December 2011
Starting in the mid-1970s, and continuing through the UPS case, the IRS fought captives tooth and nail. Over the course of these cases, they advanced three different legal arguments against captive insurance: the economic family argument, the nexus of contracts and the assignment of income doctrine.
However, it's important to ask this question regarding the IRS' legal battle: "what was it about captives that the IRS didn't like?" To answer that question, we need to go back to a series of cases from the early 20th century called the reserve cases. In all of these cases, a taxpayer foresaw a particular adverse event and started to place money into a reserve fund in anticipation of future payment. In all of these cases, the taxpayer attempted to deduct the amount paid into the fund as a legitimate, section 162 deduction. The Bureau of Tax Appeals (B.T.A.) heard all of these cases and struck down the deduction. They advanced several reasons for these denials.
- The tax code allowed a deduction for business expenses, but not for amounts paid into an internally held reserve. This is supported by a strict reading of the statute.
- Moving funds internally — from cash to a reserve or from one corporate "pocket" to another — does not shift the risk as required by insurance.
- Preventing the manipulation of gross income through the use of "reserves" and "contingency funds" as outlined in the case Spring Canyon Coal.
- Both accrual and cash accounting methods require the taxpayer to deduct specific "realized" amounts. A taxpayer cannot deduct a speculative amount.
In this audio interview, Dave Dias interviews Tom Williams, Chairman of Interwest Insurance Services.
With more than 25 years of successful business and entrepreneurial experience, InterWest Insurance Services, Inc.’s founder, Tom Williams, has a diverse and colorful background, including an early career as a decorated Psychological Warfare and Propaganda Officer in the famed Special Forces Green Berets.
Throughout his career, Tom has lent his expertise to a broad range of insurance related activities. Following his Special Forces duties, Tom entered the insurance industry as a claims manager/investigator for a national claims organization. He later went on to form and run several successful insurance management entities prior to founding InterWest Insurance Services, Inc. in 1992.
Let's face this truth: many people are looking for a shortcut to attaining high achievement and there is anecdotal evidence all around us. Ask yourself these questions:
- How many people are buying lottery tickets?
- How many people are at the gambling casinos hoping to cash in?
- How many people shipwreck their lives pursuing fame and fortune?
Perhaps a more subtle pursuit relates to this question: How many sales professionals are hoping to land the “big deal” so they won't have to work as hard, or ever again? Yes, big deals do occur, but they can seldom be planned for nor counted upon to deliver.
Then, there is this reality which brings us back to earth — “Steady plodding brings prosperity, hasty speculation brings ruin.” Proverbs 21:5
... and that's why we call it work.
Sales Ethos excellence compels the pragmatic reality that it takes time to build long term client value. There is no shortcut to building long term, sustainable, and growing relationships.
Why is this true? And, if it is true, how can I shorten the timeframe in order to win new clients?
It's true because prospects and clients long to work with people they wholeheartedly trust and are constantly testing our character and our competence. In order to shorten the sales cycle, one needs to ask and answer these questions:
- How does one engender trust?
- How is character developed?
- How is competence demonstrated?
The debate rages on about whether or not multi-tasking is a good or bad thing. The animated conversations rant about whether or not concentration and focus are more beneficial and produce better results than multi-tasking.
Here's one provoking quote on the topic:
"Multi-tasking is dead. It never worked and it never will. Intelligent people love to sing its praises because it gives them permission to avoid the much more challenging alternative: focusing on one thing." Timothy Ferriss
I'm not here to debate either position, but the challenging nature of the matter does beg the question, "How are you doing at being focused in sales?"
Are we more successful in sales with a laser beam focused approach, or is there benefit to multi-tasking?
Here are some related words:
- Procrastination
- Distraction
- Tangents
Procrastination, distraction, and tangents are certainly the enemy in a sales driven, results oriented economy. Sales Ethos excellence demands vigilance and fortitude. If we're endeavoring to build long term client value and we're procrastinating, distracted or on an unproductive tangent, our clients suffer. We must conquer this sales and service buster. It's imperative that we get this one right!
So, how do we battle these obvious hurdles to sales ethos success?
If your goal is to physically feel better by utilizing a form of exercise, which do you think is more likely?
- "I will start exercising when I feel better.”
- "I will feel better when I start exercising.”
It's been my experience that I will feel better after the activity rather than preceding the activity. Hoping to feel better and somehow at that point being motivated to exercise is kind of like the saying "bass ackwards/" At least that's true for me. Sometimes I have to force myself to workout because my personal motivation is zero. After working out, however, I am re-energized for the day and the activity ultimately leads to better physical, mental and emotional well being.
The point is this: sometimes we must do the "hard things” first — before we see results — rather than hoping for results and then committing to do the more difficult task. I find this especially true in a sales career. The biggest difference between achievers and receivers is their willingness to do what the under-achievers won't do. Sometimes it's as simple as that. The achiever is not necessarily superior, intellectually advanced or far more educated than others. He or she simply decides to act on the disciplines in front of him/her. This even applies to our expectations. If we believe that we can achieve outstanding results, we're more likely to do so than if we don't believe we can achieve them.
Now, don't get me wrong, I'm not talking about the easy "positive thinking” mentality that does exist in some circles. But I do think there is a correlation between envisioning what we can achieve in contrast to just going through the motions and accepting mediocrity. I think this is why goal setting is imperative and Sales Ethos excellence demands nothing less.
It's been my observation that many sales trainers, systems and books are focused on the sales person's benefits of sales — not those of the person or organization that they're supposed to be delivering value for.
I won't name specifics but it's easy to do an internet search and find many of these provocative sales words:
- Intimidation
- Get what you want
- Make more money
- Wake up
- Win
- Killer
- Etc.
Is that the right motivation for sales professionals — to do what is in their own best interests? Is this the reputation that you want to build — using one or more of those words to position your value proposition? I would adamantly say "Not"!
A better way is to listen and learn from your prospect exactly what it is that they're looking for in the product or service that you can deliver. Another way is to take a long-term view of the people you're working with and build a relationship that will stand the test of time. Building a strong relational foundation takes time. Sales Ethos professionals embrace the reality that nothing replaces quality and quantities spent with valued prospects and clients.
Having said that, listening is a lost art. Most sales professionals are so set on rehearsing and communicating their sales pitch that they forget to listen. Or, after a prospect is getting close to giving the order, I have seen many sales people talk the prospect right out of the sale — because they were talking instead of listening.
It reminds me of this ancient, enduring truth: "... he who holds his tongue is wise." Proverbs 10:19b
To effectively listen one must hold his tongue and:
- Actively listen and focus exclusively on the one speaking.
- Long for understanding and repeat back to the speaker what they have just communicated for clarification.
- Let the speaker finish their comment before responding. The unforgiving sin is interrupting the speaker to make your point!
- Don't let your biases and opinions get in the way of the speaker's point of view.
- Position your body language in a way that communicates your interest in what they're saying. In other words, lean in, make eye contact, and don't cross your arms!
In this audio interview, Sales Ethos founder Dave Dias interviews Larry Broughton, Founder and President of Broughton Hospitality.
In January 2001, Larry Broughton founded Newport Beach, CA-based Broughton Hospitality — a comprehensive management and development group, specializing in the hospitality industry.
Sales Ethos has three guiding principles articulated below:
- "The truth will set you free." John 8:32 (NIV Bible Translation)
- "It's amazing what you can accomplish when you do not care who gets the credit." Harry S. Truman
- "It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself for a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat." Teddy Roosevelt, "Citizenship in a Republic," Speech at the Sorbonne, Paris, April 23, 1910
Guiding Principles are foundational for building long term client value. These tenets are so important that if a sales professional doesn't fully embrace each one of them, then failure is certain to follow. Adhering closely to each principle is like a rudder on the ship that keeps it steadily on course.
Let me dissect each one of the three Sales Ethos guiding principles for further clarification, understanding and application.
The Truth Will Set You Free
If this is true, and I believe that it is, then the opposite is also true: error and/or falsehood will keep you enslaved. Here are some elaborating thoughts on the truth.
- Truth always stands the test of time.
- When you speak the truth you never have to hide; in other words, you never have to look in the rear view mirror to remember what was said.
- Truth puts a skip in your step because it is liberating and emotionally validating.
- Truth shines like the light of day.
- The truth will, sooner or later, became known to all parties.
Vast amounts of information are required and maintained in the insurance industry. The colossal amount of information that an insurance buyer must provide to the brokerage and carrier can be overwhelming and exhausting. Repeated requests for information from multiple sources out of the buyer's control, over an extended period of time, can fatigue even the most diligent professionals. It's easy to become discouraged, take a shortcut, or long for the easy way out. Sometimes it's tempting to not pursue all of the information requirements or, in some dreadful cases, prevent information from being learned or going so far as to deceptively conceal information that might be compromising for the placement of a policy. In other words, full disclosure and reporting of all truthful information is a Sales Ethos value.
I have seen underwriting decisions adversely influenced by not having all of the information because it wasn't appropriately disclosed. I have seen individuals hurt as a result of this unprofessional behavior. Sooner or later, however, the information was learned by the various parties involved. Reputations have been damaged by these disclosures because the information should have been made public. Relationships have been forever altered because trust was violated. Sales Ethos advocates for the truth to always reign ... every time and in every circumstance. Long term value can never be fostered when trust has been violated.
Summary
A statement issued by DuPont on November 9 said trace amounts of aniline were found outside of the company's Beaumont, Texas, plant. Brown pinhole size spots were discovered at a nearby firm and church. DuPont determined the exposure was limited to an area about 800 feet from the site's fence line. The firm is cleaning its neighbor's vehicles and buildings as a precautionary measure to minimize the risk of exposure. A trace material in the aniline stream is 4-aminodiphenyl, which contains a health risk in the event of repeated exposure over a long period of time. There is no significant risk due to the November 3 incident because of the short-term, low level potential for exposure. DuPont indicated its aniline unit remains shut down.
Analysis
When it comes to the potential for humans to come in contact with carcinogens, why do we have evolving versions of the truth?
On the National Response Center, a caller reported that the situation had been fixed and that the incident had exposed 0.25 mile (one mile is equal to 5,280 feet, therefore, one quarter of a mile is equal to 5,280 / 4 = 1,320 feet). Yet, per DuPont's regional manager of public affairs, Aaron Woods' published statements on November 3, 2011 at 2:08 pm, "there are no impacts to the community, as the release was confined to the site."
On a later report, it was stated that "... a relief valve failed and spewed 1,000 pounds of the chemical aniline into the air. The brownish-orange liquid coated much of the north end of the industrial complex, which include the Lucite and Pandora plants." Despite earlier reports that none of the chemical escaped the boundaries of the plant, Aaron Woods, later confirmed that there were leaks.
In a subsequent interview, Mr. Woods announced that "up to 5,000 pounds of aniline may have been released into the air" — which is far more than a trace. These 5,000 pounds of aniline apparently escaped outside of the building extending up to 800 feet beyond the fence line of the facility. Given the vaporizing nature of toxic aniline, there is a high potential that a much larger area may have been contaminated.
Contradicting the earlier public statements — "There are no impacts to the community, as the release was confined to the site," Dr. Matthew Hoke, an environment microbiologist at Lamar University said "4-ADP can affect people differently and saying a one-time exposure won't cause cancer doesn't seem wise."
Per discussion with Mr. Woods on November 17, 2011, it appears that DuPont was busy being immediately responsive and had decided to take a proactive measure in providing the Texas Commission on Environmental Quality (TCEQ) with a supplemental voluntary report which they did not need to complete. Note that DuPont apparently did not have to complete any report according to current industry standards as Dupont's latest findings had no reportable quantity breach of aniline — which means that less than 5,000 pounds of aniline was released. Mr. Woods could not provide me with official numbers but commented that the final results "were well below."
Our recommendations here are that a communications plan with special crisis management resources should be included as part of all business continuity, security and disaster recovery programs. Quarterly hands-on training exercises need to be taking place including the communications team where pre-established templates reviewed by the legal teams are prepared in advance.
In my past pieces, I have written about the importance of a disruptive model of care and payment called Direct Primary Care (DPC) such as The Most Important Organization In Silicon Valley That No One Has Heard About. As the Direct Primary Care models scale, they become a great option for individuals and small business. However, larger organizations have another option at their disposal that I'm as excited about as the Direct Primary Care models (see this article for more detail).
Employers fed up with the annual "get less for more" health story when they get annual health plan updates have taken matters into their own hands. This has created one of the hottest sectors of the economy — onsite clinic providers. These are companies such as Concentra and CareHere providing corporations with primary care onsite at employer workplaces. Each of the onsite clinic provider CEOs I have spoken with have shared that their business is growing 100 percent annually. Reportedly, 20 percent of employers with over 1000 employees are implementing onsite clinic programs.
Faced with healthcare's hyperinflation which is hurting their competitiveness, employers have been trying an array of solutions. Led by IBM's study of their $2 billion annual health expenditure, the overwhelming evidence comes to a surprisingly simple conclusion: more primary care = healthier population = less money spent. Ben Franklin was right. An ounce of prevention is worth a pound of cure. Time and again, it's been shown that proactive primary care can reduce the most expensive downstream healthcare costs — surgeries, scans, emergency department and specialist visits — by 40-80 percent. Rather than waiting for small issues to become full-blown medical incidents, proactive primary care can make a big difference.
As a board member of the Healthcare Delivery Innovation Alliance, I have had the privilege of talking with the disruptive innovators. They're proving that employers don't have to endure the "get less for more" program anymore. Larger employers are finding onsite clinics have the same cost and health benefits as Direct Primary Care models, but it goes beyond just direct costs.
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Dave Dias
David Axene
Jeff Pettegrew
Jennifer Weathersbee
Mark Webb