The Path of a Peanut Seller

It started as a blog post I wrote in January and now the moment that changed my life as a teenager is a video in the Moments series on the Saporta Report. And it all started with peanuts.

Please click this link to view the short video and find out how I gamed the system in the peanut-selling business, which led to my career as The Turnaround Authority. I no longer work for peanuts.

Grant Field in the 1960s, where I began my peanut-selling career.

Grant Field in the 1960s, where I began my peanut-selling career.







The Red Flags of Fraud

In a continuing series on fraud, this week’s column is about how to spot the signs that an employee may be engaged in fraudulent activity. Please see last week’s column, “Employee Tips Key to Fraud Preventionfor tips on decreasing fraud in your company.

It happens every day. Employees are caught stealing from their companies. Then the messy business of uncovering the amount of money stolen, how it was taken and how to prevent it in the future begins.

Fraud not only hurts businesses financially — an estimated $9 billion a year is lost to fraud in the US annually — but it takes a toll on the company in other ways. Employees are demoralized and time is lost to dealing with the results of the fraud.

A strong fraud prevention program is critical. Part of that program should include managers being trained to be on the lookout for red flags that employees may be involved in fraudulent activity. Here are just a few of those red flags.

imgres1. Refusal to take vacation and rarely taking personal or sick days

Isn’t that great to have such a dedicated employee? Except that often the employee who never takes off is not dedicated to the company. That employee is dedicated to continuing to perpetrate the fraudulent activity he or she has begun, and doesn’t take off work because of the risk the activity may be uncovered.

I’ve mentioned dear Aunt Tess in this column before. She was the beloved payroll clerk who showed up the day after she had major surgery to hand out the paychecks. In 25 years she hadn’t missed a payroll and a little thing like an appendectomy wouldn’t keep her away.

Turned out she had to show up to handle the paychecks for her non-existent employees whose creation had allowed her to steal around $100,000 year from the company.

Be wary of the employee who never takes off work.

2. Getting annoyed at reasonable questions or offering unreasonable explanations

If a simple question about how an invoice is handled, or who double checks the list of vendors or changes to payroll evokes a defensive or irritated response, don’t back down until you get an answer. The same is true if the responses don’t make sense or sound unreasonable. Guilty people will act defensive when questioned about why they do things a certain way.

3. An employee wants to remain in his or her current position

Staying in the same position is not necessarily a bad thing, and many people enjoy staying in a job that they feel comfortable with for years. But if that person turns down opportunities to advance or otherwise better his or her situation in some manner, that can be a warning sign that they are afraid of being unable to continue their fraudulent activity or that it may be uncovered if they leave or change their position.

4. An employee that exhibits behavioral changes, undergoes a sudden change in lifestyle or has financial difficulties

If an employee starts talking about his new lake home, wearing an expensive watch or driving a new car with no explanation for his new-found wealth, that may be worth a closer look. If she starts acting more stressed at work for no discernible reason and claims all is fine at home, that could be a sign that engaging in the fraudulent activity is causing stress.

Having financial difficulties can be a precursor to fraudulent activity. A law student in Atlanta was arrested for stealing more than $100,000 of jewelry at his part-time job at a department store. When he was caught, he said he did it because he had so much debt in student loans.

5. An employee has unusually close relationship with vendors

Friendships do develop in the business world when we deal closely with each other and are often a source of pleasure in our work environment. However, an employee that seems to spend a lot of time with a vendor could indicate a kickback scheme that involves vendor overbilling.

Be on the lookout for these red flags at your company. To learn more about why fraud occurs, read my next column later this week about the Fraud Triangle.

How Not to Lay Off Staff

The chairman of a network of local websites in the Northeast sent the following email to his staff on a recent Friday afternoon. It was a follow-up to an email they received earlier that day informing them that the CEO was resigning.

“Monday morning we will share with you the news about where we’re going and how we’re going to get there. The news is good—but you’ll need to sit tight while we finalize our plans. Check your email about our company-wide phone conference early Monday morning.  …I am pumped about the prospect of working with you to build a great company.”

urlIt’s nice to get a positive, hopeful email from your chairman in our still-struggling economic times, isn’t it? But what happened on Monday could hardly be classified as good news.

That morning employees at Daily Voice were told that it was shutting down 11 bureaus in Massachusetts and laying off everyone in those offices with no severance pay. The Chairman had flat out lied to the employees.

That’s just one example of how not to handle a layoff. You’ve probably heard plenty stories of bad layoffs. There was the woman who received a FedEx package at home with her severance in it. Problem was no one told her she was being laid off. Or the woman who was lying in a hospital bed when her boss thoughtfully came to visit, bringing her a bouquet of flowers. And a severance check.

Another woman named Sylvia found a document, available for public viewing on the company’s shared hard drive, called SylviaFired.doc. She read it and spent her last few hours at the company correcting its many spelling and grammar errors. If you’re being let go like that, at least all the words should be spelled correctly.

At one small ad agency where a husband and wife both worked, the husband got laid off. Then a few hours later his wife was laid off as well because the creative director thought she would be uncomfortable working in the office that laid off her husband. More uncomfortable than losing both incomes in one day?

One of the worst stories I’ve heard is about a company that evacuated hundreds of employees for a fire drill. They were all standing outside when a person on a loudspeaker said, “Due to the ongoing recession and bad business climate, the company is laying off 50 percent of its staff. So when the announcement finishes I ask all of you to move back to the building. If your employee card does not give you access to the building, it means you have been laid off and will not be allowed inside the building. All of your belongings will be sent to you.”

That sounds like the premise of a horrible reality TV show, but in this case half the people get kicked off the island.

In my position as The Turnaround Authority I’ve had to lay off hundreds of people. It’s never easy and I do it with full recognition of how losing their jobs will affect the employees’ lives and those of their families. But sometimes it is the only way to save the company and employment of hundreds, if not thousands of other people and their families.

While unpleasant, there is a right way and a wrong way to lay off someone.

Stay tuned for my next blog post for the right way to lay off an employee. And there are no fire drills or bouquets involved.

Learning the Family Business – In a Classroom

While many college students due to graduate in 2013 are stressing over finding a job, a lot of students already know where they will be spending their days after turning the tassel on their mortarboard. The family business.

Family businesses employ 62 percent of the U.S. workforce. Two out of five Fortune 500 firms are family businesses so every year thousands of recent grads will join family members in the workplace.

A lot of colleges, particularly those with entrepreneurship programs, are responding to the large numbers of young people who are taking that path by teaching courses on managing family-owned businesses.

urlAccording to a recent article, Northeastern University launched a class in 2011 and Rice University in Houston and University of Denver have recently launched courses.

New York University added an undergrad course on family business this semester and Savannah State University will add one next year. Some schools, including Saint Joseph’s University in Philadelphia, have family business majors.

It’s probably a lot easier to get the parents to foot the bill for tuition when it’s an investment in the future of the business as well as in their kid.

Students who are juggling multiple interviews, nervously waiting for calls for a second interview or contemplating the horror of moving back into their 1990’s-era childhood bedroom under the draconian rules of mom and dad may be feeling a bit envious of their classmates who never had to answer a question like, “Where do you see yourself in five years?”

Those kids won’t be sitting across the large wooden desk of some executive asking, “Tell me about yourself.” Their future employer changed his or her diapers or watched them blow out candles on multiple birthday cakes.

While these young folks slotted to join the family business may not have to worry about finding a job, they have a lot to deal with when it comes to actually doing the job and maintaining family relationships.

You can quit a company and never hear from them again, with the only reminder the W-2 you’ll receive the following January. But you can’t quit your family.

I write a lot about family business in my new book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.” While it’s true that family businesses make up a majority of those in the U.S. and can be extremely profitable — take Walmart for one — they involve additional complications. Why do you think so many companies have anti-nepotism policies?

In my work as The Turnaround Authority, I have often been called in to run or consult with family businesses and have seen all the difficult situations that can arise when you mix family and business.

There can be issues of family members in the wrong jobs making poor decisions, questions of favoritism and bad morale among the staff for non-family members. And if you think it’s hard to fire any employee, think how much harder it is to fire Uncle Ned, especially when he and Aunt Irene host Thanksgiving every year.

No matter how many classes you take, you can’t learn everything you need to know to run a family business. Or any type of business for that matter. But taking courses in topics such as family succession and governance can be beneficial to students.

One young man mentioned in the article is Tony Holzbach, who is taking classes at Texas Christian University and will one day take over a wholesale and retail garden center in Forth Worth that his parents started 30 years ago.

He wasn’t too sure about what he could learn by taking a class and thought his dad knew everything about the industry. But after just a few weeks, he said, “I have discovered that there is much more to family businesses than I had realized.”

Just getting someone to admit that there’s a lot they don’t know is a great first step.