一期_Neat2

THE MOST POWERFUL WAY TO CREATE INNOVATION

WOMEN

PAYAND

The Daily Struggle for Equality

AUGUST 2014 | $5.95

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2 NBIZ ■ August 2014

EXPERTConMfroYntTinHgthe
By Leanne Hoagland-Smith, M.S.
deliver what they believe the client ✓✓Lack of personal accountability
Have you ever thought, with ✓✓Micro-management
all those experts out there in wants. After all, these experts rational- ✓✓Motivation difficulty
the business world, “Why do ✓✓Personal conflicts or power
companies still have problems?” ize, they are listening to the client’s
or “Why do so many experts fail when struggles
they come into organizations with their needs and wants even though they may ✓✓Preponderance of consensus-driven
next-generation, usually high-priced
solutions?” know a better, less costly, and even decision making (i.e., cover your

Just imagine how many profit quicker solution. behind mentality)
dollars are being directed to the ✓✓Productivity, quality, and time
following: continuous improvement, For example, 99.9% of all problems
customer service, IT and technology management issues
leadership, marketing, branding and are because of absent to ineffective ✓✓Reactive rather than proactive
advertising, operations, organizational
culture, sales, social media, supply to overall poor executive leadership. thinking
chain management, talent manage- ✓✓Unacceptable results
ment, training and development, and This leadership problem occurs within
workforce engagement. Each of these, when viewed
Fortune 100 international firms to
Some of these business areas have separately, appears to be a problem.
been around for a very long time, yet local sole proprietors.
many problems in business still exist. In the book, Fail-Safe Leadership: However, if experts would invest
So what gives?
Straight Talk About Correcting the a little more time and be far more
From my experience, many experts Leadership Challenges in Your Orga-
do not tell the entire truth. They nization, Linda Martin and David G. honest in their assessments, they

Mutchler provide a checklist of condi- would realize these are all symptoms of

tions present in many organizations: poor leadership. Of course, who wants
✓✓Can’t do attitudes
✓✓Communication problems to tell a client willing to pay thou-
✓✓Chronically sagging sales
✓✓Duplication of effort sands of dollars that you and your
✓✓Fear of making decisions
✓✓High staff turnover executive team are the first problem

to be addressed?

4 NBIZ ■ August 2014

Contents
August 2014

Publisher Debra Anthony

COVER STORY Managing Editor David Young

Corporations Tackling Social Issues on Associate Editor Desiree Cho
Their Own Hope to Raise Women
Out of Poverty Designer Tanya Bäck

By Kerri Fivecoat-Campbell Feature Writers
The staggering facts! Women are heads of households in 30 percent of homes in Texas but Troy Anderson
represent more than half—53 percent—of households considered to be at poverty level. In fact, Kerri Fivecoat-Campbell

e2a.1rnmedillbioynthweoimr menalaencdouginrltseripnaTretsxa. s1li2ve in poverty. Women earn only 79 cents for every dollar Phone 832-766-1546

BUSINESS Website nbizmag.com

Confronting the Expert Myth By Leanne Hoagland-Smith, M.S. Corporate Address PO Box 6352

Have you ever thought, with all those experts out there in the business world, “Why do companies still Katy, TX
have problems?” 4
77491-6352
A Drought of Texas Proportions By Troy Anderson
NBIZ Magazine is published
Growing concerns about the length of the drought and the economic impact on the state’s economy and six times per year. All articles
business sector come as water demand in Texas is projected to increase by 22 percent between 2010 and advertising represent the
and 2060. 19 opinions of the authors and
advertisers and not necessarily
ENERGY the opinion of the publisher.
The information contained
6 Reasons Investors Are Eyeing Middle-Market Oil & Gas Companies Today By David Mahmood herein has not been verified
for accuracy, and its inclusion
The O&G industry has witnessed exponential growth. This factor, combined with the continued demand should not be construed as
for fossil fuels and advances in O&G technology, has placed middle-market O&G companies squarely in the publisher’s endorsement
the bull’s-eye for eager investors. 24 of the products, services, or
articles presented. No part
Texas Business Powering Up with Renewable Energy By Alan Lammey of NBIZ Magazine and NBIZ
Website’s content may be re-
While the Lone Star State is well-known for its oil and natural gas assets, renewable energy in Texas has produced in any form without
been quietly gaining traction—a lot of traction. 28 written permission from the
publisher.
HUMAN RESOURCES
www.nbizmag.com
10 Important Questions to Help Identify High Potentials By Kerry Carney

Many organizations make the mistake of only looking at ability when assessing an employee’s potential
for managing a job. When trying to identify a high-potential (or HiPo) employee, performance—or
productivity—should not be confused for aptitude. 30

SALES

Summer Sales Slow? Five Things to do NOW! By Mike Brooks

Does this mean companies aren’t buying or planning for the fall?
Of course not. It just means that they are going to begin doing
things on their time table for a while, not yours. 10

TECHNOLOGY By Vivek Wadhwa

The Most Powerful Way to Create Innovation

Competitions inspire entrepreneurs and
philanthropists to attempt the impossible. 7

When leaders fail to take the right When leaders fail to take the right action,
action to make the right decision, to make the right decision, symptoms
symptoms continue to happen. “Indeci- continue to happen. “Indecision is
sion is a decision.” This is a truism.
a decision.” THIS IS A TRUISM.
These symptoms, resultant from
all the indecisions of leaders, start Assessments are another bottom- would you do in addition to running
sprouting up like dandelions herald- less, profit-sucking money pit. For as fast you could out of his or her
ing the arrival of spring. Soon, the the most part, there are already a office? For most, they would seek
dandelions start going to seed, and plethora of assessments with proven another opinion.
then even more symptoms are sown and established track records.
into the wind. Of course, some are Experts who implement solutions
buried into the lawn and sprout the Many of these assessments are very without employing any diagnostic
following spring when leaders believe affordable, yet consulting firms (experts) assessments for individuals to
they have everything under control. are more than willing to create another organizations are, in my humble
assessment because they are paid more opinion, committing malpractice. When
Additionally, the desire to make money. The newly-created assessment, an assessment is published by an outside
money overcomes ethical and afford- however, has not been statistically firm, this suggests greater truth and
able solutions. How often do we hear validated, and collected data may then validity. Also, an outside assessment
of an expert wanting to redesign a give some false indicators. helps to avoid solution failure.
particular process such as the entire
hiring procedure? That same expert Of course, there are those experts Then there is the issue of ego,
is unaware that the redesign is out who do not even apply any assessments especially within professional
of alignment with the organization’s to the situation or problem. They know consulting services as well as
current strategies, structure, other best because they have “seen” this or academia. Just recently, a very
processes, rewards, and people. that hundreds of times before. well-known sales expert suggested
in his blog that the word “results”
For example, the Association for Imagine for a moment that you should be avoided by leaders but the
Talent Development certifies that walked into your doctor’s office com- word “expert” should be embraced. I
experts published an article about plaining of a headache. Immediately, reread this article several times and
how training must be delivered over without any diagnostic tests, he or just shook my head in disbelief. This
a longer period of time. They cited she schedules you for surgery. What
proven research that 50 percent of
what is learned in a one-day work-
shop is lost the next day unless there
is ongoing reinforcement. Next to
this article, there was an advertise-
ment for a one-day workshop.

NBIZ ■ August 2014 5

particular individual is indeed very about whom to hire to solve their are having problems. This search
full of himself. challenges. Their belief is that a noted, would include the following: viewing
national or international expert is their LinkedIn profiles, visiting their
Such experts might tout, “My far better than a local, experienced websites, and reading their blogs or
company or I have to create a custom- provider. Of course, when the solution other postings.
ized solution,” which increases the fails, those in leadership roles do not
fees. Again, there are many existing want to admit they made a mistake. When you feel you have found
curricula that have proven track several potential “experts,” then
records. These are successful and In addition to poor to failed leader- connect with them, talk with them
generally free or very affordable solu- ship, experts often fail because of this in person, if possible, and just get to
tions such as Six Sigma or the Lean one word: alignment. Unless solutions know them. Learn their approach
Startup Methodology. The desire to are aligned to what Jay Galbraith from beginning to end, and ask for a
put the organization’s own brand on it identified as the Star Model™, gaps general ballpark investment to see if
only increases the price and potentially will exist and become a fertile ground you can afford their solutions. Listen
reduces the ability to achieve results. for all those dandelions. for their answer when you question
the return on your investment. Review
Years ago, I was exposed to Dr. Don The question then arises: how do I their LinkedIn recommendations or
Kirkpatrick’s “Four Levels of Evalua- know, as a small business owner, sole recommendations on their websites
tion.” At least once a year, if not more, proprietor, sales professional, or even and speak to companies or individuals
some noted organizational or talent a C Suite executive, what individual or who have done business with them.
management expert attempted to sell company to select to help me overcome
the “Five” or “Six Levels of Evaluation.” current challenges or barriers? During the sales process, study the
Sometimes what has already been proposal for deliverables. What will
created works and does not need a Believe it or not, the answer is this particular expert deliver to your
revamp at a much higher investment. at your fingertips, your keyboard, business? Review the time line as well
and phone. as anticipated results. In spite of what
Ego also surfaces when it comes to the noted sales expert said, in business,
business executives making decisions Begin a search of local professionals leadership results do matter.
with expertise in the area where you
After making a favorable deci-
COMPREHENSIVE SIGN SOLUTIONS sion to hire an “expert,” create
a communication process where
for events, store fronts, buildings, vehicles, trade shows and more. decision makers will receive weekly
updates. This is a critical and often
ignored step because by the time it
is discovered the “solution” was not
effective, the expert may potentially
offer a “reason” and suggest an
“add-on” to address this unexpected
obstacle. Some experienced and
results-focused professionals will
include this communication process
within their proposal.

Yes, qualified and caring business
experts do exist. Just because their
solutions are a lesser investment, do
not discount their ability to get the
job done. Experts do not have to cost
an arm and a leg. They can support
your future business growth provided
they understand how your business
makes and keeps money. N

We create signs and graphics to meet all your visual communications needs — from Leanne Hoagland-Smith is the heurist
vehicle graphics to building signs to decals and everything in between. And don’t for the next generation of talent
forget about upcoming events — from trade show displays to golf tournament signs, management. Her ability to guide
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6 NBIZ ■ August 2014 looks forward to hearing from you at
[email protected].

INNOVATIONTHE MOST POWERFUL WAYTO CREATE
By Vivek Wadhwa

In the 1920s, New York hotel owner first privately financed team whose Such competitions do this by setting
Raymond Orteig offered a $25,000 spacecraft would carry three people a specific target that several teams
prize to the first person to fly to 100 kilometers above the Earth’s strive toward.
non-stop between New York and Paris. surface twice within two weeks.
Several unsuccessful attempts were Unlike traditional philanthropic
made before an American airmail pilot Renamed the Ansari X PRIZE, in organizations, which focus on specific
named Charles Lindbergh won the recognition of the family who donated projects and determined outcomes,
competition in 1927 with his plane, the the purse, pursuit of the prize large purses backing competitions
Spirit of St. Louis. motivated 26 teams to spend more attract sizeable amounts of operating
than $100 million on research and capital, and teams often wind up
Lindbergh’s achievement made him a development. On October 4, 2004, the investing significantly more money
national hero and a global celebrity, but Mojave Aerospace Ventures team won than the prize offers. Consequently,
it also sparked interest and investment the competition, launching a new era responses with broader applicability
that led to the modern aviation industry. in competition and yielding the $2 are created.
billion commercial space industry
In 1996, inspired by Lindbergh’s that exists today. Diamandis explains that such
achievement, Peter H. Diamandis competitions, in setting an audacious
wanted to reach for the stars. He Unlike traditional venture-capital but achievable target, “offer credibil-
formed a new organization called the firms, which back one idea, specific ity and ‘air cover’ for entrepreneurs,
New Spirit of St. Louis and created a competitions inspire multiple solu- innovators, and inventors who want
$10 million competition to reward the tions, often leading to new industries. to pursue a path that would otherwise

NBIZ ■ August 2014 7

be considered too risky.” Competitions “impossible,” will form the basis of There are other notable public
inspire entrepreneurs and philanthro- the next X PRIZE competitions. competitions. Richard Merkin,
pists to attempt the impossible. president and chief executive of
My brainstorming team, which Heritage Provider Network, for
I recently joined about 100 engi- included Tilton and Tata, proposed example, announced in 2011 the
neers, scientists, thought leaders, a prize to create affordable housing $3 million dollar Heritage Health
and celebrities in Los Angeles to for the billions of people who lack Prize data-mining competition to
design such a competition. This decent shelter. The challenge: decrease the $40 billion dollars
“Visioneering” conference, hosted develop the tools and technology to spent in the U.S. on avoidable hos-
by the X PRIZE Foundation, brought build, in less than 24 hours, a home pitalization costs. The challenge is
together people such as innovation for a family using locally-sourced to create an algorithm that predicts
guru Bill Gross, Qualcomm executive materials for $1,000, providing them how many days a patient will spend
chairman Paul Jacobs, business- with the dignity and shelter that all in the hospital so that doctors can
woman and investor Lynn Tilton, human beings deserve. work with the patient to prevent
Indian industrialist Ratan Tata, and hospitalization in the first place.
entertainment industry leaders, It sounded like an impossible chal- This prize in predictive modelling
will.i.am and Patricia Arquette. lenge but so were transatlantic flight is larger than the Nobel Prize for
and building your own spacecraft. Medicine and offers six “milestone
The purpose of the gathering was to prizes” along the way. Merkin says
brainstorm what new and radical innova- In the end, our prize concept took that his goal is to “create an online
tions might be created in the next few second place. The winning idea was to global community of problem
years to positively affect humanity. develop radical, even controversial, al- solvers dedicated to creating more
ternative sources of energy. But other cost effective, healthier outcomes.”
These ideas, which could spawn ideas that emerged from this event
new industries and challenge the were so great, that a few contestants Useful competitions needn’t be
conventional wisdom of what is said they would personally fund them. grand, though. Corporations can
use more achievable challenges and
smaller prizes internally to spur
out-of-the-box thinking.

The power of the crowd can also
be harnessed for social causes. A
startup named HeroX, which the X
PRIZE Foundation spun off, created
a platform upon which to design and
launch such competitions on the
Internet. It is modeled on popular
crowdsourcing sites Kickstarter
and Indiegogo. One of the first
HeroX competitions is the ImagineX
Challenge, which offers ten $1,000
prizes for the best ideas to address
problems in communities.

The real genius in offering
such prizes is that the possibilities
truly are endless. We could have
thousands of innovation prizes
addressing every challenge human-
ity faces—competitions that unleash
the intellectual power and drive
of entrepreneurs to create better
solutions for a better world. N

Vivek Wadhwa is an entrepreneur turned
academic. He is a Visiting Scholar at
UC-Berkeley, Director of Research
for the Center for Entrepreneurship
and Research Commercialization at
Duke University, and Senior Research
Associate for the Labor and Worklife
Program at Harvard Law School.

8 NBIZ ■ August 2014

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NBIZ ■ August 2014 9

SumSmLOerWSale?s
Five Things to Do NOW!
By Mike Brooks

Idon’t know about you, but two weeks off! I just spoke with a potential only keep sales coming in now but also
days before July the 4th, business coaching client, and when I asked him set yourself up for the best finish of any
slowed down, and after the holiday, when he was thinking of starting our year you’ve ever had.
it seemed to stop! We do have business, coaching relationship, he told me it
of course–very much like you–but the would be after his month-long vacation Don’t let up. Keep working hard–
pace of business, the new leads, and in August. He and his wife will be back if not harder. Make more calls. Send
especially the urgency of the first half right before Labor Day. more emails, stay later, and come
of the year seems gone. in earlier. The time you put in now
So there you have it. Business is may not seem to pay off right away,
What happened? seasonal. Kids get out of school. The but in the fall you’ll see the fruits of
Summer happened, that’s what. As weather changes. People have worked your labor.
I speak to clients and colleagues (who hard and are now ready to take some
aren’t on their family vacations), they time off. The business environment It’s just like the “dog days of
tell me the same thing–many of their changes as people start to relax. summer” in NFL training camps. I still
bosses, co-workers, suppliers, or busi- remember what coach Bill Parcells
ness partners are either on vacation, Does this mean companies aren’t told his players in late December when
just coming back from a vacation, or buying or planning for the fall? Of they were about to begin a drive that
just about to take a vacation. course not. It just means that they are would determine whether they got into
In fact, many people I know are going to begin doing things on their the playoffs or not. He looked at his
taking as much as three to four time table for a while, not yours. exhausted linemen and said: “This is
why you lift all those damn weights!”
So here’s what you can do to not

10 NBIZ ■ August 2014

The effort you put in now will make I’ll bet you have your own list of you will be more prepared than your
the difference at the end of this year. positive reading material you’d like to competition is to prosper when busi-
finally read or revisit. Pick out a couple ness picks up again. N
Connect with established of books tonight, put them on your
clients. This is the perfect time to desk, and commit to reading them Mike Brooks is president of Mr. Inside
send a card, make a call, and talk with before Labor Day. That alone will make Sales, an inside sales training and
clients about things other than busi- a big difference for you. consulting firm. Mike has been voted
ness. For example, where are they one of the Most Influential Inside Sales
going for their summer vacation? The most important thing to remem- Professionals four years in a row by The
ber during the summer is that “this American Association of Inside Sales
Face it: if things are slow for too shall pass.” If business has slowed Professionals. For more information, visit
you, things are probably slow in down, that will change. And if you take his website: www.MrInsideSales.com.
your clients’ businesses as well. advantage of any of the five suggestions,
How about asking what they are
doing to deal with this period and
what they are doing to get ready
for the fall. And how about asking
how you can help them do that? Set
yourself up to work with them when
they’ll be ready.

Work on improving your skill
sets, new product development,
or other parts of your business
that will make a difference in the
second half of the year. If any of
you have thought about developing
a greeting card campaign to stay
in front of your customers and
prospects, this is the perfect time
to do it!

Why not design a card with a
picture of yourself and family on YOUR
vacation and send it to all your clients
and prospects! That’ll give you some-
thing to talk about and your clients
something to remember you by.

Make goals for September
through December and develop a
plan of action to accomplish them.
Develop an affirmation card and goal
sheet of what you’re going to earn,
what it’s going to feel like over the
holidays to have accomplished that
specific goal, and then begin smiling
each day knowing you did it.

Remember, “Fear pushes, but
vision pulls.” Use this time to create
an exciting and compelling vision of
the rest of the year for yourself and
family, and let that vision proactively
pull you all through the summer.
Don’t let fear push you into doing
something reactive in your business.

Feed your mind a positive diet
every single day, many times
during the day. My favorite book to
re-read during each summer is The
Advanced Formula for Total Success
by Dr. Robert Anthony. The Power of
Habit by Charles Duhigg is another
good summer read that focuses on
transforming not just our businesses
but our lives in general.

NBIZ ■ August 2014 11

Corporations Tackling

SOCIAL ISSUES
on Their Own Hope to

RAISE WOMEN
OUT OF
POVERTY

By Kerri Fivecoat-Campbell

12 NBIZ ■ August 2014

Women are heads of
households in 30 percent
of homes in Texas but
represent more than half—
53 percent—of households
considered to be at poverty level. In fact, 2.1
million women and girls in Texas live in
poverty. Women earn only 79 cents for every
dollar earned by their male counterparts.

These staggering facts come from a re-
cently released report based on a study by the
Center for Public Policy Priorities. Economic
Issues for Women in Texas, by the Texas
Women’s Foundation, a regional women’s
fund and research arm of the Dallas Women’s
Foundation, finds that many factors contrib-
ute to these issues, including women in low
paying jobs, many of which have no benefits
such as healthcare or childcare or tuition reim-
bursement. Additionally, a lack of affordable
housing does not help matters.

“About 63 percent of women in Texas
are low wage earners,” said Roslyn Dawson
Thompson, president and CEO of the Dallas
Women’s Foundation. “They are disproportion-
ately represented in low paying jobs.”

The report will eventually examine the
issues Texas women face in nine areas, includ-
ing Amarillo, Austin, Dallas, El Paso, Fort
Worth, Houston, McAllen, San Antonio, and

Tyler. The report for Dallas had been released
as of press time, and the rest of the reports
will follow throughout the fall.

“We’re looking at it market by market.
It’s logical to look at the issues in each
area, what it takes to live, and what each

community can do to help women,” said
Thompson. For example, the study
focused on Dallas found that women,

on average, earn $7,400 less than men
per year, but in Fort Worth, that gap
jumps to nearly $11,000.

As federal and state law makers
continue to battle it out on how best
to fight poverty in the state and

NBIZ ■ August 2014 13

country, some companies are taking it inequality that’s been rising over wage for its U.S. workers from $9.17
upon themselves to help improve the the past three to four decades. They to $10.76 per hour beginning January
lives of their lowest paid workers, the also argue that raising the wage will 1, 2015. Other workers will see a raise
majority of whom are women. They create a more focused work force. to $13 per hour in some high-cost
hope such measures will continue to living areas. Clothing retailer Gap,
help the economy grow. “The brain focuses inward, and if which also includes Banana Republic,
people are not paid enough to take Old Navy, and Athleta just raised its
IT STARTS WITH A LIVING WAGE care of their families, they’re not able employee minimum wage to $9 per
Everyone has heard the arguments to work at their full capacity,” said Kim hour in June and will increase that to
Seeling Smith, founder and CEO of $10 per hour in 2015. The company
for and against raising the federal Ignite Global, a human resources and sees the move as a competitive one to
minimum wage, which is $7.25 per hour leadership consulting firm in Austin. “If draw in the best-qualified workers.
in Texas, or a pre-tax income of $15,080 people aren’t paid enough money, they “When it’s all said and done, this is a
per year. The poverty threshold for a will just do enough to get by. People race for talent, and if we have the best
single parent with one child is $15,450. need to feel they are paid what they are talent, then we’re going to win,” Glenn
worth.” Smith argues that once money Murphy, Gap’s CEO recently told the
Opponents of giving a raise to low is not an overriding factor in basic daily National Law Review.
income workers say the effect will be survival, internal motivators kick in on
a loss of jobs and the rise of the cost the job, increasing productivity. “THE RIGHT THING TO DO”
of goods and services. Opponents Some smaller, regional companies
also argue that a minimum wage In Dallas, Thompson said that
increase will not only affect those who the study found that a single woman and organizations are also taking on
are really struggling but will also with one child needs $44,496 per what state and federal lawmakers have
raise the wages of many first time job year to thrive, not just survive. been deadlocked on since the last raise
seekers, many of whom are teenagers “That means putting money in in 2009. One such organization is
who might not necessarily need nor savings, retirement, and a college Parkland Hospital Systems in Dallas.
deserve to have the extra income fund,” said Thompson. “Seventy After recent turmoil that included top
based on their skill level. percent of jobs in Dallas currently management changes at Parkland,
pay less than that.” one of the largest safety net health
“When small businesses have to systems in the country, the Employee
raise the minimum wage, it will bring While raising the minimum wage cer- Relations Executive Compensation
profits down, and there is so much tainly would not put most women in the Committee voted on June 12, 2014,
competition, they will have to raise “thriving” category, it might help some of to raise the organization’s minimum
their prices and get rid of employees,” them make it beyond “surviving.” wage from $8.78 to $10.25 per hour.
said Dan Levin, host of the CPR Radio The goal was to raise employee morale,
Show and a retirement planning Several companies have made reduce the turnover rate, and, as Jim
specialist based in Dallas. headlines by voluntarily raising the Dunn, PhD, executive vice president,
minimum wage for their own workers.
Proponents of the increase argue Global retailing giant IKEA recently an-
that it is needed to slow the income nounced that it is raising its minimum

While raising the minimum
wage certainly would not

put most women in the
“thriving” category, it might
help some of them make it

beyond “surviving.”

14 NBIZ ■ August 2014

Business Banking

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NBIZ ■ August 2014 15

and chief talent officer said, “It was the One in four women in Texas
right thing to do for our employees. lack health insurance, and 36
We wanted to show that those that
work hard and play by the rules will percent of women lack
be rewarded.” The wage increase health insurance during their
will affect 233 employees, mostly in
the environmental, linen, and dietary childbearing years.
services. Of those 233 jobs, 168, or 72.1
percent are held by women. fiscal year, executives could split from areas: “We are definitely looking at
$750,000 to $1.2 million in incentive stabilizing retention, especially in
Louise Sedberry has been a house- pay. The cost of the wage increase those areas, and we’re in the middle
keeper at Parkland for two years. She will be covered from this upcoming of making projections on that right
is married with three children but quarter’s bonuses. The executive’s now.”
still struggles to find the balance of compensation is tied directly to the
holding down a job to help provide for performance of the front line workers, Dunn acknowledges that this is an
her family while spending quality time giving each group an incentive to do unconventional plan but says the or-
with her children. Sedberry said that well. Parkland’s board will evaluate ganization was not looking to become
the increase, which took effect July four main areas when deciding on a national model or make a social
1, will allow her to opt out of some executive incentives: quality, service, statement, although that seems to be
of the voluntary overtime and spend people, and operations. Specifically, what is happening. “We did it as part
time with her children. She also hopes measures include 30-day readmission of our talent management strategy,
it will provide more discretionary rates, patient satisfaction scores, and and it certainly is unique, and you
income. “I plan on buying a new car at overall employee turnover, among won’t find it in a lot of executive pay
the first of next year, which I need to other measures. plans,” said Dunn. “We’ve received
get to work,” said Sedberry. “With the calls from all over, and we certainly
raise, I can save more money and get Dunn said that the cost of the wage are enjoying talking with and meeting
[a car] quicker.” increase has not yet been tallied with these people, but we did it because
a projected savings of increasing the valuing all levels of employees is the
Dunn said the challenge of finding employee retention rate in the affected right thing to do at Parkland.”
the money to pay for the wage increase
was really quite elementary when the
committee took a look at the pay-for-
performance compensation plan for
the company’s 60 top-level administra-
tors. “We wanted to make a plan that
compensated all levels of employees,
and this really just adds our frontline
workers to that,” Dunn said.

The system projects the wage in-
crease to cost $350,000 the first year.
For the final quarter of the system’s

GOING BEYOND WAGES
In June, Howard Schultz, CEO of

Starbucks, made headlines announcing
that the company would offer tuition
reimbursement to all of its 135,000
workers. Many people who went to
school on their employer’s dime in the
1980s and ’90s wondered why this
was news. Companies such as Citicorp
Credit Services, which was a subsidiary
of Citibank and had offices in Rich-
ardson in the Dallas/Fort Worth area,
offered tuition reimbursement, as did
many top employers of the day. “In the
1990s, especially when tech companies
started getting big, companies were
offering crazy benefits to draw in the
best talent,” said Smith, the HR and
leadership consultant in Austin. “After
the tech bubble burst about a decade
ago, and especially in the past five years

16 NBIZ ■ August 2014

since the recession, companies healthcare needs of their workers, she is planning on returning to school
have been all about cutting those and it also recognizes that education either this fall or spring to hopefully
benefits.” will help all of their employees not complete her degree.
just within their organization but
Thompson notes that benefits in society as a whole. Sedberry, the IT’S A COMMUNITY ISSUE
such as healthcare, on-site child- housekeeper at Parkland, had begun A few years ago, Jack Matthews,
care or allowances for childcare, taking classes in social work when
and tuition reimbursement are she was diagnosed with thyroid president of Matthews Southwest,
especially important for women cancer. Now that she is once again a commercial developer in Dallas,
employees. Economic Issues for healthy and is earning more money, was drinking coffee and waiting for
Women in Texas noted that women a meeting at a local upscale hotel.
with a high school diploma earned
44 percent more than a woman
without a high school diploma. It
also noted that the cost of higher
education in Texas is prohibitive
for many, especially those earning
close to the poverty threshold.
From fall 2003 to fall 2012, the total
cost of college in Texas has doubled.
“Borrowing to pay for education
can lead to a personal debt burden
that hinders the beginning of a
student’s working life,” reads the
report. “Education is the pathway
to better paying jobs and economic
security.”

The report also states that if
additional expenses, such as child
care and transportation were
included in the poverty calculation,
the U.S. poverty rate would increase
by almost two percent.

“The typical cost of child care
for a full-time working parent in
Texas is around $5,000 per year
per child. A typical single mother
in the state earns slightly less than
$24,000 per year, making child
care fees 21 percent of a family's
expenses. Half of all infant-care
options cost more than $8,000 per
year, more than the average cost
of college in Texas. Reliable and
affordable child care determines a
mother’s ability to go to school, job
interviews, and/or work.”

Finally, health insurance is a
primary concern for women in
the job force. Economic Issues
for Women in Texas reports that
one in four women in Texas lacks
health insurance, and 36 percent
of women lack health insurance
during their childbearing years.
This limits their access to prenatal
care and reduces their chances of
finding problems in their reproduc-
tive systems before and during
pregnancy.

Parkland Health and Hospital
Systems is working to address the

NBIZ ■ August 2014 17

He said he noticed his server was a “We are a unique developer in that we looking at what we need, building the
little flustered, so he engaged her in like to create communities, and you teams, and getting foundations to help.
conversation. “She explained that her can’t build a community in an area Our challenge right now is convincing
car had broken down getting her kid where the waiters can’t afford to live.” the hotels that they should get involved.
to daycare and she had been late that To that end, the company developed They are asking, ‘Do we want to pay for
morning and was afraid she would be The Bellview, an affordable housing that if we don’t know it will work?’”
fired,” said Matthews. “She had a 12 project that will open in September.
year old car and had to drive 10 miles The apartments are situated near Matthews said his company alone
to her child’s daycare, and I just real- public transportation, which will give will invest a substantial amount in the
ized it was a recipe for disaster, that parents more access to and options for effort to align area employees with the
if she wasn’t fired that day, she most childcare, school, and jobs. other tools they need. “When a woman
likely would be fired the next time.” has access to job training, childcare,
The company also began the transportation, and affordable
Matthews' company, Matthews process of investigating how compa- housing in her community, only then
Southwest, develops affordable nies and non-profit organizations can can she begin to think of job advance-
housing and hotels in Dallas. He had work together to help provide access ment,” said Matthews. “When you help
already started investigating job train- to training, childcare, transportation, advance individuals, it advances the
ing available in the area for hospitality and affordable housing. Matthews’ city and then everything runs better.”
workers when he realized something estimates have shown that by getting
important. In order for hotel employers hotels directly involved in the train- Thompson lauds such efforts. “If
to attract long-term employees, many ing process, they will produce better we, as a society, invest in women, it
of whom are women, an alignment qualified, targeted employees and po- is the surest way to make changes in
was also going to have to be created tentially save them $10 million a year society and the economy.” N
with access to childcare, affordable in job turnover costs. “The challenge,”
housing, and transportation. he said, “with such an experiment is Kerri Fivecoat-Campbell is an independent
creating a comprehensive program journalist who writes regularly on issues
Although Matthews Southwest is that is economically sustainable to surrounding the environment. She is a
a for-profit company with substantial the companies. We’re about half way member of the Society of Environmental
investment in south Dallas, Matthews through the process right now in Journalists and writes from her home in
says it is about more than the money. the Ozark Mountains.

18 NBIZ ■ August 2014

PTroeAxpDraoousgrhtt ioof ns
T ByTroyAnderson
he normal amount of annual rainfall in Texas reservoir capacity continues to set new, modern-day lows. Robert
is about 28 inches. In the first 12 months of Mace, deputy executive administrator for the Texas Water Devel-
the current drought, the state only received opment Board says, “Our reservoirs are two-thirds full. Normally,
10.8 inches of rain. Since the drought began they would be about 85 percent full. If you look at the reservoirs in
in October of 2010, the state has received the Houston area, they are 100 percent full. In the Dallas area, it’s
74 inches of rain instead of the normal 98. 68 percent; in Fort Worth, it’s 73 percent. But Wichita Falls is 23
“Drought conditions have persisted throughout much of percent. That’s one of the worst in the state. The reservoirs in the
the state up to the present time so that, at this point, it’s the San Angelo area are about 14 percent full, and those in Midland
second worst drought on record for the state as a whole,” and Odessa are only 10 percent full. Ground Zero for our drought
says John W. Nielson-Gammon, a professor in the Depart- has been in the Panhandle of Texas, and there are areas to the
ment of Atmospheric Sciences at Texas A & M University west of Dallas and Fort Worth.”
in College Heights. He notes that, currently, 69 percent of
the state is experiencing the drought. The Great Drought of While much of the state is in drought, the Houston area
2011 resulted in the deaths of millions of trees, drained area is not. “Our water supplies are faring well,” says Janice
lakes, and contributed to the worst wildfire in east Texas Evans, the chief policy officer and director of communica-
history that burned 20,000 acres and destroyed 71 homes. tions for Houston Mayor Annise Parker. “Rainfall is a little
below normal, but we are catching up due to recent regular
Nielson-Gammon notes that the worst drought in Texas precipitation. It’s just not really an issue for the city like
history occurred from 1950-’57, and the first 12 months of the it was several years ago when we had to implement water
drought were the driest since recording began in 1895. Statewide, conservation measures.”

NBIZ ■ August 2014 19

Waste Not The worst drought in Texas drought from moderate to severe to
history occurred from 1950-’57, very severe. Right now, despite the
In early July, with reservoirs dipping and the first 12 months of the recent rain, we’re in the midst of a still
down to 23 percent of capacity, Wichita drought were the driest since very serious drought that is going to
Falls, Texas, began using treated challenge the state on a lot of levels.”
wastewater in a state-approved process recording began in 1895...
to bolster drinking water supplies. The Water Scarcity at Large
city near the Oklahoma border is the “To me, it’s severe,” says Tom
second in the state to directly reuse Mason, president of the board of The dry conditions aren’t limited
treated wastewater as the drought the Texas Water Foundation, an to Texas though. A third of the United
continues unabated. The water supplier Austin-based nonprofit organization States, the Central and Southern
to Big Spring, Midland, and Odessa was that promotes water education and Plains, and the Western U.S. is experi-
the first, and the city of Brownwood is awareness efforts. “Meteorologists encing drought conditions, according
considering doing the same. have different classifications of to the U.S. Drought Monitor. The
highest level of drought—exceptional
The use of treated wastewater to drought—was noted in portions of
supplement drinking water supplies in California, Nevada, Oklahoma, and
Wichita Falls and Brownwood comes as Colorado, as well as Texas. A total of 18
the drought is heading into its fourth states are currently facing droughts.
year. According to Mace, currently, 1,172
water systems across the state have In many parts of the world, water
instituted some type of drought contin- scarcity is increasing, and rates of
gency plans, including 785 with manda- growth of agricultural production have
tory restrictions that restrict outdoor been slowing. Today, some 1.6 billion
watering, car washing, and topping off people live in countries or regions with
or filling swimming pools. absolute water scarcity, and by 2025,
two-thirds of the world’s population
could be living under water-stressed
conditions, according to the Food and
Agricultural Organization of the United
Nations. Five times as much land is
likely to be under “extreme drought”
by 2050, according to Food & Water
Watch, a Washington, D.C.-based
organization that works to ensure that
food, water, and fish are safe, accessible,
and sustainably produced.

In terms of how long the drought
could last in Texas, Nielson-Gammon
says it’s hard to say when it will end.
There is a chance the drought could
last until 2020 or even later. However,
he also says, “It could end suddenly
if we get the right weather patterns.
One thing that is working in our
favor is El Ni~no developing in the
Pacific Ocean that tends to provide
above normal rainfall in the winter
months in Texas. But on the other
hand, the longer-term patterns in
both the Pacific and the Atlantic are
unfavorable for rainfall, so we’re in an
extended period of drought suscep-
tibility. There have been a couple of
major statewide droughts before this
one in the early 2000s, and it wouldn’t
be surprising if another drought
developed soon after this one ended.”

Economic Impact

Growing concerns about the length
of the drought and the economic impact
on the state’s economy and business

20 NBIZ ■ August 2014

sector come as water demand in Texas Bledsoe said when he “If the drought continues, there is
is projected to increase by 22 percent speaks to young farmers going to continue to be competition
between 2010 and 2060, according for water, and obviously, in a state that
to a recent report by the Texas Water and ranchers who are has become as urban as Texas, there
Development Board. The state’s popula- thinking about taking is going to be a lot of pressure placed
tion is expected to double by 2060. over operations from their on agricultural water supplies for that
fathers, he tells them to water to move to other uses.”
Given the limited supplies of water “have a drought plan …
in Texas, tough choices are coming because we are going to At a time when businesses are con-
for Texans. Without appropriate have more dry years than tinuing to relocate to Texas because it is
actions, the state could suffer signifi- known as a business-friendly state with
cant economic losses. For example, wet years.” a fair and affordable tax structure and a
economic models show that if the fair regulatory climate, the drought–
1950's drought occurred in 2010, if it continues—is expected to have a
income losses to Texas businesses growing impact on the state’s economy
and workers would have been nearly and businesses, experts say. Mason says
$12 billion. Apply that scenario to the drought could eventually hurt the
2060, and the losses jump to more state’s efforts to attract companies into a
than $100 billion, according to a June state that weathered the recession better
report by the Texas A & M AgriLife than most states nationwide. “When
Extension Service. In 2011 alone, businesses are looking to move to an
this same agency estimated statewide area, they want to make sure the city has
agricultural losses at $7.6 billion. a viable, long term water supply,” Mason
says. “That can inhibit growth and
“There has been a huge economic development very dramatically.”
impact,” says Carole Baker, executive
director of the Texas Water Founda- NBIZ ■ August 2014 21
tion. “Agriculture has been especially
impacted. [Many farmers and ranchers]
had to sell their cattle and livestock
because there wasn’t enough rain to
feed their livestock. It really hurt them
in 2011 and 2012 when we hardly had
any rain.” Thomas Linton, a senior
lecturer in marine sciences at Texas
A & M University in Galveston and
an emeritus professor in wildlife and
fisheries sciences at Texas A & M
University in College Station, concurs,
noting that in 2011 and 2012, ranchers
in the upper parts of Texas had to sell
off their cattle at a cost while wheat
and cotton farmers watched as their
land dried up in the Panhandle. There
were substantial losses.

In recent remarks before the
Texas A & M Beef Cattle Short Course
in College Station, Brian Bledsoe, a
weather forecaster, told the 1,400 at-
tendees that Texas is “reliving the 1950's
drought-producing pattern with periodic
breaks.” Bledsoe said when he speaks
to young farmers and ranchers who are
thinking about taking over operations
from their fathers, he tells them to “have
a drought plan…because we are going to
have more dry years than wet years.”

Billy Howe, the state legislative
director of the 500,000-member Texas
Farm Bureau, says the drought has
had a tremendous impact on the state’s
agricultural industry. “It’s caused
billions of dollars in losses,” he says.

But Steve Minick, vice president of The drought has also affected businesses at the state’s lakes. According
government affairs for the Texas Associa- to Mason, one of the most popular recreational lakes in the state, Lake
tion of Business, which represents 4,000
businesses and 200 chambers of com- Travis on the edge of Austin, is only about 40 percent full.
merce, says the association doesn’t expect
it will: “We think that what the legislature River basin, rice farmers won’t be able In November, Texas voters
did with Proposition 6 and the use of the to water from the Highland Lakes,” approved the creation of a $2 billion
Rainy Day Fund to support these efforts Mason says. “This is the third year in fund to provide low interest loans
was the right thing to do. The fact our a row. Some of them may end up going and other financial assistance to
legislature is focused to ensure we can out of business. I think that’s a real local governments and public water
continue to meet the demand of growth possibility because it’s gone on for some providers to develop solutions to
and business opportunities in Texas sends time now. We have cotton growing up the water shortage. “We have taken
the right signal and should give those in the Panhandle area, which is largely steps to reallocate tax revenues
companies every confidence that Texas dependent on groundwater. Every time in Texas to make the financing
is the place to continue to bring jobs and there is a drought, it causes problems of water projects easier and more
capital investment to.” for cattle raisers. If you can’t graze affordable for local water providers,”
cattle on the grains produced by grass, Minick says. “We are also beginning
The drought has also affected busi- you have to buy pretty expensive hay discussions about the political and
nesses at the state’s lakes. According to from elsewhere and that drives some procedural changes that are neces-
Mason, one of the most popular recre- ranchers out of the cattle business.” sary to put new technologies and
ational lakes in the state, Lake Travis new water supply options on the
on the edge of Austin, is only about 40 Possible Solutions table. Those include enforcement
percent full. Some businesses on the of existing water rights from a
lakes are experiencing financial difficul- Despite the impacts of the drought, political standpoint, desalination of
ties. “You have people who rent [out] Minick says that the association is opti- brackish water, of which we have an
motorboats, jet skis, sailboats, marina mistic that state and local agencies are enormous resource in Texas, and
operators, the restaurants around the responding in a “very positive way.” He alternatives to new reservoirs such
lake, along with the real estate,” Mason says business owners and businesses as the recharge of aquifers. All these
says. “There are also very expensive interested in relocating to Texas can things have proven to be technically
homes that were lakeside residences feel confident that the state is going to feasible. The issue is, ‘How do we
that are now much further from the make the best use of its resources. look at existing water management
water than before. You have that impact and water legal structures and
whenever there is an extended dry examine what changes need to be
period that affects lake levels.” made to make those technically fea-
sible alternatives more practical?’”
But Mason notes that the
agricultural sector is probably the The Texas Center for Policy Studies
hardest hit of any sector because there released a report in May that argued
is limited water to grow crops in some the state could make better use of its
parts of the state. This includes rice existing water supplies and doesn’t
and cotton farmers. “In the Colorado have to spend billions of dollars on new
reservoirs, pipelines, and other water
supply projects. The report questioned
two conclusions in the 2012 State
Water Plan, including claims that
Texas would face a demand/supply gap
of 8.3 million acre-feet in 2060 and that
the price tag of meeting increasing
demand would be $53 billion.

“Our analysis shows that the
2060 demand/supply gap of 8.3
million acre-feet/year projected by
the 2012 State Water Plan is greatly

22 NBIZ ■ August 2014

over-stated,” the authors of the it all depends on the weather. “The An award-winning journalist at the Los
report wrote. By 2060, the demand severity of the drought in 2011 Angeles Daily News, the Press-Enterprise, and
could be reduced by 3.5 million acre- was a good wake-up call so those other newspapers for 20 years, Troy Anderson
feet per year through conservation water suppliers relying on a single writes for Reuters, Newsmax, Christianity
measures and the increased use of source have been scrambling to build Today, Bankrate Insurance, and many other
brackish water. Minick says a fifth infrastructure to ensure that they magazines and online publications. He lives
of the $2 billion must go to water will have enough water throughout in southern California. For more information,
conservation projects. “The state is the current drought.”N visit www.troyandersonwriter.com.
not going to give the money away,”
Minick says. “The state will loan the
money. It will be repaid.”

So far, Mace says the state has
done very well responding to the
drought: “The preparations and
planning that we’ve done so far have
served the state well, and we’ll just see
how things continue, but, again, it’s
really hard to predict. You could look
for examples in one community and
say this is what is going to happen,
but one big rainfall could come,
and the problem is solved. Even in
droughts, you can get pretty big
rainfalls that can solve the problem or
extend water supplies.”

Mace also says, “Through
drought preparedness, a lot of
efforts are done to prevent a com-
munity from running out of water.
Typically, a community will inter-
connect with a neighbor that has
a more secure water supply. So far,
in this drought, nobody has really
run out of water in terms of a public
water system.”

Officials are seeking a variety of
solutions, including better watershed
management, water recycling,
underground storage of excess water,
more desalination projects, and more
effective conservation measures. “The
folks up in the Dallas area are making
great inroads in getting people to
believe there is a water problem,”
Linton says. “They are doing their
part to conserve water. They are
taking serious steps, as are El Paso,
San Antonio, and Las Vegas, to get
rid of grasses and trees that really
suck up water and to get people to use
equipment that uses less water.”

Minick acknowledges Texas is
facing water challenges but wants to
be clear that officials are working to
ensure the state has enough water to
meet its needs.“I think our legislature
and governor have shown that we
are going to do what it takes to solve
these problems,” Minick says.

As far as the future of the
drought, Nielson-Gammon says

NBIZ ■ August 2014 23

6Reasons Investors Are
Eyeing Middle-Market Oil
& Gas Companies Today
I By David Mahmood
f you own a successful, middle- privately-held businesses, are getting though there was plenty of M&A capital
market oil and gas (O&G) company, better valuations when selling their available to invest. Sellers had fewer
investors want to talk with you. company than ever before.” options, and buyers suddenly enjoyed
While the economy has seen a slow more leverage.
and steady recovery, the O&G industry If you own a middle-market O&G
has witnessed exponential growth business (annual revenues of $25 million Today, our economy is slowly but
over the same time period. This factor, to $500 million), now is a great time to surely on a path of recovery and so
combined with the continued demand review your options with an experienced are profits of middle-market O&G
for fossil fuels and advances in O&G O&G investment banker. companies. Those same businesses look
technology, has placed middle-market good to investors, as profits are up and
O&G companies squarely in the bull’s- But why are investors eyeing middle- economic uncertainty is yielding to a
eye for eager investors. market O&G businesses today? restored confidence in the recovery.
Sellers once again have more options
This same set of market realities, The Economy and leverage is on their side. As market
combined with growing interest in conditions continue to improve, more
O&G companies within the mergers Prior to 2009 (before the Great Reces- investors have been willing to loosen up
and acquisitions (M&A) market, sion), middle-market O&G companies their purse strings and get in the game.
equates to new opportunities for O&G were enjoying rapid growth associated
business owners. Growing demand for with rising oil prices and an associated Information is power, and while
established, successful companies has demand for related services. Business economic growth is fueled by optimism,
increased competition among investors, owners were not interested in selling market sentiments are fueled by statistics.
resulting in a pool of buyers who are because life was great as they focused The April 2014 Bureau of Labor and
willing to pay more now than any other their attention on what seemed to be Statistics jobs report indicates both sus-
time in recent history. endless opportunity! tained growth and a budget deficit that
hovers at a seven-year low accompanied
According to Shama Kabani, CEO of The O & G market experienced first- by home prices that have risen for the past
The Marketing Zen Group and a Forbes hand what Sir Isaac Newton quantified 24 consecutive months. We have a way to
contributor, “Recently, one such emerg- in 1687: what goes up must come down. go to full recovery, and yet, investors are
ing trend has caught my eye—more The industry tanked along with the rest already confident that now is the time
businesses, especially middle-market, of the economy. The world was inverted to be investing in this particular sector.
in the 2000s, and fewer businesses
looked desirable to investors, even

24 NBIZ ■ August 2014

Money Available $30 million, the sales multiple would There is more
be six. money on the
There is more money on the sidelines today than
sidelines today than at any time in Recently, Allegiance Capital has at any time in U.S.
U.S. history. According to Wall Street seen an uptick in sales multiples. Last history. According to
sources, there is approximately $1.1 year, good O&G services companies Wall Street sources,
trillion dollars waiting to be invested. were selling for multiples in the 4 to 5 there is approxi-
I have seen that investors are looking range. This year, we have seen those mately $1.1 trillion
for high-quality, successful companies increase to the 6 to 7 range with even dollars waiting to
they can purchase or invest in. More higher multiples for companies that be invested.
oilfield services companies are coming are technology-based, hold patents, or
on the market this year than at any possess other special factors. recent Energy Information Admin-
other time in the past. istration (EIA) forecast predicts that
Even the Warren Buffet Indicator, more than half of our energy needs
Investors always want a good a special Wall Street measure based will be fulfilled by oil and natural gas
return on investment, and O&G upon the values of companies sold products through 2040 and beyond.
services companies are very profitable compared to historical values, shows There is little fear that demand will
right now. Investors who have a long- middle market companies selling in evaporate any time soon. In fact, the
term vision can afford to ride out any the “significant premium” range now. EIA is forecasting that we will produce
potential downturn in oil prices and As a comparison, companies sold more oil than we import in 2014.
still make a nice return. That is why immediately following the crash of
they are ready and willing to invest in 2008 were valued in the “significantly High Value of New
these companies. discounted range” on the scale. Technology

Buyers Willing to Pay More Thus, we have a perfect storm for According to the American Petroleum
sellers right now. There’s an abundance Institute, the U.S. leads the world in
Currently, there are not enough of cash available to buy companies. technological innovations within the
high quality companies for sale on the There’s a shortage of companies for sale, O&G industry. These innovations have
market. Whenever the demand for a and the demand is high. That means not only improved O&G efficiencies but
product or service increases and the owners can get a better price for their
supply decreases, the value of that company and better terms right now
product or service will increase. than they could in the past.

The value of most companies Enduring Demand for
is determined by a multiple of the Fossil Fuels
company’s earnings. For example,
if a company earns $5 million in While the demand for renewable
profit or earnings before interest, energy sources keeps growing, fossil
taxes, depreciation and amortization fuels continue to provide a significant
(EBITDA), and the company sells for percentage of U.S. energy needs. A

NBIZ ■ August 2014 25

have resulted in expanded production of early next year. As these new shale industry. Today, sellers are enjoying
domestic crude oil (29 percent since 2008) fields amp up, the foreign demand for the perfect market for their compa-
and natural gas (more than 33 percent U.S. O&G technology will increase. nies. As we know, market factors can
since 2005) from shale deposits. change rapidly and without warning.
Foreign investors are looking for If the price of oil drops, the related
Foreign Investors Driving proven O&G technological advances to value O&G companies will also fall.
Higher Prices continue to help them cut costs, boost While oil prices are at or near all-time
production, and increase profits. The highs, nothing is guaranteed.
The O&G boom is not limited to the fastest way to accomplish this goal is
U.S. There are shale fields being discov- to purchase U.S. based companies that In my own experience, selling a suc-
ered and tapped worldwide. A small, own proven O&G technology. cessful, proven O&G services company
independent exploration company with normally takes 9 to 12 months, and if
a gargantuan acreage position in central Case in point, my own Allegiance market conditions change while we are
Australia is making final preparations Capital helped Fiberod find a buyer in in the sales process, it could impact
to spud, or begin, its third test well in the UK for its innovative, fiberglass the final value of the company. Owners
an unconventional formation that looks sucker rod. This new technology should take advantage of the current
very similar to the Bakken and Eagle increases efficiencies in the pumping market. It just does not get much
Ford shale plays half a world away. process, and the London-based better than this. N
Smiths Group, along with its Illinois
Elsewhere around the globe, from subsidiary, John Crane, were eager to David Mahmood created and sold seven
Argentina to Quebec to Poland, North make a deal and paid a premium price different businesses before founding
American independents are testing to secure the technology. Allegiance Capital in 1998, which provides
other shale gas and tight oil forma- mergers and acquisitions financial services to
tions. Some are in the early stages of Owners of middle market O&G ser- middle market business owners. Follow him
development with limited production vices companies owe it to themselves on Twitter: @MiddleMktMandA
possible by the end of this year or to investigate the opportunity to cash
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BTEUXSAINSESS

PROEWENRINEGWUPAWIBTHLE
ENERGY

By Alan Lammey

As the Texas economy This is enough energy to power 23,000 technology. IKEA owns and operates each
continues to grow, elec- homes. In fact, last year, $174 million was of its solar PV energy systems from atop
tricity consumption has invested in Texas to install solar for home, its buildings as opposed to a solar lease
increased for businesses business, and utility use. This represents or power purchase agreement (PPA). For
and residences alike. However, environ- a 4 percent increase over the previous the development, design, and installation
mental regulations and various market year and is expected to grow again this of the Houston store’s customized solar
pressures have forced a significant year. Meanwhile, the price to install solar power system, IKEA contracted with REC
amount of power generation, including in homes and businesses has dropped by Solar, one of the largest U.S. solar electric
coal-fired power and other older sourc- nearly 4 percent from last year and 37 installers with more than 8,000 systems
ers, to exit the market in recent years. percent from 2010 across the country. built nationwide.
In order to replace part of the outgoing
generation, new solar and wind capac- Big Stores Utilizing Another type of solar power that’s
ity has been constructed (as required Big Solar Systems gaining a lot of interest in the office
by law in many cases) in order to meet a building construction niche is known as
large percentage of the Texas market's With the cost of solar becoming building-integrated photovoltaics (BIPV),
demand. With appropriate state policy much more affordable in recent years, where the power-generating features
that removes market barriers and some large big box retailers, such as are built into the glass and construction
recognizes the benefits of renewal furniture giant IKEA, have recently of office buildings. The advancement
energy, the Texas solar and wind power embraced the use of solar energy at their in technology of BIPV has allowed for
market should see significant growth in Texas locations, including the store in the integration of solar systems in office
the coming years, bringing new renewal Houston. When combined with IKEA buildings and factories, which generate
sources of energy to Texas’ businesses solar systems installed at stores in Frisco energy consistently during daylight hours
and residents. and Round Rock, Texas, IKEA has the while not requiring additional expensive
distinction of being the state’s largest land space or unsightly installations. The
While the Lone Star State is well- solar owner. According to IKEA, their market for solar built onto the outside
known for its oil and natural gas assets, Houston 116,400-square-foot photovoltaic facade of buildings and into building
renewable energy in Texas has been (PV) array consists of an 813-kW system, materials is expected to grow to $7.5 billion
quietly gaining traction—a lot of traction. built with 3,388 panels. The program by 2015 from about $2.1 billion in 2011,
In fact, there are currently more than will produce approximately 1,152,464 according to some industry statistics, while
290 solar companies at work through- kWh of clean electricity annually, the sales of solar glass are expected to reach as
out Texas, employing approximately equivalent of reducing 795 tons of carbon much as $4.2 billion by 2015. The outdoor
4,100 people. In 2013, Texas installed dioxide, eliminating the emissions of retailer, REI, has employed various forms
75 megawatts (MW) of solar electric 156 cars or powering 99 homes yearly. of BIPV into the design and construction
capacity. In fact, Texas ranks 13th in the This investment by IKEA reinforces of its stores with one example located in
country in installed solar capacity with the company’s long-term commitment Round Rock, Texas, which generates about
a total amount of 213 MW of energy. to sustainability and confidence in PV 8 percent of its own power needs.

28 NBIZ ■ August 2014

Texas Wind Generation “Renewable Energy” as electricity fuel larger percentage of electricity genera-
choices for businesses and residences. tion capacity for years to come. N
While solar energy is a growing
force to be reckoned with, the largest While traditional forms of power Alan Lammey has 16 years experience as
of the renewable sources of energy generation from coal to natural gas a senior markets analyst and journalist
in Texas is, without a doubt, wind to nuclear will most certainly play a and is best known for his forward-thinking
power. In fact, Texas has become the large role in electricity needs of Texas energy market analysis. He can be reached
national leader in wind energy, with residents for many years, renewable via www.TexasEnergyAnalyst.com or
more installed capacity and more wind energy is here to stay and is certain to [email protected].
turbines than any other state in the continue to make up an incrementally
U.S. Texas wind also leads the U.S. in
thousands of jobs and provides billions
of dollars in economic benefits. To
date, installed wind power generation
capacity is at 12,355 MW, which ranks
the Lone Star State first in the nation
for total MW installed. According to the
Electricity Reliability Council of Texas
(ERCOT), 11,000 MW of generators
already contribute to the grid, and
another 8,000 MW are due to come on
line shortly. In addition, more than
26,700 MW are under study. In 2013,
wind power contributed 9.9 percent to
the state’s overall electricity supply, up
from 9.2 percent the year prior. With
recent forecasting tools and a proactive
approach to wind development, Texas
is helping to demonstrate where this
resource can go.

With wind power, there’s another
benefit that isn’t just strictly about
producing electricity; wind also
conserves water. With a large percent-
age of Texas remaining in exceedingly
high multi-year drought conditions,
the state is always seeking new
methods to safeguard water supplies.
As with other forms of power genera-
tion, which utilize massive amounts of
water in the generation process, wind
power doesn’t require any water, which
is a feather in the cap of wind energy
proponents.

Wind energy has become such a
significant power generation source
that earlier this spring, ERCOT
announced that an all-time high wind
power utilized capacity record was
achieved in March: 10,296 MW. This
represented close to 29% of the nearly
36,000 MW of electricity on the power
grid at the time. According to the
American Wind Energy Association,
this is the most for any U.S. power
system to date. Of that wind power
produced, 1,433 MW of the wind
resource came from turbines on the
Gulf Coast while 8,863 MW came from
other regions, mostly West Texas.
Many Retail Electricity Providers in
Texas now offer “100 percent Wind” or

NBIZ ■ August 2014 29

10Important Questions
to Help Identify
HIGH POTENTIALS
By Kerry Carney
A ccording to a study by the Corporate Executive
Board (CEB), as many as 25 percent of high-potential present, or to fill an open position quickly. Companies also
employees plan on leaving their jobs within a year. Many should look to the past to determine what made previous
organizations make the mistake of only looking at ability people successful so others may emulate those strengths
when assessing an employee’s potential for managing a job. while also noting the shortcomings they had.

When trying to identify a high-potential (or HiPo) Here are the 10 questions you should ask when identifying
employee, performance—or productivity—should not be high-potential employees:
confused for aptitude. Misidentifying a HiPo can be costly.
For example, you have a top-selling sales rep and decide to 1. Does this employee have a proven track record for
promote them to a managerial position. It would make sense, accomplishing impressive results, not just meeting
right? However, if that sales rep doesn’t have the aptitude, expectations?
aspiration, or overall potential, he or she will fail in the new
position. What’s worse, the HiPo that you overlooked will feel 2. Does this person take charge and make things happen or
snubbed and may leave in search of an organization that offers sit back and react to a situation before producing?
more opportunities for advancement.
3. Are others inspired by the confidence of the candidate’s
The reason high performers, as opposed to high poten- decision making?
tials, fail typically falls within one of these three categories:
leadership behaviors, aspiration, or engagement. Aspiration 4. Can this worker lead through persuasion and influence
entails whether the candidate really wants the position and where he or she serves as an effective sounding board to
is willing to make the sacrifices it requires. Engagement others who are struggling with complex issues?
involves the employee’s commitment to the company and
its mission. When considering an employee’s potential for 5. Do others trust this person to lead projects and teams,
success in a certain job, many organizations neglect to ask, even if he or she doesn’t have a leadership title?
“Does he or she really want to do this?”
6. Does he or she have an understanding of how to separate
Pinpointing the characteristics of a HiPo can be difficult, “what” from “how” with an awareness that establishes the
especially in a young employee. The attributes people develop goal before deciding on the steps to achieve the end result?
over time with training, experience, and progress are not
always apparent from the beginning. Also, many managers 7. Are priorities apparent while keeping a global perspective,
have an outdated estimation of what leadership should be: or does she or he become mired in the details and tactics?
loud, aggressive, and in-your-face. Employees who exhibit
these qualities are favored for advancement before considering 8. Do obstacles threaten or stop this employee, or do they
the aptitude they will bring to the position. represent healthy challenges to overcome?

Organizations should develop leadership competency 9. What success has this person had with multitasking?
models based on a predetermined aggregation of traits and 10. How do unexpected changes affect this candidate’s
behaviors associated with the success of the company and
evaluate each employee based on how they measure up to performance?
that standard. Employers need to assess their employees
with long-term, future goals in mind, not merely to suit the Whether it’s repositioning the job of a HiPo or counter-
acting the effects of a future skills gap, identifying high
potentials with these 10 questions will enable you and your
organization to prepare better for future needs. N

Contributed by Profiles International. For more information, please
contact John Caspole at [email protected].

30 NBIZ ■ August 2014



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