Quarterly Connecticut Economic Outlook Released

January 1, 2014

The Connecticut Center for Economic Analysis, led by Professor Fred Carstensen, released its latest Economic Outlook in mid-December.

Even while jobs are returning to Connecticut’s economy, the apparently encouraging seasonally unadjusted unemployment rate of 7.5% for 2013Q3 needs to be compared with the Seasonally adjusted (SA) unemployment rate of 7.9%. The improving unemployment rate is in large measure a result of declining participation in the workforce. Nearly 65,000 working-age adults simply stopped looking for employment since 2010Q2.

Continuing productivity gains often approaching (or even exceeding) 2% annually translate into no job creation unless the economy grows even faster. Even at the national level, job creation remains modest for this reason. Ironically, Connecticut’s strength in manufacturing, which typically delivers quite high productivity growth, is a concomitant of fewer jobs, and thus a challenge for job creation.

Full-time equivalents (FTEs) have risen 43,000 over the three years. With gains in FTEs and loses in the number jobs, the ratio of FTEs to jobs in Connecticut has risen, which can be an indicator of further job growth.

Read the Full December 2013 Outlook 

A Partnership in Progress

December 25, 2013

This article first appeared in the UConn Business magazine, Volume 2, Issue 1 (Fall 2010)

partnership-in-progressUConn Faculty and Northeast Utilities Collaborate for the Finance Academy

David McHale, Executive Vice President and Chief Financial Officer of Northeast Utilities System, was reading a book a few years back about why people with original ideas succeed in business, when he had an idea of his own.

The book, entitled Mavericks at Work, advocated taking risks and investing in your employees as a way of moving your company to the next level – a concept that appealed to McHale and led him to the idea of creating an in-house college curriculum for his own employees that is called the Finance Academy.

The two-and-a-half year program, which began in 2008, is taught in partnership with UConn School of Business Executive Education faculty and experts from NU.

The company also partnered with the UConn School of Education to help train NU employees to be teachers.

“The idea was really born out of the need to support the organization as we strategically navigate through the new energy economy,” said McHale. “But fundamentally it was to make them better business people and help drive good answers for this company. My  sense was that the world was getting more sophisticated and complex and we needed a work force that was going to keep pace with this. The bigger issue was how to do it.”

McHale knew what he didn’t want – a general exposure to business concepts – and that led him to UConn School of Business’s Executive Education Program, which stresses  experiential learning for its students. Going in deep, and actually testing the theories that are taught in the classroom, was exactly what McHale had in mind.

The end result is an interesting mix of general business classes, in subjects such as accounting and finance, taught by School of Business professors, and industryspecific courses run by experts from NU. Many of the latter courses also involve simulation of real-life job experiences, such as rate case hearings before the state Department of Public Utility Control and investor presentations for the sale of company stock and bonds.

“I wanted this program to have a special feel that was interesting, where people would want to engage and work in teams and experience something away from the norm,” said McHale. He participates enthusiastically in many aspects of the program, such as playing the role of Attorney General Richard Blumenthal during rate case hearings and getting up in a bucket truck to explain the importance of NU’s capital program.

UConn graduate Steven Casey ’87, now Manager of Financial Development at NU and director of the Finance Academy, said he had 60 employees apply for the 30 spots in program the past two years.

“We’re making a significant investment in our own employees and, with UConn’s help, we’re customizing it to what they need to know for our business so they can come back and apply the learning to the job they’re in or a future job down the road,” Casey noted. NU will spend about $275,000 with UConn on the academy in 2010, when three different classes with a total of 85 to 90 participants will take place simultaneously.

The core offering of the academy is a five-semester program that begins with a four-hour online course covering the basics of electricity and then progressed to fundamental classes on the electric and gas markets. After that, students move on to accounting, revenue requirements and rate design, and finance.

The basis of the revenue requirements and rate design course is the simulated rate case, which comes at the end of six weeks of classroom learning, Casey said. Students work in groups of five or six and each team has to create a rate case as if they were preparing it for the DPUC.

“People just love it, but it’s really a lot of work and very nerve-wracking,” Casey said, adding that he, McHale and other NU executives play different roles in the mock hearings.
Sal Giuliano, the Manager of Corporate Real Estate at NU and a UConn graduate from the
Class of 1980, recently completed the revenue and rate design course. “I had a little bit of apprehension going in because the mock hearing was very formal and structured as much as possible to mirror the actual hearing at the DPUC,” Giuliano said. “But it was very insightful and I certainly got an appreciation for the folks who do this work for the company.”

Part of the appeal of the program is that employees such as Giuliano, who has 25 years with NU, work side-by-side with people who have recently started their careers – for instance, Mohammad Nauman ’07 MBA, who has been employed as a Risk Management Analyst at Northeast Utilities for about two years.

“I’m really grateful that I was accepted into this program,” Nauman said. “The things that I have learned, I never would have learned. Never. The whole experience has been great.”

Dr. Shantaram Hegde, Professor of Finance and fomer associate dean of Graduate Studies at the School of Business and director of the Executive Education program at UConn, said he and other UConn faculty worked with NU officials for six months to develop the program.

“It was an intensive effort to develop this program. In a conventional program you learn and then apply what you’ve learned. We wanted to accelerate that process in this program,” Dr. Hegde said. “Northeast Utilities has an enlightened management and a very strong conviction that empowering their employees is a good investment.”

The partnership with NU is good for the school on a number of levels, Dr. Hegde said, because it offers faculty an opportunity to learn more about the gas and electric industries.

“We typically look at a larger cross-section of firms. What this allows us to do is to dig deeper into a particular industry and see how the financial management operational tools can be applied to that firm’s challenges and problems,” said Dr. Hegde. At the end of the day, that’s what McHale wants his employees to do, too, which is why the company is also offering a case studies course in which employees study business concepts and then apply them to NU.

“Although it’s still a little early in the program, I think we are already developing better business people,” McHale said. “And I would bet that when we look back five years from now, we’ll see a lot of people who have contributed something significant to the company.”

Legal Advantage

This article first appeared in the UConn Business magazine, Volume 2, Issue 1 (Fall 2010)

legal-advantageFinding value in your firm’s law team

Today’s difficult economy demands that firms find new sources of competitive advantage.  Recent research by Professor Robert Bird finds an answer in one of the most unlikely of sources – a firm’s legal environment.

For too long, Bird explains, companies have overlooked an opportunity for capturing marketplace value right in their own offices. “We know that corporate counsel can skillfully evaluate risk, manage litigation, and confront regulatory challenges. We also know that the legal department is too often shunted aside when big business questions arise.”

When executives roll out a new product or consider a merger, lawyers are usually consulted for their legal advice but rarely their business advice. “Legal experts can be an incredible source for corporate decision making,” Bird’s research shows. “Lawyers and
non-lawyers alike can use their knowledge of the legal and regulatory environment to discover new markets and expand on existing ones.”

Examples of using law as an opportunity already exist. While most executives viewed Sarbanes-Oxley as yet another regulatory burden, a visionary few used SOX to improve their firm’s investor ratings and streamline financial controls. These firms used compliance with SOX as a vehicle to consolidate key financial processes, eliminate  redundant information systems, broaden responsibility for financial controls, and integrate distant business units with new acquisitions. These SOX firms have attracted the attention of investor rating services which evaluate the strength of the financial control environment as a positive factor. Such rating services have a significant impact on investor relations
and the firm’s cost of capital.

Bird’s research identifies numerous examples of the business benefits of a legal perspective. When the head of PepsiCo’s Frito Lay division became concerned over the increasing threat of health-related product liability lawsuits, he worked closely with in-house attorneys to find a solution. Instead of simply perceiving these lawsuits as threats, managers and lawyers reframed the problem as an impetus to create new products. Reformulating existing products to satisfy consumer demands for healthier foods, in 2004 PepsiCo became the first consumer products company to remove trans-fats from its snacks, and as a result, captured a significant first-mover marketing advantage from the decision. “These events are scattered throughout firms and in the
pages of academic journals,” Bird explains, “but are rarely tied together as pieces of a
firm’s overall business plan.”

A large retail firm being sued for firm-wide sex discrimination was burdened with a cumbersome judicial consent decree. The firm could have responded by challenging the consent decree in court, looking for loopholes, or by simply paying a penalty and promising to follow the law. Instead, the company instituted an automated hiring promotion system that allowed applicants or employees to enter into a pool for any position that met their
qualifications and interests. The system reduced the effect of subjective biases, expanded the pool of applications for every position and promoted the advancement of employees that otherwise might not have sought or attained higher positions. For example, when one female employee applied for a job as a cashier because she believed “that’s where women went,” the automated system bumped her to a higher job level based upon her extensive prior experience. This system was so successful that Home Depot voluntarily expanded it beyond the jurisdiction where it was originally imposed by the consent decree; the system is now used company-wide.

Professor Bird’s innovative work has received accolades from academic circles: “Pathways of Legal Strategy,” was published in the Stanford Journal of Law, Business and Finance and received a junior faculty best paper award. The article explains that firms knowingly or unknowingly interact with their legal environment in their ordinary operations. Bird discovered that while some firms avoid legal obligations altogether, some merely comply with the letter of the law and overlook hidden value. “Each possibility is available,” Bird says, “but most companies just comply with the law and move on. That’s a lost  opportunity for firms.”

Bird is currently finishing a working paper that is already cited in the literature: “Law, Strategy and Competitive Advantage.” This paper explores how a firm’s past experiences might influence whether its executives view the legal environment as a threat or an opportunity. The experiences of individual managers with government regulators or the legal system might influence how strongly they perceive rules as barriers. The presence of legal advice in-house or outside the firm might impact the strength of relationships that develop between lawyer and manager. Certain heavily-regulated industries that interact
with government officials and navigate complex regulations on a regular basis might be in a better position to think strategically about law than their less-regulated counterparts. “We just don’t know why one firm uses law skillfully and another does not,” Bird says.  “Considering the possible sources helps answer this important question.”

Bird’s work has also attracted attention from other universities. Presenting at the University of Michigan’s Ross School of Business, Bird spoke with fellow instructors interested in incorporating legal strategy into scholarly research. “We were intrigued by this timely and innovative concept,” said Lynda Oswald, the Michael R. and Mary Kay Hallman Fellow and
Professor of Business Law. “We invited Professor Bird to speak to our faculty, and his research was well received.”

Faculty from the Opus College of Business at the University of St. Thomas also invited Professor Bird to speak about his research. The focus of the lecture was to help students understand the importance of the legal system in the business environment. “We held a forum that was well attended by students and faculty,” explained Michael Garrison, Professor of Ethics and Business Law and Department Chair, “and his work helped our undergraduates think of regulation as a opportunity and not just a cost.”

Professor Bird was also invited to present at two universities in Turku, Finland. Faculty  there were interested in how principles of strategy applied to an emerging scholarly  movement in Europe known as proactive law. “The University of Turku and the Turku University of Applied Sciences were most gracious,” Bird said, “and offered a wonderful opportunity to interact with international scholars interested in the intersection of law and business.” In addition, Bird is serving as a special topic advisor for a forthcoming issue of the American Business Law Journal on the topic of “Law as a Source of Strategic Advantage.”

There is much that can be done to take advantage of legal opportunities. Top leaders can  treat their company counsel as full partners in the business planning process. Managers  can involve lawyers earlier in contract negotiations and budding legal problems. Formation of teams with legal and non-legal experts who work closely together can help develop  creative and effective solutions that impact regulation.

Furthermore, non-legal personnel who manage compliance, ethics, or other regulatory-related functions can be given greater decision making power to exploit opportunities and participate in decision-making. They should also be allowed to take a more proactive attitude toward planning for anticipated changes in the law. If, through government  contacts, a compliance department learns that change is on the horizon, preparation can cut costs, avoid last-minute efforts to comply, and earn goodwill with regulators. The less a decision-maker perceives a legal rule as an immutable barrier, the more likely potential  opportunities for competitive advantage will become evident.

Work in this area is just beginning and Bird analogizes the research to early debates over the role of information technology in the 1980s and 1990s. “About twenty years ago,” Bird said, “firms openly questioned the value of IT. Some executives saw little benefit beyond back order processing. Writers questioned whether it could provide a competitive  advantage at all. Law today is like IT twenty years ago. Law is now the last great resource
of competitive advantage, and with ongoing vigilance, managers can unlock this untapped opportunity inside their own companies.”

STUDIES CITED

Bird, Robert C., “Pathways of Legal Strategy,” Stanford Journal of Law, Business and
Finance, vol. 14, iss. 1, pp. 1-41.

Bird, Robert C., “Law, Strategy, and Competitive Advantage,” http://ssrn.com/abstract=1327795.

Firms Worth Fighting For

This article first appeared in the UConn Business magazine, Volume 2, Issue 1 (Fall 2010)

Firms Worth Fighting ForFamily Business Keep Hope Alive

Drive down any Main Street and, more often than not, you’ll pass a sponsor of the town’s  little league, a provider of scholarships for high school seniors, and members of the town  council. You may also pass by architects who designed your office space, a bakery that
supplies bread and holiday treats to your local grocery store, or manufacturing facilities that make everything from plastic gears in your washing machines to springs in your cell phone. These firms thrive on dexterity, deftly balancing the “Mom & Pop” feel of community
commitment while setting their sights on global reach and industry transformation.

They’re family-owned enterprises. Though common, family firms are nonetheless unique. While the public’s heads are turned to grand scale of large publicly-held multinational  organizations, family firms quietly serve as the brains behind  global innovations, the heart behind local, national, and international philanthropy, and the central nervous system of  American free enterprise. Over 90% of all U.S. firms are family-owned, and family businesses employ 62% of the United States workforce. They contribute 64% of the US GDP and they create 78% of all new jobs.

The dexterity of family business pays off via a broad variety of contributions pertaining to community service and social responsibility that cannot be as nimbly managed by larger organizations. A joint study conducted in 2009 by the University of Connecticut Family Business Program and the Connecticut Business & Industry Association found that 80% of family business owners emphasize their family values in the operation of the firm, and at least 79% are dedicated to incorporating socially responsible practices in their business. This all contributes to quality management, high ethical standards, and low staff turnover – as well as potential gains in revenue and profitability. “Being a family firm constantly influences our decisions. The biggest example is in these tough times; we have lost money and worked hard at coming up with alternatives to layoffs. Some examples include cutting back work hours – and for those working full-time, we’ve reduced their pay with the promise that we will reimburse the difference when business returns. We have good people and we are investing in the future,” notes Sam Simons ’95 MBA,  Vice President of Administration at OEM Controls, a Shelton CT-based manufacturer of electro-hydraulic controllers and joysticks for industrial and mobile equipment. OEM Controls was founded in 1966 by Sam’s father, S. Brian Simons ’60, and currently employs over 200 Connecticut residents.

Greg Bachmann ’03 MBA, President & CEO of Dymax Corporation – a 2nd generation Torrington-based adhesives manufacturer – adds, “What comes around goes around. Most of our donations go toward education, and on top of that we reimburse employees 100% for tuition. Our return is having the educational institutions to turn to for a strong employee base as well as a highly skilled, educated work force with a higher degree of job satisfaction, loyalty and self satisfaction. Non family firms tend to be short-term driven
by shareholders who do not live in nearby communities. Philanthropy generally requires a longer term perspective outside of simple shareholder return.”

While the return on investment in social responsibility contributes significantly to the intrinsic value of a company, the benefits can’t just be measured quantitatively, “The return on being socially responsible and philanthropic not only gives you a warm feeling of having helped others but it’s also part of the responsibility of owning a successful company in your community. It is important to have our family involved in giving back to the community
and taking part in making a positive difference in the lives of others,” notes John G.  Sommers, President & CEO of Allied Printing Services, Inc. Allied Printing is a Manchester-based 3rd generation family firm and is one of the largest independent, financial and commercial printing companies in the country.

“My father always said ‘take care of the company and it will take care of everyone who works there’ – and that still stands true for us today at Allied. As a family-run business, we are in it for the long haul. We don’t have to worry about how the stock market reflects on any decisions that we make. We truly have a commitment to our employees, community and family to run a successful business. Being a second/third generation family-owned
business means that we have been raised with the values and principles that Allied was built upon, and we are instilling those values in our people.”

Family business’s contributions are not going unnoticed. The 2009 UConn/CBIA study found that 82% of family firms donate regularly to community organizations, educational initiatives, and religious institutions. The philanthropy of family firms provides a boost to the community and critical support to the education efforts of the future workforce.

“UConn’s partnership with family firms is strong and recognized in labs and classrooms across campus,” notes Brian J. Otis ’06 MBA, Vice President of Development at the UConn Foundation. “Whether it is supporting teaching, research, or outreach, we’re grateful for the support and proud to work with each and every family and business. As vital stakeholders, family firms help us achieve comprehensive learning models whereby each student can develop into a productive global asset.”

John Sommers emphasizes this partnership: “Education is important to us and is something in which the entire community must invest. The benefits are amazing – education has the power to reduce crime, increase investment, and raise productivity. I’ve seen firsthand that by employing teenagers during the summer, at some time in the future they may become full-time employees. Education has a high correlation with increased earning potential in the United States and sends a message to young people that they are important and an essential part of our society.”

UConn Students Compete in 7th Annual Business Language Case Competition

December 2, 2013

On Friday, November 8, three students from the University of Connecticut traveled to Provo, Utah to compete in the Seventh Annual Business Language Case Competition at the Brigham Young University (BYU) Marriott School of Business. The three students were Sarah Scheffel ’14, a senior who is majoring in international business with a minor in Spanish, Akanksha Singh ’16, a second-year student studying finance and Spanish, and Jonathan Sanchez ’14 (CLAS), a political science major also in his last year. The team was accompanied by Kelly Aceto, Managing Director of the UConn Center for International Business Education and Research.

The competition was conducted in two categories: Spanish and Mandarin. All of the participants were non-native speakers of each language. The team from UConn participated in the Spanish competition, in which they had to read a case about Wal-Mart’s expansion into organics, create an executive summary and PowerPoint presentation, and answer ten minutes of questions all in Spanish.

Overall, the BYU competition was an incredible experience for the students who took part because it allowed them to showcase their business acumen and foreign language skills, sharpen their presentation skills for real-life global business situations, and network with international business professionals who served as judges and coaches, as well as the other participants. Other schools present at the competition were Arizona State University, University of Miami, Indiana University, American University, University of Nevada Las Vegas, University of Washington, University of Pittsburgh, Rutgers University, University of Pennsylvania, Utah State University, and University of Notre Dame. This is the first year that UConn has participated in the Business Language Case Competition.

The UConn team was sponsored by the UConn Center for International Business Education and Research (CIBER), which is one of the 33 CIBERs located in top business schools throughout the U.S. The UConn CIBER is mandated to increase the competitiveness of U.S. business in the global marketplace.

UConn EBV Program is a Community of Veterans Supporting Connecticut’s Economy

November 8, 2013

UConn’s Entrepreneurship Bootcamp for Veterans with Disabilities (EBV) fills an important need both for the veteran population in that it provides access to entrepreneurial education and resources, and to the state in that it helps create economic vitality and businesses that create jobs.

A May 2011 study from the Small Business Administration Office of Advocacy revealed that 45 percent of veterans are more likely to take the plunge into entrepreneurship than people with no active-duty military experience. “I think there are several reasons why veterans tend to be more entrepreneurial, says Michael Zacchea ’12 MBA, EBV program manager, in a 2012 Hartford Business Journal interview. “First, in the military, they developed a bias for action, and a commitment to mission accomplishment. Veterans tend to network with other veterans, and tend to understand things like logistics and supply chains. Veterans have learned management and planning skills that lend themselves to entrepreneurial success.”

On Veterans Day in 2004, Zacchea nearly died while fighting with his unit in the streets of Fallujah, one of Iraq’s deadliest combat zones. Nine years later and retired from the Marine Corps, he has led more than 60 disabled veterans through the EBV program curriculum. “We believe that veteran entrepreneurship is part of the solution both for the current generation of 2.5 million Iraq and Afghanistan veterans, and for our economy both nationally and for our state. In Connecticut, there are more than 40,000 veteran-owned businesses, which account for 8% of the state’s GDP,” says Zacchea. “Veteran business owners create both economic and social value disproportionate to their size of the population.”

Learn more about UConn’s EBV program and hear feedback from participants in this video:

Over 400 Attend Second Annual Business Career Expo

November 7, 2013

On a crisp October morning, more than 400 students and employers participated in the School of Business’ Second Annual Business Career Expo. The event, which was designed to complement the successful career fairs hosted by the UConn Center for Career Development, featured a multi-dimensional format designed to enhance personal connections between students and those employers who specifically seek School of Business undergraduate and MBA students.

Students were advised to come to the Business Career Expo prepared to talk about their personal passions such as sports, clubs, hobbies, musical interests, community service, and unique pursuits. Employers were invited to tell stories reflecting their company culture including team sports, community service initiatives, and distinctive company activities or efforts. Students were encouraged to understand the differentiators between companies and in return to highlight the differentiators between themselves and other business students.

In their introductory remarks, the School of Business Career Center (SBCC) team encouraged the crowd to think beyond traditional career fair conversations. “Our students are more than their GPAs, and our corporate partners have more to offer than job postings; we invite you all to find those compelling reasons for connecting here today,” announced Kathy Hendrickson, assistant director of the Undergraduate Business Career Center.

In order to encourage this unique dialogue and to highlight personal passions and talents beyond academics, the event was opened with a performance of the national anthem by the Conn-Men. The Conn-Men is a student a cappella group who performed at the inauguration of UConn President Susan Herbst, and has also recently won the UConn A Cappella Competition. Their inspiring performance launched the morning discussions in a manner which brought immediate energy into the room and the conversations. Employers Jodi Culberston, Northwestern Mutual, and Sean O’Connell ’83 (CLAS), ’92 MBA, GE, were just two of the participants who expressed enthusiasm and appreciation for the unique introduction to the day and the manner in which it immediately facilitated conversations with students.

The full agenda included an open forum in the Student Union Ballroom and 18 concurrent individual employer sessions. The event culminated at 1:30 p.m., when the Conn-Men returned for a half-hour performance for all students, employers, faculty, and staff of the School of Business who participated in the event. Meg Warren, assistant director of the MBA Business Career Center, concludes, “In terms of connecting students and employers in a personal way, the day was a resounding success!”

Halloween 2013

October 31, 2013

Pumpkin carving, painting, and of course… candy!!

 

Hartford Campus:

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Stamford Campus:

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The Wall Street Journal Available to UConn School of Business Students & Faculty

The UConn School of Business is excited to announce that the Wall Street Journal’s premium digital products—including WSJ Online and smartphone and tablet apps—are now available to all business majors and School of Business faculty at Storrs, Connecticut and at regional campuses.

“In our continuing efforts to increase the business information literacy of all our students, we are pleased to be able to offer them this opportunity to keep abreast of all the latest breaking news in the business world,” says Larry Gramling, associate dean for undergraduate programs.

For over a century, WSJ has sustained a legacy of journalistic excellence and is the #1 most trusted newspaper for the 27th consecutive year, according to the Pew Research Center.

The Wall Street Journal provides students with:

  • Deeper understanding of current global news and probing analysis of markets, corporations, financials and technology.
  • A personalized experience through customizing WSJ.com to track companies and industries for class projects and interview research.
  • Access anytime, anywhere with WSJ online and tablet and smartphone apps.

“Having access to the Wall Street Journal gives students the opportunity to read what recruiters are reading—from a concise, reputable source,” says Bill Tracy, educational representative for the Wall Street Journal. “The mobile apps provide them with in-depth videos, interviews, and more than just a traditional news article,” he adds. “Nearly 90% of our student subscribers say that reading WSJ makes them feel confident and prepared.”