Archive for the ‘General’ Category

Branding Real Estate

Friday, May 23rd, 2014

We’ve all heard the term “branding” but for most of us it’s seemed like just another name for the familiar business of marketing. Some people think it’s the packaging around a product – the logos and colors; others think it’s the sum total of the advertising that promotes a company. Both are wrong. Interbrand defines brands as “a living business asset, brought to life across all touchpoints which, if properly managed creates identification, differentiation and value. The key word there is “living”.   At its fundamental level, branding involves giving an inanimate object –a company, service or product — human properties. It allows you to relate to it at a human level. While marketing pushes a product to market (through the 4 P’s of Product, Price, Promotion and Place), branding is what creates its emotional appeal, its narrative.” A brand is what makes you insist on an Apple iPad as opposed to the well-reviewed Barnes & Noble Nook HD; a brand makes you covet an Audi S4 over the highly-rated Hyundai Genesis. A brand is a mist of memories, associations and aspirations that corporations spend millions of dollars trying to understand.

Modern brand management has its roots in the 1930s at Proctor & Gamble but it’s only in the last 20 years that we’ve seen it become the preeminent creed of effective marketers. For corporations, the implications of branding are enormous for this simple reason: a strong brand commands a premium in the marketplace (consider that the Ipad can command a price of more than $100 more than the Kindle Fire which is lighter, has better resolution, more RAM and a better camera). No wonder then that branding is entering the world of the biggest-ticket items.

Branding is still evolving in the real estate industry. We’ve seen companies like CBRE, JLL, and Hines do a fine job of conveying their scope, financial strength and expertise but rarely has it been applied at the product level. This is changing. One of the early adopters is Forbes, the eponymous business magazine, which will now put its name on commercial real estate. It has chosen the Philippines as the site for the world’s first Forbes-branded office high-rise — a partnership with a local developer. The 646,000-square-foot Forbes Media Tower will be located in the suburb of Manila. The project is expected to be part of a network of Forbes Media Towers around the world. It’s a tantalizing concept. While premium Class A buildings are sometimes branded under their anchor tenant (like the Time Warner Center in New York) or their vanity name (think of the Rookery in Chicago), the vast majority of the nation’s commercial real estate stock isn’t; it’s viewed as a commodity separable only by practical concerns like location, technology, lease rate, incentives and buildout. Clearly, it is an idea worth exploring: the Forbes brand has equity — a hundred year old company that is associated with hard news on “business, investing, technology, entrepreneurship, leadership and affluent lifestyles”. According to Omniture, forbes.com reaches 47 million monthly unique visitors, while Forbes Magazine, Forbes Asia and Forbes Europe attract a global audience of more than 5 million readers. It would appear to be the ideal brand to extend into the realm of premium office space. Plus, the concept of the branded tower has its precedents (albeit mostly in residential real estate) — most famously with the Trump organization which has licensed its brand across a vast portfolio of real estate. One report has the value of the Trump brand alone at $3 billion.

So, how do you brand? We start with a full-scale brand audit of an asset, looking at its perception in the market (including it’s positioning, identity, personality, reputation) by talking to brokers, CREs, investors; then we look at competing buildings to see where we stand in relation to them. Once we have a very detailed snapshot of the asset, we undertake the actual branding process which starts with a SWOT analysis (and maybe a PEST analysis to see where the market as a whole is going) and proceeds to lay out all the aspects of the brand that will make it personal and unique. Think of it as an onion with layers – a vision, mission, positioning statement, personality, promise, values. The deepest layer is the brand idea or unique selling proposition. It is the DNA of a company of a product or company and motivates all of its messaging. To clarify, here are the most famous USPs in history:

Jaguar – styling
Mercedes – Engineering
Volvo — safety
FedEx – overnight
McDonald’s – Kids
Burger King — grownups

This simple idea is the spark that fires the look and feel of the brand, its expression in the market and the target audience. Think of Volvo and how every ad you see in some way references safety.

Case Study
Most recently, The Alter Group wanted to rebrand one of its signature buildings in downtown Chicago, Dearborn Plaza. Built in 1999, the 385,000 SF office building in downtown Chicago’s River North neighborhood was known across the industry as the Chicago headquarters of Google and winner of numerous architecture prizes. With the Google space becoming available in 2015, Alter knew that they needed to brand the asset as the best tech space in the best location in the city. However, when the Alter marketing team did their audit of the asset, they found that the brand didn’t reflect the status of the building.

Firstly, in our research we found that everybody knew the building as 20 West Kinzie and not Dearborn Plaza. Secondly, the brand expression , including its logo, signage and messaging didn’t convey what was special about the asset – the fact that it had a Michelin-rated restaurant and a boutique hotel in the building and was located in a spot with more nightclubs, restaurants and art galleries than anywhere in the city. After an exhaustive study , we re-engineered the brand under the Unique Selling Proposition of “Primetime Office” to convey the prime space and the notion that the building remained vibrant well into the night when the area became the center of the city’s nightlife. As part of this we introduced a new logo, new brand colors, and monument signage that still gestured at the building’s unique architectural lines. To cap it off, the building’s new web portal is one of the most content-rich sites ever done for an individual building with a look that evokes the most stylish tech companies like instagram, pinterest and tumblr.

Looking ahead, we are now seeing the second major revolution in marketing after branding – namely social media. Make no mistake, it is a sea change. And the biggest part of this is the internet and social media. Consider that 93% of B2B customers now begin the buying process with an online search and 48% participate in industry conversations online. In 2011 there was a study of 600 chief executive officers and 70 percent of them stated that they thought their chief marketing officer was on the wrong track. The reason is because the nature of the sales process has changed entirely. Customers now make 60 percent of their buying decision online before they even engage with your company. The reason for that is because we have moved from the old model of marketing—institutional marketing and the broadcast model, where the company would create a slick campaign and beautiful marketing materials and push that to the audience. This was effectively a one-way conversation. Now, we have moved from that owned content model to earned content which is about engagement.

For 20 West Kinzie, we have to go beyond branding to engaging with tech firms through twitter, LinkedIn and other channels and through very targeted banner and PPC ads. We produce meaningful content through our blog and podcasts and then combine that with presentations at conferences and through the press. You have to be useful and you have to be authentic in this marketing space. The new watchword is interaction not interruption.

In the end, branding real estate , whether it’s the Forbes or the 20 West Kinzie strategy is powerful and a natural extension of the branded environments we’ve become used to in the retail and hospitality industry. Whether it’s the marbleized no-hassle restraint of Nordstrom’s or the design-conscious eccentricity of Target, our energy and attitude is subtly altered by branding. We feel different in these spaces by virtue of the brand. Forbes is a pioneer in trying to do this within office space. It will be a great test case for the influence of the b-word.

Tom Silva is Principal of Silva Brand, a strategic branding agency based in downtown Chicago. Previously Senior Vice President of Marketing & Strategy for The Alter Group, he has branded major corporate campuses and downtown high rises, including 111 West Illinois, a major high-tech office tower in River North (www.111willinois.com) and 625 West Adams (www.625westadams.com), a 490,000 SF, 20-story office building. His writing on branding and business strategy has been featured by Reuters and in his regular column for the Huffington Post.

 

Tom Silva
Principal
Silva Brand

Mahima Narula on the E-Commerce Revolution

Monday, March 10th, 2014

Mahima Narula Icon ImageAs more and more people shop online, industry experts say that e-Commerce has the potential to eclipse traditional retail shopping. And with the increasing number of mobile sales transactions, this transition could happen sooner than we think.

Launched in 1999 as an exclusive online purveyor of floral arrangements and gifts, Flora2000 is a particularly good example of an e-commerce company that’s successfully taken traditional gift giving into the 21st century. Over the years, the brand has expanded its network across the world and presently has the largest network of vendors with delivery in over 190 countries. According to Mahima Narula, business head at Flora2000, nearly 170 million people live outside the countries in which they were born, an important—and lucrative—market for companies like Flora2000. Many of their customers, for example, regularly purchase products to be delivered to friends and loved ones back home.

E-commerce companies are especially adept at serving business travelers, whether they are flying around the globe or driving from one town to the next. With just a couple of keystrokes, a department head can arrange for his or her entire team to receive a “job well done” gift from any number of websites. Similarly, online retailers like Red Envelope and Birchbox make it easy to shop for just about anyone on your list, from a loved one to a business associate. Online dating companies, like Zoosk, offer easy-to-use apps while many social media sites like LinkedIn, Facebook and Twitter are now serving as a backdrop for those seeking love.  “Tweetup” or Twitter meet-ups, occur between people who meet at an event organized through Twitter.

Social media, whether it’s Instagram, Pinterest, Twitter, or Facebook, offers another opportunity for e-Commerce companies to increase their customer base. Creating an online presence opens up tremendous opportunities for marketing campaigns like product launches and contests. Social media also increases a company’s visibility. And the content potential is infinite.

Another critical piece is research. It is essential for e-Commerce companies to reach out to two important groups: customers who’ve already purchased products (“retention”) and those they’re trying to attract (“acquisition”). To keep the customers they have, companies maintain communications by regularly sending out newsletters, implementing loyalty programs, and staying engaged through social media. To acquire more customers, the companies must constantly seek ways improve their SEO rankings, collaborate with various affiliates, use pay-per-click ads if appropriate, and maintain active public relations campaigns.

And it’s always good business to keep an eye on what other online purveyors are doing to snag more business. Amazon’s warehouse building spree and Ebay’s social pop-up store in London are good examples of e-Commerce companies embracing portions of traditional retail models in order to increase revenue.

Listen to the podcast here.

 

 

Beatlemania is Back. Beatlemania Never Left.

Wednesday, February 12th, 2014

“It was 20 years ago today..” Actually, more like 50 years plus a couple of days.  February 9, 1964. The Beatles took to the Ed Sullivan stage, and music history was made.  Getting on the Ed Sullivan show was surreal in itself; the whole deal was sealed with a handshake between Ed Suillivan and Brian Epstein (The Beatles manager) that guaranteed three performances, top billing and a monetary compensation of $10,000. Hard to image a current artist agreeing to that contract.  So, the question to ask is just how big were the 1964 Beatles and could they hold a candle to the stars of today?

Let’s look at the numbers: By the early 1960’s, Beatlemania had already spread through Europe with the release of The Beatles first album, Please Please Me.  However, it was only with “I Want to Hold Your Hand” that they scored an American number one hit.  With a promotion budget of $40,000, the single sold 250,000 copies in the first 3 days; in New York City alone, 10,000 copies were sold every hour. That’s without Facebook, Twitter, Pandora, Spotify, YouTube and iTunes.

Compare that to Justin Timberlake’s (JT) long awaited musical comeback.  After a 6 year hiatus, “Suit & Tie” was the first single off his album, 20/20 Experience. The song debuted at number 84 on the Billboard Hot 100 based on two days of airplay and was number four on the Billboard Hot 100 with 315,000 first-week downloads sold.  That’s 45,000 singles/day versus the Beatles’ 83,000/day.

And what about TV ratings?  The Beatles scored a record-setting 45.3, meaning that 45.3% of households with televisions were watching. That figure reflected an audience of 73 million viewers, all on one night. Within two months of the performance, the Beatles had the top five songs on the American charts, and 63 percent of records released in America were Beatles records. And what about JT?   If you do a search for the official “Suit & Tie” video on YouTube, it received just under 63 million views (and that’s almost a year after it was released).

The Chinese Moto into Chicago

Monday, February 3rd, 2014

It’s a strange experience to attend a tech conference like I did last Thursday and have no one — not the audience or the speakers — mention the biggest tech story of the year. It’s a little like attending a family reunion and having nobody comment on your Aunt Mary’s 25-year old boyfriend.

Motorola Mobility is being sold by Google to Chinese computer powerhouse, Lenovo. You remember them — the company that bought IBM’s ThinkPad division in 2005. They paid $2.9 billion and it’s for one reason: to enter the smartphone war against Apple and Samsung. It’s the largest ever deal by a Chinese tech company (although a relative bargain when you consider that Google paid $12.5 billion for Motorola — primarily for its patent portfolio which it will license to Lenovo.)

For Chicago, the sale comes weeks away from the biggest real estate move of the last year: Motorola moving more than 2,000 workers into the Merchandise Mart and becoming the biggest tech employer downtown. Lenovo says it will all move ahead with no plans for layoffs.

The reason a Chinese tech behemoth with resources pays for an American company is twofold — brand and know how. “Motorola brings a strong brand, brilliant engineering and strong relationships with carriers and retailers.” said Lenovo CEO Yang Yuanqing.

In a blog for Crain’s Chicago Business, John Pletz spells out the challenges: Today, it (Motorola) has just 1 percent global market share, putting it in 16th place among the top cellphone vendors, according to research firm Strategy Analytics Inc. That’s down from No. 2, with 22 percent share, in 2006, when Motorola’s Razr phone was the must-have device.

After the acquisition, Lenovo will be No. 3, with 6 percent of the smartphone market, which accounts for most of the cellphone industry’s profit, according to Strategy Analytics. Samsung is No. 1 with 32 percent of shipments, followed by Apple, with 15 percent.

Keen for ’14

Wednesday, January 29th, 2014

The nation’s CEOs are bullish about their prospects for the new year, according to annual PricewaterhouseCoopers survey of more than 1,300 chief executives, which was released on Wednesday.  A full 39 percent were “very confident” that their company’s revenues would grow this year (up 3 percent from a year ago). More than 60% of the U.S. CEOs in the survey said they expect to hire more people this year–the highest in the past five years of the report. Sure they’re feeling good — businesses in the US are sitting on $1.4 trillion in cash; worldwide its $4.5 trillion,  73% more than the pre-recession level in 2006 (of course, you could argue that the reason it’s so high is that businesses hoard cash when they are uncertain about the market).

Add to this, the fact that the indicators have been good:  the IMF has upped its world economy growth prediction to 3.7 percent in 2014 and says the U.S. will grow 2.8 percent. Goldman Sachs and Credit Suisse First Boston (CSFB) are both expecting this to be the best year since 2011. The World Bank is slightly more tepid but still optimistic , predicting growth of 3.2%, less because of the US and more because Japan and Europe are slowly getting their acts together.

Going back to the CEOs, 44 percent said they believe the global economy will improve in the next 12 months. Last year, 18 percent said so. So where do they see growth? A full 86 percent say it’s in “advancing technologies” that are going to transform their businesses in the next first years. They cite how tech intersects with other industries, such as healthcare and retail, to create new hybrid industries, according to the survey. One of the biggest drivers will be replacing outdated equipment (the average piece of equipment is 17 years old in the US).

That’s the good news. But let’s remember that it still doesn’t feel like a recovery for a lot of people. Despite the unemployment rate falling to its lowest level since October of 2008 at 6.7 percent,  the labor participation rate is still a concern for many. 347,000 people dropped out of the labor force (that is, are no longer looking for work) according to the December report. However, even that number may have a bright side. a A recent study by Shigeru Fujita, a senior economist at the Federal Reserve Bank of Philadelphia says that “discouraged workers” only made up about a quarter of those leaving the labor force between 2007 and 2011, while “the decline in the participation rate since the first quarter of 2012 is entirely accounted for by increases in nonparticipation due to retirement.” If this is in fact the case, the current headline 6.7% unemployment rate may indeed reflect the true health of the labor market

Despite the dueling numbers, it is clear that partisans on both sides are correct: we have a lot of work still to do and we have a lot to be positive about.

 

Have We Given Democracy a Bad Name?

Thursday, January 23rd, 2014

I was struck recently by an interview conducted recently by McKinsey & Company with Ogilvy Public Relations Worldwide Global CEO, Christopher Graves. Discussing India, Graves was opining on what the country needs to do to improve its prospects and attract foreign direct investment. Graves said, “India has often baked into part of its investment brand a few amazing attributes, such as being the world’s largest democracy, the world’s largest English-speaking country, for example, and used those as attractions for would-be foreign direct investment.” So here’s the striking part: “There are a couple of problems with that. One, if you look at the world’s most famous democracy, the United States of America, you find nothing but dysfunction at the moment. So actually leveraging democracy as expressed by Americans at this point may not be such a great brand attribute.”

Can that really be true?

Contrast this with the End of History. No, I don’t mean the event but the article. As the millennium turned there was no more discussed a piece than Francis Fukuyama’s 1989 essay “The End of History?” published in the international affairs journal The National Interest. The idea was that the West won the Cold War but more significantly, that democracy had trumped every other way of life. Here’s how Fukuyama, building on Hegel’s political philosophy put it:  “What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.”

So the question is how final is final? At a time when approval of congress is at 13%, some critics are now wondering if our conclusive answer to all of humanity’s ills needs fixing from the ground up. Google the words “democracy” and “broken” and you get pages upon pages of thought pieces and articles. Jeffrey Toobin in the New Yorker explores the possibility that the Constitution, the most formidable democratic document since the Magna Carta, may need an update.  “In many ways the contemporary debate reflects the framers’ arguments, more than two centuries ago,” he writes. “How insulated should elected officials be from the demands of the people? How should power be divided among the federal and state governments? What rights of the individual must be protected against the claims of the government? The Constitution offers only contingent answers to these questions…On the left and the right, [critics] are asking whether the pervasive dysfunction in Washington is in spite of the Constitution or because of it.”

Putting that question aside, other countries are now flaunting their own rejoinders to democracy. Take the Chinese who are now using aspirational rhetorical strategies clearly borrowed from the Americans to sell their vision. The new leader Xi Jinping has unveiled his big idea, the “Chinese Dream”. It boils down to making China a “moderately well-off society” (there’s a phrase that would never pass muster in an American election) by 2020, the 100th anniversary of the Chinese Communist Party; and making China a fully developed nation by 2049, the 100th anniversary of the People’s Republic. The Chinese Dream has four parts: Strong China (economically, politically, diplomatically, scientifically, militarily); Civilized China (equity and fairness, rich culture, high morals); Harmonious China (amity among social classes); Beautiful China (healthy environment, low pollution). All of this sounds benign until you realize that it’s promoted as part of a one-party system. As the NY Times describes the philosophy, “only the Communist Party can continue to improve citizen’s standard of living (and ameliorate severe social and economic disparities); only the party can maintain a stable, unified country and construct a happy, harmonious society; and only the party can effect the “rejuvenation of the Chinese nation,” which stresses a firm command of “core interests” (i.e., sovereignty and territoriality) and increasing global respect. It’s interesting to see how this gets refracted in the Chinese presses. The Beijing Review quotes a Chinese official at length attempting to crystallize the Chinese Dream: “People are confident in the Chinese dream because we have found the correct road to realize it. That road is socialism with Chinese characteristics. Along this road, we have implemented the reform and opening-up policy for 35 years. During this period, China’s GDP has increased 142-fold and urban residents’ income 71-fold. People’s living standards have been drastically improved, and so has our national strength. Now, we are closer to our dream and goals than ever.”

If all this sounds utopian, it’s meant to. Unlike democratic rhetoric which is messy and contingent (in other words planted in the real world) it drives towards an endgame and a hazy future of untroubled fixity.

Apart from the Chinese mix of socialism, central planning and the free market, could other systems arise and gain traction (like Brazil’s mix of a hefty public sector and free market liberalism)? Perhaps, but not everyone thinks that democracy has come a cropper. Larry Summers argues for the achievements of our system this way: “At last, universal healthcare is in sight. Within a decade, it is likely that the United States will no longer be a net importer of fossil fuels. Financial regulation is not in a fully satisfactory place but has received its most substantial overhaul in 75 years. Gay marriage has become widely accepted across the states. No remotely comparable list can be put forth for Japan or Western Europe.”. Consider that Japan is pulling itself out of two lost decades of economic doldrums by instituting American-style quantitative easing, and Europe could be next. Talk to people around the world and you see that our system, for all its numerous flaws, still has its occasional wins.

Three things about the state of our democracy to keep in mind: One, according to the White House, the United States has been the world’s largest recipient of foreign direct investment (FDI) since 2006.  For 2012, FDI inflows totaled $166 billionWriting in the Huffington Post, FDI experts Robert Wolf and Barry Johnson qualify this by saying that “In the period 1999 to 2012, the US share of annual global foreign direct investment flows fell by more than half, from 26 per cent to 12 per cent.” However, a fair accounting would point out that a great deal of this is not because of American dysfunction but because Europe and the developing world were growing at stratospheric rates for much of that period. Secondly, saying that democracy is broken is as old as the system itself. David Runciman, professor of politics at the University of Cambridge, does a creditable job of laying out the broadsides since the dawn of our republic. Thirdly, Tocqueville called democracy an “untimely” form of government because it plays a long game and only shows its principal strength once the dust settles—namely that our systems has an unbeatable ability to self-correct (not to mention it’s the only system to figure out how to peacefully transfer power). Maybe that’s what’s happening right now in a small way with the December surprise out of Washington – a bipartisan budget deal brokered by Paul Ryan and Patty Murray. It’s a small glance of government coming back from the brink, staving off radicalism and starting to work again. A small victory but one we should hold on to as proof that the system, for all its flaws, is far from broken.

A Quick Story About Irrational Exuberance

Tuesday, January 14th, 2014

There is roughly 55m SF of office spec and construction nationally at a time when the vacancy rate has dipped to 15.2 percent. Seems like a lot until you consider past recessions. Robert Bach, Director of Research – Americas, for Newmark Grubb Knight Frank offers an interesting look at the building boom that caused the recession of the early 1990s to show us that we are in relatively restrained times. Construction levels today are much lower than the industry’s prior two expansion cycles. In the period leading up to the 2001 recession, office construction peaked at 3.6% of inventory while industrial peaked at 2.1%.

Here’s how Bach describes it:

The 1990-91 recession was preceded by a massive cycle of office overbuilding triggered by tax legislation in 1981 and 1986, which loosened and subsequently tightened the tax advantages available to real estate investors, setting off an ill-considered construction and lending boom that spawned the savings and loan crisis. It was the era of opulent, granite-clad towers delivered empty to the market. Texas fared worse than average due to reckless lending by many of its financial institutions compounded by an oil bust in the mid-1980s. Houston, with its lack of zoning, turned into the poster child for the boom-gone-bust and was punished accordingly by a generation of institutional investors who red-lined that market. Fast-forward to 2013 when Houston is near the top of investors’ buy lists.

The overbuilding of the 1980s haunted the commercial real estate industry, tarnishing its reputation as an asset class suitable for conservative investors while leaving a residue of concern that the industry was chronically prone to similar episodes. But lenders and developers have been more restrained since then, which has played a large role in restoring the industry’s credibility among investors. Will that restraint hold? In New York, longtime observers are wondering whether demand will catch up with projects in the pipeline. In Washington, D.C., the market has softened as a moderate construction cycle ran headlong into tenant downsizing related to government cutbacks. But these examples are like ripples from a stiff breeze on a lake compared with the tsunami of overbuilding a quarter century ago.

According to Bach 2014 will bring another surplus of demand over supply, reducing vacancy rates and pushing rents higher.

In Search of Millennials

Thursday, October 31st, 2013

This post is another article about Millennials. Like Time Magazine‘s May feature, “The Me, Me, Me Generation” and countless other cover stories, it’s full of assertions and a few accusations. Unlike Time however, my accusations are directed at us older folk. Simply put, we don’t have a clue about the Millennial Generation and it’s liable to cost us. In her book, Generation Me, Jean M. Twenge, PhD, quotes an advertising executive looking back at the way Gen Xers were regarded as bored cynics (immortalized by Ethan Hawke in Reality Bites), calling it the “most expensive marketing mistake in history”. Overstatement but we get the point: Don’t believe the pop psychology and the cover-story jeremiads about Millennials because the findings are all over the place. One will say Millennials travel more, spend more and complain more, while another will tell you they are browsers not spenders. Some of the books that purport to do a deeper dive on the subject than the magazines, are even more heavy handed and their titles give them away: The Dumbest Generation; Not Everyone Gets a Trophy; The Culture of Narcissism; and The Narcissism Epidemic. So, in looking at this generation of 80 million born between 1980 and 2002, where exactly do we go for insight?

Who can blame young people from heading for cover when the adults in charge of our government and institutions insist on juvenile posturing, easy either/or formulations and intransigency? Maybe the lesson for us–the generation that brought you the government shutdown and the Cable TV rant–is not to be so quick to judge and to give this next generation the benefit of the doubt. Let’s start by taking the sting and negative valence out of the word Millennials.

This blog originally appeared in the Huffington Post on October 24, 2013.  To view the full blog, click here.

Ignoring Employee Health Can Have a Huge Impact on the Bottom Line

Monday, September 16th, 2013

Employers are faced with many tough bottom-line decisions every day.  Because of healthcare reform, the health of employees and cost of that health has moved to the forefront. We all know that the growing trend over the past 20 years has showed Americans becoming less active, overly stressed and obese. How does that translate into dollars? Obese employees cost their employers $1,850-$5,500 more per year in healthcare costs than their healthy-weight peers. A new Gallup poll o nearly 110,000 full-time employees estimates that unhealthy workers cost businesses $153 billion a year in lost productivity. Only about one in seven employees — 13.9 percent of the workforce — is of normal weight with no chronic condition.

In response, many employers try to implement wellness programs that promise big return on invested dollars, but often fail. Why? In one word; Culture! The only true way to create behavior change, which leads to lifestyle change, is through creating a culture within the office walls. Behavior change takes time which is why having a supportive culture plays such a large role in the process. Accountability and adherence is vital in this process. For example, some companies choose to do an online wellness program, which of course is normally the least expensive option to choose.  Employees log on and register in the beginning, but rarely utilize the program over a two to six month period, or these employees “click through” a program in order to say they have completed it without gaining any type of benefit! Why? Because there is no follow up and commitment aspect.  Some US companies are finally realizing that these types of “wellness programs” are merely a band aid on an amputated arm!  It just doesn’t work. At a human level people need interaction and attention to build the culture, then the behavior changes can start to take place. It’s a process that needs to be nurtured.

Many companies look at “wellness programs” as something to check off the list when talking about insurance, benefits or human resource topics.  This is a grave mistake. A healthy workforce not only yields more productivity and less insurance claims that drive down aggregates, but it creates loyalty from the employees.  A wellness program isn’t simply a blood panel test taken once a year followed by a couple webinars and a pedometer. A true, and effective, wellness program takes into account the entire person on a physical, nutritional and emotional level. It deals directly with stress, quality of life, time management, productivity, planning and self esteem!  The cherry on top is the reduced health care costs and increased work output!

Don’t just “check off” wellness. Become involved, become the example and become the leader who creates a positive and productive culture for employees.

Listen to the full podcast here.

 

Danielle Girdano is a Certified Master Personal Trainer, who specializes in Childhood Obesity, Exercise for Persons with Diabetes, Postural Assessment & Corrective Exercises for Postural Abnormalities, Weight Loss, Strength and Endurance, Senior Fitness, Pregnancy & Postnatal Exercise, and Exercise Motivation & Psychology.  She is President of D’fine Sculpting & Nutrition LLC with offices in multiple US states. In addition to being one of only 12 worldwide professionals that sit on the prestigious Personal Training Advisory Board for The Cooper Institute based in Dallas TX, she was recently named to the “Top 40 Executives Under 40” by the Dallas Business Journal and nominated for the “2013 Chicago Innovation Awards” because of her mathematical based fitness programs.  She serves as Fitness Advisor for Synergy Worldwide based in Utah.

Detroit Goes For Broke

Monday, July 29th, 2013

In the largest bankruptcy filing by a city ever, Detroit filed Chapter 9. The effect of bankruptcy could be devastating on the public sector. The man at the center emergency manager for the city, Kevyn Orr, who has since been negotiating with Detroit’s many bondholders and other creditors about restructuring the city’s debt. Those negotiations were at an impasse this week, with the fate of about $11 billion in unsecured debt proving especially contentious. One area that could be adversely affected is pensions for the city’s 21,000 public-sector retirees which could be slashed since the municipal shortfall accounts for about $3.5 billion of the city’s $18 billion in debts. The unions have shot back that pensions are protected by Michigan’s Constitution.

The filing is a new arc in a narrative of decline that has come to symbolize the Rust Belt the and the deindustrialization of America. The facts are striking  – the 5th most populated state in 1950 that now ranks 18th as people have left; unemployment that has doubled since 2000; and an unemployment rate of 16%.

So where do we find some good news? In the private sector. The three major publicly-traded companies based in Detroit — General Motors,  Ally Financial and DTE Energy all  released statements saying there will be no impact on their operations, while venture capitalists say innovation will continue to thrive. Over the last 5 years,  more than $10 billion and some 12,000 jobs have been added by the private sector in Downtown Detroit.

While the effect on the real estate industry has been severe — the metro area  has a 26% office vacancy, 78,000 abandoned buildings and 66,000 vacant lots– the CBD has also seen positive shifts.  According to Newmark Grubb Knight Frank, the Central Business District “has been the dominant submarket in Southeast Michigan with large and small tenants alike migrating downtown”.  The trend began with Blue Cross Blue Shield, DTE Energy and Quicken Loans in 2011 leasing a combined 750,000 square feet. Then in 2012, companies like Title Source, Chrysler, PricewaterhouseCoopers, Metro-West Appraisal Co and Agency 720 leased just under a half million square feet combined.” Acording to Newmark the vacancy rate could hit its lowest level since 2002 by end of year. It’s cold comfort for the city’s municipal workers but it does prove the private sector might show the way out.