BusinessWest

• Eastside Story: Debra Flynn Melds Innovation and Tradition in Northampton

• Local Flavor: Perigee Makes a Tasteful Statement in the Berkshires

• Star Quality: Slice California Café Looks to Rock in a Resurgent Holyoke

• Recipes for Success: Pioneer Valley Chefs Present Their Signature Dishes

• Who’s Cooking? A List of the Region’s Restaurants

As you look around your office, is everyone just like you? Probably not.

The demographics of the American workforce have changed dramatically over the past 50 years. In the 1950s, more than 60% of the American workforce consisted of white males. They were typically the sole breadwinners in the household, expected to retire by age 65 and spend their retirement years in leisure activities. Today, the American workforce is a better reflection of the population, with a significant mix of genders, race, religion, age, and other background factors.

The long-term success of any business calls for a diverse body of talent that can bring fresh ideas, perspectives, and views to their work. The challenge that diversity poses, therefore, is enabling your managers to capitalize on the mixture of genders, cultural backgrounds, ages, and lifestyles to respond to business opportunities more rapidly and creatively.

Diversity is no longer just a black/white, male/female, old/young issue. It is much more complicated and interesting than that. In The Future of Diversity and the Work Ahead of Us, Harris Sussman says, “diversity is about our relatedness, our connectedness, our interactions, where the lines cross. Diversity is many things — a bridge between organizational life and the reality of people’s lives, building corporate capability, the framework for interrelationships between people, a learning exchange, a strategic lens on the world.”

A benefit of a diverse workforce is the ability to tap into the many talents which employees from different backgrounds, perspectives, abilities, and disabilities bring to the workplace. An impressive example of this is found on the business cards of employees at one Fortune 100 technology company. Employees at this company have business cards that appear normal at first glance. On closer inspection, the raised Braille characters of employee information are evident.

Many companies, however, still face challenges around building a diverse environment. Part of the reason is the tendency to pigeonhole employees, placing them in a certain silo based on their diversity profile. If an employee is male, over 50, English, and an atheist, under what diversity category does this employee fall? Gender, generational, global, or religious? In the real world, diversity cannot be easily categorized, and those organizations that respond to human complexity by leveraging the talents of a broad workforce will be the most effective in growing their businesses and their customer base.

So, how do you develop a diversity strategy that gets results? The companies with the most effective diversity programs take a holistic approach to diversity by following these guidelines:

Link diversity to the bottom line. When exploring ways to increase corporate profits, look to new markets or to partnering with your clients more strategically. Consider how a diverse workforce will enable your company to meet those goals. Think outside the box. At a Fortune 500 manufacturing company, Hispanics purchased many of the products. When the company hired a director of Hispanic markets, profits increased dramatically in less than one year because of the targeted marketing efforts. Your new customers may be people with disabilities or people over the age of 65. How can your employees help you reach new markets?

Walk the talk. If senior management advocates a diverse workforce, make diversity evident at all organizational levels. If you don’t, some employees will quickly conclude that there is no future for them in your company. Don’t be afraid to use words like black, white, gay, and lesbian. Show respect for diversity issues and promote clear and positive responses to them. How can you demonstrate your company’s commitment to diversity?

Broaden your efforts. Does diversity at your company refer only to race and gender? If so, expand your definition and your diversity efforts. As Baby Boomers age and more minorities enter the workplace, the shift in demographics means that managing a multigenerational and multicultural workforce will become a business norm. Also, there is a wealth of specialized equipment available to enable people with disabilities to contribute successfully to their work environments. If your organizational environment does not support diversity broadly, you risk losing talent to your competitors. How can your recruitment efforts reach out to all qualified candidates?

Remove artificial barriers to success. The style of interview — behavioral or functional — may be a disadvantage to some job candidates. Older employees, for example, are less familiar with behavioral interviews and may not perform as well unless your recruiters directly ask for the kind of experiences they are looking for. Employees from countries outside the U.S. and non-Caucasian populations may downplay their achievements or focus on describing, who they know rather than what they know. Train your recruiters to understand the cultural components of interviews. How can your human-resources processes give equal opportunity to all people?

Retain diversity at all levels. The definition of diversity goes beyond race and gender to encompass lifestyle issues. Programs that address work and family issues — alternative work schedules and child and elder care resources and referrals — make good business sense. How can you keep valuable employees?

Provide practical training. Using relevant examples to teach small groups of people how to resolve conflicts and value diverse opinions helps companies far more than large, abstract diversity lectures. Training needs to emphasize the importance of diverse ideas as well. Workers care more about whether or not their boss seems to value their ideas than whether they are part of a group of all white males or an ethnically diverse workforce. In addition, train leaders to move beyond their own cultural frame of reference to recognize and take full advantage of the productivity potential inherent in a diverse population. How can you provide diversity training at your company?

Mentor with others at your company whom you do not know well. Involve your managers in a mentoring program to coach and provide feedback to employees who are different from them. Some of your most influential mentors can be people with whom you have little in common. Find someone who doesn’t look just like you. Find someone from a different background, a different race, or a different gender. Find someone who thinks differently than you do. How can you find a mentor who is different from you?

Measure your results. Conduct regular organizational assessments on issues like pay, benefits, work environment, management, and promotional opportunities to assess your progress over the long term. Keep doing what is working, and stop doing what is not working. How do you measure the impact of diversity initiatives at your organization?

In the book Beyond Race and Gender, R. Roosevelt Thomas defines managing diversity as “a comprehensive managerial process for developing an environment that works for all employees.” Successful strategic diversity programs also lead to increased profits and lowered expenses.

The long-term success of any business calls for a diverse body of talent that can bring fresh ideas, perspectives and views and a corporate mindset that values those views. It’s also no secret that the lack of diversity can affect your ability to communicate effectively with diverse clients.

Link your diversity strategies to specific goals like morale, retention, performance, and the bottom line. Build your business with everything you’ve got, with the complex, multi-dimensional talents and personalities of your workforce, and make diversity work for you. n

Judith Lindenberger, principal of the Lindenberger Group, LLC, and Marian Stoltz-Loike, CEO of SeniorThinking, provide human-resources learning and consulting;www.lindenbergergroup.com;www.seniorthinking.com

While most sectors of the economy can say the worst is over in terms of the economy and its impact on business, most in construction can’t use such language yet. Traditionally one of the last industry groups to witness real recovery, the construction sector is simply trying to hold on and get through what most expect will be a challenging 2010.

When it comes to business and the prospects for the months ahead, Karen Sprague told BusinessWest, to say it doesn’t look good out there is a huge understatement.

As president of A.R. Green & Son in Holyoke, her comments echoed just about everyone’s in the construction sector, both here in the Pioneer Valley and the nation at large. It is true that the nation’s consumer confidence index rose to 52.5% in March, edging above predictions and the February statistic of 46.4%. Wall Street is gaining ground, and while unemployment figures are still in the double digits, the sweeping layoffs of 2008 and ’09 have passed on to the history books.

Unfortunately, what we also know from history is that the construction sector’s customary lag behind most other economic growth — upwards of 12 to 24 months — and news from trade analysts at Associated Builders and Contractors Inc. paint a grim picture indeed.

ABC’s construction backlog indicator, a measurement of the amount of construction work under contract to be completed in the near future, is at its worst level since the organization began collecting such data 15 months ago. ABC’s chief economist, Anirban Basu, cited this figure as indication that the construction sector remains mired in its own recession.

“With the broader economy having been in a slow recovery for roughly three quarters,” he reported at the end of March, “and with the stimulus package still having an impact, the hope had been that some signs of backlog stability would be apparent by now. However, all indications continue to point toward an ongoing decline in the commercial and industrial construction industry.”

Adding insult to injury, the Northeast, said the ABC, is an area of “particularly sharp declines.”

Paul Ugolini, president of Western Builders in Granby, reluctantly agreed with such an outlook. “There’s just really not a lot of work out there.”

But like most in his field, he said that such observations are common when the economy is down. “Not to mention we’re in an industry that just doesn’t recover very easily,” he added.

For those who thought that 2009 was a bad year for the construction sector, this year isn’t going to offer much contrasting good news. However, area contractors say that, despite all the knocks that have been dealt to their industry, from heightened competition to a dwindling number of jobs; from trickling stimulus funds to increased costs of materials, there are valuable lessons to be learned. And those that get to the other side of the recession will be in better shape than ever.

Last year might have been the school of hard knocks, but in 2010, it’s time to see just what those area builders have learned from the worst days their industry has seen in their lifetimes.

The Competitive Edge

“Quiet and slow” is how Seth Crocker described the area’s construction market.

Co-owner of Crocker Building in Springfield, he said that smaller, private clients are still hesitant to do any work. “If they have the business, or the need to expand or renovate,” he continued, “they are making do with what they have and are putting off any construction. It seems like the bigger, national companies are putting money into capital improvement, but around here, it’s more quiet than it has ever been.”

Crocker said that his team is fortunate to have repeat customers in the private sector to keep his employees active, but the public-sector work is another matter altogether.

Mirroring a trend witnessed over the past few years, competition for those jobs in this area is fierce. Everyone BusinessWest spoke to said that 10 to 15 bids per job has become the new norm, where before one might have seen roughly three to five other contenders.

“I just read in a construction journal that, for a job at UMass, there were 18 bidders,” said Ugolini.

Western Builders won the contract for the work on Holyoke’s multimodal transportation center on Maple Street, and he laughed when remembering the bid walk-through that day. “It looked like a pancake breakfast, there were so many guys there.”

Eric Forish, president of Forish Construction in Westfield, called the bidding on public jobs “intense.”

“These days, 18 to 20 bids on a job is not uncommon,” he continued, “which is a good situation for the customer or the authority doing the purchasing. The taxpayer is getting a great price for any work done now. That’s great news. But not for contractors.”

Said Ugolini, “builders will come out from everywhere for a sizeable job.”

That kind of change to the marketplace is troubling for area builders who are seeing work going to firms from beyond (and sometimes well beyond) the 413 area code, which sends money out of the region and negatively impacts an already dour employment situation.

A.R. Green boasts a history that spans back to the earliest days of its home city of Holyoke. “It’s disheartening to those of us that have been in business for so many years that the work is going to those builders in Boston, New Hampshire, and Albany,” Sprague said.

“Even the municipalities around here are going outside the area,” she continued. “They’re taking Boston architects — but there are quality architects in the Valley. They are inviting contractors from hours away — but there are quality contractors here in the Valley.”

Sprague called it an economic loop that is being eroded at the worst possible time. “If I can’t employ 60 people, those same people aren’t going to be able to shop in area stores. I want to be able to support the Valley businesses, but somewhere along the line you have to support the area contractors.”

The majority of activity is happening in the public sector, most said, and will continue to be that way.

“As long as the financing is available,” Forish said, “some of which is funded with grants, and those projects will stay in motion. So I do see the public sector staying adequate, but would I call it anything beyond that? No. And that is essentially what is going to be supporting the construction industry.”

While all signs point to a buyer’s market, as a result of all that competition for jobs, many small-business owners cannot obtain the financing needed to fund exapsnion projects, new construction, or capital improvements, said area builders.

“Where an owner used to be able to build with little or no money down,” Crocker said, “maybe even without the very best financials, now the banks are looking at 30% to 40% down. You better have good historical income, because the banks have clamped down. The guys that are confident and willing to take the risk to build out are having a hard time finding the money.”

Stimulating Conversation

Armando Nunes said that, while winter is typically when his company will unwind and regroup for the next season, ’09 into 2010 was anything but time off. But with such diligence came reward.

“We have a good bit of work right now,” said the vice president of Ludlow-based H.M. Nunes & Sons Construction. “We are very fortunate that through the winter we were so aggressive, bidding five to seven jobs per week. It was very taxing. We’ve been fortunate in the past to be picky, getting the model jobs for us, what is in our comfort zone. Now, we have to bid on everything that comes down the line.”

In business since the late 1980s, H.M. Nunes is a road builder and site-development contractor, overseeing groundwork, excavation, and “all the pretty stuff you see at the end of the job, like bricks and paving surfaces,” he said.

Nunes was awarded the second stimulus-package-funded project in the state, a sidewalk project in Northfield, and is currently working on another in Springfield, completing surfacing near the Basketball Hall of Fame.

The much-touted federal assistance is offering some aid for contractors like him, he agreed, buoying the stagnating municipal work which is the bread and butter of his industry.

“Before the stimulus money hit, we saw a real problem,” he said. “The towns were backing away from work that they normally allocate every year, the $250,000 projects. They were trying to save their money, and then they faced huge budget cuts.”

Paving projects, which are traditionally quicker to engineer and easier to move from planning table to bid, became the most visible recipient of stimulus money. At Daniel O’Connell’s Sons, Stephen Maiorano said he sees most of that money gone into the tarmac on Route 91 and the Mass Pike.

Vice president of Construction Operations for the Holyoke-based contractor, his field of expertise is what he termed “heavy and highway. As differentiated from building construction, it’s horizontal versus vertical,” he explained.

Even though the majority of his industry’s work is publicly funded, he explained, “in tough economic times, this sector gets hammered because private developers don’t have any money and projects get tabled. Even projects that are well into design and ready to go have been stopped in the private sector. Places like colleges and universities put all their projects on hold as they watched their endowments take a hit.

“I would say that the heavy and highway sector has been hit as hard as the building sector,” he continued.

DOC, as it’s called, was fortunate to get some of the larger stimulus-funded jobs, including a project for the Mass. Water Resources Authority on Deer Island in Boston Harbor, and another in Cumberland, Md. The beginning of this year saw a flurry of activity for projects to qualify for stimulus funds, but since that time, Maiorano said that the number of projects has dropped off quite a bit.

When asked if stimulus money was the main source of revenue keeping his sector alive, he said “there are a number of contractors out there right now who would probably say that it’s not alive. A lot of contractors have had to cut back considerably, and a lot have gone out of business. They’re laying off people or selling equipment.”

Maoirano said that, while DOC is in good shape for the year ahead, he couldn’t extend the same prognosis to his peers in the industry.

“In order to stay alive, smaller contractors are bidding work less than cost,” he explained. “The numbers are so competitive out there, with guys just trying to keep their equipment, that it is extremely difficult to get new work. These people who get that work at those depressed prices, they may cease to exist also when their project is over.

“If you were to ask the majority of heavy construction contractors,” he continued, “they would tell you that it’s very difficult right now to survive.”

Another Notch on the Toolbelt

“What does it look like for 2010?” Maiorano asked. “Tough.”

Despite that sentiment echoed across the industry, most would agree that lessons learned from this recession will prove invaluable on the other side of the economic downturn.

Crocker said that this is the first major trough he and his brother have faced since taking over the helm of the company their father started. But with the clear-eyed focus of a seasoned veteran, he said, “there are three lessons that come to mind here.”

Speaking to the experience of many others, he added, “one is to be diversified in what you do, so that if new construction slows down, you can pick up renovations. Second is one thing we weren’t doing, in hindsight, as much as I’d like, which is to keep a steady marketing program, even when you don’t need it. Because when you do need it, it’s too late. Third, be ready to hunker down and make changes quickly. Don’t stall in making cuts or trimming the fat.”

Nunes agreed with such sentiments, adding, “you learn how to tighten your belt, which will help you on the other side of this recession. Instead of three trucks going to a site, you use two. Instead of seven employees at a project, it’s five. We can continue to run our operations this way, and it will only make us more efficient.”

Ultimately, the construction industry is like a roller coaster, Ugolini said. “Always has been, probably always will be.

“All construction companies need to prepare for that,” he continued. “It’s feast or famine. I think people are staying afloat because they are financially OK. They have enough money to get through the lean times because they planned for it. How long they’ll be able to do that, who knows?”

And that’s the real scary part, because no one knows how long the construction sector will have to contend with such sweeping challenges. As one who keeps close tabs on trade-related news, Forish said that, with ABC forecasts projecting upwards of 24 months for an industry recovery, it might be some time before the construction sector’s fortunes rebound.

While he is hesitant to contribute to the forecast of doom and gloom that has permeated the news, he said that it is scary to hear those economists predicting 2012 as the possible time for the construction sector’s recovery.

“This will be an interesting conversation next year,” he concluded.

It was just one of 84 such pages, detailing nearly 400 breaches reported in 2009 involving more than 219 million people, said Christianson, president of Peritus Security Partners, which has offices locally in East Longmeadow. But it shows clearly the extent of a burgeoning problem.

There was one report involving Suffolk Community College in South Carolina, which has agreed to pay a company for the next year to monitor the credit of 300 students whose last names and Social Security numbers were mistakenly listed in an attachment to an e-mail sent to those students in September. There was another concerning the Blue Cross Blue Shield national office, which had a laptop computer stolen from an employee, potentially exposing the Social Security numbers of tens of thousands of physicians nationwide. The insurance giant encrypts all of its information on company computers, the resource center reported, but an employee who was authorized to have the information violated company rules by downloading an unencrypted version onto a personal laptop.

And then, there was an incident involving Rocky Mountain Bank in Wyoming, when an employee sent an e-mail to the wrong person. The message, intended for a bank customer, included an attachment that should not have been sent, containing confidential customer information for 1,325 individual and business accounts. Which begs the question: why was that information being sent to a customer?

It is these kinds of calamities that a new Massachusetts law — known to those well-versed in its contents as 201 CMR 17, or the Massachusetts Personal Data Protection regulation — was designed to prevent, said Christianson, noting that the measure is scheduled to take effect March 1. That means he and others with the company are quite busy these days, trying to inform business owners of the new legislation, and then, if they’re hired, helping them move into compliance.

Thus, the personal-information measure represents a significant business opportunity for companies like Peritus, and also area employment-law specialists, who can assist companies and nonprofits create what’s known as a WISP, or written information security program (much more on that later), which, in essence, protects personal information from the kinds of breaches detailed above.

Christianson said Peritus has put its message before perhaps a few thousand business owners at informational seminars over the past few months, and has completed more than 40 WISPs to date, with the promise of many more over the next several months.

Meanwhile, Amy Royal, a partner with the Northampton-based law firm Royal & Klimczuk, which specializes in employment-law matters, said the personal-information law has provided an additional service the firm can provide to its existing clients and, hopefully, some new ones.

She noted that, as the year draws to a close and the March 1 compliance deadline draws ever closer, business owners and managers are starting to sit up and take notice of the new law and the steps needed to prepare for it.

“A number of existing clients have called and said, ‘we need to set up a meeting for early next year,’” she explained. “Now, it’s finally setting in with people that they need to have a plan in place and that there’s a lot to this.”

Indeed, for business owners and non-profit managers, the new law represents a challenge and an expense (a few thousand dollars for most small businesses), both significant enough to warrant the state to push back the deadline for compliance several times. But there is no indication that there will be another delay, which means that any business that handles personal information — and there is a working definition of that phrase in the statute — has a choice to make, said Christianson.

They can either put themselves in compliance, or they can roll the dice and save themselves time and money by not doing so. But those who gamble and lose could pay a steep price, he continued, noting some heavy fines that are attached to the legislation.

With the deadline for compliance looming, BusinessWest takes an indepth look at the state’s personal-information security measure (said to be the toughest in the country), what it means for consumers, as well as affected businesses, and what responsible companies need to have done by March 1.

Data with Destiny

They’re calling it the Massachusetts Information Security Summit, or MassISS for short.

That’s the name affixed to a nearly day-long seminar scheduled for Jan. 27 at the Sheraton in downtown Springfield. Chrstianson and others from Peritus will be among a group of speakers who will address specific aspects of the new law, and there are many of them (visit www.massiss.org for more information).

The event is the latest, and by far the biggest, in a host of informational gatherings on 201 CMR 17 that have been staged by IT companies, law firms, chambers of commerce, the Associated Industries of Mass., or any combination of the above. Royal says she’s been involved with many, and that they have been fairly well-attended by business owners who typically have a lot of questions.

Still, there are many business owners and managers and non-profit directors who don’t know about this measure, or as much as they should about what it will take to be in compliance, said Royal — this despite intensive media coverage of the legislation and a barrage of electronic invitations to those aforementioned informational seminars.

Christianson agreed, and speculated that perhaps only 10% to 20% of the state’s businesses, government agencies, and nonprofits are in compliance. “It’s still a pretty well-kept secret — people were not really paying attention ’til this past fall,” he said.

Larger companies tend to be better-informed, and, in general, there is more awareness in the eastern part of the state, Christianson continued, adding that his firm has invested considerable time, energy, and marketing dollars trying to spread the word (and expand the client list) in the 413 area code.

In essence, the new Bay State measure — passed in 2007 in response to the massive data breach at TJX Co. in 2006 that led to the theft of more than 45 million customer credit- and debit-card numbers — states that Massachusetts businesses and nonprofits have a duty to protect personal information.

And that means virtually every business, given the definition of personal information contained in the new law: “a Massachusetts resident’s first name and last name or first initial and last name in combination with any or more of the following data elements that relate to such resident: (a) Social Security number; (b) driver’s license or state-issued identification card number; or (c) financial account number, or credit- or debit-card number.”

“That’s just about everyone,” said Christianson, noting that to be exempt from the new law, a business would need to be a sole proprietorship with no employees that deals only in cash.

There aren’t many, if any, of those, he continued, adding quickly that, while most companies are aware of the law and the March 1 deadline, many are still not attacking the matter with a great deal of diligence. Months ago, there were doubts that the law would even take effect, he said, noting that the bigger obstacle now is general resistance to new controls on how people do business.

“People are just regulation-wary in general,” Christianson explained. “Regulations get peoples’ hackles up. The important thing for business owners who might be upset about this is to step back from that role of business owners and look at this from the perspective of the consumer, with yourself being the consumer; greater than 10% of the state’s population has already had their identity compromised.”

For the record, here’s what the law states: that “every person that owns or licenses personal information about a resident of the Commonwealth shall develop, implement, and maintain a comprehensive information-security program that is written in one or more readily accessible parts and contains administrative, technical, and physical safeguards that are appropriate to (a) the size, scope, and type of business of the person obligated to safeguard the personal information under such a comprehensive information security program; (b) the amount of resources available to such a person; (c) the amount of stored data; and (d) the need for security and confidentiality of both consumer and employee information.”

The law goes on to say that each comprehensive information-security program shall designate one or more employees to maintain the program, and that companies must identify and assess “reasonably foreseeable internal and external risks to the security, confidentiality, and/or integrity of any electronic, paper, or other records containing personal information, and evaluating and improving, where necessary, the effectiveness of the current safeguards for limiting such risks.”

Other provisions include:

That’s a Lock

Roughly translated, this all boils down to establishing new policies and procedures, and considerable amounts of training, said Pat Guenette, vice president of Human Resources for the early-education provider Square One, that agency’s point person for the new law, and one of many working to get both hands around the compliance issues.

Guenette told BusinessWest that there has been a significant learning curve involved with the new law, which she says she’s negotiated, in large part, by asking a number of hard questions at informational workshops and training sessions she has attended. There have been many, and they’ve been hosted by a wide range of organizations, from the Employers Association of the NorthEast and AIM to Whalley Computer Associates and Human Resource Management Assoc. of Western New England.

Her work started several months ago, she said, noting that Square One understands the importance of the law, and not only wants to be in compliance but needs to in compliance if it is to properly serve a number of constituencies.

“Our organization is concerned not only about protecting employee information, but information on the clients that we work with and the families that we work with,” she explained. “It’s imperative that, as an organization, we are up on this and ensure complete compliance.”

Square One isn’t quite there yet, Guenette continued, but it’s close. Work toward finalizing a WISP is ongoing, she said, adding that she and others are working with legal counsel to review operations and complete what amounts to an assessment and audit.

“They’ll review our policies, procedures, and operations to make sure, with all of the information we have, whether it’s maintained on paper or electronically, that we have procedures in place to make sure that it’s properly stored and that it’s kept confidential.

“When you look closely at the law, you can see that’s long, the regulations are pretty in-depth, and there are a number of challenges for businesses,” she continued. “And I think that’s why it’s been delayed so many times, because there are so many requirements that are difficult for businesses, such as your carriers and vendors and your service-provider agreements — all of these things have to be considered very carefully.”

A team approach has helped Square One get to this point and to where it should be in compliance by the deadline, Guenette continued, adding that work with an IT provider and the organization’s law firm has also been a key element in clearing the many hurdles posed by 201 CMR 17.

When asked to describe her work with regard to the new law, Royal said much of it comes down to training clients’ employees, but also training the trainers.

“We’re essentially giving HR administrators and upper-level managers the tools they’ll need to be able to train their employees in these policies that they’re going to have in place by March 1,” she said. “There’s a lot they need to know.”

There are several components to the identify-theft law, she explained, noting that, in addition to the drafting of a WISP, an internal document for dealing with personal information, companies must have in place policies regarding how the WISP is to be implemented.

“These would spell out for employees what their duties and obligations are surrounding the protection of information and the storage of information,” she said, noting that few small and medium-sized companies have such policies, and are essentially starting from scratch.

Christianson stressed the importance of training, but also the simple awareness of the importance of protecting personal information, a seemingly missing ingredient at some companies.

“Most of the breaches that have happened were not malicious in nature,” he said, noting that there are exceptions. “Most of the time it’s carelessness — a guy or woman wants to make a good impression and takes work home at night. They take a thumb drive and put a spreadsheet on it, and it’s got all this personal information; they go to Dunkin Donuts to get their big coffee so they can stay up all night, and they drop the thumb drive in the parking lot.”

Putting policies in place to at least reduce the chances of such a calamity, and those others outlined in the Identity Theft Resource Center report, is what the new legislation is all about.

Into the Breach

Christianson noted that most businesses will not be in compliance with the new law by March 1, and for a number of different reasons, but mostly because they started too late. But he believes the state is hoping that, by then, business owners and others will at least be moving in that direction.

There may indeed by a large degree of regulation-wariness on the part of business owners, he continued, but the bottom line is that businesses, sooner or later, will find themselves in the same boat as Square One — wanting to be in compliance, but needing to be in compliance.

George O’Brien can be reached at

obrien@businesswest.com

Cover

While there are concerns about a double dip and a largely jobless recovery, the general consensus among economy watchers is that the worst is over and better times are ahead. But ‘better’ is certainly a relative term, they say, and in this case it refers to what will likely be slow, steady growth, with the accent on slow, with the eventual pace to be impacted by the level of job recovery and, perhaps more importantly, by overall confidence among consumers and business owners alike.

Bob Nakosteen feels like most of those people watching the economy for signs of what’s to come. He says he’s pretty much convinced that the worst is behind us … but he’s not at all sure how much better things are going getting to get, or when.

After discussing all the major talking points — from the housing market to consumer and business confidence; from the employment scene to the latest, and improved, gross domestic product numbers and whether he believes them (he doesn’t) — Nakosteen, an Economics professor at UMass Amherst, finally drew an analogy between the current economy and an oil tanker.

“You can turn it around, but it’s not going to happen quickly or easily,” he said, projecting that recovery will indeed come in 2010, probably by the second or third quarter by his estimates, making this what he termed a “slow-motion process” in the Bay State.

Continuing his search for words, phrases, and images to describe his sentiments, he said this region and the state as a whole are due to experience what he called a “U-shaped” recovery, meaning a pronounced slide (already behind us, by most estimates), followed by a long, relatively flat stretch, which we’re in now, by most accounts, followed by a sharp tick upward.

Quick Quote

But when that ascension will begin is anyone’s guess, and other economy watchers found words similar to Nakosteen’s to describe what they see coming in the months and quarters ahead.

“I don’t see much happening that’s going to be terribly vibrant; I don’t see a robust recovery coming,” was how Richard Collins, president of West Springfield-based United Bank summed up his thoughts. “We have money to lend here, but we don’t see people knocking on our door demanding it because they’ve got more pressing things to do.”

Such passive activity is a clear sign that consumer and business confidence, while improving, according to some yardsticks, is still not where it needs to be for a quick, strong recovery, said Collins, who is certainly not alone in his use of the word ‘slow’ to describe his thoughts on the pace of this much-anticipated recovery.

Andre Meyer used it early and often as well. He’s the senior vice president for Communications and Research at the Associated Industries of Mass. (AIM) He said that while only a few quarters ago, all economic signs were pointing down, some, but not all, are now pointing up. He’s seeing it in AIM’s Business Confidence Index, which, at 44.9 for the November reading, is still below the 50 mark (indicating general positiveness about the economy), but it has gained a point or two seven of the past eight months and is now well above the low point of 33.3 recorded this past February.

He’s also seeing it with regards to employment, despite widespread projections for a jobless recovery (see related story, page 22). There hasn’t been a marked uptick in hiring, but there are some indications that matters have improved, said Meyer, citing a slight surge in hiring among in an area he called ‘professional business and scientific services.’

“That tends to be a real bellwether,” he explained, “because that’s money that companies are spending on outside vendors, and it’s often the kind of thing they’ll put off if they don’t absolutely need it; you don’t need an architect if you’re not going to build a building.”

Meyer says he’s also seeing hints of progress in such things as improving sales figures for some categories of retail, a slight bounce for the housing market, and rising export levels, and that together, the signs validate the heavy use of the words ‘slow’ and ‘steady’ with regard to a turnaround

“Barring some unforeseen setback, we’re looking at a year of recovery, but slow growth overall,” he told BusinessWest. “But things will accelerate as we get into the year.”

Just how much they’ll accelerate is the question on everyone’s minds as they prepare to turn the calendar. The consensus seems to be that there are too many related question marks — concerning everything from jobs to confidence to the housing market — to effectively answer that question.

The Hoard Way

Before looking ahead to 2010, Meyer chose to start with a glance back, to about a year ago, when the dark clouds had gathered and the conjecture focused on just how bad things were going to get.

“The last quarter of 2008 and the first quarter of 2009 were just terrible,” said Meyer, stating the obvious. “Everyone was hunkered down, and companies weren’t even filling critical jobs if they became vacant; they just didn’t want to make any kind of commitment because there was a sense that almost anything could happen.

“In retrospect, 2009 hasn’t been the complete meltdown and disaster that a lot of people thought it would be,” he continued, adding that, regionally, what has occurred over the past 12 to 15 months is not in most ways unprecedented, and, in fact, not as bad as the last great recession, the one in the early ’90s, in terms of duration and the impact on the financial-services sector.

All that said, the region was hard-hit, especially with regard to employment — which came close to but didn’t actually hit double figures in Massachusetts — as well as construction, residential, and commercial real estate, and companies’ bottom lines, Meyer continued. But things were much worse in many other parts of the country.

And while there is come concern about what’s known as a double dip — a recession followed by a slight uptick and then another downturn — most experts believe that the worst is in the rear-view mirror and that the nation and the region are in recovery mode.

But how pronounced will the recovery be, and when will business owners see real improvement?

Nakosteen is not particularly optimistic because he doesn’t see the requisite fuel he says is needed for a pronounced recovery.

“This has been a recession that’s killed off a lot more small businesses than most other recessions have,” he explained. “Couple that with the stagflation we’re seeing, and I just don’t see anything that’s going to pull us out of this.”

There is still a great deal of stimulus money remaining to be spent, Nakosteen continued, noting that maybe 75% of the nearly $1 trillion package has yet to be allocated. But he has doubts about whether that money will have any real impact on the pace and overall level of recovery.

“The only sector that’s really spending is the government,” he said, “but all that’s really done is put a bottom on the recession.”

Real recovery is only going to come when individuals and business owners possess enough confidence to start spending again, Nakosteen explained, adding quickly that he hasn’t seen any solid evidence indicating that day is here, or even close.

“For the most part, people are keeping are keeping their wallets in their pocket and their credit cards in their wallet,” he explained, noting that both consumers and business owners are hording cash and paying down debt — trends that are generally positive, but not when businesses need sales and the national recovery needs that aforementioned fuel.

Interest-bearing

Collins has witnessed this cash-hoarding first-hand. Like most all bank presidents, he’s seen growth in deposits far surpass growth in the loan portfolio.

Part of the reason for this has been a tightening of credit, which has been industry-wide, he continued, but the far bigger factors have been confidence, or a lack thereof, and the fact that many people — and businesses — don’t have the wherewithal, even if they do have the confidence.

Indeed, looking across the board, Collins said his bank has near-historically low rates on mortgages (around 5%), attractive products for new and used cars, and solid commercial packages. But demand for such offerings simply isn’t there.

“There are people who are really just hanging on, and they’re going to continue to have to hang on for a while,” he explained. “It gets tough; if you’ve been laid off, you can continue to pay your mortgage for a while, but if you’re out of your job for a long time, it gets more difficult.”

Overall, those at the bank are cautiously optimistic about the year ahead, he continued, but all expectations have to be grounded in realism, and the reality, as he sees it, is limited growth potential with regard to the loan portfolio.

Allan Blair, president of the Economic Development Council of Western Mass., sounded similar notes about realistic expectations. He described 2009 as a quiet year in terms of both new-business attraction and growth of existing businesses, and a big year for hunkering down for businesses large and small.

“Most all of them have cut their costs; they’re hoarding cash and paying down their debt,” he explained. “Some have laid off as part of their cost-cutting, but most of the smaller ones have tried to hold onto their people because they’re expecting an uptick and their workers have unique skill sets that they’re trying to preserve. In general, this has been a year of people weathering the storm, and most have done that well.”

When asked when business owners will come out of the proverbial storm cellar, Blair said much depends upon the sector in question and the level of confidence reached by decision makers. In health care, he explained, there is widespread concern about the debate on national reform of that sector and the impact it will have (see related story, page 25). Meanwhile, in public higher education, there has been a collision between rising enrollment and budget-cutting on the state level (trends seen in most recessions), which might hamper growth of that important sector.

Springfield Technical Community College President Ira Rubenzahl said his school, like all other public institutions, was helped considerably by stimulus funding, which nearly offset state cutbacks. His concern is that the same level of federal help won’t be there for fiscal year 2011, for which STCC is facing what could be a 14% budget cut.

The school has responded to the budget adversity with some fee increases, a hiring freeze, and a number of steps to control costs, said Rubenzahl, adding that recessionary times, and especially this recession, present challenging times for public schools. On one hand, their services are in greater demand, among both those seeking to upgrade their skills and high-school graduates (and their parents) recognizing the value of starting at a community college, but on the other hand, it becomes more difficult to deliver those services.

“What we’re seeing is people recognizing that they need a college education to get a high-paying job these days,” he explained. “Our mission is more important today than before the recession. But we need adequate funding to deliver a quality product.”

Looking at other sectors, and the larger issue of business recruitment, Blair said the EDC has not abandoned those efforts, although 2009 has been a tough year in that regard. And he is seeing signs of what could be light at the tunnel.

“We’ve seen more interest among European companies in having a U.S. presence than ever before,” he explained. “Much of this has to do with the favorable exchange rate with the Euro, but a big part of it is a need to get into the big U.S. marketplace. These companies are looking for partnerships and manufacturers’ representatives.

“We’ve been busy responding to the interest expressed by European companies,” he continued. “We haven’t seen any making any final decisions yet, but there is a lot of interest and a lot of talking.”

Meanwhile, Blair said, over the last part of the third quarter, his agency has seen an uptick in searches by national site selectors, an indication that perhaps some of the nation’s larger companies are looking at expansion opportunities or relocation of distribution facilities.

“That’s been a fairly encouraging trend,” said Blair, adding that the EDC is watching the distribution sector closely because it is usually a good barometer when it comes to developments in their respective sectors, and also because there is a trend toward decentralization in that industry that may bode well for this region given its strong infrastructure.

Still Laboring

Overall, both Meyer and Nakosteen say the Bay State is trailing the nation by at least one-quarter when it comes to recovery.

In fact, a report in the latest issue of MassBenchmarks, the quarterly publication produced by the UMass Donahue Institute in cooperation with the Federal Reserve Bank of Boston, indicated that the state’s economy is estimated to have declined at a 1.1% annualized rate in the third quarter, a time when the national economy was, by many accounts, beginning to grow.

“The state entered the recession later than the U.S., and so appeared to be performing better than the U.S. through the spring of this year,” wrote Alan Clayton-Matthews, MassBenchmarks senior contributing editor and associate professor of Economics and Public Policy at Northeastern University. “However, recently released income and tax data suggest that the state’s economy continued to decline through the third quarter, and that recent economic performance may be weaker than that of the nation as a whole.”

When and to what degree the state catches up and experiences real recovery depends mostly on two factors — jobs and confidence, said Meyer.

Regarding the former, he said he expects to see some turnaround in 2010, at least in several sectors of the economy, and that, long-term, he expects the state will recover all or most of the jobs it lost to the recession, something that didn’t happen with the last downturn in 2001.

“There’s been some disagreement among economists about how quickly employment comes back,” he said. “Some people feel that employers actually let too many people go and will need to hire some back.

“In many industries, the jobs will come back, but they’ll come back slowly,” he continued. “It’s hard to hire the people you want, and it’s expensive to hire the people you want, and employers are going to be somewhat reluctant to hire people.”

Meyer sounded a cautionary note about falling too far behind the rest of the country.

“It’s very damaging to us here in this state when we lag seriously in the recoveries, as we have in the last two recessions,” he explained. “A big thing that happens is that people, particularly young, well-educated people, leave. If they think they can get a job somewhere else and not get one here, they’ll go to where the jobs are. But so far, the signs look pretty good on that.”

But many, including Blair, are somewhat less optimistic when it comes to jobs.

“Employers continue to be extremely cautious,” he said, “and from a broad economic-development point of view, the forecast of a jobless recovery in 2010 continues to be the predominant view. A lot of companies have invested in technology that reduces their reliance on labor, and so they’ll be productive as the economy’s demand increases without having to add workers.

“So it may be a a year from now before we see an uptick in job growth,” he continued, “which is obviously very important to our region.”

Sea Change

Returning to h
s comparison between the economy and an oil tanker, Nakosteen said that, for the most part, the change in course has begun.

But it will take some time to turn this ship around, he continued, adding that the so-called Great Recession touched every sector and nearly every business, and the specter of a jobless recession looms large.

It won’t be full-speed ahead any time soon, Nakosteen concluded, but the slow-motion process he described is at least underway.

George O’Brien can be reached

atobrien@businesswest.com