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The Forces of Change

“People don’t change unless the pain of not changing becomes greater than the pain of change.” That was one of many observations made by those presenting the latest installment of BusinessWest’s Future Tense series late last month. The more important point made: by the time companies get to that point, it might just be too late to change.

‘Burn the boats.’

That’s supposedly what the Vikings did before entering into battle — a bold indication that there would be absolutely no turning back from a particular course of action — and the phrase has become heard with increasing frequency in boardrooms across this country and in many others.

And Mark Borsari, president of Palmer-based wire-brush manufacturer Sanderson MacLeod, made it one of many phrases (and takeaway strategies) he offered as co-presenter of the latest installment in BusinessWest’s ongoing and appropriately titled Future Tense series.

Borsari shared the podium with Jim Barrett, managing partner at Holyoke-based Meyers Brothers Kalicka, and advice not to be afraid to burn the boats was among the many messages they passed along to audience members during a program titled “Change Considerations: An Examination of Lean Process, Market Disruption, and the Future of Your Business.”

The two focused on every phrase within that long title, but especially that one word ‘change.’ Like others who presented in this series before them, they noted that change is coming at business owners at an unprecedented pace and scale. And while there are some changes that cannot be foreseen or remotely planned for — Barrett summoned the example of the city of Westfield, a buggy-whip manufacturing hub that was one of few communities worldwide economically devastated by the invention of the automobile — there are things business owners can and must do.

Over the course of their talk, Barrett and Borsari listed several — from embracing new technology to being ultra-diligent when it comes to investing in it; from watching the horizon for imminent changes to recognizing emerging new trends in workforce skill sets; from embracing lean practices (whatever your business sector), to, yes, being fully prepared to burn the boats when it comes to all or most of the above.

Mark Borsari says his parents used the wet-facecloth method to get him up in the morning

Mark Borsari says his parents used the wet-facecloth method to get him up in the morning, and now he manages his company with the same mindset.

“You need to have confidence in what you’re doing,” said Borsari, noting that many lean initiatives and investments in new technology fail because leadership lacked the confidence to ride out the inevitable early questions and problems that accompany change. “If you’re a leader, stick with it; you have to burn the boats.”

One also has to keep his head out of the sand, he went on, referencing a business he was once in — the making of dentures — to get his points across.

“If you’re a leader, stick with it; you have to burn the boats.”

“That technology had not changed, until about 2004, in 150 years,” he explained. “You’d go to the dentist, the guy would put that big plastic thing with a bunch of goop in your mouth, make an impression, and send it off to a dental laboratory to a dental technician who would, by hand, make teeth; they were getting $120 to $130 a unit on average.”

By 2006 or so, intra-oral scanning had completely changed the landscape, he said, adding that a milling center in a dentist’s office can now make a tooth in hours instead of days and for a fraction of the cost.

“That is technology that is absolutely disruptive; if people in that industry were watching, they would have seen what was coming, but they missed it,” he noted. “Now these technicians have milling centers in their laboratories, and they’re making $40 a unit. You go from $120 to $40 with inflation — that’s the stuff that scares you to death.”

Barrett agreed, and for another example of not recognizing what in hindsight, or even careful foresight, seems obvious, he recalled Jim Keyes’ now-infamous quote from a decade ago: “Neither Redbox nor Netflix are even on the radar screen in terms of competition; it’s all Walmart and Apple.”

“Two years later, Blockbuster files for bankruptcy, and today, Netflix is worth about $62 billion. That’s how fast change can happen, and if you don’t anticipate the disruption, chances are you’re not going to make it,” said Barrett, adding that the business landscape is littered with similar examples of companies moving too slowly, or not moving at all, to anticipate change and get ahead of it.

How and why does that continue to happen?

“People don’t change unless the pain of not changing becomes greater than the pain of change,” said Barrett, adding that companies and business sectors are going to keep doing what has made them successful until it becomes more than obvious that they can no longer do that.

But at the rate change is happening, that won’t be possible in the near future. By the time the pain of not changing exceeds that of changing, it may be too late to change.

For this issue, BusinessWest recaps the third segment in its Future Tense series, a presentation that brought home the need for business owners and managers to prepare for and be able to withstand what can possibly come at them in the months and years to come, rather than be a buggy-whip maker in the age of the automobile.

Brush with Fame

Rosie Noble worked at Sanderson McLeod for a half-century, Borsari told those gathered at Tech Foundry for this installment of Future Tense. Her job — no, make that her domain — was a specific wire brush, or stylus, made for the healthcare sector.

“Rosie walked seven miles a day, 14 feet at a time, for 50 years — she has 2% body fat,” said Borsari as he attempted to draw a picture of how these brushes were made. “You are not going to find another Rosie Noble working for Sanderson MacLeod, walking seven miles a day, making brushes for the rate we were paying. And Rosie wants to retire; what do you do?”

The answer was the Rosie 2, built with her input. It’s the world’s first (and only) fully automatic twisted-wire stylus machine — technology that does essentially what its namesake did starting when Lyndon Johnson was in the White House. Ultimately, Borsari said, the company didn’t build this machine because it wanted to, but because it had to to remain competitive.

“People don’t change unless the pain of not changing becomes greater than the pain of change.”

The Rosie 2 is a great example of a company adapting to change, embracing and utilizing technology, and finding better and more efficient ways to do things, he noted, adding that, moving forward, it’s incumbent on all business owners and managers to write their own Rosie stories.

Jim Barrett

Jim Barrett says that, while lean practices are most commonly associated with the factory floor, this is a strategy, and mindset, that all business sectors must embrace.

There are many factors involved in this equation, said the presenters, starting with the world of work and the rapid pace of change of pace in that realm, most of it driven by technology.

To sum it all up, Barrett talked about this country’s new Lockheed-Martin F-35 fighter jet, a plane that uses artificial intelligence to self-diagnose its needs in term of fuel, parts, maintenance, ammunition, and more. Those servicing the plane don’t have to accumulate that data, as they did with past models, because the plane provides it for them.

Emerging technology does essentially the same for business owners across virtually all sectors, he went on, adding that, in the future (and even today, for that matter), employees, especially those involved in finance, won’t be needed to gather or even analyze information — again, because technology, like Blockchain, will do that for them.

“Today, a large part of the financial function is data analysis; 60% to 80% of the time is spent gathering data and making that sure that data is compatible, either between years or sets or whatever metric you’re trying to measure to: ‘do we have the right data? Is it good data? Is it compatible?’ — 60% to 80% of the time!” he said. “Moving forward, that’s largely going to be automated out of existence, all that time is going to be freed up, and that’s going to be a huge disruption to the financial function of industries.”

Instead, one of employees’ primary functions is to take the information available to them and help management decide what to do from a strategic standpoint. And to do that, they’ll probably need different skill sets than they have now, said Barrett, adding that they’ll need to do everything from “help the company make smart bets,” as he called them, to making sure the business is using the right data and the right metrics.

Instead of counting money in the cash drawer and figuring out where it came from, the retail finance employee of the future (or today) will need to be able to help answer questions like, ‘should we open a new store or close a store?’ ‘Do we go online?’ ‘How much does that cost?,’ said Barrett.

“And that’s a whole different skill set than the finance function of the past,” he went on, adding that employers and human-resources professionals need to be aware of these changes as they create their workforces.

“What people in the finance function need to understand is they need to adapt to this information, because what made them successful in the past is not going to make them successful or, like the buggy whip, relevant in the future,” Barrett noted. “If you’re still counting cash, your competition is way ahead of you.”

Investments in the Future

Borsari agreed, and said that knowing what to do with both data and emerging technology is the biggest challenge facing business owners and managers today.

With that, he clicked to a PowerPoint slide with two images — one of a palm tree, the other of an iceberg — and kept it there for a few moments as he talked about the immensely difficult and far-reaching decisions business owners face when it comes to investing in technology.

“Those of you who run businesses or run companies or organizations and have to make these decisions know that it’s exhausting — absolutely exhausting,” he said. “Our job, when you get right down to it, is to be on the bow of a ship looking out and seeing what’s on the horizon long before it gets there. It’s either an iceberg that’s going to put a hole in the side of the ship and sink you, or a pretty place you might want to take the company and go sailing.

“What people in the finance function need to understand is they need to adapt to this information, because what made them successful in the past is not going to make them successful or, like the buggy whip, relevant in the future. If you’re still counting cash, your competition is way ahead of you.”

“And it’s exhausting because you’re getting bombarded from all sides,” he went on. “Our challenge is, ‘how do we look at the palm trees and the icebergs and sort out what is the technology we think is relevant, what we think works for us, and what doesn’t?’”

Elaborating, he said the place companies must start is with a basic question: what is the technology for? And until it’s answered, the checkbook should certainly stay in the drawer. The goal, he went on, is to embrace and choose technology that enhances that which already separates you in the marketplace.

“Understand what the value-driver is for your customer,” he told his audience. “What do they come to you for? Then determine if technology is going to help you, neutralize you, or put you at a disadvantage. Once you buy it, you own it.”

Borsari noted that Palmer-based Sanderson MacLeod is not going to make wire brushes less expensively than companies in China, or almost anywhere else, given the high cost of doing business in this state.

“So why do people buy from us?” he asked rhetorically before answering that question for the audience.

“Our feeling is that our customers have to think that they’re either with us or that not being with us is a competitive disadvantage,” he said, adding that the company is known for its innovation and making products that stand out in the marketplace.

“These are the things that we think about when we consider technology,” he explained. “Is it going to help us with this, or does it make us more of a commodity?”

This discussion of technology and investments in it led naturally to another of those phrases in the program’s title — lean process.

Lean, the science of taking waste out of the process, can help drive decisions on technology investments, said Borsari, who cited the ‘5 Ms’ of waste — man, machine, method, materials, and money — and the need to identify which one (or ones) are the target of new technology.

“What are you buying the machine for?” he said. “Sometimes you think you’re chasing something, and you realize that’s not what you’re really chasing.”

What all companies are chasing are greater efficiencies and better ways of doing things, said Barrett, adding that a great misconception in business today is that lean is just for the manufacturing floor.

That’s a very limiting attitude, said Barrett, adding that Meyers Brothers, and the financial-services sector as a whole, is starting to embrace lean — out of necessity more than desire. But there are hurdles to be overcome, he said, primarily because these businesses are “dealing with people, not machines, and people are resistant to change.”

“We’re great at analyzing data — we made a career analyzing data — and people love to sit at their desks and play with spreadsheets,” he explained. “But that’s not valuable anymore; people are going to continue doing what made them successful over the past 30 years, even though times are changing.”

That’s why, said both Barrett and Borsari, what a company ultimately needs to change through lean isn’t equipment, technology, or even processes — but the culture.

The Naked Truth

Borsari called it ‘wet-facecloth management.’

And, obviously, he needed to explain that.

“When I was a kid, my parents didn’t like me sleeping in,” he noted. “They’d come in the first time and say, ‘you’ve got 10 minutes to get up.’ If I didn’t get up in 10, they’d say, ‘you’ve got five minutes, then we’re coming up with a wet facecloth.’

“It is impossible to not deal with reality when you’re facing a cold facecloth in the morning,” he went on, adding that the tactic almost always worked, and today, he more or less runs Sanderson MacLeod the same way. Reality, in this case, isn’t having to get out of bed, but to operate with the full knowledge that a few mistakes, or even one big one, can make your company the next Blockbuster or the next Kodak, a venerable institution that just didn’t position itself for the advent of digital photography.

With that, he said ‘wet-facecloth management’ means avoiding certain attitudes, including putting a company’s collective heads in the sand, as the dental technicians obviously did at the start of this century.

“Their heads were in the sand; there’s no question that there was technology coming up that would make a tooth faster than layering porcelain by hand,” he said. “You have to question yourself, and you have to have people in your organization who are empowered to challenge you on that.

“You want them reading, and you want them not feeling that if they come to you with an idea that’s a little out of whack, they’re not going to have your ear,” he went on. “But you have to make sure you don’t get your heads in the sand when it comes to technology, because if you do miss a major one, that will shut the doors.”

Another mindset to avoid is ‘magic-bullet thinking,’ he went on.

“This is where someone goes to a presentation, comes back, and says, ‘we have to buy this thing; it’s unbelievable,’” he said. “That’s dangerous; there are no magic bullets. There are things that will help you, but there are no magic bullets. I’ve bought magic bullets. They don’t work.”

Still another mindset to avoid, said both Borsari and Barrett, is the thinking that all the answers have to come from inside the company.

The proper mentality is to ‘get naked,’ as Borsari called it.

“I encourage people to get out and see other companies, and to have people come and pull you apart,” he explained. “Bare what you have; you want an idea that can come through and change things, but don’t get into thinking that you have everything covered, because you don’t.”

Barrett agreed, and said one of the bigger challenges facing businesses in all sectors is changing the culture of an organization and inspiring people to think lean, avoid magic bullets, and get their heads out of the sand.

What’s needed is a compelling message, he told BusinessWest.

“To stand in front of people and tell people they need to be more efficient because if we’re not more efficient and we’re not doing it better, we’re going to be out of business — that’s not really motivational to a lot of people,” he explained. “You need to find some way to engage them.

“In our business,” he said, “that might be to say, ‘yes, you might lose 60% to 80% of what you used to do, but if you understand that, you can now spend your time going out to customers and trying to help them with their business, and you can do better stuff that, A, they value, and, B, they’re going to pay more for, and you can have a better feeling when you leave that you helped somebody, as opposed to reading spreadsheets.’

“The message can’t be, ‘we have to be lean because we don’t we to be the next Blockbuster,’” he went on. “The message has to be, ‘we have to be lean so we can do better, higher-value stuff that’s more rewarding for us and more valuable for our customers.”

Bottom Line

‘Wet-facecloth management?’ ‘Burning the boats?’

These are not phrases you would probably hear in the boardroom 20 years ago, or even a few years ago.

But you hear them now, because the times (maybe you’ve heard this) are changing. And change is coming quickly and profoundly, and companies need to be aware that they have to change attitudes and change the way they do things.

As Barrett so aptly put it, businesses, and especially those who lead, simply can’t wait around until the pain of not changing becomes greater than the pain of change.

George O’Brien can be reached at [email protected]

Berkshire County

Changing the Narrative

Created through the merger of several economic-development-focused agencies, 1Berkshire has a broad mission statement, but it can be boiled down to making this unique region a better place in which to live, work, and do business.

Jonathan Butler says he grew up during what was, in most all respects, a down time for many communities in the Berkshires.

This was a period — a few decades in length, by most estimates — when General Electric in Pittsfield and Sprague Electric in North Adams were slowly disappearing from the landscape and taking roughly 25,000 jobs with them.

Butler told BusinessWest that he’s heard countless stories about what it was like when those huge employers were in their heyday and the downtown streets were clogged with people on payday — and every other day, for that matter — and seemingly everyone who wanted or needed a job had one.

“But that’s not part of my narrative,” he said, adding that he grew up on the other side of all that, when the downtowns were populated largely by empty storefronts and jobs were much harder to come by.

“The good-old-days stories are actually getting quite old,” he went on. “That’s because a few generations have grown up not knowing them.”

Instead, there are new stories being told, said Butler, involving everything from ziplining to craft beers; from health spas to new and exotic eateries; from communities’ populations getting larger to populations getting younger.

Indeed, the best stories involve people — a lot of them just like Butler — who grew up during those darker times, left the area (because that’s what they thought they had to do), and are now coming back to enjoy all of those things mentioned above.

Jonathan Butler

Jonathan Butler

“The good-old-days stories are actually getting quite old. That’s because a few generations have grown up not knowing them.”

“We’ve really changed the narrative around what it’s like to live in the Berkshires,” he noted. “People my age that grew up here, went away, and have had the chance to come back, whether it’s to live here or visit family, are shocked at what they see.”

This changing of the narrative was and is the unofficial mission statement for 1Berkshire, an economic-development-focused organization that resulted from the merger of four agencies — the Berkshire Chamber of Commerce, the Berkshire Convention and Visitors Bureau, the Berkshire Economic Development Corp., and Berkshire Creative, a support organization for entrepreneurs and those involved in the arts.

Housed in an historic former firehouse called Central Station in downtown Pittsfield, 1Berkshire’s employees are focused on a number of strategic initiatives collectively aimed at advancing the region’s economy and making this a better place to live, work, visit, and operate a business.

“We spend a lot of time and energy bringing visitors to the Berkshires, but we also spend significant time and energy promoting this as a place for families and for people to relocate to,” he explained.

The ‘visit’ component has always been a huge part of the equation, said Butler, noting that tourism has long been the primary economic driver in the Berkshires. That’s still true today, but visitation is becoming more diversified, or “rounded out,” as he termed it.

 

“We have an extremely robust visitor experience here,” he noted, adding that that tourism spending, up 30% over the past decade ago, now averages about $500 million a year. “There’s the performing arts, the visual arts … but we’ve also become established as a food economy — dining in the Berkshires is great, for the foodie audience but also the more traditional audiences.

“There’s a farm-to-table component of our economy — there’s a lot of agritourism — and there’s also the recreational economy: hiking, biking, adventure sports, scenic rail, and more,” he went on. “People have always come here for nature and culture, but what’s catching up is the recreational economy and the health and wellness economy.”

But those other parts of the puzzle are equally important, he went on, adding that 1Berkshire is also committed to bringing people here to live, work, and start and grow businesses.

Overall, the agency was conceived as a “better way to do economic development,” said Butler, and to date, the evidence, both qualitative and quantitative in nature, would show that it’s succeeding in that role.

“Over the past 15 to 20 years, the Berkshires have been re-energized, but there are still a number of challenges,” he said, adding that the largest involves ongoing efforts to attract young people and lower the age of the region’s population, a vital component to overall vitality and economic sustainability.

For this issue and its focus on Berkshire County, BusinessWest talked with Butler about 1Berkshire and how it has gone about helping to change the narrative in this unique corner of the Commonwealth.

New Breed of Economic Development

‘The Year of the Dog.’

That was the name attached to the 63rd annual Fall Foliage Parade, staged on Sept. 30 in downtown North Adams. When asked, Butler was more than willing to explain, and started by noting that an elementary-school class in that community has the honor of coming up with a name to accompany the much-anticipated event, which draws thousands to that town.

“This is the Chinese Year of the Dog, and they recently opened a dog museum in North Adams,” he noted, referring to the facility located in the former Quinn’s Paint & Wallpaper Co. on Union Street. “So … it all makes sense.”

There was a huge banner at the top of the 1Berkshire website hyping the parade, he said, adding that the promotional support for such traditional gatherings is just one of many functions carried out by the agency.

There’s also something called simply ‘the jobs thing.’ This is a job-posting site on that same website (1berkshire.com). All positions listed (and there is a fee for such postings) must be for jobs in Berkshire County and come with a salary of at least $40,000. Those doing some browsing can search by field (they range from administrative and clerical to hospitality and tourism to sales and advertising) and by experience (entry-level, mid-level, and senior-level).

1Berkshire also has an events calendar filled with a host of programs, including a youth-leadership program and Berkshire Young Professionals events; a ‘relocation’ button on its website that enables visitors to explore every community from Adams to Windsor; and ‘featured opportunities,’ such as a ‘Get Mentored’ program that pairs selected entrepreneurs with experienced mentors. Applications are being accepted now for the winter session.

“We’ve really changed the narrative around what it’s like to live in the Berkshires. People my age that grew up here, went away, and have had the chance to come back, whether it’s to live here or visit family, are shocked at what they see.”

Then there’s the Berkshire Blueprint, a detailed strategic plan for the region — similar in many ways to the Pioneer Valley Planning Commission’s Plan for Progress — that was first drafted in 2007 and is now being updated.

All of these are examples of how 1Berkshire is carrying out that aforementioned assignment — to find a better way to do economic development, said Butler, who was hired to lead the Berkshire Chamber four years ago, and spent much of the next 18 months working out the merger of the chamber and the convention and visitors bureau into 1Berkshire.

Overall, two years after the all the components of this agency came together, the venture is proving to be much bigger than the sum of its parts.

Going back those four years, he said several of the smaller economic-development-related agencies were doing good work but struggling to keep the doors open financially. Discussions commenced on the many potential benefits from bringing them together under one roof and one administrator, he went on, adding that this somewhat unique economic-development model became reality.

That uniqueness is matched by the region itself, he went on, adding that, while the Berkshires is part of Western Mass., or the 413, as many call it, in many, if not all, respects, it is more than just one of four counties.

“We’re a little bit of our own place,” he explained. “We have our own identity, our own brand. People actually know the Berkshires of Massachusetts on a national level, and even internationally, as a destination. But we’re small — only 135,000 people, with about one-third of them living in Pittsfield.”

That small population is matched by a small economy anchored by a few large employers — General Dynamics and a few banks, for example — and dominated in most ways by tourism.

There are many benefits to living and working in the region, Butler went on, adding that 1Berkshire exists primarily to educate people about them and encourage them to take full advantage of it all.

Right Place, Right Time

To carry out its multi-faceted mission, 1Berskshire, with an annual budget of roughly $2 million, relies on revenue from a number of different streams.

They include membership dues — there are currently about 1,000 members — as well as larger donations from so-called ‘investors,’ major employers such as Berkshire Bank, Greylock Federal Credit Union, and General Dynamics. There is also revenue from website advertisements (a spot hyping a Harry Potter-inspired Halloween party at the Blantyre is among those on the site now), the jobs initiative, and other programs; there are actually two web sites — berkshires.org, the primary visitor portal for the region, and 1berkshire.com.

And there is state money, because the convention and visitors bureau is part of the mix and is funded in part by the Commonwealth, and also because the agency is a regional economic-development council.

As noted earlier, a primary function of the agency is to drive visitation to the region, because tourism has a very broad impact on overall vibrancy in the region.

“With visitation, there is a ripple effect that goes well beyond the traditional visitor-stakeholder economy,” Butler explained. “It has an impact on the quality of our downtowns. We have much more vibrant downtowns today than we did 20 years ago, whether it’s Pittsfield, Lee, or Great Barrington. Those communities have benefited from visitor activity, which has made them a better place to live. It’s had a ripple effect into downtown housing projects, new restaurants and eateries, and things to do.

But there are many other aspects to the mission, he went on, listing everything from advocacy for members to the all-important work aimed at bringing new residents to the area, not just tourists.

Tracing his own career, Butler said that, after earning a graduate degree, he went to work for the Commonwealth in economic development and later for state Sen. Ben Downing in the State House.

He “worked his way back” to the Berkshires, as he put it, and worked as town manager for the city of Adams for six years before becoming director of the chamber.

Now, in his new role, he and his staff are working to encourage others to work their way to the Berkshires, or discover it for the first time, not as a place to leaf-peep or hike or ski — although they can do all of that — but as a place to live.

And this is important work, he said, because so many young people of his generation did in fact leave, in part because so many jobs disappeared, leaving communities demographically older and less vibrant.

But many are returning because what they see now is not the Berkshires of their youth.

“There are so many stories of people who choose, after they get their careers started, to come back to the Berkshires,” he explained. “The dialogue for them when they were kids might have been that they needed to get their college degrees and go off somewhere where there was lots of opportunity and be successful.

“Now, that dialogue is starting to shift to ‘go out, get your degree, experience the world, and why not come back to the Berkshires?’” he went on. “That’s important — that’s really important — and we’re seeing more and more of it.”

Good ‘New’ Days

Getting back to those stories about when the major manufacturers like GE were humming, Butler said they’re getting so old, they’re not really worth telling anymore.

That was a different Berkshires region, and so was the one he grew up with in the ’90s.

The Berkshires of today is not like either of those Berkshires. It is different, vibrant, diverse, and always changing — in short, it’s a different narrative, he explained.

Creating that narrative and making the story known is what 1Berskshire is all about, and four years after its formation, it is thriving in that all-important role.

George O’Brien can be reached at [email protected]

Accounting and Tax Planning

Five Hot Tax Topics

The Tax Cuts and Jobs Act represents a seismic shift within the broad realm of accounting and tax planning, and some of the aftershocks may not be felt, and fully understood, for some time. But some things are known, and individuals and businesses should understand their implications.

By Teresa Judycki

For better or worse, the Tax Cuts and Jobs Act was the most significant tax-law overhaul since the Reagan Administration, and there’s potential for more change on the way. With the breadth and depth of this law, it can be hard to determine what might be meaningful to you and your business.

This article will highlight five hot tax topics that may be particularly meaningful for this tax year.

Qualified Opportunity Funds

Taxpayers with large gains from sales of property to an unrelated person should be aware of Qualified Opportunity Funds. Enacted as part of the Tax Cuts and Jobs Act, a new Opportunity Zone program encourages investment in low-income community businesses.

Terri Judycki, CPA, MST

Terri Judycki, CPA, MST

The program allows individual and corporate taxpayers to defer tax on gains from the sale of stock or other assets by investing in an Opportunity Fund, which invests in businesses in Opportunity Zones. The tax is deferred until the earlier of Dec. 31, 2026 or the date the new investment is sold. To defer a gain, the taxpayer must invest within 180 days of the sale.

For example, if a taxpayer sells appreciated securities for $1 million at a $700,000 gain, tax on the $700,000 could be deferred until Dec. 31, 2026 (or earlier if the investment is sold prior to that date) by investing $700,000 in a Qualified Opportunity Fund within 180 days of sale. Capital gains on the new investment are exempt from tax if the investment is held for more than 10 years. Opportunity Funds may be a multi-investor fund or a single-investor fund established by a taxpayer to invest in projects he or she selects.

While there are a few multi-investor funds, many are hesitant to promise tax deferral until the IRS issues proposed regulations in this area, but September news is that the proposed rules are being reviewed and should be issued soon.

Foreign Accounts

For taxpayers with unreported income from foreign accounts, the Streamlined Filing Procedures (SFP) are still available. The Offshore Voluntary Disclosure Program ended Sept. 28, 2018.

Under SFP, taxpayers who can certify that the failure was non-willful can file amended returns and pay a reduced penalty. The IRS also has procedures in place for filing delinquent information returns reporting the existence of a foreign account when there has been no unreported income.

For example, a life-insurance policy with Sun Life may have a cash value that’s now increased to more than $10,000. That is a ‘foreign account’ that must be reported or could be subject to penalties. Consider reviewing any asset that is a foreign account and ensuring that tax filings are current, because penalties are confiscatory and may include criminal penalties.

The civil penalties for willful violations are capped at the greater of $124,588 or 50% of the amount in the account.

Employee Parking

I hoped to be able to provide you with specifics related to employee parking, but that guidance has not been issued as of the date of this writing. Perhaps there will be guidance by the time you are reading this article.

As a reminder, the Tax Cuts and Jobs Act provides that no deduction is allowed for the expense of a qualified transportation fringe, which includes van pools, transit passes, and qualified parking. Qualified parking is parking provided to an employee on or near the business premises of the employer or on or near a location from which the employee commutes to work by commuter highway vehicle or carpool. Tax-exempt organizations are subject to tax on the expense. But what is the ‘expense’ of qualified parking? At the 2018 AICPA Not-for-Profit Industry Conference, a speaker said that guidance had not yet been issued, because those in Treasury could not agree on the meaning of the law.

The cost of a parking permit is easy to quantify, but the law encompasses all expenses of providing parking. There are some practitioners who think a portion of depreciation on a parking lot owned by the business could be disallowed. Some others think the IRS may require apportioning office rent if the lease entitles the tenant to a certain number of parking spaces. As the law applies to amounts paid or incurred after Dec. 31, 2017, it affects computation of taxable income for entities with fiscal years ending in 2018. There are many practitioners hoping for retroactive repeal or postponement.

State and Local Tax Itemized Deduction

In August, the IRS issued proposed regulations in response to state legislation intended to circumvent the $10,000 limit on the state and local tax itemized deduction. A few states have enacted or considered enacting programs permitting state residents to make contributions to state agencies or charities in exchange for state and local tax credits that could be applied to income or property taxes.

In the proposed regulations, IRS restates the general rule that charitable deductions must be reduced by anything of value received in return for the charitable donation. The proposed rules, applicable to contributions made after Aug. 27, 2018, provide that, if a taxpayer receives a tax credit in return for a donation, the tax credit is a benefit to the taxpayer that must reduce the charitable contribution deduction.

It is important to note that these rules apply to programs created in response to the Tax Cuts and Jobs Act as well as to pre-existing programs, such as the Massachusetts program that provides tax credits in exchange for gifts of conservation land.

There has been no response from the IRS to the Connecticut strategy; Connecticut now imposes tax on a pass-through entity instead of on the individual partner or shareholder, which should result in shifting the deduction away from the individual who is subject to the $10,000 limit. The shareholder or partner should now be able to report his or her share of the entity’s income net of the state tax.

Trusts that pay taxes are also subject to the $10,000 limit, but a trust does not have to share the beneficiary’s $10,000 limit, providing a potential benefit.

Alimony

Finally, for those who will be divorced soon, the tax consequences of alimony differ for payments under instruments finalized after Dec. 31, 2018.

Before the Tax Cuts and Jobs Act, alimony was deductible by the payor and taxable to the payee. This resulted in shifting income from the higher-earning spouse paying the alimony to the former spouse who may be in a lower tax bracket. Alimony payments finalized after Dec. 31, 2018 will no longer be deductible by the paying spouse and no longer included in the income of the recipient spouse. There are some workarounds such as division of property where the spouse in the lower tax bracket receives property with the greatest unrealized gain or by using a Qualified Domestic Relations Order to shift retirement assets (along with the tax burden) to the lower-income spouse.

While this change will not affect pre-2019 alimony instruments, it may apply if the parties modify the pre-2019 agreement and state in the modification that the new rules are to apply. If this law change will impact you, be sure to discuss its effects with your attorney.

If you have any questions about the material featured in this article or how it might apply to you specifically, be sure to consult your tax professional or CPA.

Terri Judycki is a senior tax manager with Holyoke-based public accounting firm Meyers Brothers Kalicka, P.C.; (413) 322-3510; [email protected]

Home Improvement

Serving Up Style

Karen Belezarian-Tesini (left) and Sarah Rietberg

Karen Belezarian-Tesini (left) and Sarah Rietberg are selling plenty of white and gray tiles these days.

Professional designers can often walk into a house and tell what decade it was built in by the styles of certain rooms, and the kitchen is definitely high on that list. From the high-gloss look of the ’80s to the more neutral ’90s; from a shift back to color at the turn of the Millennium to the current embrace of whites and grays, kitchens do seem to reflect their time. But one trend of the past generation isn’t likely to change — the increased perception of the kitchen as a home’s main hub of activity.

The economy wasn’t the only thing that went flat a decade ago. So did kitchen colors.

“When the economy tanked in 2007, 2008, everything became very flat. Color was gone, along with texture, pattern, flowers. Everything became industrial and cold — no frills. And that’s how the economy was, too,” said Karen Belezarian-Tesini, manager of Best Tile in Springfield. And she’s not the only one who noticed the coinciding trends.

“It’s funny how the economy dictates the colors,” said Frank Nataloni, co-owner of Kitchens & Baths by Curio in Springfield, recalling how many kitchens of the late ’80s featured high-gloss surfaces and plenty of black and red, but when the recession of the early ’90s hit, it was all earth tones. By 2000, color had come back, but around 2008, neutrals took over again. “I don’t know what that means, but when you look back, you can clearly see it.” That decade-ago shift has stuck, however, and even intensified, he added. “Everything now is white and gray.”

While taupe is making a comeback, said Belezarian-Tesini — “I love that more than gray because it gives you an option to go either way, warm or cool” — she’s seen the white-and-gray trend intensify over the years. But better financial times might be causing a subtle style shift.

“Now that the economy is picking back up, it’s getting a little warmer — softer edges, a little more color in glass mosaic or patterns,” she said.

That would be just fine by Lisa Lindgren, designer with Kitchens by Chapdelaine in East Longmeadow.

“The most popular kitchen is white — white on white. So whenever I get a client who wants some color and wants to do something a little different, I get excited,” she told BusinessWest. “People tend to be so scared of color. A lot of it is about sellability, but we tend to encourage people to go for what you like. It’s your house.”

Frank Nataloni

Frank Nataloni says styles shifted away from bold colors when the economy tanked, and have largely remained muted since.

R.J. Chapdelaine, owner of the company, an offshoot of builder and remodeling firm Joseph Chapdelaine & Sons, agreed.

“Whenever you have someone who comes in with a little imagination, wants to have a little fun, it gets exciting,” he said. “And why not? That’s where people want to spend their time. Kitchens are getting bigger, and other living spaces are getting a little bit smaller.”

For this issue’s focus on home improvement, BusinessWest visited a few companies that deal in kitchen design to get a read on some of the hot styles — only to find that the hottest is a decidedly cool white. But they offered plenty of other food for thought as well.

What’s Your Style?

Take countertops, for instance, where white- and gray-colored quartz surfaces are in, both Lindgren and Nataloni said.

But they’ll find contrast in other places, Lindgren noted, like weathered driftwood for accent pieces or a dark wood floor — or, more commonly these days, porcelain planks designed to look exactly like wood. “That’s the most popular floor. You can’t even tell it’s not wood. It’s pretty fascinating.”

“That seems to be what everyone’s looking for right now,” Nataloni added. “With some of them, it’s amazing how much it actually looks like real wood. You can even feel the texture. That’s what people are looking for.”

And homeowners aren’t stopping in the kitchen, Belezarian-Tesini said. “When I sell those planks, I might sell 2,000-3,000 square feet at a time. They’re doing their bedrooms, they’re doing the whole house. It’s just incredible. People say, ‘oh my gosh, I love that,’ and when we tell them that it’s porcelain, they look again and say, ‘are you sure? Really?’ ‘Yeah, really.’”

In addition to the move away from tile floors into wood and wood-like porcelain, Chapdelaine noted that shiplap walls — in both vertical and horizontal patterns — are popular as well, perhaps driven by their ubiquitousness on HGTV.

As for cabinetry, while painted white tops the list right now, Nataloni said, he was working with someone recently who wants a black cabinet with a rubbed-off type of finish so there’s some wood coming through. Still, those neutral shades provide plenty of flexibility.

R.J. Chapdelaine and Lisa Lindgren say it’s fun to work with customers who have a design vision not necessarily bound by what’s currently fashionable.

R.J. Chapdelaine and Lisa Lindgren say it’s fun to work with customers who have a design vision not necessarily bound by what’s currently fashionable.

“With a white or gray cabinet, we can make it look very formal or casual in the scheme of things,” he said. “I haven’t sold a cherry kitchen in over a year, but at one time, that was probably 60% of our business. Some woods remain relatively popular, though, including walnut. “That’s the fashion part of the business, and it changes depending on who walks through the door.”

Sarah Rietberg, showroom manager at Best Tile, said all these trends amount to people seeking a clean, uncluttered look in their kitchens, which is why subway-style tile backsplashes are still common, but with a twist — different sizes, something with a little texture to it, or even lines that aren’t perfectly straight.

“Those things can add some oomph to subway tile,” she said. “People want a little movement, but nothing too crazy. They don’t want to take away from the other things going on.”

In addition, a well-placed accent color can be striking amid a sea of white, Chapdelaine said. “We just did one all-white kitchen with a hale navy blue island, and it’s a striking look.”

Indeed, Belezarian-Tesini said, many customers complement the dominance of white and gray with mosaic tile backsplashes; where once a mosaic pattern broke up the solid color of the rest of the backsplash, now it’s being used across the entire backsplash to break up the white of the kitchen.

Sometimes it’s hard to predict the next trend, she added. “If you asked me 10 years ago if glass would still be here, I’d have said no, but glass is hotter than it’s ever been. It’s the medium of choice now. People still use ceramic, and porcelain has really come up the ladder. But glass has become the decorative. It’s a 10-year trend for sure, and it’s probably going to last longer than that.”

Meanwhile, she sees metallic tile coming into its own. “As technology gets better, you’re going to see more things within the glazing. You’re even seeing crystals in the glazing, little pieces of metal, to create a true, realistic metallic. So technology advances, and the tile changes.”

Good, Better, Best

The upside of so many options in kitchen surfaces is that there’s typically something for every budget, Nataloni said.

“We have to have a good, better, and best product selection,” he told BusinessWest. “We have a product for people flipping homes that’s very current with the trends, reasonably priced, good quality, with a quick turnaround time. Then we have a semi-custom type of product that offers a lot of selection and is a little quicker than the higher-end product. That means a lot if someone is doing a home renovation, because a kitchen is not an inexpensive proposition. If you know where to save money, you can get more bang for your buck, and that’s our skill.”

Some customers arrived with a vision in mind for their kitchen, he explained, and his job is to refine it. “Then there are other people who come in and don’t have a vision, and they’re looking for me to help them create the vision. That’s why we have to be flexible in meeting the need of whoever is coming to us.”

To help people envision the end product — quite literally — Nataloni uses a virtual-reality device called ProKitchen Oculus, which uses Oculus VR goggles to allow people to walk around in the environment Nataloni has programmed into the computer.

“For people who have a hard time visualizing, it really solves that problem for them,” he said. “We create a basic floor plan in 3D, and you’re actually in the room, so you can look and walk around. They literally see what they’re going to buy, or as close as possible to what it’s going to be like.”

For example, one customer was having trouble envisioning the soffit Nataloni suggested for the top of their cabinets. “Then I showed it to them on the Oculus, and their response was, ‘oh, now I understand what you were talking about.’ For those type of people, it really helps tremendously.”

Chapdelaine also sees a healthy mix — about 50-50 — of people who know exactly what they want and customers who need a little more guidance. “And that guidance can occur through Lisa, or through decorators. We see clients occasionally bring in a decorator to help them make decisions on color, cabinetry, and tile.

Most of those are typically renovating their whole house, Lindgren added. “It doesn’t tend to happen just with a kitchen, but with a broader scope.”

Whole-home renovations are common these days, said Chapdelaine, who noted that the remodeling business has been outpacing new home building for some time. His grandfather, who first hung out a shingle in 1925, saw the value of remodeling work early on, and evolved the firm in that direction after originally focusing on new construction.

“That became an integral part of our business,” he said. “You have to evolve. I see people who just build houses or just remodel, and I’d find that difficult. You can go from building three, four, five houses at a time to building one or maybe none, and doing all remodeling.”

Open Wide

He and Chapdelaine’s father also recognized perhaps the most prominent shift in kitchen design, and one that remains dominant today — the open floor plan.

“They were building compartmentalized houses, but they rolled into a more open floor plan on the single-story executive ranches,” he recalled. “Now, there’s very little compartmentalized building. Everything is wide open, with less formal living spaces.”

Nataloni said homeowners prefer a free flow of traffic through the kitchen, and islands are desirable if they can be put in. “Gone are the days of the U-shaped kitchen or a peninsula only, unless it’s necessary. Everyone is looking to have cabinetry that creates the outside shell of the kitchen and then some kind of an island in the middle, whether it’s with seating or without.”

That’s also the style potential homebuyers prefer when they’re visiting open houses, which is one reason why hot trends — like that white and gray — remain so dominant once they take hold; people design the room not only for their own comfort, but with resale in mind.

“For many people, this is where they’re staying, but we do have a lot of people coming in saying, ‘look, I want to fix up the kitchen, and we’re not going to be here forever, so I want it saleable,’” he noted. “We get probably more of the people who are staying for the foreseeable future, and they want to enjoy it. That’s the majority of our business.

Belezarian-Tesini said most of her business at Best Tile contractor-driven — either builders putting up or remodeling houses, or homeowners shopping for product, then hiring a professional to do the work. The do-it-yourself crowd is much smaller — perhaps because the kitchen is such a critical part of 21st-century home life that people don’t want to get it wrong.

That said, “business has been fantastic,” she noted. “I’ve seen a lot of new construction over the last few years. When I started here 23 years ago, it was all new building. Then it went to remodeling, and now it’s coming back again to new construction, which is nice to see.”

So, for the foreseeable future, she’ll continue to track the design trends and help customers design the kitchen of their dreams — usually with an open concept.

“It makes for easy living, and really great entertaining,” she said. “After all, the kitchen is the heart of the home.”

Joseph Bednar can be reached at [email protected]

Berkshire County

Creating an Ecosystem

State and local officials joined with stakeholders in the Berkshire Innovation Center to break ground on the project last week.

State and local officials joined with stakeholders in the Berkshire Innovation Center to break ground on the project last week.

Steven Boyd isn’t just the president and board chairman of the Berkshire Innovation Center; he’s a true believer that the $13.8 million facility will be a game changer for the region’s manufacturing and life-sciences economy.

“From a broad perspective, I’d say the center aims to support the legacy manufacturing base that has a long history of innovation here in the Berkshire region,” he told BusinessWest. “We’re an innovation center that is equal parts research and teaching institution and programming for private-sector businesses.”

State and local officials gathered last Tuesday at the William Stanley Business Park of the Berkshires in Pittsfield to break ground on a project that has been in the planning and fundraising stages for a decade, and is expected to open by the third quarter of 2019.

The two-story, 20,000-square-foot workforce-development center will include training facilities, lab space, clean rooms, and office and event space for small- to medium-sized companies, just to name a few amenities, with the collective goal of boosting economic growth, employment, and private investment in the region.

“The center aims to support and accelerate growth and innovation by providing access to state-of-the-art equipment like 3D printers and a microscopy suite, as well as conferencing and teaching facilities,” Boyd said, adding that the center will also be the centerpiece of the mostly underdeveloped, 52-acre business park it calls home.

“The building will have all these types of spaces combined into a very cooperative, shared maker-space type of environment,” he went on, with one goal being to bring ideas and inventions from colleges and research institutions, even those from the eastern part of the state, together with local manufacturing knowhow and the resources needed for commercialization.

“One of the things that makes Cambridge so vibrant is all the new technology that’s being researched or commercialized as a result of all the ideation happening at places like MIT,” Boyd said. “So, as part of stimulating the economy in the Berkshires, we want to promote more of that ideation and commercialization here.”

Gov. Charlie Baker said as much at last week’s groundbreaking. “Our administration is focused on boosting the Commonwealth’s thriving life-sciences sector in every corner of the state,” he noted. “Investing in the Berkshire Innovation Center will help expand the capacity and capabilities of this region’s entrepreneurial community to drive job creation, retention, and outside investment in Western Massachusetts.”

Boyd, who is also CEO of Boyd Technologies in Lee, said the Baker administration has been focused on creating a network of innovation in manufacturing and the life sciences that encompasses the entire state, and the Berkshire Innovation Center (BIC) will be a key part of it.

“They recognize all the momentum going on in Boston and see the opportunity to provide efficiencies by creating a statewide ecosystem,” he noted. “In the Berkshires, we have available space and facilities at lower cost to provide that type of efficiency. It can be invented at MIT and commercialized in the Berkshires, and you don’t have to get on a plane and fly halfway around the world to make something that’s truly innovative.”

Nearly 5,000 jobs in Berkshire Country are in the manufacturing sector, making it the fifth-largest industry in the region.

With that in mind, Housing and Economic Development Secretary Jay Ash noted that the center will serve as an anchor institution for region, “strengthening connections between the life sciences and advanced-manufacturing industries and education institutions, creating jobs, and shaping the next generation of home-grown innovators.”

Precision Endeavor

At the start of the summer, the BIC board brought on Consigli Construction Co., one of the largest general contractors in the Northeast, to oversee construction at the former General Electric site. John Benzinger, a senior project manager for Skanska USA Building Inc. of Springfield, will serve as the owner’s project manager. Skanska recently served as the project manager for Union Station in Springfield.

Resources inside in the innovation center, when it is completed, will include:

• Precision measurement and reverse engineering utilizing the BIC’s flagship platform, the Hexagon Metrology 121510 CMM with touch probe, laser scanner, camera module, and ROMER Arm;

• A rapid prototyping center featuring cutting-edge 3D printing capabilities in plastics and metals;

• Precision analysis and microscopy with the Zeiss Axio Imager 2 platform, for both life-sciences and materials research;

• Clean-room lab space to conduct research or pilot production for nanotechnology, life sciences, or other applications requiring a clean environment; and

• Wet-lab space to conduct collaborative life-sciences research or start up a biotechnology company. The lab will feature sinks, DI water, fume hoods, biosafety cabinets, autoclave, centrifuge, incubators, deep freezer, glass washer, ice machine, and lab supplies.

The center will also offer customized training programs for advanced manufacturing, access to Berkshire Community College’s engineering technology classes, and the space for companies to conduct their own proprietary training in technology-loaded classrooms.

In addition, BIC members will be able to collaborate on research with UMass Amherst, Rensselaer Polytechnic Institute, UMass Lowell, and SUNY Colleges of Nanoscale Science & Engineering, as well as develop training and internship programs with Berkshire Community College (BCC), McCann Technical School, and Taconic High School.

This broad coalition of academic partnerships sets BIC apart from other facilities, like the Institute for Applied Life Sciences at UMass Amherst, that provide cutting-edge resources for manufacturers and commercialization opportunities for innovators, Boyd said.

“When we started thinking about the business plan, we felt this area is underserved in terms of business-class conferencing and teaching areas,” he told BusinessWest. “Of course, BCC has wonderful classrooms and teaching facilities, and many companies around here have their own conference rooms, but not a place to host larger-scale strategic meeting or annual board retreats. I think it would be nice to have a local facility that allows third-party distance learning and access to state-of-the-art conferencing that is otherwise not available here.”

Steven Boyd

Steven Boyd

“We’re an innovation center that is equal parts research and teaching institution and programming for private-sector businesses.”

In fact, it’s the workforce-development aspects of the facility that have Boyd as excited as the cutting-edge technology.

“Specifically, we envision training that is very germane to industry, and at the same time we want to provide a provide a place for our fundamentals to be available for incumbent workers,” he said. “BCC will play a very central role in training — in manufacturing fundamentals, LEAN manufacturing concepts, STEM-related programs — but we also will bring in subject-matter experts to talk about things like sensors and actuators that relate to automation systems and things that provide deeper lifelong learning for the workplace out here — and, of course provide a steady stream of talent.”

Next Generation

That last aspect is key, he added — the idea that partnering with area high schools and colleges on training and internship programs will boost the pipeline of young talent into fields like biotechnology and precision manufacturing that desperately need it.

“It’s self-serving for businesses in that way,” Boyd said. “We’re preparing kids in schools today for careers that may start with a local company but end with a long career in biotech. Our point is, if you are qualified in this space and engage in a growth mindset and lifelong learning, you will have the opportunity for upward mobility, both at your specific company or at another one in the industry at large.”

Plans for the Berkshire Innovation Center were launched about a decade ago, when the city of Pittsfield received a $6.5 million earmark in then-Gov. Deval Patrick’s $1 billion life-sciences bill to construct a facility in the William Stanley Business Park. When the project moved forward in 2014, the Massachusetts Life Sciences Center provided an additional $3.2 million.

However, construction, originally scheduled to begin in 2015, was delayed after the original bids came in $3 million higher than expected. Since then, a coalition of state, local, and private-sector funding sources raised the difference, with the state coming through with the final $2.3 million earlier this year. Boyd was elected the BIC’s first president and board chairman in 2015, while Rod Jané, president of New England Expansion Strategies in Westborough, was hired as the BIC project director.

While planning the facility, the BIC has already begun developing and launching its programs, such as a speaker series that, since 2015, has conducted more than 10 speaking events on topics relevant to advanced manufacturers in the region. The featured speakers for these events have included executives from the medical-device industry, advanced equipment manufacturers, researchers from leading research universities in the region, workforce-development leaders, and career-center directors from colleges and universities.

“If you are qualified in this space and engage in a growth mindset and lifelong learning, you will have the opportunity for upward mobility, both at your specific company or at another one in the industry at large.”

Meanwhile, BIC workforce-training programs were launched in 2016, and have featured all-day training seminars on topics such as lean manufacturing and continuous improvement, thermoplastics for medical devices, and medical-device regulations. That same year, the first wave of advanced R&D equipment, acquired through grants by Berkshire Community College, and training for employees of BIC member companies on the advanced equipment has been ongoing.

Taken as a whole, Boyd said, the innovation center will essentially cast a net to attract and train the next generation for some of today’s most intriguing careers — and, in some cases, careers that haven’t even emerged yet. What is clear, he added, is that modern manufacturing jobs are a far cry from long-outdated stereotypes about factory floors.

“You don’t get dirty on the production floor,” he said. “Quite the opposite, at Boyd Technologies, they’re the cleanest spaces in the building. They’re precise and clean-room controlled and certified as such, and people that work there are mainly using computers. Of course, there are materials and all types of processes and actual manufacturing, but it requires statistics and technical reading and understanding of biocompatibility and sterilization methods. All these are things the workforce of today have to be cognizant of.”

The Berkshire Innovation Center promises to not only build that awareness, but provide the resources and partnerships to make the Berkshires a key part of a high-tech ecosystem that is no longer the exclusive domain of Boston and Cambridge.

Joseph Bednar can be reached at [email protected]

Accounting and Tax Planning

New Rules of the Road

By Julie Quink, CPA

Tax-IncentivesIn 2018, nonprofit organizations face implementation of the first major overhaul of accounting standards in two decades. The goal of the overhaul is to improve the communication of financial results for donors and other outside stakeholders and to emphasize transparency in financial reporting.

With these changes, nonprofit organizations can expect significant changes in financial reporting practices. Donors and outside stakeholders can expect enhanced information on liquidity, access to cash and endowments.

What are the significant financial reporting changes for nonprofits?

Some of the major changes in the new standards encompass net asset classification, liquidity and availability, investment returns, reporting of functional expenses, and presentation of statement of cash flows.

Net Assets

The new accounting standards focus on the existence or absence of donor restrictions as opposed to the type of restriction. The new rules provide for two classes of ‘net assets’ — with donor restrictions and without donor restrictions. Previously, nonprofits have reported three required classes of net assets — unrestricted, temporarily restricted, and permanently restricted.

Julie Quink, CPA

Julie Quink, CPA

For underwater endowments, in which the fair value of the endowment at the reporting date is less than the original gift or the amount required to be maintained by the donor or by law, the cumulative amount of losses is netted in assets with donor restrictions under the new classifications. Previously, the accumulated losses were included in unrestricted net assets.

Disclosures relative to underwater endowments now encompass the aggregate amount of original gifts required to be maintained, endowment spending policies, and discussion of actions taken or strategy relative to the underwater status of the endowment. For the nonprofit, a concern may be that the status of and strategy of managing underwater endowments is highlighted in the new financial-statement disclosures.

The goal of the change is to simplify tracking and reporting of donor restrictions and also to enhance disclosures on the nature, amounts, and types of donor restrictions.

Liquidity and Availability

Quantitative and qualitative information is required under the new standards relative to liquidity and availability of liquid assets, which are typically cash and investments.

The qualitative disclosures require analysis of how the organization manages its liquid assets to meet cash needs for expenditures within one year of the statement of financial-position date. The quantitative information regarding the liquid assets and their availability to meet the current-year needs can be presented on the face of the financial statements or in the notes to the financial statements.

Donors, grantors, creditors, and other stakeholders want to understand that these nonprofit organizations that they are evaluating have adequate financial resources to meet obligations as they become due. For the nonprofit organization, a concern is that this liquidity information can highlight potential liquidity shortfalls, which may affect future donations and grants.

Investment Returns

Investment income is to be reported net of internal and external investment expenses. This has been an optional presentation under current standards. The requirement to disclose investment expenses net in investment income has been removed. The netting of fees against income does not suggest that nonprofits should not still manage and monitor investment fees, but assists in eliminating the burden of trying to identify embedded investment fees.

Functional Expenses

Currently, only health and welfare organizations are required to report expenses by function. Under the revised standards, all nonprofits must report expenses by function and must disclose the methodology used for the allocations to program and overhead expenses in the notes to the financial statements.

Nonprofit organizations should have been allocating expenses to programmatic and administrative expenses even though not required to detail the expenses by function. The requirement for functional reporting and disclosures may require nonprofits to review their allocation policies for consistency.

Statement of Cash Flows

The new rules continue to allow nonprofits to choose the method, direct or indirect, by which they present operating cash flows. The new guidance does eliminate the need to add an indirect reconciliation if using the direct method in presenting operating cash flows.

By streamlining the requirements, it is believed that the statement of cash flows will be a more useful statement and result in a reduction of costs to the nonprofit to prepare the financial statements.

Conclusion

The new accounting and reporting standards are intended to provide more transparency to donors and other stakeholders. These changes may, however, have a significant time and financial impact on nonprofit organizations as they implement the new requirements.

Julie Quink, CPA is the managing principal of Burkhart, Pizzanelli, P.C., specializing in the accounting and consulting aspects of the practice. She is also a certified fraud examiner.

Education

The New College Try

Diane Prusank

Diane Prusank

Diane Prusank says Westfield State University is a few years behind the other Massachusetts state schools in adopting the so-called ‘college structure’ for its Division of Academic Affairs.

In most respects, that’s a good thing, she told BusinessWest, because it has provided the 180-year-old institution with an opportunity to learn from what those other schools have done and shape a system that reflects what amounts to best practices. And that’s important, because going from 25 academic departments to four colleges is a significant change for students and faculty alike.

“It takes time for people to see how this works, time for people to talk with those at other institutions and say, ‘how did this go for you?’” said Prusank, who last spring was named WSU’s provost and vice president for Academic Affairs. “So, in some ways, coming later than our sister institutions was really beneficial.”

Elaborating, she noted that the delay, if it can be called that, in adopting this structure resulted from, among other things, apprehension that it might create silos at the university at a time when greater collaboration between the departments was and is the goal, as well as an additional (and perhaps unwanted) layer of bureaucracy.

But over the course of a 15-month planning period — one that included examination of what’s happened at the other state universities and other institutions of higher learning after they adopted the college system — it was determined that these fears were mostly unfounded.

In fact, that review showed the college structure fostered greater communication among faculty members within various programs, and also new collaborative efforts.

Jennifer Hanselman

Jennifer Hanselman

Juline Mills

Juline Mills

Emily Todd

Emily Todd

Once you place faculty essentially in proximity to each other in the kinds of meetings and events that colleges put together, they create a chemistry with each other that you don’t see when they’re spread out across 25 different departments,” said Prusank, who joined the university in 2008 as dean of Academic Programs and Accreditation.

“When there are eight of them in the room, they start to talk about things they have in common,” she went on. “And they start to create connections. Sometimes people worry that when you create the college system you’ve made silos, that these colleges will separate themselves from each other. But the truth is that those deans have conversations with other, and they make connections.”

Under the new system, WSU now has four colleges — the College of Graduate and Continuing Education, the College of Mathematics and Sciences; College of Education, Health, and Human Services; and College of Arts, Humanities, and Social Sciences.

Three new founding deans were also appointed in June: Jennifer Hanselman, former chair of the Department of Biology, was appointed interim dean of the College of Mathematics and Sciences; Juline Mills, most recently a professor in the College of Business at the University of New Haven, was named dean of the College of Education, Health, and Human Services; and Emily Todd, former chair of the Department of English at WSU, was named interim dean of the College of Arts, Humanities, and Social Sciences.

As for Prusank, she brings a great deal of experience to her new role as provost and vice president of Academic Affairs — and the process of bringing the college system to fruition.

Before coming to WSU a decade ago, she served as a faculty member, associate dean, and assistant provost at the University of Hartford. At Westfield State, in addition to her work as dean of Academic Programs and Accreditation, she’s served as dean of Undergraduate Studies, chair and faculty member in the Department of Communications, and chief of staff in the President’s Office.

Thus, she brings a number of different perspectives to the shift from 25 departments to four colleges. And from the lens of both a faculty member and administrator, she said it brings with it considerable promise for enhanced collaboration and innovation, as well as greater operational efficiencies.

“You get a lot of points of sharing that you didn’t have before,” she said, referring, again, to what happens when you bring the chairs of eight departments together for meetings of the individual colleges. “You get a lot of synergy, a lot of collaboration, and a lot of sharing. And that’s great for our students because it opens up more opportunities for them.”

Elaborating on the nature of these opportunities, she said they come in many different forms, from greater collaboration on curriculum and potential new programs of study to creation of new events, to the broadening of existing events, such as alumni gatherings, which might now involve graduates of several different (but related) programs instead of one.

“You get a lot of points of sharing that you didn’t have before. You get a lot of synergy, a lot of collaboration, and a lot of sharing. And that’s great for our students because it opens up more opportunities for them.”

“There’s synthesis and collaboration that opens doors for students that might not have been there before,” she explained.

Prusank told BusinessWest that a shift to the ‘college’ format is something that’s been under consideration at the university for some time.

“Westfield State has had this conversation periodically over the past few decades, as most institutions have,” she explained. “Eventually, the college structure found its way onto college campuses across the country.”

Discussions were ongoing when Ramon Torrecilha took the helm as president in 2015, she went on, adding that he essentially took the conversation to a higher level, asking the advisory committee on academic planning to research the college format, talk with campus constituencies, look at what other schools had done, and make a recommendation on what should be done moving forward.

The eventual recommendation was to take this step, she said, adding that what followed was a lengthy implementation period involving work to determine, among other things, how many colleges would be created and the composition of each one (the specific departments). When that work was completed, searches were conducted for the deans that would lead each college, as well as for the provost and vice president of Academic Affairs.

While there will be a period of adjustment to the new system, Prusank said the many types of benefits are becoming increasingly apparent to students and faculty alike. Chief among these benefits for students is greater access to assistance when its needed.

“With the older structure, when we had a dean of Undergraduate Studies, students who had academic issues or problems would have to go to that dean, and there are 4,500 full-time undergraduate students looking for one person,” she explained. “Now, with the four-college structure, there are four different points of access; it’s easier to get that individual quicker.”

There are many other benefits to this system, she told BusinessWest, adding that, while WSU may be the last school in the state system to embrace this structure, it is already making up for lost time.

— George O’Brien

Home Improvement

Sparking Success

Jay Peloquin says gas fireplaces are especially popular at a time when natural gas is inexpensive.

Jay Peloquin says gas fireplaces are especially popular at a time when natural gas is inexpensive.

 

Jay Peloquin remembers the heady days for pellet stoves, back in 2008, when oil surged to more than $100 a barrel.

“When oil prices were skyrocketing, we couldn’t keep these things in stock,” he recalled. “We had people lining up out the door just to order stoves because it would save them so much money over their regular heating bills.”

Oil prices have come down significantly since then, he said, but pellet stoves remain popular, particularly for people who otherwise heat their house with electricity or propane. “For people in the right situation, it’s still a great investment — it pays for itself within a few years, and you’re using a clean energy source.”

For Fireside Designs, a family business that dates back 40 years, those economic trends have occasionally impacted sales, said Peloquin, the West Springfield store’s general manager. But more important has been a continual focus on what products — in the categories of fireplaces, heating equipment, and grills — customers want most.

In the realm of fireplaces, that tends to be gas-burning units, in addition to pellet stoves. In addition, “if you have an existing brick-and-mortar fireplace used for wood, and if you want to convert it to gas to make it more efficient and get more heat out of it, you can do a gas fireplace insert, because natural gas is one of the cheapest ways to heat right now.”

As for new construction, Fireside receives a number of calls from consumers who want a higher-end fireplace rather than the one that came with the house.

“A lot of times, builders will spec in a fireplace for a customer, and if they’re building, say, a $400,000 house and putting in a $1,000 fireplace, something doesn’t add up,” Peloquin said. “So that’s when they come to us and see what’s available for their budget and the style they want, whether they want contemporary, traditional, or something in between. Some higher-end builders do tend to spec in some of the fireplaces we carry, because we definitely are on the higher end.”

Whether a large wall unit or a smaller fireplace installed above the TV, he said, there are plenty of options for customers who want to bring the heat home.

Tools of the Trade

When Peloquin’s father, Jean, launched the company 40 years ago, its product line was a far cry from what it is today.

Back then, the elder Peloquin sold tool sets, which evolved into a small retail store on Brookdale Street in Springfield, mainly focusing on tools and glass doors. From there, around the mid-’80s, he moved into selling and installing stoves, before relocating to Riverdale Street in West Springfield, not far from the store’s current location on that same road.

“We found that during our off season, we needed to keep busy. So that was when we got into the grills, which keeps us busy during the spring and summer.”

In 2004, Jay came on board, and has seen the store grow consistently since then. But he had a long path to his leadership role of today.

“When my father brought me in, he said, ‘go sweep the warehouse. Go stock the shelves,’” Peloquin recalled. “I wasn’t treated with kid gloves by any means. My father was very hard on me, but 14 years later, I can say it was worth it. Because I started at the bottom — from stockboy to installer to salesperson to general manager — it’s been a gradual path to where I’m confident, and the employees feel confident that I can lead them, and my father feels that way as well.”

During his tenure, Fireside saw a major shift to outdoor grills as a significant part of the inventory because people weren’t seeking out home-heating products during the warmer months of the year.

“We found that during our off season, we needed to keep busy,” he said. “So that was when we got into the grills, which keeps us busy during the spring and summer, even though during that time we’re still putting in fireplaces for new constructions and additions.”

Besides the Napoleon line of grills, Fireside sells the Big Green Egg, a versatile charcoal grill that does anything a regular grill or oven does, in addition to its capabilities as a smoker, he explained.

“Those are very popular as well. They have more of a cult following, whereas they don’t advertise nationally, but if you try the food off of them once, you’ve got to have one. It’s that good,” Peloquin said. “On the internet and YouTube, you’ll find people cooking new recipes, and we have customers who come in and say, ‘this is one of the best things I’ve ever bought,’ and they use it every day.”

Grill islands are becoming more popular as well, he noted, due to the growing prevalence of outdoor entertaining spaces. “Napoleon makes modular products, and you can put in, say, a sink or some cabinets for an outdoor kitchen. It’s something that’s relatively new for us, but something we’re definitely moving toward doing more of.”

As for the wintertime work, that’s the prime season for pellet stoves — Fireside is the number-two Harman dealer in the country — and gas fireplaces and inserts. “We’re starting to expand and getting into the commercial side of fireplaces as well, and we’re working with builders that are building senior citizens’ homes and resorts,” he said.

“There are things in my father’s 40 years of experience that I haven’t experienced, so I still need to learn from him. But also with all the new products that come out, we learn together,” he went on. “Every day, it’s a new thing — it’s learning, it’s evolving, not just in terms of products, but your advertising and who you’re marketing to.”

Take social media, for instance; Fireside has a robust Facebook presence, and highlights not only products, but informational links like safety tips.

“That’s the thing about social media — it isn’t necessarily about ‘come in and see our sale and buy this,’” Peloquin told BusinessWest. “If you engage people enough to where they want to read about something that goes on in their everyday lives, I feel like that’s brand building.”

Hot Takes

Because Fireside Designs has been around a long time, there aren’t many companies with the Peloquins’ experience in the field, he noted. That’s also a long time to develop good word of mouth and repeat business, which is something the team relies on.

“We can advertise all we want, but especially in this day of social media, if you’re not treating your customer right from A to Z, you’re not going to survive,” he said. “I’m taking over [leadership] gradually, and I want to make that a priority.”

Part of that reputation is shouldered by Fireside’s in-house technicians, he noted. “If you buy something from us, you don’t have to go somewhere else if something breaks. That’s the advantage of buying from a company like ours, a fireplace specialty store, as opposed to buying fireplaces online. People go to Home Depot and buy a fireplace, and then when something happens, they come to us for service. When you buy something from us, if anything goes wrong, we take care of our customers, and we service everything we sell.”

That’s just part of being a small business with deep community roots, he added.

“As a family business, we do appreciate when customers keep their business local. That’s helped us get to where we are today. Hopefully consumers realize that when you keep your business local, it supports the community.”

If Jean Peloquin set his son to sweeping floors 14 years ago instead of a cushy job he hadn’t earned, perhaps it was a way to determine whether he had a passion for this business. As it turned out, a fire was lit — both literally and figuratively.

“I don’t really consider this a job; I consider it what I do,” Jay said. “I consider this my future. I work every day not as a 9-to-5 thing, but to improve the business as a whole. I enjoy what I do, and I enjoy the fact that my experiences — from sweeping the floors to being an installer to what I do now — all of that together has made me a leader here. And I have employees that trust me — great employees that I look forward to keeping around for a long time.”

Joseph Bednar can be reached at [email protected]

MGM Springfield

Looking at His Reflection

Mike Mathis, seen here with Anita Bird

Mike Mathis, seen here with Anita Bird, assistant general manager of the Starbucks at MGM Springfield, says the $960 million initiative has gone from being a campaign and project to being an employer and operator.

When Mike Mathis rode down Main Street with Springfield Mayor Domenic Sarno in the back of a Rolls-Royce (built in the city) on Aug. 24, it was the symbolic end to a journey that began nearly six years earlier. Or one stage of it, anyway. Indeed, Mathis, president and COO of MGM Springfield, made it clear that the journey continues, personally and professionally, as the casino works over the next few years to ‘hit its stride,’ as he put it.

Mike Mathis said there were so many high points during the journey to opening the $960 million MGM Springfield that he was having some trouble listing and ranking some that stood out above the others.

As for low points, well, he didn’t have any trouble at all with that assignment.

There was one stood out well above the others, and it brought with it some lessons — and humility — that served him well for the rest of the sojourn that climaxed on Aug. 24 when the resort casino opened, but is still very much ongoing.

It came in the fall of 2015 as the design of the casino, and, more specifically, its hotel, changed considerably — from a 25-story glass tower that would dominate the skyline to a five-story facility along Main Street that would blend in. And especially at a hastily arranged press conference to announce the change and the days that followed.

Mathis, named president and COO of MGM Springfield roughly a year and a half before that day, looked uncomfortable and quite defensive at that press conference, called after news of the design change leaked out in the local press and spurred a reaction he and others within the company were not prepared for after years of doing business in Las Vegas and other locales where such design changes aren’t really news, let alone confidence-shattering developments.

“Some of our naysayers took advantage of that and accused us of a bait and switch,” Mathis recalled. “Meanwhile, some of the folks that were more pessimistic about what our intentions were — despite years of goodwill I thought we had earned — seized on that moment.

“It was almost a condition of … this community had seen such a tough run that even some of our supporters thought that maybe MGM is too good to be true — the commitment is too good to be true — and used that change to say, ‘I told you so.’ That was challenging on many levels for me personally and the team.”

“It was almost a condition of … this community had seen such a tough run that even some of our supporters thought that maybe MGM is too good to be true — the commitment is too good to be true — and used that change to say, ‘I told you so,’” he went on. “That was challenging on many levels for me personally and the team.”

Elaborating, he said that he and his team members were all very visible in those days — and throughout the process — and some of those they greeted on the streets in the days following the announcement made their feelings known.

“I got a lot of personal flak on the streets, some of it not so gracious,” he recalled. “But that was a very small window and from a small majority, and that’s what I kept telling myself. And we weathered that storm, and we got the right information out. We didn’t handle it perfectly by any means, and I told the mayor that, but we got past it.”

Indeed, and on Aug. 24, Mathis and Mayor Domenic Sarno shared an energetic high-five as they opened the doors to the casino complex just before 11 a.m., capping a six-year journey that actually began in Brimfield, not Springfield, as some may recall.

Or at least the first part of the journey.

Mike Mathis says it takes two to three years for a facility like MGM Springfield to fully “ramp up.”

Mike Mathis says it takes two to three years for a facility like MGM Springfield to fully “ramp up.”

Building and opening the casino was obviously a long and difficult assignment, but it was just a step in the process, said Mathis, who told BusinessWest that MGM Springfield has gone from being a campaign and a project (one that officially ended on Aug. 24) to being an employer and an operator. And with that change, there are new responsibilities — for him and the team.

“That means thinking about the customer first, and everything flows from that,” he explained, adding that one of the things he’s most proud of to date is how the workforce, much of it without any experience working in gaming, has progressed. “There’s so much you can overcome in our industry with a positive attitude, and that’s been really gratifying to see.”

For this issue, BusinessWest talked with Mathis, clearly the face of MGM Springfield, about the journey he’s on — the parts have been completed and the ones still to come.

A Solid Bet

As noted earlier, when Mathis, then vice president of Global Gaming Operations for MGM’s hospitality division, first arrived on the scene in Western Mass. with the goal of helping the company win one of the coveted casino licenses in the Bay State, the focus wasn’t on Springfield, but tiny Brimfield.

That’s where Mathis, who described himself as the “MGM advance Massachusetts guy,” first touched down and commenced learning all about Massachusetts politics, zoning, and more.

Eventually, he and the team would learn some other things — primarily that a Turnpike exit needed to make a Brimfield casino happen was not in the cards, as they say in this business, and also that Brimfield residents weren’t very responsive to the idea of having a project of this scale in their proverbial backyard.

“We mistakenly thought, because they host the antiques fair a few times a year that brings in hundreds of thousands of people a year, that they would be receptive to this attraction,” he recalled. “What we learned is that they like that a few times a year — to let their town get taken over — but they weren’t looking for that 365 days a year.”

Mathis and the team at MGM would learn many other things in the weeks, months, and years to come, especially the fact that they were not in Las Vegas anymore, and that things move much more slowly in the Bay State.

They also learned a lot about Springfield, which, in the early going, was emerging as a competitor to Brimfield. And the more they learned, the more they came to like the city and understand that whichever proposal emerged from the City of Homes would be a formidable candidate for the Western Mass. license.

Fast-forwarding a little, by late 2013, MGM’s plan to place a resort casino in Springfield’s South End was the only Western Mass. proposal still on the table after voters in West Springfield and Palmer rejected casino referendums and officials in Springfield chose the MGM option over two others placed into contention.

But still the fight wasn’t over, as MGM had to withstand a statewide referendum bid to ban casinos in November 2014, which it did, when 59% of voters gave the go-ahead to commence the casino era.

All that was left now was to design and build the facility, staff it up, meet a host of conditions set by the city and the Mass. Gaming Commission, and eventually open the doors.

“I remember the humility of Jim Murren walking into his [Sarno’s] office and saying, ‘mayor, we do these all the time, but we want to make sure we understand what your goals are before we even think about what we want to do here.”

Mathis, of course, was involved in every step of the process, and he recalls it as the most challenging but ultimately rewarding experience in his career.

“Seeing crowds enjoy this product that we created out of thin air, and seeing it serviced by a bunch of my friends and supporters and volunteers that I’ve been with since we were knocking on doors back in 2012 and 2013 … that’s as good as it gets,” he told BusinessWest. “That’s been the highlight of my career.”

As he looks back on that process, dozens, if not hundreds, of memories float to the surface — from attending neighborhood council meetings across Springfield to working with volunteers to summon the votes to defeat the ballot initiative on gaming, to visiting the Springfield Armory with MGM Chairman Jim Murren to learn about city history and architecture, and especially the influence of Frederick Law Olmstead, who designed not only Central Park in New York but Forest Park in Springfield.

And, yes, that uncomfortable press conference when the design change was announced.

Early on the in the process, when Mathis was still on the advance team and not yet the face of the project, he recalls watching senior-management members as they worked to develop a relationship with Springfield and its leaders — and learning from those experiences.

Mike Mathis and Springfield Mayor Domenic Sarno ride in style on opening day of MGM Springfield

Mike Mathis and Springfield Mayor Domenic Sarno ride in style on opening day of MGM Springfield — in a Rolls-Royce made in the city — at the symbolic end of a journey that began six years ago.   Getty Images

“My memory from those early days was how important it was for the chairman of our company to really understand what the mayor wanted,” he recalled. “I remember the humility of Jim Murren walking into his [Sarno’s] office and saying, ‘mayor, we do these all the time, but we want to make sure we understand what your goals are before we even think about what we want to do here.’”

All In

Actually, MGM doesn’t really do this all the time. It opened National Harbor in Maryland in late 2016, and another casino in Detroit a few years earlier. But it hasn’t opened many in this country, and hadn’t opened anything in the middle of an urban area like downtown Springfield.

So this was a pioneering effort in many ways, and for Mathis, who had previously done considerable work for the company overseas, in locales ranging from Singapore to Toronto, it was, quite obviously, a significant career stepping stone to be put in charge of it all.

To put that in perspective, he flashed back to the Gaming Commission session in early 2014 (he easily summoned the exact date, Jan. 24), when he was announced as the president of the project.

“There was a huge round of applause, and I recognized some of the voices in the audience saying ‘attaboy,’ and that was based on some of the relationships I had formed over the two years before that,” he recalled. “It was a special moment, and it really cemented for me how important this project was going to be for not just the company but the community, and they saw me as the face of it. And I thought that I owed them personally to deliver on the commitment; there was no way I was going to let these people down.”

He said the biggest challenges involved with coming to a new market like Massachusetts is understanding the local population’s experience with gaming, and its wants, needs, perceptions, and fears.

“We would go into neighborhood meetings and ask how many people had been to Las Vegas,” he recalled. “And not many had, and that told me that, to the extent that they know gaming, they know it in a regional way, and they don’t know some of the great things we do in Las Vegas, a lot of which is MGM.

“And that gives you some perspective on the group and the level of education you have to give them,” he went on. “Because I knew what the fear was — the fear was a slot box that would be cavernous and unimaginative and prey on the worst elements of the business. Overall, you have to identify with people on a very personal level and overcome some of the stereotypes people have from watching movies about what a casino operator is.”

Now that MGM Springfield is open, there’s been that shift he described, going from being a project to an operation. For him, the day-to-day is obviously much different, with a great deal of time spent on the casino floor.

“I view my role, especially in this early stage, as being quality assurance,” he explained. “I try to put on the eyes of the customer and walk through every space and observe every interaction.”

I do so with the mindset, ‘what is the customer experiencing, from the minute they enter our garage, or even further downstream — what are they experiencing as they travel on I-91 or the Turnpike?’” he went on. “‘What are they seeing for signage? What are they seeing in terms of access and traffic?’ These are all things I’m trying to see from their perspective.”

He said he will frequently engage patrons, asking them about their experience, their meal, and more. And many times, they’ll engage him because they recognize him from all those times he’s been in the news — and walking around the city, through the good times and the bad.

That’s when happens when you’re the face of the operation.

As for MGM Springfield as an operation, not a project, he said that, overall, it takes two to three years for a resort casino like this one to “hit its stride,” as he put it.

“That’s the typical ramp-up,” he went on. “There’s a lot of runway for us to do more business and more profitable business moving forward, especially as understand our staffing patterns, our peaks and valleys throughout the week and throughout the season, and what the customer wants and doesn’t want.”

Next Question

When asked what comes next for him — a prolonged stay in Springfield, a new assignment in another corner of the world, or something in between — Mathis said he really hasn’t had any time to think about that.

“The journey was amazing, and I’d be worried about trying to replicate it — if I could replicate it,” he explained. “This has been pretty unique, and it would be a mistake to think I could find another Springfield and do what we did here.”

And with that, he went back to the casino floor to engage customers and be engaged by them.

The journey has, indeed, been amazing, but in most all respects, this trip is far from over.

George O’Brien can be reached at [email protected]

Women in Businesss

Leadership Course

Nancy Buffone

Nancy Buffone

Nancy Buffone has three degrees from UMass Amherst and has spent her entire career working for her alma mater. The job titles and long lists of responsibilities have changed over the past 23 years, but the one constant has been that she loves — really loves — coming to work every day. As a manager, leader, mentor, and role model, she says it’s her mission to make all those on the teams she supervises feel the same way.

Nancy Buffone says that as a manager — and as a leader — one thing she tries to do is put herself in the shoes of those she’s supervising.

And in the case of younger staff members, that’s not a hard assignment, because she’s certainly been in those shoes.

Indeed, not long after graduating from UMass Amherst more than 20 years ago, Buffone went to work for the institution in the Provost’s Office. A few decades later, she is associate vice chancellor of University Relations, a relatively new realm at the school, has two offices, and manages roughly 35 people handling a wide array of assignments, from planning commencement to putting out the alumni magazine to dispensing news.

Putting herself in the shoes of those carrying out that work enables her to better understand their wants, needs, anxieties, and challenges, she said, and overall, it makes her a better leader and the offices she supervises better places to work.

“If you don’t enjoy coming to work, it can be really hard to come to work every day,” she said, making an observation that essentially defines her approach to management.

Becoming a more effective leader is one of the few things not actually listed on Buffone’s job description (we’ll get into what is a little later on), but professional development is something she takes very seriously.

In fact, earlier in her career, while working for the university’s Provost’s Office, she developed a leadership program for academic department chairs — an initiative that filled what she saw as an enormous need.

“This was something brand new, and there was a lot to the job. It was a new challenge, and it was something just so out of the box, so out of the comfort zone for me.”

As part of her own professional-development efforts, she became a participant in the Leadership Pioneer Valley program, specifically as a member of its class of 2013. She said the experience not only provided her with a much better understanding of the four-county region — one of LPV’s stated goals — but helped her do something she said all good leaders need to do — step out of her comfort zone.

In this case, that meant taking on the additional responsibilities of the Communications Department with University Relations, which effectively tripled her workload and the number of people she was managing.

“This was something brand new, and there was a lot to the job,” she said. “It was a new challenge, and it was something just so out of the box, so out of the comfort zone for me.

“And to some extent, it still is, but I love it,” she went on. “This is a place to get creative and take a lot of the work that we’re doing here every day and think about how we’re going to tell that story; that’s fun, and that’s a challenge for me.”

Her ability to move well beyond that comfort zone has been invaluable as she has taken on that ever-growing list of responsibilities, many if not most of which have to do with telling the university’s story — and telling it much better than it was told decades ago.

In many respects, it’s better story to tell these days, said Buffone, who was in a particularly good mood on the day she spoke with BusinessWest because the new U.S. News & World Report rankings of the nation’s colleges had just come up, and the university had moved up a few notches in many of the categories.

“We keep moving in the right direction,” she said, noting, for example, that the school moved up from 29th to 26th on the list of best public institutions, and from 75th to 70th among all schools.

Meanwhile, her career has taken on the same general trajectory as the university’s. For this issue and its focus on women in business, we talked with Buffone about her multi-faceted role at the university, but moreso about the broad subject of leadership and her ongoing efforts to improve those skills.

Background — Check

There are two large bowls of candy in Buffone’s office at the Whitmore Administration Building on the UMass Amherst campus. And it’s the same in her other office on University Drive, where the Community Relations staff is based.

The candy serves many purposes, she told BusinessWest, noting that, in many respects, it is an icebreaker and a temptation that brings people to those offices, which they generally leave with more than a miniature Mr. Goodbar or Reese’s Peanut Butter Cup in their hand. Indeed, they also generally leave with a smile.

“We work very hard at our jobs, so I want to laugh very hard while we’re working,” she said of her general approach to management and leadership. “I want to make sure we’re having a good time while we’re doing this.

“As for the candy … my only rule is that you’re not allowed to ask — just take,” she went on. “But over the years, the candy has been a nice icebreaker for people, and it brings people in — it’s an opening.”

Stocking her office — and later her offices — with candy is just one of the traits Buffone has developed in a career that has seen her take on a growing list of responsibilities since she graduated from the university in 1995.

Nancy Buffone sums up her broad job description by saying that that many employees she now supervises are tasked with “telling UMass Amherst’s story.”

Nancy Buffone sums up her broad job description by saying that that many employees she now supervises are tasked with “telling UMass Amherst’s story.”

As a student, she took a job working in the Provost’s Office (the provost is the chief academic officer on the campus) and had the opportunity to work for and be mentored by Judy Barker, who, as fate would have it, retired soon after Buffone graduated.

She was offered a job approximating the one Barker held, thus commencing a 14-year stint in the Provost’s Office that turned out to be learning experiencing on a number of levels.

“It was an amazing educational opportunity,” Buffone recalled. “I learned so much not just about how UMass works, but also higher education and especially public higher education. Being in the Provost’s Office, I never knew from day to day what I’d be working on; my position evolved into more of a generalist position that allowed me to get involved with many different things.”

That list included everything from working on a number of search committees for many senior administrative positions to creating new events on campus, working with the news office to promote faculty honors, and much more.

Along the way, she worked for several provosts who also became mentors, and she also earned two more degrees, including a doctorate in higher education policy and leadership. She said she was given the opportunity by those provosts to take what she was learning in the classroom and apply it in the workplace, especially within the broad realm of leadership and, more specifically, the academic department-chair level.

“Looking at what universities did to train the next person to be in the chair’s role, it became clear that at most places … it was nothing,” she explained. “So I was able to create an orientation leadership program for new department chairs that still exists today, although in a slightly different format.”

That program was among the hardest things to give up as Buffone moved on to the next chapter in her career in early 2009, as executive director of External Relations and University Events as part of the new University Relations department.

That office, created by then-Chancellor Robert Holub, is tasked with a wide variety of assignments, including community relations, events, media relations, federal and state government relations, and more. Early on, Buffone was placed in charge of events, with one of the first being the school’s 150th anniversary, a party that was several years in the making.

“We work very hard at our jobs, so I want to laugh very hard while we’re working. I want to make sure we’re having a good time while we’re doing this.”

These days, she leads two teams, one handing events and community relations and the other assigned to communications — a very broad term covering everything from the alumni magazine to the college website.

As she said, the expansion of her duties and the title on her business card tripled her workload and put dozens more people under her supervision, giving her more opportunities to apply lessons learned in graduate school and also while working with and for many great mentors.

Leading by Example

When asked to describe her style of management, Buffone paused for a second before noting that she’s from New York (Long Island, to be more specific) and thus relies heavily on sarcasm.

And then gave an example. Sort of.

“I learned how to manage by making mistakes, and I try not to repeat my mistakes,” she said with a laugh. “I started small, managing one person, and then four, and then it grew seemingly overnight when I took on the communications team. But whatever the number is, it’s really about trying to understand what I can do for the people I work with every day to make their jobs easier.

“If they can focus on what they need to do, especially the creative people … if I can make it so they can focus on what they’re trying to accomplish and not worry about distractions, then that means they’re going to be better at their jobs,” she went on. “I’m trying to create an environment that will foster that creativity and foster collaboration; to me, that’s really important.”

As for her own professional development, Buffone said her involvement with LPV enabled her to do something she really needed to do but was hard pressed to find the time for — doing some reflection on what she wanted to do and where she wanted to go professionally.

“I think it’s hard to find the time to think about what you want and about how to get where you need to go when you’re moving from project to project — it’s just too fast sometimes,” she explained. “Leadership Pioneer Valley offered that opportunity to really think about what I wanted and what skills I needed to keep moving forward.”

Elaborating, she said that, through her LPV experience, she decided she needed to get more involved in her community (Amherst), and she has, serving as a town meeting member and as president of the Amherst Area Chamber of Commerce board.

Meanwhile, at the office — or, again, at both her offices — she works hard at her job and equally hard at making sure people enjoy their jobs, something she believes is key to promoting creativity and, ultimately, better, more effective telling of the university’s many stories.

That includes the staging of what she called ‘standing meetings,’ which are just that — 15-minute meetings, instituted about five months ago, in which the participants stand and, in this case, keep a huge inventory of individual projects (700 a year for the communications department alone, by Buffone’s estimate) on track.

“The meetings will go half an hour even though they’re supposed to go 15 minutes,” she explained. “But if you’re sitting, the meeting can go way too long; that’s the thinking, and they’ve been pretty effective.”

As have most of her initiatives, all aimed at not only getting the word out about everything going on at the school, but making everyone on the team as enthusiastic about their role as she is.

“I’ve been really lucky; I’ve been at UMass for 23 years now, and I love my job, I really do, and I love coming to work just about every day,” she said. “And that’s how I want the people I work with to feel.”

Grade Expectations

Unlike the university itself and several of its departments — from food service to the marching band — there are no rankings for communications and events departments.

But there are still measures of success, and plenty of them, Buffone said, listing everything from letters to the editor of the alumni magazine (they show that the material is being read) to feedback on a host of events, to the sense of satisfaction showed by her team members when one of those events is over.

Another measure might be how many times she has to fill those candy bowls — which is often. That shows that people are breaking the ice, coming into her offices, communicating, and enjoying their hard work.

Which, at this university and within this department, is an effective course of action — literally and figuratively.

George O’Brien can be reached at [email protected]