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Second Phase of Regional Manufacturing Survey Reveals Findings on
Human Resource and Marketing Issues
February 2002
Alpern Rosenthal and Robert Morris University today released the
second phase of findings from a survey they designed to determine the
best practices of regional manufacturing companies. This phase of the
study looked at three issues manufacturing executives deal with when
running their businesses: ownership issues, human resource issues and
product and market issues.
The survey was designed based upon the principles of the Balanced
Scorecard, a method to both measure performance and establish
strategies. The survey was sent to Western Pennsylvania manufacturers
with revenues between $5 and $100 million.
"We have developed this survey to stay on the forefront of
manufacturing trends and issues so we can deliver better advice to our
clients," said Joel Rosenthal, CPA, co-director of the manufacturing
services group of Alpern, Rosenthal & Company. "Our intent is to
inform the regional manufacturing community on what best practices
they should be employing to be growing and profitable
companies."
"As an institution, we are continually looking at employer and
business trends because we want to know what will be expected of our
students after they graduate," said Richard Stolz, dean of the School
of Business at Robert Morris University. "By partnering with Alpern,
Rosenthal & Company on this research project, we are able to
comprehend the current state of the manufacturing industry in our
region so that we will be better equipped to provide our students with
the necessary skills they will need to be effective leaders in their
chosen careers."
An interesting aspect of the ownership issue section of the survey
revealed that only 41% of regional manufacturing companies have a
succession plan. Of those who do, 70% will name children as the new
owners versus non-related employees for 13%. Seventeen percent will
name outsiders or others as the new owners. It was also discovered
that only 21% of companies have a board of advisors. This proves to
be a profitable practice because those who do have a board of advisors
also have a higher average net income before taxes as a percentage of
sales over the last three years.
Findings in the human resource section showed that companies that
provide performance-based bonus programs for employees were more
profitable than those who didn't. Companies who offer bonuses to both
management and non-management employees were more likely to have
higher expected annual average sales growth and a higher average net
income before taxes as a percentage of sales. Of those surveyed, 70%
provide performance based bonuses to management employees with only
50% providing them to non-management employees.
The product and market issues section revealed that companies that
have a marketing plan are more likely to have a higher expected annual
average sales growth for the next five years. Fifty-eight percent of
the survey respondents have a marketing plan. Companies that have a
marketing plan are also more likely to utilize a business plan and
integrate their sales and operation plan. These companies measure on
time delivery, visit customer facilities and track and follow up on
lost customers. They are also more aware of sources of success by
measuring product line profitablity and using key financial ratios as
a basis for measuring improvement. These companies utilize customer
imputs to develop and improve products and processes. They also
survey their customers regularly.
The Manufacturing Services Group of Alpern Rosenthal, one of
Pittsburgh's largest accounting and business consulting firms, is
dedicated to serving the complex and changing needs of manufacturers
operating in Western Pennsylvania. The Group provides specialized
business consulting services, as well as offers educational seminars
and distributes information on trends and issues in
manufacturing.
Robert Morris University, founded in 1921, is a private, four-year
institution with an enrollment of approximately 5,000 undergraduate
and graduate students at its Moon Township Campus and downtown
Pittsburgh Center. The University offers more than 30 undergraduate
degree programs and 13 master's and doctoral degree programs. An
estimated 22,000 alumni live and work in Western Pennsylvania.
For more information, contact Elisabeth Mehta-Leach, Director of
Marketing, at (412) 281-7692, ext. 353 or eleach@alpern.com.
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