People aspects of entrepreneurs: personal service contacts with key personnel including non-compete clauses, methods of reimbursement for company success, incentives (profit-sharing or other), and effect of immigration restrictions on entrance of possible entrepreneurs into Canada and the U.S.

Author:Jeffers, Benjamin W.
Position:Canada-United States Law Institute Annual Conference on Comparative Legal Aspects of Entrepreneurship in Canada and the United States
 
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INTRODUCTION

Gerald "Jerry" Torma

MR. TORMA: Good morning. Can everyone hear me all fight? Can everyone hear me okay? Good morning to everyone.

My name is Jerry Torma from the Nordson Corporation, and I am very pleased to be here today. I would like to thank Henry King and the other advisors and other organizers for their kind invitation to be here to represent Nordson Corporation at this extremely valuable and worthwhile event.

I will introduce our two presenters in just a moment. Nordson Corporation was founded in 1954 by Walter G. Nord and his two sons, Evan Nord and Eric Nord. (1) All three of them received their engineering degrees here at the Case Institute of Technology. The first product was airless electrostatic painting established and founded by and developed and discovered by a person from Case. (2)

As early as 1965, when Nordson was a relatively small company, they began their operations in Canada, and it was still very entrepreneurial in nature. And ever since 1965, Canada has been a truly important source of road for Nordson in three ways:

Number one: it provides sales, number two: it is a source of executive and managerial talent, and, three: it has always been managerial rather than entrepreneurial. It has always been rather unique in its innovative and technological contributions.

All of you have there in front of you a brochure called Northeast Ohio, and if I could ask you to open up to the center and look on the right-hand side. It reminds us that Northeast Ohio is a link to international business. The graph or chart or map on the right-hand side, in the middle there, also is very illustrative in that it shows us that Ohio and Canada are inextricably tied together.

There is a mutual interdependency in business, and many of us consider the Southern Canadian, Northern Ohio region, Northern United States and Midwest region as one economic unit, not two. So I think it is very fitting that we have this conference and presentation today to reinforce the oneness of that economic unit.

We are very fortunate to have with us this morning two presenters who are extremely experienced and extremely knowledgeable. I am sure we will all benefit from them. One of the principals I like to see sometimes is what I call three-way communication. Hopefully, one way is, from the three of us to all of you. Equally important I think is from all of you to us--your questions--and then sharing three-way communication participant to participant. So with no further delay, I would like to ask Benjamin Jeffers to introduce himself and to give the appropriate background and presentation followed by John Craig, our visitor and guest, pleased to have him from Canada.

Ben?

UNITED STATES SPEAKER

Benjamin W. Jeffers *

MR. JEFFERS: Good morning. I am very happy to be here. I want to thank the Institute for letting me come and speak this morning.

I have a litigation background, and my specialization is in commercial litigation. I have experience in a lot of supply issues, particularly when they rise to a dispute level. I also spend a fair amount of time working with small businesses, dealing with issues of non-competes, employment situations, and company secrets. Hopefully--and part of what I enjoy--is counseling and providing guidance that helps them avoid litigation. Certainly, my specialization is getting involved when there is a dispute. I come from Detroit, and I am one of the few that can say when I look across the border to our colleagues, I am actually looking south. That is a little known fact that has tripped up a politician or two here and there, and it is a fun place to be.

The people aspect of entrepreneurs is potentially a very broad topic, and what I decided I would like to do this morning is just address a couple of distinct issues. All of these things are things that I think entrepreneurs or business venturers need to think about when they are dealing with personnel decisions.

Of the three things that I want to speak about, first, is very briefly some current events and immigration issues. Candidly, this is not my area of specialization, but I find it very fascinating and interesting--the policy debate going on involving immigration and some of the real world impact of that policy debate.

Second: protecting a venturer's trade secrets. Really I just want to touch upon the importance in an entrepreneurial setting, or any small business setting, of putting the fight protections and measures in place to protect your company's secrets with respect to key employees and other stakeholders of your business.

And last, again, I am just going to touch upon an area that I have some familiarity with but certainly not expertise, which is compensation. I want to just address a few of the trends in U.S. executive compensation.

I recently read a little report that was published by a company called Interior Software Company. They were identifying some trends of small U.S. businesses. One of the trends that they had identified was classifying what they call a new breed of entrepreneurs, which they indicated would include people who are near retirement age--

lot of people. This is meaningful coming from Detroit--displaced from their jobs, leaving their jobs earlier than they had anticipated, earlier in their careers and starting something new. (3) More women are becoming entrepreneurs. (4)

Then the report also noted a continuing trend of immigrant entrepreneurs as being one of the fastest growing segments in, certainly, small business ownership. (5) It attributed this to a number of factors, some of which may include trying to steer around traditional barriers of employment when you come to the U.S., including not having corporate contacts, English language skill barriers, not having experience with large companies and really noting that starting a business in some respects may be easier than trying to get a job in your field in the US. (6) The report went on to comment that the trend may depend in large respect on how this policy debate plays out. (7) I think that is true to a degree. I think that whether or not immigrants to this country, or even Canada, can come here and establish an entrepreneurial venture I think is one topic.

One of the things in which I do see a potential problem is in establishing U.S. ventures or entrepreneurs trying to get access to highly skilled workers who are foreign born coming to the U.S. to work here, and the need for U.S. companies to attract these highly skilled workers.

I am going to get to just one example. Before I do, I also want to note that in Tab 3 of your materials--this is not material that was keyed for today's preparation--but there was additional data. I believe it was called Trend Setter. And I noted in looking through it that in this Trend Setter barometer data they had polled some CEOs of vast growing businesses, and that one of the single most important challenges a business will face in 2007, number one on that list, was finding and entertaining qualified employees. (8)

The data went on to mention the top three wild card issues in 2007:47 percent mentioned a shortage of qualified workers. (9) One example of this is somewhat recent, and this is the H1-B visa shortage (10), my term.

U.S. businesses use H1-B visas as a means of employing foreign-born workers with specialized knowledge--scientists, engineers, and computer programmers. (11) Certainly, there are a myriad of other visa programs and mechanisms for non-immigrants and immigrants alike to come to the U.S. and work. (12) I am not going to go through all of them in any degree, but I wanted to touch on this example as perhaps being illustrative of some problems we have and how the policy debate needs to focus on it.

The key here for the H1-B visas is that there is an annual limit of 65,000 for new visas every year. (13) These applicants have to have a B.A. degree, and there are another 20,000 who have to have a U.S. Master's Degree. (14) Petitions are flied by U.S. businesses as of April 1st of every year for the following fiscal year--U.S. Government fiscal year, October 1 through September 20th. (15) So there is really a rush to file.

The date this year was April 2nd, which was a Monday, and the U.S. Citizenship and Immigration Services announced that they had received more than enough petitions on that very day to satisfy the count for the entire year. (16) I just picked up the press release, and it is notes they had received over 150,000 H1-B petitions on April 2nd, the day that you could actually file, so the cap was reached. (17) They will have a random selection process to determine which cases are actually accepted, and everyone else will have to wait another year. (18) I think this is really an interesting problem.

Talking with Jerry before the program, I asked him how his company deals with some of these issues. He said, well, you know, we are global and have facilities in so many different parts of the world, and if we want to bring people over here, there are other visa programs that might get by, the L1-B for example. (19) Or there may not be the need to bring workers over here to make products if, in fact, you have the facilities abroad and are going to have to hire workers there and make the product there. (20)

But if you are a U.S. business relying on skilled workers and you cannot find enough in the United States, this is going to be a real issue. I think what it says about the problem in the United States of U.S. citizens acquiring this sort of specialization education is something for another day, but that's certainly a sub-theme in there. (21)

So there is an obvious barrier here to businesses in the U.S. that need access to this skilled talent pool. Perhaps a little less obvious, but clearly related, is the notion that this sort of policy, if it continues, may force U.S. businesses to go abroad looking for this sort of skilled labor. (22) So this is perhaps another example of U.S. companies...

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