the Date

2020 ANNUAL CONVENTION & EXPOSITION SE P T E M BE R 30– OC T OBER 3, 2 02 0

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It's Happening! As of the printing of this Supplement, we are hopeful that we will all be able to safely gather in Louisville. However, the AWT Convention Committee and Leadership Team are closely monitoring the situation with COVID-19. If it is unsafe to meet, or if we are unable to meet in person, rest assured that our Annual Convention & Exposition will still take place! We are working on an exciting contingency plan for a robust virtual meeting!

Mark your calendar for the 2020 Annual Convention & Exposition! Kentucky International Convention Center and Omni Louisville Hotel Louisville, Kentucky Visit our website awt.org/annual-convention-2020 for more details.

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What Business Opportunities Arise From WMPs to Reduce Legionella Risk? By Patsy Root, Kristin Majeska, and Jeff Bates, IDEXX Laboratories, Inc.

Hotels and resorts are in the headlines—and in the courtrooms—for Legionnaires’ disease cases. Of course, the Opera House Hotel outbreak in the Bronx, New York, with 138 cases and 16 deaths traced back to the hotel cooling tower, is the best-known recent outbreak (1). But hotel-associated outbreaks happen regularly and are often traced back to non-cooling tower components of building water systems, such as hot tubs and guest room showers. From the small Sands Resort in New Hampshire, which experienced a 49-case outbreak (causing two deaths), to a brand-name downtown

(Editor’s note: This article focuses on potential business opportunities available to water treaters through water management plans associated with the control of Legionella in cooling water and other types of water systems. The authors have also contributed a sidebar article that looks at water treatment concerns that may arise as part of responses to the COVID-19 pandemic. The sidebar was written by the authors in early April 2020 to accompany the original article that looked at Legionella.)

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What Business Opportunities Arise From WMPs to Reduce Legionella Risk?

continued

• Inconsistent occupancy.

Chicago hotel associated with Legionnaires’ disease cases in 2012 and again in 2018, to large hotels in Las Vegas and a family resort in the Wisconsin Dells, Legionnaires’ disease continues to rear its ugly head.

• Seasonal occupancy or dramatic seasonal fluctuations. • Constant turnover of guests, meaning many people can be exposed in a short time.

Yet, despite these headlines, a 10% to 25% fatality rate, and research by the Centers for Disease Control and Prevention (CDC) that shows 9 out of 10 Legionnaires’ disease outbreaks could have been prevented through better water management, most hotel and resort properties do not yet have water management plans (WMP) in place to reduce their Legionnaires’ disease risk (2–4).

• High percentage of older guests, both business and leisure travelers. • Range of potable and non-potable water sources and features, such as showers, hot tubs, fountains, etc.

Travel-Associated Legionnaires’ Disease: The Numbers

• “Green” water and energy conservation efforts that create ideal environments for L. pneumophila growth.

According to a CDC review, 44% of outbreaks The WMP “Europe has seen similar numbers. The in the United States Opportunity for during 2000 to 2014 Water Treaters most recent figures from the European were travel related, and There are more than Centers for Disease Control show 21% the majority of travel50,000 hotels in the related cases involve United States. That of reported Legionnaires’ disease cases public accommodations number not only across 17 countries were travel related.” (3). Europe has seen includes tens of thousimilar numbers. The sands of heating ventilamost recent figures from tion and air conditioning the European Centers for Disease Control (ECDC) (HVAC) systems and many, many cooling towers, but show 21% of reported Legionnaires’ disease cases across also likely more than 5 million showers, not to mention 17 countries were travel related (5). In the United hot tubs, spas, decorative fountains, ice machines, and Kingdom (UK), the numbers were even higher at 50%. the list goes on. Hotel management companies handle Domestic UK travel contributed to 9% of Legionnaires’ facility operations at many of these locations, but there disease cases, and 41% were associated with travel are many different types of engineering and facilities outside of the UK (6). management setups, and contract hotel staff can be stretched thin and across multiple locations. There is a significant variety of water management expertise of What Drives Disease Risk at Hotel those on staff who are often handling multiple facets of Properties? the operations. Although they are not home to a concentrated number of ill or significantly older individuals like hospitals and Water treaters who already serve this industry as cooling long-term care facilities, hotels have their own set of risk tower treatment providers are often very familiar with factors for Legionnaires’ disease. Hotel risk factors for contracting for the specialized services in this sector. The Legionnaires’ disease include the following: development and/or execution of WMPs is a natural extension of these current services. Certified water • Typically complex and often older water systems, not treaters (CWTs) can provide services for non-potable always consistently maintained. and potable water systems that meet the requirements of ASHRAE Standard 188 and the Association of Water • Numerous water outlets and water features that are Technologies (AWT) Legionella 2019: A Position traditional hazards. Statement and Guidance Document.

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What Business Opportunities Arise From WMPs to Reduce Legionella Risk?

This is a natural add-on service for CWTs to provide directly or through consultant partners and can be a compelling way into facilities to gain new business. Once finalized, the pending ASSE International Professional Qualifications Standard for Legionella Water Management Specialists will be a valuable way for water treaters and/or their consultant partners to demonstrate competency certification for this work. At the same time, the understanding of the hot and cold water systems as well as heating and cooling systems that are required to prepare an ASHRAE Standard 188-compliant plan can provide an in-depth look at the facility and a chance to propose improvements to the system related to water treatment and cooling tower optimization, among other things. It can also offer ongoing water management plan implementation and continuous review services. Organizationally, AWT offers many Legionella and WMP-related resources, including a list of accredited laboratories that can perform WMP water testing.

Case Study: The Value of a Complete WMP

Two guests who stayed at a Missouri hotel in 2015 became ill with Legionnaires’ disease over a three-month period. The hotel did not have a WMP in place. The outbreak investigation focused on the three-story, 79-room building with unenclosed pool and spa in the central atrium. Initial sampling, however, was limited to the pool and spa area and came back negative. Only after a third hotel guest became sick and died from Legionnaires’ disease four months later was an investigation of the potable system conducted. Sinks and/or shower fixtures in five guest rooms were found to be contaminated with L. pneumophila; the environmental isolate was matched with the clinical isolate from the deceased hotel guest. Hazardous conditions, such as unused rooms, an out-of-service water softener, heavy scale, corrosion of most sink faucet aerators, and temperatures ideal for Legionella growth, were also identified. According to the CDC report, “A water management program might have prevented these gaps in water system maintenance (7).”

How Can Water Treaters Help?

CWTs are already trusted partners for many hotel and resort facilities. They tend to be on site regularly, testing a range of parameters to ensure general water quality as 10

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well as monitoring cooling tower performance; they are constantly making water management adjustments tailored to those buildings. There is no simple “plug-andplay” option for WMPs to reduce the risk for L. pneumophila, so the ability to be on site and have knowledge of the facility, as well as have deep understanding of water chemistry, cooling systems, and the facilities’ boilers, make the certified water treater an invaluable member of any facility’s WMP team. The CWT is also an ideal candidate to perform routine tasks in the plan, such as collecting water samples for environmental and chemical testing. Water treaters who currently only handle cooling towers have the expertise and credibility to talk with their clients about other components of their water systems that potentially create equal or greater risks of disease from L. pneumophila and guide them to resources to learn more. Hotel and resort owners are accustomed to following local regulations for pool and spa operation and maintenance. They might not understand that WMPs are not simply a guidance they could adhere to, or that the stakes of not managing their water effectively to prevent disease risk are much higher than a closed pool or small fine; owners may erroneously assume that following local pool and spa regulations will keep their guests safe from Legionnaires’ disease, too. Likewise, they may need education about what’s involved in developing an effective WMP and about the training and expertise they should be demanding from a consultant who might help them (8). Depending on the specific property, the right person to reach with the message about the importance of a proactive WMP and routine testing may be right at the facility—the director of engineering or the general manager who interacts regularly with the owner. In facilities where operations are outsourced to a management group, it might be more effective to go to that management company and identify both the engineer responsible for the facility/facilities and the person with the management company who has the final say on their health, safety, and risk management policies. Certainly, whenever possible, it’s also very valuable for the property owners themselves—whether individuals or Real Estate Investment Trusts (REITs)—to understand their options … and understand the risk of not doing anything. the Analyst Business Supplement 2020

What Business Opportunities Arise From WMPs to Reduce Legionella Risk?

Making the Case to Hotel Owners

The ASHRAE Standard 188 is moving toward being the “standard of care” for all buildings with complex water systems, including public accommodations. ASHRAE Standard 188 is still voluntary, however, and there are not yet any laws requiring hotels to take any specific actions to reduce their Legionnaires’ disease risk, except those regarding cooling towers in New York and Quebec. How can water treaters convince bottom-line focused hotel owners and property managers to invest in developing and executing a WMP? What are the key touch points to get across to ensure that crucial steps are taken to demonstrate the plan’s effectiveness through regular validation testing for L. pneumophila and that ongoing review and updating of the plan occurs? Here are some important benefits to promote when making a WMP pitch: Reputation. Brand and reputation are essential to any hotel property success. A Google search that associates an “outbreak investigation of deadly disease” with a hotel does not help occupancy rates or prices! For example, in addition to weeks of frightening television and newspaper stories, one Tennessee hotel had to send emails and/or letters to more than 4,000 recent guests informing them of the risk of having contracted Legionnaires’ disease from their facility where L. pneumophila was found in the pool and hot tub filter after two cases and one death were reported. An additional 94 cases from 29 different states were identified after this major communications effort (9). Liability reduction. The Sands Resort did not have a WMP in place at the time of the 2018 outbreak. During the investigation, L. pneumophila was found in several areas of the hotel, including the hot tub and guest rooms, and the owner is currently facing multiple lawsuits from hotel guests (10). Having a current, well-maintained WMP that includes validation testing to demonstrate that L. pneumophila is being proactively controlled, precautions taken, and adjustments made as needed, will go a long way toward convincing a jury that any hotel or management company being charged after a Legionnaires’ disease case took the necessary and “reasonable” steps to protect their guests and their employees. According to comments from a defense

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counsel with Beveridge & Diamond PC, Legionellarelated litigation is increasing. A plaintiff’s attorney from Siegel Brill PA also points the fingers at building owners who often take “inadequate precautions (11).” Not only guests are at risk. Hotel employees are prime candidates for repeated exposure to any aerosolized L. pneumophila, and the Occupational Safety and Health Administration (OSHA) specifically states that “occupational exposure risk to Legionella in water systems” is covered under its General Duty Clause saying “Employers should know the hazards and risks with having water sources in the workplace and maintain all systems to prevent Legionella growth (12).” Cost savings. The expense of developing a tailored WMP can easily be offset by avoiding remediation and unneeded or inappropriate controls that can be prompted by attempting to put in place a generic WMP, or one that does not assess the building’s unique plumbing and specific risks or hazards. The relatively low costs of routine L. pneumophila testing to validate the WMP’s effectiveness pale in comparison to potential costs of remediation, high-volume testing, and most significantly, lost revenue and legal costs in the event of a case or outbreak that could have been prevented. Relationships with local accredited laboratories can be a great source of referrals for this business. Water treaters can also let public health officials and utilities, who are often fielding calls from facilities in their community, know about the WMP offerings as well. Knowing that a water treater can handle routine environmental sampling as well as tracking temperature and disinfectant residuals, among other things, may reduce hotel management’s concern about not having the bandwidth to implement a plan.

Final Observation

As both ASHRAE Standard 188 and OSHA make clear, hotel and resorts have a responsibility to reduce the risks of Legionnaires’ disease from their water systems. Water treaters can be valuable partners with hotel owners and property owners in developing and implementing effective water management plans and building lasting business relationships in the process.

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Sources 1. Weiss, D.; Boyd, C.; Rakeman, J.L.; et al. (2017). “South Bronx Legionnaires’ Disease Investigation Team: A Large Community Outbreak of Legionnaires' Disease Associated with a Cooling Tower in New York City, 2015,” Public Health Reports 132(2), pp. 241–250, doi:10.1177/0033354916689620. 2. Soda, E.A.; Barskey, A.E.; Shah, P.P., et al. (2017). “Vital Signs: Healthcare-Associated Legionnaires' Disease Surveillance Data from 20 States and a Large Metropolitan Area—United States, 2015,” Morbidity and Mortality Weekly Report 66(22), pp. 584–589. doi:10.15585/mmwr. mm6622e1. 3.

Garrison, L.E.; Kunz, J.M.; Cooley, L.A.; et al. (2016). “Vital Signs: Deficiencies in Environmental Control Identified in Outbreaks of Legionnaires' Disease—North America, 2000–2014,” Morbidity and Mortality Weekly Report 65(22), pp. 576–584, doi:10.15585/mmwr.mm6522e1.4. Centers for Disease Control and Prevention ( June 7, 2016). “Legionnaires’ Disease. Vital Signs,” www.cdc.gov/vitalsigns/pdf/2016-06-vitalsigns.pdf, accessed April 1, 2020.

5. European Centre for Disease Prevention and Control (2019). “Legionnaires’ Disease,” ECDC Annual Epidemiological Report for 2017, Stockholm: ECDC. 6. Public Health England (2018). “Legionnaires’ Disease in Residents of England and Wales—2016,” https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/696376/2016_ Annual_Report_final.pdf, accessed April 1, 2020. 7. Ahmed, S.S.; Hunter, C.M.; Mercante, J.W.; et al. (2019). “Legionnaires’ Disease at a Hotel in Missouri, 2015: The Importance of Environmental Health Expertise in Understanding Water Systems,” Journal of Environmental Health 81(7), pp. 8–13. Environ Health. 2019;81(7):8–13, www. neha.org/sites/default/files/publications/jeh/JEH3.19-Feature-Legionnaires-Disease-at-a-Hotel.pdf, accessed April 1, 2020. 8.

Majeska, K. (2019). “How to Reduce Legionnaires’ Disease Risk from Your Properties,” Lodging Engineer, 32, pp. 18–23, http://nahle.org/eMag/ Nahle_LE-Magazine_Issue-32.pdf, accessed April 1, 2020.

9.

Yackley, J.K.; Sweat, D.; Fill, M.A.; Garman, K.; Dunn, J.R. (2018). “Notes from the Field: Legionellosis Outbreak Associated with a Hotel Aquatics Facility—Tennessee, 2017,” Morbidity and Mortality Weekly Report 67(2), pp. 77–78, doi:10.15585/mmwr.mm6702a5.

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10. New Hampshire Department of Health and Human Services, Division of Public Health Services (April 1, 2019). “Outbreak of Legionellosis Hampton, New Hampshire, 2018 Final Investigation Report,” www. dhhs.nh.gov/dphs/cdcs/documents/legionella-report-2018.pdf, accessed April 1, 2020. 11. Hayes, P. (2018). “Manhattan’s Rash of Legionnaires’ Outbreaks, Suits”, Bloomberg Law, https://news.bloomberglaw.com/product-liability-andtoxics-law/manhattans-rash-of-legionnaires-outbreaks-suits, accessed April 1, 2020. 12. Occupational Safety and Health Administration (n.d.). “Legionellosis (Legionnaires' Disease and Pontiac Fever)— Control and Prevention,” www.osha.gov/SLTC/legionnairesdisease/control_prevention.html, accessed April 1, 2020.

Kristin Majeska is associate director, Global Government and Regulatory Affairs, for the IDEXX water business. She works with researchers and public health stakeholders throughout the world to encourage application of best practices and laboratory methods that help ensure safe water and reduce the risk of waterborne diseases, including Legionnaires’ disease. Ms. Majeska’s background includes both national healthcare policy work and extensive experience helping small and medium-size businesses enjoy profitable growth. She may be contacted at kristin-majeska@idexx.com. Patsy Root is North American regulatory affairs manager for IDEXX. She is currently a member of ASHRAE SSPC 188 and the Association of Public Health Laboratories (APHL) Environmental Laboratory Science committees, and she is a member of the Executive Board of TNI, a body that develops and oversees laboratory accreditation standards and procedures. Ms. Root also is a reviewer and contributor to Standard

How Does COVID-19 Impact Water System Management for Hotels and Resorts? (Editor’s note: This sidebar article examines water treatment concerns that may arise as part of responses to the COVID-19 pandemic. It was written by the authors in early April to accompany their original article that looked at Legionella in hotels and resorts.) At the time of the submission of this article, the hospitality industry and almost every other industry is in the process of being upended by the novel coronavirus (COVID-19) pandemic. To slow the spread of infection, governments across the globe have issued social distancing and/or shelter-in-place directives, resulting in significant declines in occupancy and temporary hotel shutdowns. The impact is not limited to hotels—as more

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and more individuals stay home, public buildings in all sectors are seeing low or no occupancy. Governments, professionals, and other organizations must also take measures to ensure that the pandemic does not inadvertently lead to an increase in infection because of exposure to waterborne pathogens, including Legionella pneumophila. Governments across the globe have taken a key first step by designating water treaters and other personnel servicing water systems as essential personnel, exempt from staffing reduction requirements. Water treaters, facility owners, and engineering and maintenance personnel must recognize the threat to

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Methods for the Examination of Water and Wastewater, Part 9000. Ms. Root is a national expert who routinely works with public health laboratories to provide Water Safety Management Program development and implementation training and resources. She has published several articles and papers on effective water safety planning to reduce Legionnaires’ disease. She may be reached at patsy-root@idexx.com.

continued

globally and the IDEXX culture tests Legiolert and Pseudalert. He holds a bachelor’s degree in environmental studies from Middlebury College and received his MBA from the Darden School of Business at the University of Virginia. Mr. Bates can be contacted at Jeff-Bates@idexx.com. This article was presented at the 2019 AWT Annual Convention, which was conducted September 11–14, 2019, in Palm Springs, California.

Jeff Bates is the strategic marketing manager for Premise Water at IDEXX. In his role, he is responsible for promoting testing for waterborne pathogens in premise plumbing systems

water safety posed by low or no occupancy in hotels, resorts, and other public buildings. Water stagnation prevents effective chemical treatment and leads to the formation of biofilms, which promote the proliferation of harmful bacteria, such as L. pneumophila (1). Water treaters and other water safety professionals can take a leadership role in ensuring these conditions do not increase health risks when the public returns to work and travel.

disinfection techniques is essential in any building being recommissioned or repurposed for COVID-19 patients. Recently released data highlights the potential for severe outcomes. A preliminary study from two hospitals in China showed that 15% of COVID-19 patients developed a secondary infection, which was fatal in 97% of cases (2). While measures to protect COVID-19 patients against risks associated with L. pneumophila must be weighed against the importance of expanding hospital capacity, ignoring these risks could compound the threat posed by the pandemic.

In many cases, low occupancy is effectively equivalent to a building shutdown, where premise plumbing water is essentially not in use. Organizations focused on water safety, including the American Water Works Association (AWWA) and the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE), outline best practices for decommissioning and recommissioning these systems, including both disinfection and flushing procedures. Following these procedures and stressing their importance can prevent a follow-on water safety crisis in the wake of the COVID-19 pandemic.

The importance of a water management plan (WMP) based on the ASHRAE Standard 188 or the CDC toolkit “Developing a Water Management Program to Reduce Legionella Growth & Spread in Buildings: A Practical Guide to Implementing Industry Standards” is highlighted by the current challenges. WMPs based on industry-accepted protocols dictate clear procedures for system startup and shutdown, and having well-defined, well-documented procedures can make a significant difference in times of crisis. The key messages of the main article on Legionella in hotels and resorts are still, and perhaps even more, applicable considering the ongoing pandemic.

Potentially even more critical to protecting public health is ensuring water safety in buildings being used to provide care for individuals infected with the COVID-19 virus. Governors across the United States are reopening previously closed hospitals to increase the capacity of local healthcare systems. The spread of the virus may also necessitate leveraging hotel buildings as interim care facilities. Because L. pneumophila is an opportunistic pathogen that shows increased virulence in populations with compromised respiratory systems, reducing L. pneumophila risk with proper flushing and

Sources 1.

World Health Organization (2007). “Legionella and the Prevention of Legionellosis,” www.who.int/water_sanitation_health/emerging/legionella.pdf, accessed April 1, 2020.

2. Zhou, F.; Yu, T.; Du, R., et al. (2020). “Clinical Course and Risk Factors for Mortality of Adult Inpatients with COVID-19 in Wuhan, China: A Retrospective Cohort Study,” www.thelancet.com, vol. 395 (10229), pp. 1054–1062, doi:10.1016/S0140-6736(20)30566-3.

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What Legendary Companies Do (and You Can, Too) By Dennis Snow

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What Legendary Companies Do (and You Can, Too) continued

• Make eye contact and smile.

When it comes to delivering outstanding customer experiences, a handful of companies are consistently cited as role models. Disney, Ritz-Carlton, Nordstrom, Harley Davidson, and a few others have inspired countless business books, articles, training classes, and speeches on customer service. I know—I use them all as examples myself!

• Greet and welcome each and every guest. • Seek out guest contact. • Provide immediate service recovery. • Display appropriate body language at all times.

But an argument I hear from some consulting clients or workshop attendees is that it’s pretty easy to deliver legendary service when you offer high-end products and services, like Disney, Ritz-Carlton, etc. The argument goes that, while the service delivered by these companies does make for great stories, most organizations operate on tight margins and can’t afford to do the things these legendary companies do.

• Preserve the “magical” guest experience. • Thank each and every guest. While Disney has seven standards compared to Ritz’s three, they look pretty similar, don’t they? And they don’t appear to be any big, complex secret do they? They’re pretty basic standards of courtesy that can and should apply to just about any interaction. If an organization or its employees can’t apply at least some of those standards, they’re just not trying.

I recently read an online article that described how when Apple decided to open retail stores, they sent their store managers to Ritz-Carlton’s hospitality training. One of the inevitable comments posted to the article was that of course Apple can afford to apply Ritz-like service; they offer high-end products.

Every industry has companies that have stepped up and decided to deliver legendary customer experiences, regardless of the challenges. Publix Supermarkets and Wegmans Food Markets, operating in the notoriously low margin grocery business, have both done it. Chickfil-A has done it for quick-serve restaurants, and Southwest has done it for discount airlines. Wawa has done it with convenience stores. On opening day of the first Wawa in the Orlando area a couple of years ago, there was a line out the door and down the block—for the opening of a convenience store!

But what I suggest here is to take a closer look at what some of these legendary service providers actually do that makes them legendary. Ritz-Carlton’s famous motto is, “Ladies and gentlemen serving ladies and gentlemen.” That’s a pretty simple idea. But let’s go a bit deeper and look at the service standards their associates are expected to follow: • A warm, sincere greeting.

No matter the industry, it can be done.

• Anticipation and fulfillment of the guest’s needs.

Here's something to think about: Rather than coming up with excuses for why proven best practices won’t work for our organization because we face “unique challenges” (most challenges aren’t that unique), why not focus on how we can adapt those best-practices and put them to use?

• A fond farewell using the guest’s name. No matter the industry, size of the organization, or tightness of margins, can’t any organization apply some version of those three simple standards? Heck, I’ve purchased hotdogs at food carts where these Ritz-like standards were applied (the vendor may not have used my name but certainly provided a fond farewell).

Dennis Snow's customer service abilities were honed over 20 years with the Walt Disney World organization. He can be reached at (407) 294-1855 or dennis@snowassociates.com.

And let’s take a look at Disney’s 7 Guidelines for Guest Service:

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Don’t Just Tell Employees Organizational Changes Are Coming— Explain Why By Morgan Galbraith

Employees around the world are reporting that big organizational changes are affecting their jobs. From leadership transitions and restructurings, to mergers and acquisitions, to regulatory changes, there seems to be constant unrest in the workforce. But according to one survey of more than half a million U.S. employees, almost one-third don’t understand why these changes are happening. This can be detrimental for any company trying to implement change. When employees don’t understand why changes are happening, it can be a barrier to driving ownership and commitment and can even result in resistance or push back. And employees’ resistance to

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change is a leading factor for why so many change transformations fail. Executives and those responsible for leading change cannot assume that employees understand the reasoning behind them. You must spend time explaining the changes and why they are important. Based on my experience supporting organizational change initiatives, there are four key aspects to helping employees understand change, to drive commitment, and to ultimately contribute to your success. Inspire people by presenting a compelling vision for the future. During times of uncertainty, people experiencing change want a clear view of the path ahead. It’s the Analyst Business Supplement 2020

Don’t Just Tell Employees Organizational Changes Are Coming—Explain Why continued

important to share what you know—including what’s changing, when, and how. But for most change initiatives, it is also helpful to start with a narrative or story that clearly articulates the “big picture”—why change is important and how it will positively affect the organization in the long term. This should serve as the foundation for how you communicate about the change moving forward. To be successful, your story needs to start with the company’s core mission and then offer a compelling and inspiring future vision. You want to answer: How are the changes you make today helping you achieve your vision for tomorrow? For example, in 2017 our client FMC Corporation was preparing to acquire a significant part of DuPont’s Crop Protection business, which would transform FMC into the fifth-largest crop protection company in the world. As part of their change story, they developed a unifying internal communications campaign called the “Nature of Next” that articulated the reasoning and vision for the acquisition. The campaign explained how FMC would gain a broader product portfolio, an expanded global footprint, and full-discovery R&D capabilities—all of which helps them achieve their aspirations of helping customers feed a growing population in a sustainable way. While the integration is still underway, the campaign generated excitement for the acquisition among employees and is still used today to communicate the promise of the new FMC. Change events are often uncertain, unstable, stressful, and risky. But having a clear meaning or purpose behind the change will strengthen your case. If you can clearly articulate this case, employees will also build a better understanding of the business strategy. Keep employees informed by providing regular communications. Change communications is never a one-and-done event; keeping employees informed is something that you will have to do throughout every step of the change process. Studies have found that continual communication is a leading factor in a transformation’s success. When thinking about how to communicate, keep the following in mind: 19

Be clear and consistent: All of your communications should tie back to the narrative that you developed, reiterating the case for change and presenting a compelling future vision. You will not have all the answers: Often times, you will not have all the answers employees are looking for, and that breeds anxiety and uncertainty. It’s important to focus on what you know and be candid about what you don’t. If you do not have an answer, say so. When this occurs, it’s important to let employees know you are committed to communicating openly and transparently and that you will follow up as soon as you know more. Don’t forget to articulate “What’s in it for me?”: One of the most important phrases you may come across in change communications is “what’s in it for me?” If your employees understand what’s in it for them personally, you’re more likely to see individuals commit to and own the change. Failing to articulate “what’s in it for me” will only hinder your efforts. A few years ago, I supported change communications for the integration of two leading companies in animal health. A leader at one of the organizations was exceptionally good at communicating how individual employees would benefit from the merger. And it wasn’t just about new job opportunities or increased market share. He reinforced how it would carry out their shared passion for keeping animals healthy, and how together, the two organizations would be able to offer new solutions, products, and technologies to customers that would not have been possible before. Empower leaders and managers to lead through change. Major changes or transformations often require asking employees to adopt specific behaviors or skillsets in order to be successful. And when senior leaders model the behavior changes, transformations are five times more likely to be successful. Leaders not only need to be equipped with information and resources, but they need to feel confident leading through change. This can be especially challenging as leaders encounter more pressure to provide better answers and to support their teams. But how your leadership reacts to change will trickle down and impact

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Don’t Just Tell Employees Organizational Changes Are Coming—Explain Why continued

your managers, who then impact your employees and their engagement. To empower leaders and managers, executives and change leads should help them to understand the fundamentals of change, including how to be an effective leader during times of change, how individuals react to and navigate change, and how to address roadblocks or areas of resistance. Recently, I attended an offsite meeting for a client that was undergoing a major transformation of their shared services organization. While a vast majority of the visit was focused on why the organization was changing and what would be happening, they carved out specific time to train and upskill leaders—the individuals who would ultimately be responsible for driving the change. Leaders could select from trainings on a range of topics, including how automation and artificial intelligence are changing their business, how to apply Design Thinking to solve business problems, and the fundamentals of change management. For example, during Design Thinking sessions, leaders were asked to problem solve and develop solutions around real-life challenges that employees may face during the transformation. As a result, leaders walked away better equipped to support how they would drive the transformation forward. Find creative ways to involve employees in the change. When planning for major change events, it is important to solicit feedback and engage people in the process. This helps build ownership in the change and makes employees more likely to support the change and even champion it.

Another way to engage employees and drive commitment is to recognize those individuals who are embracing the change and demonstrating desired behaviors. For instance, a recent client wanted to drive a culture shift that was more open and transparent and engage employees around recently launched corporate values. As part of the rollout, the company introduced a new award that recognized employees who were living their corporate values both inside and outside of work. Employees could nominate their peers, and winners were voted on by the entire organization and revealed at an all-employee town hall. Not only did this reward those who were role models for change, but it allowed the entire organization to become engaged in the process. Being able to effectively lead change within your organization is crucial—and impacts more your culture and your bottom line. Companies that are highly effective at change management are three and a half times more likely to significantly outperform industry peers. Assuming employees understand the changes your company is going through will jeopardize your change initiative. So, the next time you’re approaching a change project, be sure to think about how you can inspire, inform, empower, and engage your most powerful ambassadors—and successfully lead your company into the future. Morgan Galbraith is the employee engagement and change management manager at Weber Shandwick. © 2018 Harvard Business School Publishing Corp.

In preparation for FMC’s crop protection transaction with DuPont, more than 150 FMC employees were nominated by leaders to be part of the Change Champion Network. The group was established to engage its peers, answer questions, and excite employees about the future of the company. The group was an essential resource for fellow employees and served as a channel for two-way feedback for leadership.

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How Can a Multi-Generational Water Treatment Company Leave a Lasting Impact? By Tom Hutchison, HOH Water Technology Inc.

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How Can a Multi-Generational Water Treatment Company Leave a Lasting Impact?

continued

employees, and vendors HOH Water “What is clear is that the lasting impact is earned; a reputation of Technology Inc. is a mainly about relationships.” integrity; and friend51-year-old, threeships formed that generation water treattranscend the business ment company. As we relationship—this is the kind of impact that we have celebrated our 50th anniversary in 2018, we took the had or desire to have. opportunity to think about what the next 50 years could be. This led us to a strategic planning process that we And in multi-generational companies, we have the found useful for communicating to all current and future opportunity to see this impact continue for another employees about who we are and what we aspire to be. generation. How do we make this happen? We all hope This article reflects some of what we learned from our that our impact will have a long-term, positive effect. research and going through this process. But as they say, “hope is not a strategy.” So, the purpose of this article is to: There are at least 40 multi-generational businesses in the Association of Water Technologies (AWT), and • Create an increased awareness of the need for over time, there will most likely be more. Transitioning strategic planning. a business to the next generation is not easy—there is no doubt that the collective wisdom of companies that • Define elements of an effective strategic plan. have been through the process would benefit other companies that are right now facing similar decisions • Provide encouragement from companies who have about their future. “been there.” In preparation for this article, the author conducted 22 • Suggest next steps that an owner can take and point interviews with AWT members whose companies are them to resources that can help. multi-generational. Some of the companies have been through the process; others are going through it now, Throughout the article, the author will insert comments and still others have been through the process with the and quotes (anonymously) from the interviews previous generation and are planning for the transition to mentioned above (shown in italics). the next generation. Generally speaking, each interviewee affirmed that the transition process is not easy. Lots of mistakes were made, and relationships with family members and employees were often strained and sometimes wrecked. But as in all difficult situations, a lot of growth occurred, many businesses have thrived and are stronger now, and the majority of interviewees, when asked to rate the transition process on a scale of 1 to 10, gave the outcome a “10.”

Start With Why

What is clear is that the lasting impact is mainly about relationships. Certainly, financial viability is necessary for any business to survive, let alone prosper. But when interviewees talked about what they most wanted to pass along and see flourish in the years to come, it was more about the effect on employees, family members, and customers—past, present, and future. Service delivered with excellence; the respect of customers,

It is important to distinguish our WHY from WHAT we do (i.e., treat water) and HOW we do it (e.g., service technicians, treatment equipment, remote monitoring).

25

Simon Sinek has written a very helpful book on leadership called Start with Why—How Great Leaders Inspire Everyone to Take Action (1). In the book (2), Mr. Sinek says, “For most of us, somewhere along the way, we forget WHY we set out on the journey in the first place. Somewhere in the course of all those achievements an inevitable split happens. This is true for individuals and organizations alike.”

One interviewee said, “Isn’t it really all about the money?” This was the only explicit acknowledgement of this reality, but for every company just starting out, surviving and making a profit is a pretty big WHY. the Analyst Business Supplement 2020

How Can a Multi-Generational Water Treatment Company Leave a Lasting Impact?

Another individual said: “I think our main motivation was to kick the *** of (the company they just left).” (This was also the main motivation for my dad when he started HOH.) Profit is obviously necessary—and in the early stages of a company’s growth, most of those who started their companies were confident that they could be financially successful by supplying better service or unique treatment approaches. But as time goes on, the WHY comes into more focus. One fourth-generation AWT member said “If we weren’t around, who would take care of our customers?” Now practically speaking, there are probably quite a few companies who could perform the same service. But this member was absolutely convinced that no other company could do it as well. So why does this company exist? To take care of customers who really need them and their products. And as I interviewed this person, it was evident that their employees were all just as committed as ownership to this common mission. Another interviewee said it this way: “My dad’s goal was to feed his family. My goal is to build a business.” As time goes by, and the goal of survival has been achieved, it becomes evident that valuable relationships have been formed—relationships with customers, employees, and vendors. Financial success will come and go, but lasting impact usually centers around our relationships—with friends, family, and business.

continued

For multi-generational businesses, starting with WHY is especially important, because now an additional question needs to be, “What will we look like in the next generation? Why does it matter?” If you are convinced that your customers would really miss you if your company was not around, and if you believe that the next generation has the character and ability to continue the work that you and previous generations have started, then being clear about why you exist is the important first step to leaving a lasting impact with the next generation.

Resources

The use of an outside advisor can really help in this process. There are any number of leadership and strategic planning coaches in any metropolitan geography. Networking and word-of-mouth are the best ways to vet a potential advisor. On a national basis, there are several well-known resources, which are listed in Table A.

Strategic Planning Elements

Once you are clear about your purpose and your vision of what your company can be in the future, there are several elements of strategic planning that need to be addressed. This article is not intended to be a strategic planning template, but at a minimum, these elements will need to be considered in any transition planning: • Family dynamics • Organizational transition • Financials

Table A: Business Planning Resources Organization

Website

The Table Group

https://www.tablegroup.com/

Entrepreneurial Operating System (EOS)

https://www.eosworldwide.com/

EntreLeadership (Dave Ramsey)

https://www.entreleadership.com/

Scaling Up

https://scalingup.com/

StratOp

https://patersoncenter.com/stratop/

The Four Disciplines of Execution

https://www.franklincovey.com/the-4-disciplines.html

Family Dynamics

While 22 interviews are not an exhaustive study, I did not hear a single story of someone who was “forced” into the family business (3). The “worst” case is someone just needing a job, and the family business was a good opportunity. But every family has a certain level of “dysfunction,” and this dysfunction can easily affect the business relationship. Following the footsteps of a successful entrepreneur/business is daunting, and when that successful person is your father or mother, the daunting nature multiplies. 26

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How Can a Multi-Generational Water Treatment Company Leave a Lasting Impact?

Myths and Mortals

continued

“ ‘Good owners’ are those family

Andrew Keyt’s Myths and Mortals (4) is a helpful book on this subject. It is easy for a certain “mythology” to build up around the current leader. This is not necessarily intentional—leaders usually underestimate the power of their presence in a room. Children may idolize their father or mother. Older employees may think, “They will never be as good as their dad.”

members who consider the family business as an asset to be stewarded, who accept ownership as a responsibility, and who have a sense of caring for the business and the employees.”

At my father’s funeral, I said words that others often repeated back to me: “I am not my father, but I am my father’s son.” What I meant is that there was much to admire and emulate about my father, and there was also the need for me to be who I am, not who someone else was. Keyt refers to this as “internal credibility” (believing in yourself) and “external credibility” (others believing in you). “It’s having enough self-confidence to inspire others’ confidence in you. (5)” The parent is not some mythical figure that son or daughter must always be measured against (and found wanting). He or she is just a successful water treatment professional. If the next generation is going to become successful in their own right, they will have to remove themselves from the shadow of their parent. The more aware both generations are of this dynamic, the smoother the transition will be. Awareness, and a willingness to talk about the issue, is foundational to leaving a lasting impact on your family and those you serve. The interviewees were asked to score on a scale of 1 to 10 their satisfaction with the transition process. While the majority scored the outcome very high, there was also pain involved in almost every transition. One individual scored the process “0” with his dad (he sold the business to someone else after promising it to his son) and “10” with his sons (“I won’t do this to my kids”). In some cases, the successor had to start a different company or buy out the parent to get them out of operating the business. The most successful stories were those where thoughtful planning and open dialogue were evident.

The Best Asset a Business Has Is Good Owners

“Good owners” are those family members who consider the family business as an asset to be stewarded, who 27

accept ownership as a responsibility, and who have a sense of caring for the business and the employees. “Bad owners,” then, are those who the view the business as a type of cash cow to be used for their benefit, who see ownership as an opportunity for financial gain, and who do not really care about the people employed by the business. I really appreciate the transparency of those interviewed who have been through difficult family struggles. Cousins, uncles, stepmothers—even some parents themselves; the common denominator was what they could get out of the business. Not only were relationships strained or broken, in some cases lawyers had to be involved. All of which had a negative impact on the successful operation of the business. One insightful, concise quote: “Money does weird things to people.” Work hard to ensure that only “good owners” own the business. Direct conversations may be needed. An example would be talking about buy-sell agreements funded by life insurance. This is not a subject that many of us want to discuss! Still, it may be necessary. Beyond ownership conflict, consider the effect of this strategic planning on the family relationships. One interviewee was particularly thoughtful on this subject. Here is a summary of those insightful observations: 1. Consider the psychological dynamics as a son or daughter takes over. The second generation may have a unique set of gifts (compared to first generation). It is important to do an inventory of their particular strengths. 2. Do not monopolize dad’s affection or attention. Taking over the family business is about having the right gifts, talents, and interests, not about having

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How Can a Multi-Generational Water Treatment Company Leave a Lasting Impact?

the favored affection of the parent (think of the older brother in the Prodigal Son parable [Luke 15]). 3. For owners who are married or with long-term life partners, how you talk about work and the future is important. Close communication is key.

Resources

As already stated, an outside advisor or consultant can be really helpful—the six resources listed in Table A can also be useful in facilitating communication and planning. In Chicago, the Loyola Family Business Center (https://www.luc.edu/leadershiphub/centers/familybusiness/) exists to help family businesses thrive. It strongly recommends forming a “Family Business Council.” This does not have to be a board of directors—it is probably better that it be a more informal team with the goal of communication and connection. I have five children, all married—all own a percentage of stock, and two (son and son-in-law) are involved in the business. While we can be more disciplined at scheduling regular meetings (annual, at a minimum), the meetings have been very helpful at educating all the owners about what they own, how the business is doing, and how they can help. The key is communication with all the owners. While a formal meeting is not necessarily needed, it is best to be intentional about the purpose of a “family council” meeting as opposed to, for example, conducting one at the Thanksgiving dinner table.

Organization Transition

Face the Fear of Letting Go Trust has been defined as “character plus competency.” This definition is helpful as you consider trusting your life’s work with the next generation. You know your child’s character— they are responsible, hardworking, and honest. And yet they don’t understand water treatment chemistry and are not interested in running a business. Despite trusting their character, you would have a hard time trusting the business to them (in this regard, it is the successor’s responsibility to earn “external credibility,” as we mentioned earlier). Or, they have talent, potential, and high IQ , among other attributes, yet they are unreliable, kind of self-centered, and no one appears interested in following their 28

continued

lead—again, you will be reluctant to trust this individual with your life’s work. Some of the reluctance will be your struggle with letting go—really, letting anybody run what you have worked so hard to build. Self-awareness is important at this point (and again, external help may be needed to get selfawareness). This is the current generation’s responsibility—the next generation could be more than competent and have the highest character; if you still struggle with the idea of letting go, you owe it to your company and family to deal with the reasons why. Here are two common reasons: Financial security. You have worked hard to build security, and now you are considering trusting your financial future to someone else. Pride. There is no one who can do it like you. Probably true, but they also may be able to do it better than you. “Building a strong business is one challenge; building an organization that can sustain both a family and a business that benefits family, employees, and the community across generations is an entirely different challenge (6).” There was one very insightful comment that came out from the interviews: "I would have never started a water treatment company; my dad would not have taken it to the next level." (This is my experience as well.) Another interviewee is second generation, with the founder still active in his 80s. It is hard to make progress when the first generation holds on to what they have built. Face the fear of letting go—it may be the best action you can take to build a lasting impact in your family and in your business.

Be Intentional About Leadership Development You own your part, and it is hard to let go. But really, you know that the next generation has what it takes to be successful—they just need a little training. If that is your situation, then be intentional about developing the right plan for their development. Here are some common areas that good plans cover: • Assess what they need. Do this with them—the honest dialogue is very valuable. the Analyst Business Supplement 2020

How Can a Multi-Generational Water Treatment Company Leave a Lasting Impact?

“You own your part and it is hard to let go. But really, you know that the next generation has what it takes to be successful—they just need a little training.” • Determine the plan components—financial education; sales training; leadership development training; individual coaching (look outside your organization to find these resources. Doing it yourself will probably be inadequate and will not address the difficulty of the mythological hero developing the insecure, idolizing next generation). Two different interviewees specifically mentioned Goldman Sachs 10,000 Businesses Program (https://www.10ksbapply.com/) as their most important tool for building the business for the next generation. • Set a goal. “He/she will have achieved the necessary skills/character formation by such-and-such-a-date.” • Honestly evaluate the progress made and the necessary next steps. • Commit to a decision when the goal has been achieved in the agreed-upon timeframe. • Celebrate when the decision is made, announced, and enacted!

Financial An exit strategy is often overlooked or neglected by owners of small businesses, but the lack of an exit strategy can negatively affect the lasting impact you desire to have. Just as it is important to be intentional about leadership development, so it is important to be intentional about having a clear path of exit.

continued

planning, but he “doesn’t think it will be that tough.” And yet, the data from this survey would say exactly the opposite. Remember this interviewee’s quote: “Money does weird things to people.” It can create tension in the tightest families. Another interviewee said, "Everyone talks about exit strategies— I don't need an exit strategy. It’s about trusting the management of the company. This company is a good place to have my money." The challenge comes when control of the management is relinquished, company performance takes a dip, and your investment becomes riskier. Giving up control is easier when the current generation is comfortable with how to get their investment out of the business, and the successor generation is clear about how to accomplish this with earnings from the business. The most successful transitions in this survey were those where it was clear how the previous generation would be taken care of financially without placing too much of a burden on the operation of the business. In a few cases, stock was gifted to the next generation. In more cases, stock was purchased by the successor generation over time. The common denominator was a clear buy-sell agreement.

Guidance Rely on a trusted business advisor—this could be your attorney or accountant. An industry exists to provide this service. Two resources used by AWT members are: • Adam Green, Baker Donelson (https://www. bakerdonelson.com/adam-w-green) • Jack Veale, PTCFO, Inc. (http://www.ptcfo.com/ about/team/jack-veale A number of books exist to address the subject as well. Two to consider:

This may be your exit strategy: “I am committed to doing customer service for Craigslist for the rest of my life. The exit strategy is death (7).” This is a clear strategy—it’s just that the next generation might not agree with it. One interviewee for this article said that he and his sons in the business had not talked about estate 29

• Craig E. Aronoff, Stephen L. McClure, and John L. Ward (2011). Family Business Succession: The Final Test of Greatness, 2nd ed., Palgrave MacMillan, New York, NY. • Peter G. Christman, Christopher Snider (2015). The Master Plan: Exit Strategy for Successful Business Owners. the Analyst Business Supplement 2020

How Can a Multi-Generational Water Treatment Company Leave a Lasting Impact?

There is a lot to consider—legal agreements, business valuations, funding vehicles (e.g., insurance, bank loans), cash flow impact on the business—but a clear exit strategy will be one of the best ways for lasting impact to extend into the next generation.

Closing Thoughts

Building a multi-generational business is really hard. Statistics say that only 30% of family businesses make it to the second generation, about 15% make it to the third, and only 3% to 5% make it to the fourth. If you desire to have a lasting impact with your multi-generational business, you are attempting a goal that few achieve. And yet it can be viewed as a privilege. You already have had a lasting impact. You have delivered service with excellence; you have earned the respect of customers, employees, and vendors; your company has a reputation for integrity; and you have formed friendships that transcend the business relationship. You now have the opportunity take steps to ensure that this impact will continue for another generation. Be intentional about your next steps, and be encouraged that your work will have lasting impact on the next generation as well.

continued

References 1. Sinek, S. (2009). Start with Why: How Great Leaders Inspire Everyone to Take Action, Penguin Group, London, England. 2. Sinek, S. (2009). Start with Why: How Great Leaders Inspire Everyone to Take Action, p. 181, Penguin Group, London, England. 3.

If you have felt forced into the business, the most important first step is to analyze if running the company is what you want to do! This is not an easy analysis, and outside advice – consultant, business advisor, friend— may prove to be especially helpful.

4. Keyt, A. (2015). Myths and Mortals, John Wiley & Sons, Hoboken, NJ. 5.

Keyt, A. (2015). Myths and Mortals, John, p. xxiv, Wiley & Sons, Hoboken, NJ.

6. Keyt, A. (2015). Myths and Mortals, p. xxi, John Wiley & Sons, Hoboken, NJ. 7. Newmark, C. (n.d.). www.picturequotes.com.

Tom Hutchison has worked for HOH Water Technology since 1979 and has been president since 1989, coming to HOH from The Trane Corp. HOH was started by his father in 1968. Based in the Chicago area, the firm has more than 90 employees with two manufacturing facilities and five warehouses with sales in more than 40 states. Mr. Hutchison earned a B.S. in mechanical engineering and an MBA in business administration, both from Southern Methodist University, and a master’s in Divinity from Trinity Evangelical Divinity School. He and his wife, Beth, have five children and 10 grandchildren. This article is based on a presentation given at the 2019 AWT Annual Convention, which was conducted September 11–14, 2019, in Palm Springs, California.

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Creating Championship Culture By Alan Stein Jr.

And when it comes to standards, you either accept it or you correct it. There is no middle ground. The degree to which your team upholds its standards is your culture.

What is your organization’s identity? It’s the cumulative answer to these four questions: 1. Who are we? 2. What are we about? 3. What do we stand for? 4. What are we trying to accomplish? If I walked into your office or in on a meeting at any given time, would I clearly know your identity? I should. Your identity should permeate everything you do. How do you live out your identity? By setting standards. Rules are written at the top, handed down, and expected to be followed. Standards are collectively agreed upon by everyone and honorably upheld. They are a code that everyone on the team chooses to live by. Why do standards work better than rules? People will always give more effort when they feel like they are making a meaningful contribution to something they helped create. As far as upholding the standards … everyone holds everyone else accountable. They do this because they care about their teammate, they care about themselves, and they care about the mission. 32

Your culture is the difference between what you know you are supposed to do and what you actually do. The narrower that gap, the stronger the culture. In essence, your culture is the collective values, beliefs, behaviors, decisions, and environment of your organization. It’s what the team does every single day … during the seen and unseen hours. You test your culture by evaluating the environment when the CEO isn’t around. If there is minimal slippage in efficiency and productivity, you have a strong culture, which is imperative because your culture is the #1 determining factor as to whether or not your organization will be successful. Alan Stein Jr. is a successful business owner and veteran basketball performance coach who spent 15 years working with the highest-performing athletes on the planet (including NBA superstars Kevin Durant, Stephen Curry, and Kobe Bryant). He can be reached at alan@alansteinjr.com.

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5 Things Leaders Do That Stifle Innovation By Kerry Goyette

In 2018, for the first time, the United States slipped out of Bloomberg’s Top 10 most innovative countries. But this isn’t necessarily a hint of entrepreneurship’s demise; it’s a reflection of the unpredictable, tumultuous environment we find ourselves in. To be a serious competitor in the international market, companies must hire emotionally intelligent leaders who have the ability to look ahead and develop strategies that will help them collaborate with their teams and adapt quickly to change. Many leaders have a natural inclination to hire employees who demonstrate characteristics that they associate with entrepreneurship, such as creativity and resourcefulness. But our research shows that it’s far more crucial for managers to focus on what we call “derailers” when selecting and coaching their teams. Derailers are the characteristics that impede innovation and erode our productiveness over time. Here are the most detrimental and common derailers that we identified in our study: • Unconscious Neglect: A tendency toward carelessness and impulsivity, such as sending work before it’s ready or rushing to send quick responses, which come across as uncaring.

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• Overprotectiveness: Holding back on your best work and being reluctant to share achievements for fear that your ideas will be stolen. • Overconfidence: Leaning on your ego and willpower rather than asking for help, even when you need it. • Overexertion: Pushing yourself beyond reasonable limits. • Devaluation: Taking success for granted and underappreciating your relationships and resources out of an urge to pursue the next new thing. On a small scale, these derailers are fairly unobtrusive. But when leaders exemplify or encourage this kind of behavior on a regular basis, it can have an avalanche effect. Our study reveals that derailing tendencies often result in failure on the individual level—no matter how many positive qualities someone possesses—which, if unaddressed, will eventually affect the performance of the team at large. There are ways, however, to mitigate derailers and foster innovation and an entrepreneurial mindset among your team members.

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5 Things Leaders Do That Stifle Innovation

continued

Derailer: Unconscious neglect Solution: Align projects with company goals and hold people accountable for them. If you work with someone who juggles more projects than he or she can manage, is careless with time management, and fails to hold employees accountable for their decisions, you have to call their behavior out when you see it. It’s vital for employees to pause and reflect on how they can accomplish their goals as well as what has impeded their success in the past. Only then will they be able to move forward and better align their own goals with the company’s. Derailer: Overprotectiveness Solution: Encourage employees to find mentors. Overprotective employees tend to shield their ideas and keep their networks small. For example, a startup leader I worked with was worried that others would steal his company’s ideas. But he didn’t see any success until he began to seek out advisers to guide him through the different areas of his business. By sharing his ideas and goals, he was able to gain valuable insights and grow his revenue. Developing a diverse network helps encourage innovation among your employees. If you’re a manager, this means helping workers seek out mentors who are willing to give tough feedback and push them to improve. Here are four types of mentors they should have in their arsenal: • Superstars: People who can act as role models and help mentees recognize their potential. • Connecters: People who are generous with their networks and can make important connections. • Resource Managers: People who are aware of all the resources that are available in an organization and can help their mentees access the ones they need. • Accountability Partners: People who are willing to listen to what mentees are going through and make sure they do something about it. 34

To find these people, encourage your employees to join a professional group with members from a variety of industries, attend entrepreneurial meetups and join social media groups related to their areas of professional interest. Derailer: Overconfidence Solution: Hope for the best, but prepare employees for the worst. Innovation blindness can occur when employees are overconfident. These workers often overestimate the importance of their abilities and underestimate the overarching goals of their team or organization. As a leader, you need to help them see the big picture. Establish a procedure that requires teams to list their anticipated challenges at the start of new projects. You should also ask questions that increase their awareness of potential obstacles. For example, “What are the consequences of this decision?” and “What contingency plans do we have in place?” Anticipating challenges can help employees feel more mentally prepared to handle problems if they do arise, and more comfortable reaching out to others for help. Derailer: Overexertion Solution: Make sure team members take time to recharge. When employees are derailed by overexertion, they can lose their inspiration and drive. Innovation and creativity often come in quieter moments when subconscious connections are made. Sleep, mindfulness and recreation can help clear the mind’s clutter. Build trusted relationships with your team by giving them space to admit when they need a break, and regularly check in on these needs during one-on-one meetings. Some team members might struggle to be straightforward, so listen for their limits. Some common signs of stress to watch for include micromanaging, impulsiveness, inflexibility, withdrawing from others and being overcritical. Remember that each person will have different needs and levels of stamina. the Analyst Business Supplement 2020

5 Things Leaders Do That Stifle Innovation

continued

Derailer: Devaluation Solution: Teach your employees to create and work in an agile environment. Employees who struggle with devaluation often believe they need to expend all their energy in acquiring the most cutting-edge technology, robust marketing resources, or qualified personnel to succeed. This sentiment is often driven by anxiety.

by autonomy, flexibility, and productivity. Check in with your employees and find out what activities are wasting time or resources. Then streamline processes so that resources can be invested in the things that bring value to the company. This type of agile work environment creates room for trial and error, and, most importantly, builds in opportunities for adjustment. Kerry Goyette is the president of Aperio Consulting Group. ©2019 Harvard Business School Publishing Corp.

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Estate Planning and Business Succession Planning The lines blur when a family business comes into play

Estate Planning and Business Succession Planning

continued

For many business owners, estate planning and succession planning go hand in hand. If you’re the owner of a closely held business, you likely have a significant portion of your wealth tied up in the business. If you don’t take the proper estate planning steps to ensure that the business lives on after you’re gone, you may be placing your family at risk.

Separate Ownership and Management Succession

One reason transferring a family business is such a challenge is the distinction between ownership and management succession. When a business is sold to a third party, ownership and management succession typically happen simultaneously. But in the family business context, there may be reasons to separate the two. From an estate planning perspective, transferring assets to the younger generation as early as possible allows you to remove future appreciation from your estate, minimizing estate taxes. On the other hand, you may not be ready to hand over the reins of your business or you may feel that your children aren’t yet ready to take over. There are several strategies owners can use to transfer ownership without immediately giving up control, including: • Placing business interests in a trust, family limited partnership (FLP), or other vehicle that allows the owner to transfer substantial ownership interests to the younger generation while retaining management control.

conflicting financial needs. Fortunately, several strategies are available to generate cash flow for the owner while minimizing the burden on the next generation. They include: An installment sale of the business to children or other family members. This provides liquidity for the owners while easing the burden on the younger generation and improving the chances that the purchase can be funded by cash flows from the business. Plus, as long as the price and terms are comparable to arm’s-length transactions between unrelated parties, the sale shouldn’t trigger gift or estate taxes. A grantor retained annuity trust (GRAT). By transferring business interests to a GRAT, owners obtain a variety of gift and estate tax benefits (provided they survive the trust term) while enjoying a fixed income stream for a period of years. At the end of the term, the business is transferred to the owners’ children or other beneficiaries. GRATs are typically designed to be gift-tax-free. An installment sale to an intentionally defective grantor trust (IDGT). This is a somewhat complex transaction, but essentially a properly structured IDGT allows an owner to sell the business on a tax-advantaged basis while enjoying an income stream and retaining control during the trust term. Once the installment payments are complete, the business passes to the owner’s beneficiaries free of gift taxes.

• Transferring ownership to the next generation in the form of nonvoting stock.

Because each family business is different, it’s important to work with your estate planning advisor to identify appropriate strategies in line with your objectives and resources.

• Establishing an employee stock ownership plan.

Get an Early Start

Another reason to separate ownership and management succession is to deal with family members who aren’t involved in the business. Providing heirs outside the business with nonvoting stock or other equity interests that don’t confer control can be an effective way to share the wealth while allowing those who work in the business to take over management.

Work Around Conflicts

Regardless of your strategy, the earlier you start planning the better. Transitioning the business gradually over several years or even a decade or more gives you time to educate family members about your succession planning philosophy. It also allows you to relinquish control over time, and to implement tax-efficient business structures and transfer strategies. © 2019 Thompson Reuters

Another unique challenge presented by family businesses is that the older and younger generations may have 37

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How the Best Managers Identify and Develop Talent By Tomas Chamorro-Premuzic

Great managers are typically experts in their fields, with a strong performance history and an interest in being in charge. But to lead effectively, they need to develop another skill, one that is often overlooked: talent management. The ability to see talent before others see it and unlock human potential is crucial to running a top-notch team: Great managers are also great talent agents. But becoming a great talent agent is not always easy. It requires us as leaders to be open-minded and to throw away outdated, albeit popular, hiring tactics. Too many of us look for talent in the same old places, or follow the popular trend of thinking the best hire is the best culture fit. These approaches undermine efforts to boost diversity and ultimately hinder creativity and innovation. While there is no one “best” way to hire talent, some approaches are better than others. After carefully scrutinizing the performance of many leaders, my colleagues and I have outlined seven science-based recommendations

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to help you update your hiring tactics and develop your talent management skills along the way: Think Ahead: Prospective employees are often asked during job interviews what their five-year career aspirations are; yet few managers ask themselves what their five-year talent strategy is. Most leaders know what kind of talent they are looking for in the moment, but fewer think far enough ahead to figure out whether or not their new hires have skills that will align with their long-term strategy. If you know where you want to go, focus your efforts on hiring someone with the skills, abilities, and expertise you will need to move forward. Focus on the Right Traits: The World Economic Forum predicts that 65% of today’s jobs will no longer be around in 15 years. As the current educational curriculum is primarily designed to prepare people for present—rather than future—jobs, leaders should be wary of placing too much emphasis on resumes, hard skills, and technical expertise. Instead, they should be focusing their attention on soft skills such as emotional intelligence, drive, the Analyst Business Supplement 2020

How the Best Managers Identify and Develop Talent

continued

and learnability, which, according to research can help determine new skill and knowledge acquisition. Don’t Go Outside When You Can Stay Inside: Scientific reviews show that external hires will take longer to adapt and have higher rates of voluntary and involuntary exits—yet, they are generally paid more than internal candidates. That’s why it’s valuable to look for talent internally before you search outside your organization. Internal hires tend to have higher levels of adaptation and success rates than external hires, not least because they are better able to understand the culture and navigate the politics of the organization. They are also more likely to be loyal and committed to their company. Think Inclusively: Most managers have a tendency to hire people who remind them of themselves. This tendency harms diversity and inhibits team performance. When we hire people just like us, we reduce the probability of creating teams of workers with complementary skill sets, those with different and even opposite profiles. The only way to think about talent inclusively is to embrace people who are different from you. But we suggest you take it a step further and celebrate people who challenge traditional norms. The engine of progress is change, and change is unlikely to happen if you only hire people who perpetuate the status quo. Be Data-Driven: Every human makes bad decisions from time to time. But very few are interested in acknowledging this, which is why hiring biases are often so pervasive. People in positions of power need to be self-critical to make sure unconscious bias doesn’t creep in. For instance, when you hire someone, outline clear performance goals that can be easily evaluated by others, and see whether your assessment aligns with what others think and see. Likewise, before you nominate someone as a high-potential employee, arm yourself with solid data and evidence to ensure that your decision is fair and sensible. Think Plural Rather Than Singular: We live in a world that often glorifies individualism and bemoans collectivity. However, almost everything of value that has ever been produced is the result of a collective human effort— people with different backgrounds coming together to turn their unique talents into a high performing synergy. Thus, when you think about your talent pipeline, focus 39

less on individuals and more on the configuration of your team: Will people work together well? Are they likely to complement each other? Do their functional and psychological roles align with what the team needs? On great teams, each individual is like an indispensable organ in charge of executing a specific function, making each part different from others and the system greater than the sum of its units. Talent agents know that for teams to be successful, the individuals on them must embrace a “we before I” attitude. Make People Better: Great managers recognize potential where others don’t—and so do great talent agents. No matter how skilled your employees may be, you still need to help them grow in new ways. As Herminia Ibarra and Anne Scoular recently noted here in the Harvard Business Review, “The role of the manager, in short, is becoming that of a coach.” This means mastering the art of giving critical feedback, including the ability to have difficult conversations and address poor performance. It also means predicting your future talent needs so that you can stay ahead of the demand and have people on your team remain relevant, valuable assets for years to come. As our ManpowerGroup research surveying nearly 40,000 organizations across 43 countries shows, almost 1 in 2 employers report that they just cannot find the skills they need, which suggests that their talent planning strategies are not effective enough. In sum, being a great manager is, in large part, about being an expert in talent matters. Fortunately, there is a well-established science of talent management, grounded on decades of industrial-organizational and management research. But unless you know how to apply it, this science is useless. The most important part of this process is your continual attention to your employees’ potential and talent. No other factor is likely to make as big a difference when it comes to building a highperforming team. Tomas Chamorro-Premuzic is the chief talent scientist at ManpowerGroup, a professor of business psychology at University College London and at Columbia University, and an associate at Harvard’s Entrepreneurial Finance Lab. Jonathan Kirschner is a business psychologist and the founder and CEO of AIIR Consulting. © 2020 Harvard Business School Publishing Corp.

the Analyst Business Supplement 2020

Are All of Your Customers Profitable for Your Business?

Every business needs customers to survive. Owners typically spend a lot of time and energy trying to attract customers to their businesses and then keep them, while rarely asking whether those customers are actually desirable ones. But if you want your company to truly thrive, you may need to evaluate whether your customers are raising your business—or dragging it down. It may make financial sense to drop those that fall into the latter group.

Track the Data

Determining individual customer profitability should be your first step when considering which customers to drop. If your business systems track individual customer purchases and your accounting system has good cost accounting or decision support capabilities, this process will be simple. If you have cost data for individual products, but not at the customer level, you can manually “marry” product-specific purchase history with the cost data to determine individual customer value.

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Even if you don’t maintain cost data, you can sort the good from the bad by reviewing customer purchase volume and average sale price. Often, such data can be supplemented by general knowledge of the relative profitability of different products. Be sure that sales are net of any returns. Don’t ignore indirect costs. High marketing, handling, service, or billing costs for individual customers or segments of customers can significantly affect their profitability, even if they purchase high-margin products. If you use activity-based costing, your company will already have this information allocated accurately. If you don’t track individual customers, you can still generalize this analysis to customer segments or products. For instance, if the same distributor serves one group of customers, you can estimate the resources used to support that channel and their associated costs. Or, you can have individual departments track employees’ time by customer or product for a specific period.

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Are All of Your Customers Profitable for Your Business?

continued

Sort Your Customers

After you’ve assigned profitability levels to each customer or group of customers, sort them by that level. For example, the A group would consist of highly profitable customers whose business you’d like to expand. The B group would be made up of customers who aren’t extremely profitable, but who still positively contribute to your bottom line. Last, but not least, the C group would include those customers who are dragging down your profitability. These are the customers you can’t afford to keep because, for example, they’re overdemanding and abusive to employees, expect special servicing, or constantly request more time to pay invoices. In other words, they’re in the “no longer profitable” category.

Create Differing Objectives

With the A group customers, your objective should be to grow your business relationship, because they’re worth going the extra mile for. Spend time learning why they’re your best customers. Identify what motivates them to buy your product or service, so you can continue to meet their needs. For example: Is it your products? Your level of service? Some other factor? Developing a good understanding of this group will help you not only build your relationship with these critical customers but also target marketing efforts to attract other similar customers.

good chance that, with the right mix of product and marketing resources, some of them can be turned into A group customers. Try to identify those who have a lot in common with your best customers. Then focus your marketing efforts on them and track the results. When it comes to the C group, spend a nominal amount of time to see if any of them might move up the ladder— it could be possible if you give them a lot of attention. It’s more likely, though, that your C group customers simply aren’t a good fit for your company. Fortunately, firing your least desirable customers probably won’t require you to call them and tell them to get lost. Just don’t focus on them. Stop spending money by sending them catalogs or other mailings. Also, tell your salespeople to stop calling on them, and don’t offer any additional discounts. After a while, most of these customers will leave on their own.

Prune for Growth

Your B group customers may be OK, but just by virtue of sitting in the middle, they can slide either way. There’s a

It may seem counterintuitive to intentionally let go of customers. But as with any shrub or tree, by pruning and getting rid of deadwood, you’ll create space for a healthier company to grow. You’ll also be better able to focus on and serve your best and most profitable customers, ensuring that they will continue to stay loyal to your business over time. © 2019 Thompson Reuters

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