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                                                           Advice and information to help
PUbLIShEd bY   Pannell Kerr Forster of Texas, P.C.         you manage your business

           HoW doeS
           YoUR ComPanY
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                      voLUme 7 n iSSUe 3
                    SPRing/SUmmeR 2007

    Paperless possibilities—
    digital considerations
    10 concepts about
    doing business in Japan
voLUme 7
                The Leading Edge
 iSSUe 3

                                                                           PKF Texas Menu of Services
dear Friends and Colleagues:                                               audit and accounting
                                                                           • Audits
I’ve never met anyone who enjoyed being audited. In fact, most             • Transaction services
                                                                           • Evaluation and implementation of internal
everyone compares an IRS audit to either their worst nightmare or
                                                                             control systems
something perhaps far more unimaginable.                                   • Employee benefit plan audits
                                                                           • Systems consulting
As an accounting professional who has practiced for many years, my         • Mergers and acquisitions
                                                                           • Special agreed upon procedures
first advice is to stay calm, take stock of the situation and respond      • Operational audits
appropriately—with the guidance and assistance of a CPA who has the        • SOX 404 planning & compliance
experience and history to steer the client into what often is a very       • Forensic accounting / Fraud investigations
successful outcome.                                                        Business Process Consulting
                                                                           • eCommerce strategy consulting and implementation
Our lead story, “An overview of the IRS audit” by Aiden Arney and          • Entrepreneurial planning and business
Ashley Autrey in this issue of The Leading Edge, not only discusses          plan development
this process, but provides practical guidance in the event you should      • business process measurement
receive an audit notice. One fact is certain—there are options, and as     entrepreneurial Solutions
Aiden and Ashley report, no one should go it alone when dealing with       •   Profit Enhancement Plus
the IRS. Check out their article; I’m sure you’ll find it enlightening.    •   Reviews & compilations
                                                                           •   Turnaround management
If you are from Texas, you no doubt know the history of the King           •   Strategic planning
                                                                           •   Healthy Start Package for business start-ups
Ranch, but I bet you didn’t know that King Ranch Inc. is the largest       •   Outsourced controller & CFO
producer of orange pulp used in juice production in the United             •   Cash flow management
States and that its farming business is almost as well-known in            •   Accounting software support
agricultural circles as its ranching operations. Through this unique       information Technology Consulting
Client Spotlight, you’ll not only learn all about the King Ranch, but      • Application software selection assistance
understand some of the accounting processes associated with its            • business system design and implementation
operations.                                                                • hardware selection and implementation
                                                                           • Network infrastructure evaluation and
Finally, we turn again to our Cubesters with “battlefield hOUSTON,”        • Microsoft Gold Certified Partner
another article in a series by our younger members of the firm. It’s no
secret that when the economy is good, recruiting of talent is difficult    Litigation and insolvency
because more jobs are available, not only to recent graduates, but         •   bankruptcy and insolvency consulting
                                                                           •   business valuation
seasoned professionals as well. Ashley Autrey and daniel Travis offer
                                                                           •   Insurance claims
their opinions on the advantages and benefits associated with living       •   Intellectual property disputes
and working in the houston area, making a very strong case as to why       •   divorce proceedings
houston should be your destination workplace ahead of many other           •   Lost profits
                                                                           •   Accounting malpractice
U.S. cities.                                                               •   Tax controversies

One final thought. The group associated with publishing The Leading        Tax
Edge will take a break this summer. As a result, the next magazine you     • Federal, state and local planning and compliance
receive will be in the fall. While this sounds like a long time, it will   • Research and development tax planning
                                                                           • Cost segment analysis and accounting for buildings
be here before you know it. In the meantime—as always—let us know            and manufacturing facilities
how we’re doing. We want to hear from you.                                 • Tax controversy management and resolution
                                                                           • Estate, gift and tax trust planning
                                                                           • business succession planning

                                                                           international Tax
                                                                           • Global tax minimization planning and
                                                                           • Tax advantages for exporters
                                                                           • Transfer pricing studies and planning
Kenneth J. Guidry, CPA                                                     • Withholding tax compliance and planning for
President                                                                    cross-border payments
                                                                           • Income and estate planning and compliance for
                                                                             resident and non-resident aliens
                                                                           • Financial accounting for income taxes (EAS 109)

                                                                                       VOLUME 7   n   ISSUE 3   n   SPRING/SUMMER 2007

VOLUME 7      n   ISSUE 3 n SPRING/SUMMER 2007
             The Leading Edge
The Leading Edge Alliance is a global alliance
of major independently owned accounting and
consulting firms that share an entrepreneurial
spirit and a drive to be the premier provider of
professional services in their chosen markets.
                                                             	 4	 How	does	your	company	
Members are top quality firms who are very                   	 	 measure	up?
successful, have deep client relationships, and
strong ties to the community. The Alliance
                                                             	   	   Service,	quality	frequently	top	price
provides members with an unbeatable combi-
nation: the comprehensive size and scope of
a large multinational company while offering
their clients the continuity, consistency and
                                                             	13	 Bits	&	Pieces
quality service of a local firm.                             	   	   Small	business	tops	list,	more	people	
Member firms have access to the best and                     	   	   use	only	cell	phones,	U.S.	companies	
brightest teams of business advisors—a peer-
to-peer connection that provides the right
                                                             	   	   need	trade
business solutions for clients.
The combined revenues of the Alliance total
more than $1.1 billion with more than 6,000                  	14	 Ready	to	say	goodbye	to	paper?
professional staff. The Alliance continually
assesses new member firms, to extend into all                	   	   Digitizing	offers	efficiency,	productivity	benefits
prominent international markets.

    Leading Edge Advisory Committee
                  Linda Watson
                   Brady Ware
                Marshall Lehman
         Lurie Besikof Lapidus & Co., LLP
                  Raissa Evans
        Pannell Kerr Forster of Texas, P.C.                  	 9	 News	and	information	
                    Gary Voth                                	 	 from	our	firm
        Pannell Kerr Forster of Texas, P.C.
                 Elizabeth Reed
           Postlethwaite & Netterville
                 Belinda Ressler                             	16	 Doing	business	in	Japan…	
                   Wilson Price
                Karen Kehl-Rose
                                                             	 	 10	myths,	truths	to	consider
            The Leading Edge Alliance

               in affiliation with
                   Wise Group
                                                             	18	 In	a	nutshell:	Q&A
      (Formerly Custom Publishing Group)                     	   	   Chris	DeSantis	responds	to	your	
                  Ann M. Gynn
                     Editor                                  	   	   workplace	dilemmas
Natasha Fletcher, Amanda Horvath, Stacy Vickroy
                  Art directors
                  Andrea Jager
               Graphic designer                              	19	 The	Leading	Edge	Alliance

The Leading Edge is published three times per year by
Wise Group, 812 huron Road, Suite 201, Cleveland, Ohio,
44115, (216) 523-1212, FAX (216) 241-5458. Periodicals
postage paid at Cleveland, Ohio.

IRS Treasury Regulations require us to inform you that any
tax advice contained in the body of this communication
was not intended or written to be used, and cannot be
                                                                                Winner 2006 AGD award for publication design
used, by the recipient for the purpose of avoiding penal-
ties that may be imposed under the Internal Revenue
Code or applicable state or local tax law provisions.

          ThE LEAdING EdGE                                                                                                     


                                                     SERVICE, QUALITY FREQUENTLY TOP PRICE


         ou	 probably	 have	 at	 least	 a	 handful	 of	      John	Curtis	of	North	Carolina-based	Integrated	     tation	even	worse,”	says	Jim	Molloy,	president	of	
         poor	 customer	 service	 stories.	 Whether	      Organizational	 Development	 says	 U.S.	 busi-         the	 moving	 and	 storage	 company.	 “It’s	 Russian	
         wandering	 a	 store’s	 aisles	 looking	 for	     nesses	 began	 seeing	 quality	 as	 less	 important	   roulette	to	find	quality	service.”
help,	 putting	 together	 a	 complicated	 toy	 only	      than	price	in	the	1970s.	As	U.S.	manufacturers	            Molloy,	 though,	 takes	 customer	 service	 per-
to	find	parts	missing	or	navigating	a	company’s	          faced	the	threat	of	world	competition	(e.g.	Japan	     sonally.	 He	 offers	 all	 customers	 the	 president’s	
push-a-number	 phone	 system,	 the	 experience	           entering	the	automobile	market),	they	chose	to	        hotline—a	direct	number	to	his	office.	“I’ll	talk	
most	likely	ended	in	frustration.                         focus	only	on	price	out	of	desperation.	               to	 anyone	 who	 has	 a	 problem.	 The	 buck	 truly	
   The	 days	 of	 quality	 products	 and	 superior	          But	 the	 global	 economy	 today	 has	 led	 more	   stops	with	me,”	he	explains.	Few	customers	call,	
customer	 service	 may	 be	 diminished	 but	 they	        consumers	 to	 rethink	 that	 mode,	 now	 believ-      though,	and	some	who	do	are	just	curious	to	see	
are	 not	 a	 thing	 of	 the	 past.	 Poor	 service	 and	   ing	quality	tops	price	in	many	situations.	“The	       if	the	president’s	hotline	is	real.
quality	have	led	many	consumers	to	appreciate	            customer	 is	 king,”	 Curtis	 says.	 “The	 consumer	       The	 commitment	 to	 quality	 customer	 ser-
more	fully	the	value	in	good	quality	and	service.	        defines	quality.	They	have	multiple	choices	and	       vice	 really	 starts	 with	 hiring,	 Molloy	 says.	 The	
For	 many	 small	 and	 mid-size	 businesses,	 that	       vote	by	their	feet	and	pocketbooks.”                   company	 conducts	 background	 checks	 on	 all	
renewed	interest	signals	a	way	to	stand	out	from	                                                                applicants	and	employs	people	full	time,	so	they	
the	big	business	competition.                                                                                    are	 professionals	 rather	 than	 people	 who	 view	
   “It’s	 time	 to	 sweat	 the	 small	 stuff,”	 says	                                                            moving	as	a	side	job.
Jennifer	 Kluge,	 chief	 operating	 officer	 of	 the	                                                                Employees	are	trained	on	complying	with	all	
Michigan	 Business	 &	 Professional	 Association	         MOVING QUALITY                                         the	necessary	paperwork,	wearing	the	company	
and	 president	 of	 the	 National	 Association	 of	       Molloy	 Brothers	 Moving	 and	 Storage	 handles	       uniform	appropriately	and	saying	the	appropri-
Business	 Resources.	 “The	 tolerance	 for	 poor	         thousands	 of	 residential	 moves	 and	 even	 more	    ate	 things	 to	 customers.	 Molloy	 extends	 the	
service	is	short.”                                        commercial	moves	each	year.	Based	in	the	New	          service	 commitment	 further—employing	 field	
   She	tells	of	a	small	independent	grocer	nearby	        York	 City	 market,	 the	 competition	 has	 been	      managers	 who	 monitor	 and	 help	 drivers.	 Each	
who	 prides	 himself	 on	 offering	 quality	 foods	       fierce	throughout	its	60-plus	years.	The	advent	       field	manager	visits	10	to	15	jobs	a	day.	A	qual-
and	 at-home	 deliveries.	 “Their	 niche	 is	 quality	    of	the	Internet	only	raised	the	number	of	com-         ity	 assurance	 department	 conducts	 statistical	
in	product	and	service.	People	are	willing	to	pay	        petitors.	“It’s	made	an	industry	with	a	bad	repu-      analysis	 on	 complaints	 to	 identify	 areas	 for	
more	for	that	kind	of	service.”                                                                                  improvements.

ThE LEAdING EdGE                                                                                                                                                      

    From	 a	 prospective	 customer’s	 perspective,	
customer	 service	 begins	 with	 the	 first	 call	 to	
                                                               THE CONSUMER                                            ter	serve	its	membership,	says	Kluge.
                                                                                                                          “People	are	too	busy	to	network.	We	say,	‘You	
Molloy	Brothers.	Each	customer	is	assigned	one	
Molloy	 employee	 who	 handles	 the	 customer’s	
                                                               DEFINES QUALITY.                                        don’t	have	to.	Tell	us	your	need,	we’ll	go	out	and	
                                                                                                                       get	a	solution,’”	she	explains.
move	 from	 estimates	 to	 arrangement	 of	 final	             THEY HAVE                                                  So	 if	 a	 member	 is	 seeking	 a	 new	 phone	
delivery	(a	minimum	of	seven	contacts.)	Moving	                                                                        system,	 for	 example,	 it	 identifies	 the	 member’s	
is	 one	 of	 the	 most	 stressful	 times	 in	 a	 person’s	     MULTIPLE CHOICES                                        objectives.	 An	 association	 staff	 member	 then	
life	so	minimizing	the	frustration	is	an	important	
service,	Molloy	says.	He	explains	that	customers	
                                                               AND VOTE BY                                             takes	 over	 the	 process—prequalifying	 bidders,	
                                                                                                                       receiving	 proposals	 and	 setting	 up	 meetings	 if	
are	willing	to	spend	a	few	hundred	dollars	more	
if	necessary	to	entrust	a	reputable,	service-mind-
                                                               THEIR FEET AND                                          the	member	wants.
                                                                                                                          “It’s	a	result	of	listening	to	the	client,”	Kluge	
ed	company	with	their	life	belongings.                         POCkETBOOkS.                                            says.	 While	 the	 new	 program	 started	 last	 year,	
                                                                                                                       it	took	a	few	years	of	planning	to	set	it	up	cor-
                                                                                             JOHN CURTIS,
                                                                  INTEGRATED ORGANIzATIONAL DEVELOPMENT                rectly.	 Eventually,	 the	 association	 plans	 to	 be	
                                                                                                                       able	to	forecast	the	needs	of	members	by	keep-
                                                                                                                       ing	track	of	their	requests.	So	in	five	years,	the	
NAME DOESN’T                                                  the	field	are	so	red	it	looks	like	they	have	been	       association	could	go	back	to	the	member	seek-
SAY IT ALL                                                    sunburned.	The	company’s	staff	contacts	the	cli-
                                                              ent	to	see	if	that	redness	is	a	desired	effect.	If	it	
                                                                                                                       ing	a	new	phone	system	now	to	see	if	its	phone	
                                                                                                                       needs	have	changed	and	could	benefit	from	the,	a	Montana-based	company,	                is	not,	the	printer	corrects	the	color.                  latest	products	on	the	market.
certainly	sounds	like	a	company	competing	on	                    That	 service	 means	 a	 lot	 to	 Printingforless.       The	 proactive	 networking	 already	 is	 work-
price.	But	while	price	may	get	customers	in	the	              com’s	clients	and	brings	them	back.	“I	think	we	         ing.	Kluge	tells	of	one	member,	an	educational	
door,	 the	 long-term	 business	 model	 centers	 on	          could	 increase	 our	 prices	 and	 they	 would	 pay	     consultant,	who	lost	a	major	client	and	thought	
quality	and	service.                                          it,”	Field	says.                                         his	business	would	not	survive	because	he	could	
   “We’re	not	‘Printing	for	Least’	and	we	don’t	try	             Its	 client-centered	 approach	 is	 not	 the	 only	   not	 reach	 the	 individual	 prospects.	 Through	
to	be,”	says	CEO	Andrew	Field.	“Our	revenue	is	               quality	 service	 component	 at	 the	 printer.	          the	 association’s	 assistance,	 he	 had	 access	 to	 a	
returning	customers.	We	lose	money	on	the	first	              Running	 the	 ship	 professionally	 and	 efficiently	    professional	staff	who	secured	the	right	contact	
time.	We	have	to	have	repeat	business.”                       is	 a	 must	 as	 well.	 has	 its	   lists	for	him	and	crafted	an	effective	marketing	 positions	 itself	 as	 the	           own	 “university”	 for	 employee	 training.	 It	 also	   message.	“He	had	so	many	leads,	he	had	to	turn	
print	 expert	 for	 small	 businesses	 who	 do	 not	          creates	 a	 job	 dashboard—outlining	 the	 work-         away	business,”	Kluge	says.
have	the	money,	like	a	General	Motors,	to	sup-                flow	and,	most	importantly,	communicating	the	
port	a	design/printing	staff.	The	company	prides	             customer	requirements	clearly	for	all	to	see	and	
itself	 on	 “demystifying”	 the	 printing	 process	           understand.
to	 save	 its	 customers’	 pride	 and	 money.	 “They	            Field,	too,	sees	hiring	as	THE	essential	com-
could	 blow	 the	 whole	 marketing	 budget	 on	 a	            ponent	 of	 providing	 quality	 to	 his	 customers.	     REFINED
job	or	look	stupid	because	they	don’t	know	the	
jargon	or	technical	aspects,”	Field	says.
                                                              “I’m	really	picky,”	he	says.	Despite	high	growth	
                                                              and	 great	 need	 for	 employees,	 he	 says	 he	 may	
                                                                                                                       BABY STEPS
   When	 customers	 send	 files	 that	 are	 not	 pre-         hire	about	one	of	every	100	resumes	he	receives.	        They	 had	 heard	 and	 seen	 it	 all	 before—home-
pared	 professionally,	 works	           “I	don’t	hire	somebody	who	doesn’t	care	about	           made-looking	 puppets	 moving	 to	 synthesized	
to	ensure	the	final	project	is	what	the	customer	             quality.	 I’ve	 fired	 people	 who	 had	 wonderful	      versions	 of	 classical	 music,	 a	 cartoon	 character	
expected.	If	a	file	is	sent	to	print	business	cards	          skills	but	didn’t	care,”	Field	says.                     slapped	onto	a	T-shirt	or	an	electronic-sounding	
and	 the	 printer	 sees	 only	 nine	 digits	 in	 the	                                                                  children’s	CD.	
phone	number,	it	alerts	the	client	even	though	                                                                           Adam	Adelman	and	Belinda	Takahashi	thought	
proofreading	technically	is	not	part	of	the	print-                                                                     parents	wanted	an	alternative,	higher-end	prod-
ing	process.	“That	could	save	the	client	$500	on	                                                                      ucts	for	their	children.	That	belief	turned	into	a	
a	print	order	that	would	be	useless	without	the	              WE-DO-IT-FOR-YOU                                         business	model	and	the	two	founded	JunoBaby,	
correct	phone	number,”	Field	says.	
   Or	 perhaps	 the	 client	 sends	 a	 file	 for	 a	 flyer	   NETWORkING                                               now	 an	 award-winning	 premium	 producer	 of	
                                                                                                                       educational	 DVDs,	 CDs,	 trendy	 apparel	 and	
with	two	people	in	a	field.	The	image	looks	OK	               The	 Michigan	 Business	 &	 Professional	                plush	toys	for	children	age	5	and	younger.
on	the	customer’s	computer	screen	but	when	it	                Association,	 which	 counts	 more	 than	 20,000	            “We	 differentiate	 ourselves	 in	 the	 market	
hits	the	top-of-the-line,	professional	equipment,	            small	 businesses	 among	 its	 members,	 changed	        through	quality,”	Adelman	explains.	They	write	 finds	 the	 people	 as	 well	 as	        its	traditional	business	networking	model	to	bet-        the	musical	scores	by	hand	and	have	orchestral	

                                                                                                                             VOLUME 7   n   ISSUE 3   n   SPRING/SUMMER 2007

musicians	 perform	 them	 live	 before	 a	 profes-        market.”                                                   engine	 and	 community	 for	 entrepreneurs	 and	
sional	production	team	finishes	the	sound.	They	             JunoBaby	opted	for	quality,	taking	three	years	         small	businesses.	The	company	is	based	on	the	
hired	a	leading	behavioral	science	researcher	as	         (about	 double	 their	 original	 expectations)	 to	        belief	 (and	 research)	 that	 people	 spending	 big	
a	 script	 consultant	 to	 help	 identify	 what	 plot	    bring	their	products	to	market.	“We	decided	to	            bucks	 on	 professional	 coaches,	 motivators	 and	
points,	 words,	 etc.	 would	 work	 best	 for	 the	       stay	on	the	course.	If	we	hadn’t,	it	would	have	           mentors	want	to	assure	they	are	getting	quality	
targeted	age	group.	They	hired	world-class	pup-           been	 all	 the	 more	 difficult	 in	 the	 long	 run	 to	   advisors	who	can	help	their	particular	needs.
peteers	 and	 voice	 talents	 who	 spoke	 English,	       focus	on	our	niche	and	differentiate	ourselves,”	              He	 compares	 it	 to	 or	 WebMD®,	
Spanish	and	French.	But	even	with	all	that	tal-           Adelman	says.                                              which	 takes	 an	 enormous	 amount	 of	 informa-
ent	(or	perhaps	because	of	it),	the	development	                                                                     tion	 from	 a	 particular	 sector,	 refines	 it,	 puts	 it	
process	was	not	quick.                                                                                               into	 more	 manageable	 buckets	 and	 categorizes	
   	 “I	 was	 very	 tempted	 to	 take	 a	 different	                                                                 it	 into	 an	 easy-to-use	 format.	 Peake	 used	 that	
course,”	 Adelman	 admits.	 “After	 the	 first	 year,	                                                               thinking	 to	 focus	 on	 the	 online	 coaching	 and	
we	were	far	from	finished	and	found	ourselves	            REFINING SEARCH                                            mentoring	crowd	for	professionals.
at	 the	 crossroads.	 We	 had	 to	 make	 a	 decision	     Last	November,	Jim	Peake	launched	My	Success	                  “Appealing	 to	 a	 certain	 market	 distinguishes	
to	focus	so	intently	on	quality	or	be	more	flex-          Gateway,	 a	 Consumer	 Reports-type	 search	               the	business,”	Peake	says.
ible	 in	 the	 interest	 of	 getting	 the	 product	 to	                                                                  For	 example,	 an	 entrepreneur	 is	 looking	 to	

                                  Grab that chocolate chip cookie

                                           small	grocery	store	owner	in	New	York	was	look-              a	110-percent	money-back	guarantee	so	customers	know	if	
                                           ing	 to	 boost	 his	 business	 when	 he	 heard	 Emmy	        they	are	not	satisfied,	there’s	a	positive	return.
                                           Award-winning	comedian	and	writer,	Ross	Shafer,	                “When	you	make	an	emotional	connection	with	custom-
                                  speak	about	the	connection	of	customer	empathy	to	sales	              ers,	the	customers	can,	in	effect,	say,	‘Now	I	can	stop	dating	
                                  growth.                                                               other	companies,’”	Shafer	says.
                                     The	 owner	 took	 two	 thoughts	 from	 Shafer’s	 presenta-            Of	course,	the	opposite	is	true,	too.	If	a	company	disap-
                                  tion—chocolate	 chip	 cookies	 are	 the	 most	 aromatic	 food	        points,	customers	look	for	other	“dates.”	Shafer	tells	of	his	
                                  and	the	final	moment	of	the	customers’	transaction	is	what	           recent	 visit	 to	 a	 national	 casual	 dining	 chain	 restaurant.	
                                  will	make	them	decide	whether	to	come	back.                           The	 experience	 and	 food	 were	 great—they	 left	 having	
                                     The	owner	returned	to	his	store	and	hired	someone	to	              fallen	 in	 love.	 But	 that	 feeling	 was	 short-lived	 when	 two	
                                  hand	out	warm,	fresh	chocolate	chip	cookies	to	customers	             days	 later	 Shafer’s	 phone	 rang	 and	 he	 found	 Applebee’s	
                                  at	their	exit.	Sales	increased	more	than	700	percent.	“He’s	          automated	survey	taker	on	the	other	end.	When	his	verbal	
                                  done	the	best	he’s	ever	done,”	Shafer	says.                           responses	 did	 not	 fit	 the	 format	 the	 automated	 system	
                                     Shafer	 goes	 around	 the	 country	 sharing	 his	 research	        would	accept,	the	recorded	voice	said,	“so	you’re	refusing	
                                  and	 insight	 into	 the	 importance	 of	 customer	 empathy.	          to	take	the	survey?”
                                  He	 has	 worked	 with	 hundreds	 of	 companies,	 includ-                 Shafer	says	that	final	touch	by	the	restaurant	is	what	is	
                                  ing	 Microsoft,	 Toyota,	 Safeway,	 Nordstrom,	 GE,	 Pfizer	          remembered.	“They	blew	it,”	he	says.
                                  and	 Xerox.	 Founder	 of	 the	 Customer	 Empathy	 Institute,	            Business	lingo	also	can	detract	from	a	customer-centric	
                                  Shafer’s	most	recent	book	is	The Customer Shouts Back: 10             focus.	 Shafer	 explains	 an	 example	 from	 a	 national	 pizza	
                                  Things You Must Know If You Want Their Lifetime Loyalty.              chain	meeting	to	discuss	increasing	revenue.	The	language	
                                     “IT’S CRAZY TO THINK THAT JUST BY BEING                            left	 one	 employee	 frustrated.	 He	 responded,	 “We	 call	 it	
                                  HUMAN YOU CAN DIFFERENTIATE YOUR BRAND,                               product.	 For	 our	 customers,	 they	 refer	 to	 this	 as	 dinner.	
                                  BUT IT WORKS,” SHAFER SAYS. “THE GREAT                                We	call	it	dining	in,	they	call	it	dining	out.”
                                  BRAND DIFFERENTIATION IS HUMANITY.                                       Shafer	 says	call	 centers	 are	 designed	to	eliminate	emo-
                                     “Anything	an	organization	can	do	to	connect	with	clients	          tion	on	the	part	of	the	employees	but	can	have	a	big	emo-
                                  emotionally	is	translated	as	a	quality	move,”	he	says.                tional	impact	on	customers.	“The	problem	with	most	call	
                                     Jones	Soda	integrates	its	customers	on	its	bottles,	inviting	      centers	is	that	they’re	based	on	efficiency,	such	as	each	call	
                                  customers	to	submit	favorite	photos	for	the	labels.	Zappos,	          should	take	32	seconds.	Proficiency	is	measured,	but	you	
                                  a	major	online	shoe,	apparel	and	accessories	retailer,	offers	        can’t	measure	human	relationship	in	proficiency.”	e

ThE LEAdING EdGE                                                                                                                                                             

boost	her	company’s	marketing	and	is	searching	
for	 a	 coach.	 When	 friends	 hear	 she	 is	 looking	
                                                            WE HAD TO MAkE A DECISION TO
for	a	business	coach,	they	suggest	Tony	Robbins.	
The	entrepreneur	is	not	sure	who	would	be	the	
                                                            FOCUS SO INTENTLY ON QUALITY OR
best	 person	 so	 she	 visits	 My	 Success	 Gateway,	       BE MORE FLExIBLE IN THE INTEREST OF
which	 conducts	 one-on-one	 interviews	 with	
many	 coaches	 and	 understands	 each	 coach’s	             GETTING THE PRODUCT TO MARkET
strengths.	 At	 My	 Success,	 the	 entrepreneur	                                                                                        ADAM ADELMAN, JUNOBABY
identifies	 her	 needs.	 Robbins,	 who	 focuses	 on	
passion	 motivation,	 likely	 would	 not	 fit	 her	
needs.	 Instead,	 she	 identifies	 Blair	 Singer	 as	 a	                                                            Force	 Protection,	 a	 client	 of	 Leading	 Edge	
good	marketing	coach—a	perfect	match.                                                                           Alliance	firm	Elliott	Davis,	is	a	leading	manufac-
   Peake	 says	 he	 thinks	 women	 in	 particular	         MATTER OF LIFE                                       turer	of	armored	vehicles	vital	to	the	protection	
                                                                                                                of	armed	 forces	 and	 security	personnel	around	
place	 a	 huge	 importance	 on	 convenience	 and	
                                                           Employees	 at	 South	 Carolina-based	 Force	         the	globe.	Pruitt	explains	that	the	central	com-
value.	 “Price	 doesn’t	 matter	 if	 they	 get	 conve-
                                                           Protection	know	all	about	the	importance	of	qual-    ponent	 and	 focus	 for	 quality	 in	 the	 vehicles	 is	
nience	and	value,”	he	says.
                                                           ity.	“Someone	could	die	if	we	don’t	do	it	right,”	   the	capsule—where	the	people	are.	“We	have	to	
                                                           says	Tommy	Pruitt,	public	relations	director.        make	 sure	 the	 welds	 hold	 through	 blasts,	 run-
                                                                                                                ning	over	mines	or	other	explosion	devices,”	he	
                                                                                                                says.	In	addition,	other	truck	components	must	
                                                                                                                be	 easily	 replaceable	 in	 a	 hazardous	 environ-

                               Parts not enough,                                                                ment	so	if	something	happens	to	the	truck	it	can	
                                                                                                                be	repaired	quickly.
                               success is about the whole                                                           Quality	checks	and	multiple	inspections	are	a	
                                                                                                                must	throughout	the	manufacturing	process.	As	

                                                                                                                for	the	capsule’s	welds,	Force	Protection	follows	
                                        avid	 A.	 Fields,	 managing	 director	 of	 Ascendant	
                                                                                                                a	 rigorous	 process	 before	 it	 hires	 a	 welder	 and	
                                        Consultant	and	author	of	an	article	on	quality	pub-
                                                                                                                hires	 inspectors	 whose	 sole	 focus	 is	 on	 those	
                                        lished	 in	 The Journal of American Marketing,	 poses	
                               these	thoughts:
                                                                                                                    But	 Force	 Protection	 is	 not	 content	 with	
                               IT’S NOT QUALITY PRODUCTS ALONE                                                  superior	 manufacturing	 alone.	 It	 starts	 with	
                               Simply	having	the	best	workmanship	won’t	bring	in	the	cus-                       quality	 efforts	 in	 the	 design	 process	 and	 has	
                               tomers.	Combining	workmanship	in	the	right	measure	with	                         created	 one	 of	 the	 nation’s	 leading	 centers	 for	
                               other	factors	(consistency,	customer	service,	responsiveness,	                   blast	 protection	 technology	 development	 and	
                               friendliness,	etc.)	will	have	them	knocking	down	the	doors.                      research.	 Employees	 identify	 how	 blasts	 work,	
                                                                                                                design	 for	 survivability	 and	 keep	 up	 with	 the	
                               AVOID FALLACY OF LOCAL PERFECTION                                                new	advances	in	attacks.
                               Corporate	 executives	 often	 try	 to	 make	 each	 part	 of	 their	                  Everyone	who	works	at	Force	Protection	sees	
                               operations	perfect,	figuring	that	if	each	piece	works	with	top	                  the	results	of	their	efforts.	“They	see	the	cards,	
                               performance	 then	 the	 whole	 organization	 will	 be	 excellent.	               letters,	e-mails	from	people	who	have	survived	
                               Intuitively	obvious	and	completely	wrong.	Think	of	a	watch	                      and	 that	 really	means	 the	most,”	Pruitt	says.	A	
                               where	every	gear	spins	as	fast	as	it	can—all	the	parts	might	                    few	of	the	Marines	and	soldiers	who	have	lived	
                               be	running	in	top	performance	but	the	watch	will	keep	ter-                       through	 a	 blast	 have	 visited	 the	 company	 and	
                               rible	time.                                                                      told	their	stories	to	the	workforce.
                                                                                                                    “You	 don’t	 have	 to	 tell	 (the	 employees)	 why	
                               BALANCE REIGNS OVER QUALITY                                                      quality	is	important,”	Pruitt	says.	e
                               Companies	that	really	get	it	right	understand	how	to	balance	
                               every	 part	 of	 their	 business	 to	 meet	 customer	 needs	 better	
                               than	the	competition.	Balance,	not	quality,	per	se,	is	the	holy	
                               grail	of	market	superiority.	e

                                                                                                                      VOLUME 7   n   ISSUE 3   n   SPRING/SUMMER 2007
       VOLUME 7 n ISSUE 3
      SPRING/SUMMER 2007

                                        Pannell Kerr Forster of Texas, P.C.
                                                       Certified Public Accountants & Professional Advisors

an overview of the iRS audit
Where should you start when the Treasury department reaches out to you?
by Aidan J. G. Arney, CPA, and Ashley Autrey, CPA

a    lthough substantial changes
     in the powers and duties of
the IRS created a more customer-                                                                                    OVER ThE LAST
friendly organization in the late
‘90s, taxpayers still dread an audit.                                                                               FEW YEARS, ThE
The audit process can be stressful,                                                                                 IRS SEEMS TO hAVE
expensive and time-consuming,
even if you have immaculate books
                                                                                                                    INCREASEd ThE
and records, and have followed                                                                                      REGULARITY WITh
every procedure correctly.
   Under the present tax system
                                                                                                                    WhICh IT EXAMINES
and tax code, the IRS has a wide                                                                                    MIddLE-MARKET
latitude to “examine any books,
papers, records or other data which
                                                                                                                    COMPANY bOOKS
may be relevant” to determine the
appropriate tax liability of any tax-
able entity or individual. Over the
last few years, the IRS seems to
have increased the regularity with
which it examines middle-market
                                        • Random selection—An annual            tions with less than $10 million          i’ve been selected for
company books. This leaves many
                                          selection process of a certain        in assets, several kinds of part-         audit. What’s next?
more taxpayers wondering why
                                          number of returns within each         nerships, and all individuals
they are under audit, what the                                                                                      Upon receipt of a notice, taxpayer’s
                                          IRS audit class and division.         are subject to numeric scoring
correct approach to efficiently and                                                                                 should gain a full understanding
                                        • Non-matching third-party              which reflects the probability
expeditiously ending the examina-                                                                                   of this situation by determining
                                          information—For example,              that an error or abnormal-
tion is, and what their options are                                                                                 the scope of the audit, because
                                          when a 1099 does not match            ity exists. The higher the DIF
should an adverse determination                                                                                     whether the scope is full or limited
                                          information reported on your          score, the more likely that an
be proposed.                                                                                                        determines the number and extent
                                          return.                               examination of your return will
                                                                                                                    of examination issues inspected
                                        • Marketing segment—When the            occur and result in a change
      Why am i being audited?                                                                                       by the IRS. Next, the taxpayer
                                          IRS chooses taxpayers to deter-       to income tax liability. The
                                                                                                                    should decide who will represent
Many taxpayers erroneously                mine the handling of a particu-       formulas used in DIF are only
                                                                                                                    them. Either internal or external
assume the IRS selected their return      lar tax issue.                        disclosed on a need-to-know
                                                                                                                    representation can be used, but it
because it has some knowledge of        • Outside sources—When a                basis.
                                                                                                                    is important that whoever repre-
a pre-existing error. However, there      return is selected as a result of   • Other—Countless other rea-
                                                                                                                    sents the taxpayer is familiar with
are many different reasons for audit      information received from out-        sons may also trigger an inqui-
                                                                                                                    current IRS rules and regulations
selection:                                side sources on potential non-        ry from the IRS. For example,
                                                                                                                    for tax return preparation and fil-
• Continuous audit program—               compliance with the tax laws.         if a taxpayer files dormant
                                                                                                                    ing, and current audit procedures.
    Due to asset thresholds, the IRS    • Discriminate Inventory                5471 returns for five years, the
                                                                                                                    Competent representation can
    audits your tax return on an          Function system (DIF) —All            IRS may wish to confirm the
                                                                                                                    reduce the burden on the taxpayer
    annual basis.                         corporations and S corpora-           dormant filing is correct.
                                                                                                                                     continued on page 11

ThE LEAdING EdGE                                                                                                                                       
pkf texas

                        Client Spotlight
                        King Ranch—A living legend

                        a    round the bend of Highway
                             141 in Kingsville, Texas, is
                        the King Ranch. Passers by can’t
                                                                Ranch has provided state-of-the-art
                                                                scientific breeding programs in a
                                                                geographic area more known for
                                                                                                        Company, one of the largest pecan
                                                                                                        shelling operations in the United
                                                                                                        States. Located in Las Cruces, N.J.,
                        miss its 825,000 acres—a massive        its drought conditions than fertile     this shelling operation produces
         AS ThE LANd    amount of land that is slightly big-    ranchland.                              almost 16 million pounds of pecan
      ANd SUCCESS OF    ger than the state of Rhode Island.
                        Anyone remotely familiar with the
                                                                   In 1940, the Ranch developed
                                                                the Santa Gertrudis breed of cattle,
                                                                                                        kernels each year.
                                                                                                           As the land and success of the
      ThE KING RANCh    Ranch would often define the “old       the first breed recognized by the       King Ranch grows, so does its tech-
   GROWS, SO dOES ITS   west” through the legend that is        U.S. Department of Agriculture.         nology and commitment to excel-
                        today’s King Ranch.                     The Santa Gertrudis breed could         lence. Many of its current opera-
     TEChNOLOGY ANd        Pioneered by the diligent steam-     tolerate the harsh conditions in the    tions involve improved technol-
       COMMITMENT TO    boat pilot-turned rancher, Captain      heat of South Texas. Through the        ogy, such as genetic programs and
                        Richard King, the Ranch offers          persistence and hard work from          brush control techniques.
          EXCELLENCE    many unique innovations—many            the operations at King Ranch, this         These methods of success
                        of which would surprise most peo-       breed of cattle is now one of the       only contribute to the immense
                        ple. For example, through its citrus    most popular breeds in Australia        improvement that the Ranch has
                        holdings in Florida, the Ranch is       and many parts of the world.            achieved since it began more than
                        the largest orange juice producer in       Farming is a close cousin to         154 years ago—but success can be
                        the United States. Today, the Ranch     ranching, and by finding and cul-       measured in many ways, including
                        is home to 60,000 cattle and 300        tivating quality grasses, the Ranch     an auditor’s opinion. PKF Texas has
                        quarter horses.                         was able to improve its pasture-        been the independent auditor of
                           King Ranch began in 1853 and         lands. Eventually, it was able to       the King Ranch for two years.
                        is known mainly for its innovations     pursue diverse crops, such as cot-         “We normally try to identify
                        in cattle and horse breeding, as well   ton and milo (grain sorghum) in         and anticipate specific issues that
                        as its large-scale ranch management     South Texas, and sugar cane and         relate to our operations or specific
                        techniques. Under the early leader-     turf-grasses in Florida.                transactions before they occur and
                        ship of Captain King and multiple          Despite its extraordinary achieve-   then sit down with the team from
                        generations of his descendants, the     ments in ranching and farming, the      PKF and talk about the various
                                                                Ranch has diversified even more in      accounting and reporting implica-
                                                                the businesses of the modern-day        tions,” says William J. Gardiner,
                                                                King Ranch, and is active in many       vice president and chief financial
                                                                other industries, including publish-    officer. “This has worked well for
                                                                ing, retail, eco-tourism and pecans.    us because it minimizes the pos-
                                                                Its retail operations are primarily     sibility of last minute changes to
                                                                focused on its famous King Ranch        the numbers and also keeps the
                                                                Saddle Shop, which provides an          auditors abreast of what is going on
                                                                array of high-end leather goods         in our company.”
                                                                and home furnishings through a             As a result, communications is
                                                                retail store, national catalog opera-   the key to ensuring the process
                                                                tion and the Internet.                  goes smoothly.
                                                                   King Ranch also owns the                “It’s helpful to view the rela-
                                                                Robstown Hardware Company,              tionship from the standpoint that
                                                                a local John Deere dealership in        your audit firm is almost a busi-
                                                                Robstown, Texas, now the exclu-         ness partner, not an adversary,” says
                                                                sive John Deere dealer for skid steer   Gardiner. “The technical knowledge
                                                                equipment in the coastal bend.          provided by the PKF team to us on
                                                                   More recently, the Ranch acquired    several different accounting issues
                                                                most of the assets of Young Pecan       has been timely and helpful.” e

   10                                                                                            VOLUME 7   n   ISSUE 3   n   SPRING/SUMMER 2007
                                                                                                                                               pkf texas

an overview of the iRS audit
continued from page 9

in several ways, including prepara-     the case gets to appeals or federal
tion and analysis of all document       tax court.
requests (IDRs), conducting the
audit in a manner and location that           The audit is over, and i
is non-invasive to the taxpayer,              don’t like the answer …
and leading the IRS in an effective           now what?
direction to conclude the audit in
                                        If changes are proposed and no
the most reasonable manner.
                                        agreement is reached, IRS examin-
   Once a representative is cho-
                                        ers are obligated to explain your
sen, that individual should meet
                                        appeal rights. The first action is
with the taxpayer to perform a
                                        meeting with the assigned IRS
preliminary analysis of the return
                                        supervisor. If disagreement still
under examination, as well as any
                                        exists concerning factual matters,
associated document requests. All
                                        there are several options.                 In the case of partially agreed
significant potential issues should
                                           For small businesses or self-        matters, the IRS will request a
be researched and understood to
                                        employed individuals, the case may      waiver (Form 870) from the tax-
ensure adequate responses are
                                        be referred to “Fast Track Mediation”   payer. This waiver will give the IRS
ready for all future questions. Once
the representative and taxpayer are
                                        (FTM). Typically in the initial Small   and taxpayer the ability to settle                 IF ChANGES ARE
clear on all matters at hand, the
                                        Business/Small Enterprise option,       undisputed matters while disputed                  PROPOSEd ANd
                                        FTM attempts to resolve factual         matters can be appealed or filed for
initial meeting with the IRS can
                                        disputes between the IRS and tax-       re-determination.                                  NO AGREEMENT
be confidently conducted. From
here, the audit process may move
                                        payers within 14 days.                                                                     IS REAChEd, IRS
                                           However, if FTM is unsuccess-                Know your options
in various directions depending
                                        ful or you are not a small busi-                                                           EXAMINERS ARE
on the facts of each individual                                                 In the end, taxpayers must under-
audit. However, if the proper due
                                        ness, the IRS issues a 30-day let-
                                                                                stand the scope and direction of
                                                                                                                                   ObLIGATEd TO
diligence occurred on the front
                                        ter—the taxpayer has 30 days to
                                        file a protest with the IRS appeals
                                                                                the audit as well as all open tax                  EXPLAIN YOUR
end of the process, none of these
directions should be a significant
                                        office. The appeals meeting offers
                                                                                positions before the audit begins.
                                                                                By deciding early in the process if
                                                                                                                                   APPEAL RIGhTS
                                        an opportunity to present your case
surprise.                                                                       outside representation is needed,
                                        to new eyes. If no appeal is filed or
   The important point to remem-                                                taxpayers can avoid a sometimes
                                        the taxpayer is unsuccessful in the
ber is that during the audit process,                                           costly and lengthy IRS battle. The
                                        appeals process, a statutory notice
all facts should be clearly under-                                              biggest mistake in any IRS exami-
                                        of deficiency—a 90-day letter—is
stood, and portrayed directly and                                               nation is not being proactive, and
simply to the IRS. If the taxpayer                                              investing the time and money on
                                           Finally, if all avenues to this
is confused or uncertain about                                                  the front end of the process in
                                        point have failed, taxpayers are left
any question, it should not be                                                  order to facilitate its outcome. By
                                        with the option of filing a petition
answered until fully researched. “I                                             considering all the factors, a tax-
                                        for re-determination with the tax
don’t know, I’ll need to find that                                              payer can work toward having the
                                        court. This must occur before any
answer” is a perfectly acceptable                                               most efficient IRS audit feasible.
                                        assessment of the deficiency occurs
response to any question that gives                                             When the taxpayer does not take
                                        according to the due date on the
a taxpayer pause. Not answering                                                 charge, the IRS will! e
                                        90-day letter. Federal tax court is
a question does not necessarily
                                        a body independent from the IRS         Aidan J.G. Arney, CPA, is a tax senior
signal you are hiding something,
                                        and provides the first opportunity      manager for PKF Texas. Contact him at
while providing incorrect informa-
                                        for a taxpayer to have a completely     (713) 860-1494 or
tion often causes misunderstand-                                                Ashley N. Autrey, CPA, is a senior tax associate
                                        independent party review disagreed
ings that waste time and are some-                                              for PKF Texas. Contact her at (713) 860-5414
times impossible to unwind until                                                or

ThE LEAdING EdGE                                                                                                                                     11
pkf texas

            Cube view
            battlefield hOUSTON
            by Ashley N. Autrey, CPA, and daniel P. Travis, CPA

            T    he battle lines are drawn. It’s
                 every man for himself and the
            bounty is ripe for the taking.
                                                      and through extensive research,
                                                      seizes the opportunity to develop
                                                      breakthrough technologies in the
                                                                                                bonus it’s [always just] a few miles
                                                                                                away!” – Dawn Hodges, PKF Texas
                                                                                                Tax associate
               The war is waging all around           fight against cancer. This enables          Just as Hodges mentioned,
            us—not the literal war we are fight-      Houston to be a center of hope            Houston is an oasis for most any
              ing overseas—but the war on             and an opportunity of healing for         individual. By offering numerous
                talent. Under the direction of        many.                                     opportunities within the city limits
                   the commander-in-chief (the                                                  and a portal for easy access to those
                     CEO), “cubesters” like us are    UNIVERSAL … we could have said            in the world beyond, Houston’s
                     on the front lines waging        “global” instead of universal, but        many trifectas keep life fulfilled.
                     the battle to recruit the next   that would be a bit of an under-
                     generation. However, before      statement considering we are home         NExT GENERATION. That’s what
                    the front can be advanced,        to NASA. Not only is Houston the          this is all about. How does an
                  CEOs must analyze two strate-       fourth largest U.S. city; it is an        employer get the “next generation”
             gic questions:                           international city as reflected in our    in its door? PKF Texas wants to be
            1. What does it take for a city           firm with team members from six           on the leading edge in this war on
                 to gain an upper hand in this        countries speaking 20 languages.          talent, and recently teamed up with
                 war?                                                                           Rebecca Ryan of Next Generation
            2. What can employers do to               SOUTHERN charm abounds. Tuan              Consulting, Inc. to realize contin-
                 attract and retain talent?           Le, PKF Texas Tax associate who           ued success (see the winter 2007
               To answer these questions, a           moved here a year ago, summed it          Leading Edge for an expanded arti-
            little insight into highly-sought-        up in a simple example: “Like when        cle on this topic).
            after qualities can aid in ensuring       you are waiting to get on an eleva-          Houston has all the building
            that the battle can be won—and            tor, the gentlemen will stand aside       blocks in place to make successful
            it all begins with seven letters:         and wait for the ladies to enter first.   gains in this war on talent. However,
            H-O-U-S-T-O-N.                            I never saw that in California.”          as an employer in Houston, it
                                                                                                is important that a goal of your
            HOT SPOT—Yes, Houston can be              TRIfEcTA—As always, the best              company should be to incorporate
            hot in temperature, but that’s not        things happen in threes. Houston is       similar characteristics in order to
            what we are referring to here.            full of trifectas, including transpor-    recruit talent. By offering multiple
            Houston is a hot spot for world           tation through aviation, land and         and exciting opportunities, diver-
            events. Whether it’s making bids          maritime; athletics, including the        sity of clients and employees, and
            for the next Olympics, hosting the        Rockets, Texans and Astros; and           a general sense of friendliness and
            Super Bowl or the sizzle of mid-          geography with distinct uptown,           cheer, your company will be able
            town and Rice Village, Houston            midtown and downtown locations.           to enlist young professionals of
            provides top-notch entertainment.         Each area offers its own unique           today and tomorrow. In turn, these
                                                      characteristics and charm to the          activities enable you to share in the
            “OPPORTUNITY shines brightest on          Houston area, which makes it              bounty of war on talent. e
            those who seize it.” – Chip Carlisle,     appealing on a local, national and
            2006 chairman, Greater Houston            international stage.                      Cube View is a recurring column with fresh
                                                                                                voices by PKF Texas’ younger professionals.
                                                                                                Ashley N. Autrey, CPA, and Daniel P. Travis,
               Numerous cutting-edge indus-           OASIS. “Houston is an oasis to me         CPA, are senior tax associates for PKF
            tries exemplify Carlisle’s ideal.         in the sense that it is a retreat from    Texas. Contact Ashley at (713) 860-5414
            For example, the M.D. Anderson            the boringness of small town life.        or, and Daniel at
            Cancer Center is an anchor of             There is always something fun and         (713) 860-5432 or
            the Houston Medical Center,               exciting to do in the city and as a

   1                                                                                    VOLUME 7   n   ISSUE 3   n   SPRING/SUMMER 2007

bits pieces
SMALL BUSINESS                                            and	 Health	 Savings	 Accounts	 in	 the	 United	
                                                          States,	Private	Industry.”
                                                                                                                       bill-paying	public,	according	to	U.S.	Consumer	
                                                                                                                       Expenditure	Survey.
LEAdERS TOP LIST                                             “As	 employers	 seek	 to	 keep	 the	 costs	 of	
                                                          employee	 benefits	 under	 control,	 and	 employ-
                                                                                                                           So	who’s	sticking	with	their	cells?	The	research	
                                                                                                                       is	 predictable—younger	 people.	 Almost	 half	 of	
More	 than	 half	 of	 U.S.	 adults	 express	 a	 “great	   ees	 seek	 to	 maximize	 their	 take-home	 pay,	             cell-only	 respondents	 were	 younger	 than	 30,	
deal”	 of	 confidence	 in	 leaders	 of	 small	 busi-      pretax	 benefits	 have	 become	 more	 prevalent,”	           according	to	the	Pew	Research	Center.	About	a	
ness—more	than	any	other	institution	cited	in	a	          he	notes.                                                    third	of	cell-only	users	were	married	and	24	per-
2007	Harris	Poll.                                            In	 1999,	 7	 percent	 of	 all	 U.S.	 workers	 had	       cent	owned	their	own	home.	In	a	landline	user	
   This	is	the	first	year	that	small	business	lead-       access	 to	 flexible	 benefits	 and	 15	 percent	 had	       survey,	57	percent	were	married	and	71	percent	
ers	have	topped	the	list.	Harris,	which	has	been	         access	to	reimbursement	accounts.	By	2006,	the	              owned	their	own	home.
surveying	 confidence	 levels	 in	 institutions	 for	     percentage	of	U.S.	workers	with	access	to	flex-
four	 decades,	 added	 small	 business	 to	 the	 cat-     ible	 benefit	 and	 reimbursement	 accounts	 more	
egories	in	2005.
   The	 poll	 asked	 more	 than	 1,000	 adults	 in	
                                                          than	 doubled.	 Seventeen	 percent	 of	 workers	
                                                          could	 participate	 in	 flexible	 benefit	 programs,	
                                                                                                                       U.S. ChAMBER
the	United	States:	“As	far	as	people	in	charge	of	
running	 (specific	 category/institution)	 are	 con-
                                                          30	percent	had	access	to	dependent	care	reim-                AdVOCATES
cerned,	would	you	say	you	have	a	great	deal	of	
                                                          bursement	accounts	and	32	percent	could	have	
                                                          health	care	reimbursement	accounts.	                         FREE TRAdE TO SENATE
confidence,	only	some	confidence	or	hardly	any	              In	 this	 research,	 flexible	 benefit	 plans	 were	      The	 U.S.	 Chamber	 of	 Commerce	 recently	
confidence	in	them.”                                      defined	as	plans	that	allow	employees	to	choose	             appeared	at	a	U.S.	Senate	hearing,	“Is	Free	Trade	
   Small	business	was	 the	only	 sector	 in	 which	       the	benefits	most	important	to	them	and	forgo	               Working?”	 The	 response	 given	 by	 Christopher	
more	than	50	percent	of	the	respondents	replied	          others.	Dependent	care	reimbursement	accounts	               Wenk,	 senior	 director,	 international	 policy	 at	
“great	deal	of	confidence.”                               include	 pretax	 earnings	 designated	 to	 pay	 for	         the	chamber,	was	positive.	
   Small	 business	 was	 followed	 by	 the	 military,	    child,	elder	or	disabled	care.	Health	care	reim-                “The	 overwhelming	 majority	 of	 Americans	
major	 educational	 institutions,	 medicine	 and	         bursement	 accounts	 can	 cover	 out-of-pocket	              derive	 great	 benefits	 from	 international	 trade	
organized	religion	to	round	out	the	top	five.	The	        medical	 expenses	 such	 as	 deductibles	 and	 co-           and	investment,”	he	told	the	senators.
bottom	two	were	the	press	and	Congress.                   payments.                                                       The	 chamber,	 which	 is	 the	 world’s	 largest	
                                                                                                                       business	 federation	 representing	 more	 than	 3	
                                                                                                                       million	 businesses	 and	 organizations,	 believes	
MORE EMPLOYERS                                            PEOPLE FORGO                                                 global	trade	should	be	expanded.	“The	chamber	

SAY YES TO                                                LANdLINES FOR CELLS
                                                                                                                       does	so	because	U.S.	businesses	have	the	exper-
                                                                                                                       tise	and	resources	to	compete	globally—if	they	
FLEX BENEFITS                                             Why	have	both	landline	and	cell	phone	service?	
                                                                                                                       are	 allowed	 to	 do	 so	 on	 equal	 terms	 with	 our	
                                                                                                                       competitors,”	Wenk	reported.
                                                          That’s	 the	 question	 more	 Americans	 are	 asking	
Access	for	workers	to	pretax	employee	benefits	                                                                           He	 noted	 that	 the	 combined	 efforts	 of	 the	
                                                          themselves	lately,	and	for	a	growing	number	the	
doubled	between	1999	and	2006,	according	to	                                                                           North	American	Free	Trade	Agreement	and	the	
                                                          answer	is	they	don’t	need	two	phone	lines.
the	U.S.	Bureau	of	Labor	Statistics.                                                                                   agreement	to	create	the	World	Trade	Organization	
                                                             An	 estimated	 7	 to	 9	 percent	 of	 the	 gen-
   “Pretax	 benefits	 enable	 both	 employers	 and	                                                                    have	increased	U.S.	national	income	by	$40	bil-
                                                          eral	public	subscribe	only	to	cell	phone	service.	
employees	 to	 set	 aside	 money	 on	 a	 tax-free,	                                                                    lion	 to	 $60	 billion	 a	 year.	 Wenk	 went	 on	 to	
                                                          That’s	 a	 sharp	 contrast	 to	 just	 a	 few	 years	 ago.	
salary-reduction	 basis	 for	 retirement	 expenses	                                                                    state	that	the	lower	prices	for	imported	goods	as	
                                                          In	 2000,	 only	 0.4	 percent	 of	 households	 paid	
as	 well	 as	 qualified	 dependent	 care	 and	 health	                                                                 provided	by	the	two	agreements	means	a	family	
                                                          only	 a	 cell	 phone	 bill,	 but	 by	 the	 first	 quarter	
care	expenses,”	writes	Eli	Stoltzfus	in	his	article	                                                                   of	four	in	the	United	States	has	gained	between	
                                                          of	 2005,	 that	 increased	 to	 7.8	 of	 the	 phone-
“Pretax	Benefits	to	Section	125	Cafeteria	Benefits	                                                                    $1,000	and	$1,300	in	spending	power.	e

ThE LEAdING EdGE                                                                                                                                                         1

Ready to SaY goodBYe To PaPeR?

d    on’t	 be	 confused.	 “Paperless”	 offices	 still	
     have	paper	in	them.	They	just	have	less	of	it,	
along	with	fewer	filing	cabinets	and	more	com-
                                                           about	what	areas	of	their	operation	would	ben-
                                                           efit	 from	 a	 decrease	 in	 their	 manual/laborious	
                                                           paper		process.	“It	works	well	and	can	increase	
                                                                                                                     cess—from	 request	 to	 approvals—all	 happens	
                                                                                                                     electronically.	“That	filing	cabinet	door	couldn’t	
                                                                                                                     close	 sometimes	 with	 all	 the	 forms	 required	 to	
puter	storage.	And	if	executed	well,	these	offices	        the	efficiency	of	the	firm,”	Guzenberg	says.              be	saved,”	Guzenberg	says	jokingly.
also	 see	 a	 boost	 in	 productivity	 and	 efficiency	       Fuller	 Landau	 experienced	 the	 benefits	 first	         As	its	filing	room	(cost	center)	shrank	in	size,	
by	employees.                                              hand	when	it	eliminated	a	single	piece	of	paper	          Fuller	 Landau	 established	 office	 cubicles	 (rev-
   “Paperless’	 really	 confuses	 people,”	 says	 Rita	    at	the	receptionist’s	desk—the	sign-in,	sign-out	         enue	sources).
Keller,	 chief	 operating	 officer	 at	 Brady	 Ware,	 a	   sheet.	Any	time	an	employee	arrived	or	left	the	              Brady	 Ware	 went	 “paperless”	 six	 years	 ago.	
Leading	 Edge	 Alliance	 firm.	 Instead	 of	 “paper-       office,	he	or	she	had	to	walk	up	to	the	desk	and	         “We’ve	actually	done	away	with	our	file	rooms—
less,”	people	should	think	of	it	as	doing	digital	         write	 his	 or	 her	 name,	 time	 and	 destination.	      it’s	 all	 digital,”	 Keller	 says.	 Basement	 storage	
with	their	documents.                                      Upon	return,	that	individual	had	to	go	back	to	           with	the	historical	records	is	being	aged	out	as	
   “We	ask	clients	if	they	prefer	digital	or	paper,”	      the	 desk	 and	 sign	 back	 in.	 The	 office	 wanted	     administrators	sift	through	the	information.
Keller	says.                                               all	 employees	 to	 know	 who	 was	 there,	 where	
   Most	clients	prefer	the	digital	format	of	their	        they	went	and	when	they	would	be	back	to	be	                       getting started
personal	and	corporate	tax	returns	with	a	one-             responsive	to	both	internal	and	external	needs.
                                                                                                                     Start	 small.	 “Don’t	 bite	 off	 more	 than	 you	 can	
page	 printed	 executive	 summary,	 says	 Vlad	               Now,	 employees	 need	 only	 click	 into	 their	
                                                                                                                     chew.	 Digitizing	 lends	 itself	 to	 that	 idea,”	 says	
Guzenberg,	 director	 of	 information	 technology	         computer	 and	 visit	 the	 electronic	 sign-in	 board	
                                                                                                                     Keller,	whose	firm,	Brady	Ware,	has	been	paper-
at	Fuller	Landau,	a	Leading	Edge	Alliance	firm.	           on	the	firm’s	Intranet.	Also,	with	a	few	clicks,	they	
                                                                                                                     less	for	more	than	six	years.	
“We	 were	 printing	 and	 assembling	 huge	 docu-          are	able	to	know	if	someone	is	in	the	office.
                                                                                                                        The	first	step	really	is	just	to	start.	“Don’t	pro-
ments,	sending	it	to	our	clients’	offices	but	they	           Fuller	Landau	also	went	digital	with	its	vaca-
                                                                                                                     crastinate,”	Keller	adds.	
typically	only	care	about	a	few	lines.”                    tion	request	forms.	In	the	past,	employees	had	to	
                                                                                                                        Jeff	 McCulloch,	 president	 of	 Yeo	 &	 Yeo	
   Guzenberg,	 too,	 thinks	 “paperless”	 really	 is	      go	to	a	specific	file	storage	area,	pick	up	a	form,	
                                                                                                                     Computer	Consulting,	a	member	of	the	Leading	
just	a	buzz	word.	“In	reality,	to	go	100-percent	          find	their	supervisor	to	review	and	sign-off,	and	
                                                                                                                     Edge	alliance,	says	companies	first	should	decide	
paperless	is	a	difficult	undertaking,”	he	says.            deliver	 a	 copy	 to	 the	 controller.	 With	 vacation	
                                                                                                                     why	they	want	to	go	“paperless.”
   He	 recommends	 companies	 instead	 think	              requests	now	available	on	the	Intranet,	the	pro-
                                                                                                                        He	 offers	 two	 primary	 reasons—data	 reten-
                                                                                                                     tion	(storing	files)	and	integration	into	existing	
                                                                                                                     work	software	(searching	files).	

                                                                                                                              Who’s doing it
                                                                                                                     The	 digital	 evolution	 is	 slowly	 finding	 its	 way	
                  INTEGRATION BOOSTS                                                                                 into	businesses.	Companies	in	heavily	regulated	
                                                                                                                     industries	are	the	most	proactive	in	establishing	
                  Jeff McCorpin, vice president
                                                                                                                     digital	offices,	McCulloch	says.
                  system integration services at LBMC
                                                                                                                        Data	 retention	 demands	 in	 Sarbanes-Oxley	
                  Technologies, says that the advantages
                                                                                                                     and	 HIPAA,	 for	 example,	 impact	 financial	 ser-
                  of digitizing grow exponentially with
                                                                                                                     vices,	banking,	insurance	and	health	care	com-
                  each implementation. Consider this:
                                                                                                                     panies	the	most.	“Most	other	industries	are	still	
                  An employee wants to know more about                                                               using	paper,”	McCulloch	says.
                  a customer. She enters the customer number                                                            Greg	 Price,	 director	 of	 consulting	 solutions	 at	
                  into the company’s system and finds all types of documents related to that                         Leading	 Edge	 Alliance	 firm	 PKF	 Texas,	 says	 he,	
                  customer—electronic work processing files, images of past invoices, pictures                       too,	does	not	see	many	clients	going	paperless.	“I’m	
                  of the customer’s site, Web pages, reports, sound files of meetings, etc.                          seeing	more	and	more	instances	(of	doing	digital)	
                                                                                                                     but	they’re	not	quite	there,”	he	says.	“Conceptually	
                  Combine all that collected information with the company’s workflow and
                                                                                                                     they	get	it.	They	understand	the	theory,	but	they	
                  you can track all types of standard business processes so activities do not
                                                                                                                     aren’t	opening	their	checkbooks	yet.”
                  fall through the cracks.
                                                                                                                        He	says	in	some	industries,	custom	software	
                  Bundle it under one application umbrella and you have a great solution—                            has	yet	to	be	created—a	manufacturer	of	clothes,	
                  saving time, money and frustrations. e                                                             for	example,	has	different	custom	digital	needs	
                                                                                                                     than	the	local	dry-cleaning	store.

14                                                                                                                          VOLUME 7   n   ISSUE 3   n   SPRING/SUMMER 2007
                                                                               DIGITAL LINGO
                                                                               Enterprise Document Management (EDM)
                  TRACT PECTS
                AT ROS
                                                                               solutions make paperless offices a reality, says
                                                                               LBMC Technologies’ Jeff McCorpin. Here’s a cheat
                TO P a company al                                              sheet so you can understand what all the jargon
                        ring              igit                                 means:
                  Foste braces a d nt can
                   that  em              nme
                                 enviro             too.                       • Electronic	Signatures—not digital copies of your signature but the
                    docu  ment dvantages
                                    a                r                           binding effect is similar; requires user authentication (i.e., a password
                            other rg of Fulle
                     have        enbe              ive                           or identifier that you set up initially for each authorized person)
                              uz               ect
                      Vlad G says prosp now
                       Lan dau                to k                             • Document	Imaging—scanning paper files (among other things) so
                               yees             tive
                        emplo ir prospec                                         they can be accessed electronically
                                h e                in the
                         that t r operates T-                                  • Optical	Character	Recognition	(OCR)—machine recognizes printed
                                  ye               sI
                          emplo tury and i ng                                    characters (produced mechanically or by hand)
                                   en                cti
                           21st c ive. “Attra o join
                                   e ss              ls t
                            progr rofessiona try                               • Automated	Business	Workflow—processes are mechanized so
                                      p             ndus
                                            s an i            logy               once an employee completes his or her portion, it is automatically
                                     firm i e. Techno or
                              your        lleng              ntiat               available for the next individual in the process
                                      cha             iffere
                               wide          as a d e,”
                                can   work       tplac
                                                                               • Electronic	Document	Management	(EDM)—software that enables
                                         marke                                   electronic filing system and document merging often using a server to
                                 in the rg says. e
                                         be                                      cross networks for access by multiple people at multiple locations e

   But	 paper	 also	 is	 a	 way	 of	 life.	 When	 ATMs	          Price	says	he	thinks	digitizing	increases	pro-       think	 of	 it	 as	 a	 mandate	 from	 IT,”	 Guzenberg	
were	introduced,	many	people	opted	to	go	into	                ductivity	as	much	as	50	percent	in	half	the	time.	      says.	 “It’s	 not	 that	 we	 just	 close	 our	 doors	 and	
the	 bank	 even	 though	 the	 electronic	 machine	            A	machine	that	acts	as	a	scanner,	copier	and	fax	       come	up	with	these	ideas.
was	 available	 24-7.	 And	 still	 today	 there	 are	         is	a	must	to	contribute	to	that	efficiency.	               “Dependency	on	IT	in	the	professional	servic-
some	 who	 prefer	 to	 walk	 into	 the	 bank	 and	               He	 notes	 that	 clients	 more	 frequently	 are	     es	world	is	relatively	new.	Paperless	is	one	piece	
work	with	a	teller.                                           accustomed	to	the	digital	world—asking	for	and	         of	the	ever-changing	puzzle,”	he	says.
   One	 PKF	 Texas	 client,	 an	 Internet	 service	           expecting	 retrieval	 of	 their	 documents	 almost	        Price	 says	 going	 digital	 requires	 a	 leadership	
provider,	 gets	 the	 value	 of	 digitizing.	 The	 mul-       immediately	unlike	years	ago	when	they	would	           not	 afraid	 of	 technology.	 “You	 need	 to	 create	 a	
tiple-location	 company	 uses	 electronic	 imaging	           plan	 ahead	 for	 what	 information	 they	 needed	      culture	 that	 embraces	 technology.	 Our	 job	 is	
software	for	its	accounting	department.	When	an	              to	collect.                                             trying	to	be	much	more	efficient,	quicker	and	to	
invoice	arrives	at	any	one	of	its	sites,	the	reception-                                                               have	better	information,”	he	says.
ist	scans	it	and	adds	a	quick	tag—clear	bar	codes	                     iT and executives unite
with	sticky	notes.	Once	input	into	the	company’s	                                                                              not immediate Roi project
                                                              The	success	of	moving	to	digital	“paper”	hinges	
system,	 the	 invoice	 electronically	 attaches	 to	 the	
                                                              on	the	relationship	the	IT	department	has	with	         While	going	digital	realizes	some	paper	savings,	
company’s	accounting	software.	A	controller	in	its	
                                                              the	business’	leaders.	“It	takes	time	to	establish	     Guzenberg	 advises	 that	 businesses	 are	 not	 eas-
Houston	headquarters	then	reviews	and	approves	
                                                              relationships,”	says	Guzenberg.	“Paperless	is	no	       ily	able	to	measure	the	return	on	investment.	“I	
the	invoice	so	it	can	be	paid.
                                                              different	than	any	other	IT	project.”                   would	never	embark	on	the	project	if	the	objec-
   Gone	are	the	headaches	and	expense	of	over-
                                                                  He	 says	 advancements	 in	 information	 tech-      tive	is	only	to	reduce	paper	costs,”	he	says.
night	delivery	to	accounting	from	each	site	and	
                                                              nology	 can	 make	 IT	 an	 important	 part	 of	 the	       He	 says	 digital	 systems	 are	 a	 different	 type	
the	need	for	an	accounting	clerk	at	each	site.
                                                              business’	 future—not	 just	 the	 department	 that	     of	 expense,	 the	 costs	 of	 which	 should	 be	 fore-
   More	 than	 two	 years	 ago	 PKF	 Texas’	 audit	
                                                              buys	and	fixes	software	and	hardware,	and	is	the	       casted.	 Digital	 storage	 is	 relatively	 inexpensive	
department	 went	 digital.	 Instead	 of	 hauling	
                                                              lifeline	when	someone	accidentally	deletes	a	file.	     nowadays,	 but	 what	 about	 the	 infrastructure	
around	 hundreds	 of	 documents	 for	 an	 on-site	
                                                              “When	 IT	 provides	 business	 solutions	 to	 assist	   needed	 to	 support	 that	 storage	 growth?	 Space	
audit,	 recreating	 figures	 on	 column	 paper	 each	
                                                              in	achieving	strategic	goals,	it	obtains	faster	buy-    for	 the	 additional	 servers	 and	 disk	 space	 must	
year	 and	 filling	 work-paper	 binders,	 everything	
                                                              in	from	the	firm’s	partners,”	Guzenberg	says.           be	 planned.	 In	 addition,	 the	 company	 must	
is	now	scannable.	Gone	are	the	binders	and	clips	
                                                                  He	says	as	Fuller	Landau	has	moved	to	digital	      determine	its	system	to	back	up	the	digital	stor-
as	 that	 data	 they	 used	 to	 hold	 are	 dropped	 into	
                                                              storage	 and	 documentation,	 it	 has	 met	 with	 a	    age	in	case	something	harms	it.
an	 electronic	 file,	 tracked	 and	 put	 into	 a	 library	
                                                              little	 resistance.	 “That’s	 why	 the	 relationship	      “Going	 paperless	 takes	 time.	 You	 won’t	 reap	
where	they	can	be	checked	in	and	out	so	everyone	
                                                              between	IT	and	business	operations	is	so	impor-         the	rewards	within	a	month.	It’s	a	long-term	ROI	
knows	 who	 has	 what	 documents	 (and	 multiple	
                                                              tant.	 Together,	 all	 stakeholders	 understand	 the	   initiative,”	Guzenberg	says.	e
versions	of	the	same	document	are	not	created).
                                                              collective	 business	 objectives	 and	 don’t	 just	
ThE LEAdING EdGE                                                                                                                                                           1

                             Working globally:
                             Top 10 Concepts of doing business in ... Japan
                             Understanding the myths and realities of the country in Asia
                             By Yoshihiro hongo, hongo Tsuji Tax and Consulting

                                      Japan	is	far	away	in	the	Far	East.
             IN ThE AGE OF            Some	people	in	the	United	States	might	have	trouble	locating	Japan	on	a	map	and	just	

          GLOBALIZATION,              think	of	it	as	a	distant	place.	That’s	understandable	as	most	people	know	about	their	own	
                             country	but	do	not	think	a	lot	about	other	countries,	especially	those	farther	

          ThE WORLd hAS      away.	If	you	look	at	a	world	map	in	Japan,	you	see	Japan	in	the	center.	
                             More	than	likely,	if	you	look	at	a	world	map	in	the	United	States,	the	

          BECOME CLOSER      United	States	is	in	the	center.	Each	map	is	drafted	with	its	“selling”	
                             country	in	mind.	Yet,	knowing	where	a	country	is	becomes	the	

            ECONOMICALLY     first	step	in	understanding	it.
                                Japan	is	in	Asia—about	5,450	miles	from	Los	Angeles,	which	is	

                    IF NOT   about	an	11-hour	plane	ride	and	about	twice	the	distance	between	
                             LA	and	New	York.	Many	U.S.	flights	to	Japan	make	the	country	easily	

        GEOGRAPhICALLY.      accessible.	Gaining	an	interest	in	Japan	can	bring	an	understanding	that	
                             could	further	enhance	your	opportunity	for	doing	business	in	this	market.

             WE hOPE ThIS
                                      Japanese	is	a	difficult	language.
                                      Well,	this	one	is	not	a	misconception,	but	it	should	not	be	a	barrier	to	doing	business	in	

           YOU A gLimPSe              the	country.	If	you	think	about	it,	with	each	visit	to	a	foreign	country	you	learn	better	how	
                             to	navigate	it	and	feel	more	comfortable.	Frequent	contact	and	visits	only	increase	your	comfort	

         inTo THe BaSiCS     level	with	the	language.
                                In	recent	years,	English	has	become	a	more	commonly	spoken	language	in	Japan.	In	our	office,	

              oF BUSineSS    at	least	10	staff	members	speak	English	at	varying	levels.	Thus,	the	language	barrier	is	diminishing	
                             and	most	business	people	can	complete	deals	in	a	single	language,	English.

               WiTH JaPan
             ANd A BETTER
                                                                      Japan	is	the	most	expensive	place	in	the	world	to	live.
                                                                      London,	Copenhagen	and	Paris	have	overtaken	Tokyo	
         UNdERSTANdING                                                as	the	world’s	most	expensive	destinations,	according	to	
                                                             Economist	Intelligence	Unit’s	latest	worldwide	cost-of-living	survey.
         OF ThE JAPANESE                                        The	survey	points	out	that	Japan’s	low	inflation	and	weak	yen	
                                                             driven	by	low	interest	rates	contributed	to	Japan’s	drop	on	the	
                  CULTURE.                                   global	stage.	Tokyo	and	Osaka	still	rank	as	the	most	expensive	
                                                             cities	in	Asia,	but	their	costs	of	living	declined	12	percentage	
                                                             points	in	the	last	year.

                                     It	is	difficult	to	collect	from	Japan-based	companies.
                                     This	is	not	true.	Japan	is	a	country	that	properly	pays	the	accounts	receivable.		For	
                                     example,	in	China,	collection	can	become	difficult	once	the	goods	are	sold.	However,	there	
                             is	no	such	problem	in	Japan.	Its	nationals,	on	average,	have	money	and	can	pay	the	bills.

1                                                                                      VOLUME 7   n   ISSUE 3   n   SPRING/SUMMER 2007
5                                                                                                           10	
        Japan	is	a	Socialist	country.                                                                                     Japan	does	not	
        There	is	a	joke	that	there	are	three	communist	countries	in	the	world—Cuba,	North	                                buy	and	sell	companies.
        Korea,	and	Japan.	Further,	there	is	even	a	joke	told	in	Japan	about	a	Chinese	businessman	                        In	the	past,	Japanese	companies	
who	gave	a	speech	at	Japan’s	Keidanren	(the	best	economic	association	in	the	country).	“I	came	to	          did	not	favor	mergers	and	acquisitions.	In	
Japan	to	teach	capitalism,”	he	told	the	Japanese.                                                           recent	years,	M&As	have	become	more	
  Japan’s	vision	as	a	capitalistic	country	has	grown	in	recent	years	as	its	number	of	millionaires	         prevalent.	M&As	are	happening	
has	grown	exponentially.	In	addition,	the	Japanese	Socialist	Party,	which	brought	the	country’s	first	      domestically	but	also	with	non-Japanese	
socialist	prime	minister	since	1948	to	power	in	1994,	is	no	longer	in	power.	The	political	party	           companies.	More	money	from	outside	
ceased	after	heavy	losses	in	the	1996	election.	Its	successor,	the	Social	Democratic	Party	is	one	of	       Japan	is	entering	the	country,	which	
the	smallest	Japanese	political	parties	today.                                                              signals	a	future	of	more	global	
                                                                                                            M&A	work	in	the	country.	e

                                        The	economy	is	growing.
                                        That	is	true.	Japan	ranks	first	in	per-capita	earnings	and	
                                        second	in	GDP	in	the	world.	Japan’s	GDP	equals	that	of	
                                 France,	Germany	and	England	combined.	Further,	Japan	has	a	
                                 consumption	economy.	People	tend	to	spend	the	money	they	
                                 make,	particularly	on	luxury	items	and	high-end	products.

        The	population	is	decreasing.
        Its	population	growth	rate	now	is	relatively	flat	(about	.02	percent	according	to	2006	
        estimates).	Its	2002	growth	rate	was	estimated	at	.15	percent.	Yet,	Japan	is	home	to	almost	
                                                                                                            Yoshihiro Hongo is the managing partner of
127.5	million	people	and	its	average	life	expectancy	is	over	80	years.	These	numbers	make	Japan	
                                                                                                            Hongo Tsuji Tax and Consulting, a Leading Edge
one	of	the	best	countries	in	the	world	for	large	business	opportunities.	Its	population	is	highly	          Alliance firm based in Tokyo. He can be reached at
educated	and	it	is	politically	stable	with	sufficient	room	for	development.                        or +01181 3 5323 3301.

        It	is	hostile	towards	foreign	countries.
        In	recent	years,	certain	foreign	media,	particularly	in	China	and	Korea,	have	criticized	
        Japan’s	foreign	policy.	However,	the	true	circumstances	are	different.	Japan	sees	Europe	and	
particularly	the	United	States	as	partners.	This	is	true	in	part	because	after	losing	World	War	II,	
Japan’s	population	enjoyed	the	goods	(including	chocolate)	provided	by	the	occupation	forces,	
giving	birth	to	its	desire	to	imitate	Western	fashion	and	culture.	Further,	Westerners	get	
hospitality	that	could	be	considered	excessive.

        Japan	doesn’t	offer	a	variety	of	food.
        Japan	offers	its	traditional	native	cuisine	as	well	as	food	from	around	the	world.	It	is	also	
        low-priced	and	good.	Visit	Japan	and	I	will	show	you	around.	There	are	many	good	
restaurants	for	French,	Italian,	etc.	that	I	think	are	better	than	those	in	their	original	countries.	In	
fact,	many	businesspeople	whom	I	know	look	forward	to	the	food	on	their	business	trips	to	Japan.

ThE LEAdING EdGE                                                                                                                                                 1

in a nutshell by Chris de Santis
Reduce customer complaints, focus on employees’ performance

Q: We are a small company that provides                     and	most	importantly,	what	kind	of	company	do	                  which	they	are	capable.	If	you	view	them	as	an	
lawn care service and maintenance to                        you	intend	to	be.	                                              investment	 then	 your	 behaviors	 toward	 them	
residential and commercial properties.                         Let’s	 start	 with	 recruiting	 and	 deciding	 on	           will	 reflect	 that	 and,	 in	 turn,	 they	 are	 more	
Lately, i have received several calls from                  hiring.	 Are	 you	 hiring	 for	 the	 skill,	 for	 the	          likely	 to	 respond	 accordingly.	 If	 not,	 you	 will	
clients who have had complaints (mostly                     applicant’s	potential	or	for	a	collection	of	skills	            spend	a	good	deal	more	of	your	time	correcting	
minor) about the service. What can i do to                  and	capabilities?	Small	companies	are	often	hard	               or	cleaning	up	after	them,	if	you’re	not	too	busy	
make sure my employees are providing the                    pressed	 to	 find	 ideal	 candidates	 so	 they	 some-           recruiting	frequent	replacements.	e
level of service our customers expect?                      times	settle	for	the	immediate	need.	I	believe	in	
                                                            the	 expression,	 “there	 are	 no	 small	 dreams.”	 If	         Do you have a workplace question you want answered? What
                                                            you	have	a	small	dream,	don’t	think	small.	Plan	                do you want to know to make work a better place? Send your
                                                                                                                            questions to to get Chris DeSantis’
                                                            to	 be	 big	 or	 as	 big	 as	 you	 so	 choose.	 If	 that	 is	   two cents as to what he thinks you might want to do.
                                                            your	mental	model	then	you	act	accordingly	and	
                                                            start	to	look	at	all	potential	employees	as	people	             Chris DeSantis uses his 20 years’ experience in training
                                                            who	 can	 grow	 with	 the	 company.	 You	 start	 to	            and development as an independent consultant. He spe-
                                                            hire	a	different	kind	of	individual	and	may	find	               cializes in the design and delivery of management and
                                                            employees	who	are	more	likely	to	be	committed	                  organization development interventions. A presenter at
                                                                                                                            Leading Edge Alliance seminars, DeSantis focuses his work
                                                            rather	than	compliant.	                                         on assisting individuals or groups in identifying obstacles
                                                               Broadening	your	scope	leads	to	the	next	deci-                to effectiveness and subsequently works with them to
                                                            sion	about	what	are	you	recruiting	them	to	do.	                 create user friendly solutions aligned with the company’s
                                                            Here	again,	if	you	have	“big	dreams,”	what	you	                 strategic initiatives. He earned his undergraduate degree
                                                            recruit	them	to	do	now	is	not	what	they	will	do	                from the University of Notre Dame, an MBA from the
                                                                                                                            University of Denver and an MA in organizational develop-
                                                            forever.	 Both	 parties	 hope	 for	 upward	 progress	           ment from Loyola University.
                                                            or	expansion	of	responsibilities	as	they	grow	in	
                                                            their	jobs.	
a:	 I	 saw	 your	 question	 and	 thought	 I	 might	            The	 entire	 scope	 of	 the	 job	 may	 be	 more	
answer	 it	 in	 more	 general	 terms	 rather	 than	         than	cutting	grass	and	watering	plants,	it	
address	you	as	a	lawn	care	provider.	The	reason	            may	also	mean	dealing	with	custom-
being	is	this	issue	is	probably	felt	by	any	number	         ers,	 answering	 questions	 or	 even	
of	companies,	big	or	small.	How	do	I	know	the	              making	 suggestions	 to	 clients.	
people	who	are	working	for	us	are	doing	what	               Training	for	the	entire	scope	of	
they	 are	 supposed	 to	 be	 doing?	 In	 large	 com-        their	positions	would	be	eas-
panies	you	would	have	KPIs	(Key	Performance	                ier	 if	 you	 provide	 employ-
Indicators)	 that	 you	 would	 use	 to	 measure	 the	       ees	 with	 a	 chance	 to	 grow	
performance	you	wish	to	see.	Small	companies	               with	 the	 business.	 If	 you	
don’t	 necessarily	 have	 that	 option.	 One	 reason	       select	well,	employees	will	
is	 that	 small	 company	 managers/owners	 wear	            be	 inclined	 to	 learn	 more	
multiple	 hats	 and	 have	 little	 or	 no	 time	 to	 be	    about	 what’s	 important	 in	
exhaustive	 in	 creating	 and	 tracking	 KPIs.	 They	       doing	 the	 whole	 job.	 You	
often	hire	for	the	skills	they	need	and	hope	for	           also	 will	 have	 more	 avid	
the	 best.	 There	 isn’t	 the	 luxury	 of	 training	 and	   students	 if	 they	 see	 that	 by	
tracking	 performance	 in	 areas	 not	 absolutely	          acquiring	 new	 skills	 they	 are	
critical	 to	 the	 function	 or	 role	 required	 of	 the	   more	 valuable	 to	 the	 company	
employee.	                                                  as	it	grows.
   Knowing	the	difficulty	of	this,	what’s	a	person	            I	 realize	 this	 answer	 may	 not	 be	
to	do?	I	think	you	have	to	address	three	things:	           satisfying	 to	 some	 but	 I	 would	 argue	
who	you	recruit	and	what	do	you	recruit	them	               that	 you	 reap	 what	 you	 sow.	 If	 you	 view	
to	do;	what,	if	any,	training	should	be	provided	           employees	strictly	on	a	transactional	basis	then	
so	they	understand	the	entire	scope	of	their	job;	          you	 will	 not	 get	 the	 level	 of	 productivity	 of	

1                                                                                                                                 VOLUME 7    n   ISSUE 3   n   SPRING/SUMMER 2007
The members of the Leading Edge Alliance                                  The Leading edge alliance is an international professional association
are leaders in many key markets, including:                               of independently owned accounting and consulting firms. The Alliance enables
                                                                          member firms to access the resources of a multibillion-dollar global professional
Alabama                  harrisburg, PA            Paris                  services organization, providing business development, professional training
Albania                  hartford                  Puerto Rico
                                                                          and education, and peer-to-peer networking opportunities nationally and
Atlanta                  hong Kong                 Philadelphia
Australia                houston                   Phoenix                globally, around the corner and around the world.
Austria                  hungary                   Pittsburgh
Bahrain                  India                     Poland                 Members are top quality firms who are very successful, have deep client
Baltimore                Indiana                   Providence             relationships, and strong ties to the community. The Alliance provides members
Bangladesh               Indonesia                 Richmond               with an unbeatable combination: the comprehensive size and scope of a large
Belgium                  Iowa                      Reno
                                                                          multinational company while offering their clients the continuity, consistency
Bolivia                  Ireland                   Romania
Boston                   Israel                    Russian Federation
                                                                          and quality of service of a local firm. Member firms have access to the best and
Brazil                   Italy                     San Francisco          brightest team of business advisors—a peer-to-peer connection that provides
British Virgin Islands   Jordan                    Saudi Arabia           the right business solutions for clients.
Buffalo                  Knoxville                 Scotland
Bulgaria                 Korea                     Seattle
Cayman Islands           Las Vegas                 Senegal
                         Los Angeles
                                                                          The Leading edge offers:
China                    Macedonia                 Slovakia               • Access to the best and brightest CPAs and business advisors—a peer-to-peer
Cincinnati               Madison, WI               South Carolina
                                                                            connection that provides the right solutions for clients.
Cleveland                Mauritius                 Spain
Colombia                 Mexico                    Sweden
                                                                          • Innovative, practice-proven strategies for improving performance in management,
Costa Rica               Miami                     Switzerland
Croatia                  Michigan                  The Netherlands
                                                                            business processes, finance, operations, information technology and marketing.
Cyprus                   Minneapolis               Tokyo
                                                                          • A leading knowledge resource for multi-disciplinary information and
dallas                   Moldova                   Toronto
dayton                   Montenegro                Tucson                   industry-specific expertise responsive to clients’ unique needs.
denver                   Montreal                  Tunisia
                                                                          • The strength and reputation to attract the highest quality team members.
Ecuador                  Nashville                 Turkey
Egypt                    Nebraska                  Ukraine
                                                                          • The Alliance offers accounting and consulting services through a global network of
El Salvador              New Orleans               United Arab Emirates
Fort Lauderdale          New Jersey                U.S. Virgin Islands
                                                                            firms with more than 7,500 professional staff in more than 300 cities.
Ghana                    New York                  Venezuela
                                                                          • The Leading Edge Alliance offers world-class business advisory expertise and
Germany                  Nicaragua                 Washington, d.C.
Greece                   Norway                    West Virginia            experience with innovation, progressiveness and quality.
Guatemala                Orange County, CA
honduras                 Oregon
honolulu                 Panama
                                                                          To find out more about The Leading Edge Alliance, visit
         Visit                           or contact Karen Kehl-Rose,
         for a detailed listing of member firms.                          President, at (630) 513-9814 or

ThE LEAdING EdGE                                                                                                                                              1
    5847 San Felipe
          Suite 2400
Houston, Texas 77057
      (713) 860-1400


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