CRAIN’S LIST List ranking Cleveland nonprofit executives by pay reveals big gaps in COVID’s impact. PAGE 18
SMALL BUSINESS: Ohioans head to Washington to make their voices heard. PAGE 10
CRAINSCLEVELAND.COM I AUGUST 8, 2022
New rules of work culture How companies battling turnover turn back toxic office tendencies to engage employees
BY ANNE MICHAUD
Giant Machines, a small software company in the heart of New York City’s Financial District, built an app for Ocean Conservancy some time ago. But employees still check the reviews to see how 90,000 users and beach cleanup volunteers are rating it.
“We released it, and we moved on,” Giant Machines co-founder Roy Yang said. “But they’re still religiously going to the app store to see how people are responding. They take personal pride in that.” That sense of mission is one of the ways Giant Machines is making its culture more engaging, to defend against a potential exodus in these
much more empowered to dig a little deeper into the company culture,” she said. “There are always people who are looking just for money, but I would say the thoughtful job seekers have really wanted to land somewhere they feel is inclusive, that they identify with.”
Great Resignation times. A year ago, the company committed to leveling internal compensation to meet market salaries. Giant Machines added a learning and development team in June. Jen Cox, the company’s head of talent acquisition, said interviewing job candidates has changed since the pandemic began. “They feel
‘SEEING IS BELIEVING’
Giant Machines co-founder Ray Yang (center) with his staff. The company is making an effort to create a more engaging culture, to defend against a potential exodus in these Great Resignation times. | BUCK ENNIS/CRAIN’S NEW YORK BUSINESS
See CULTURE on Page 21
After years of delays, Canton’s Hall of Fame Village finally has momentum
Apartments continuing to change the landscape
BY JOE SCALZO
BY STAN BULLARD
If you stand on the northwest edge of Canton’s Hall of Fame Village and crane your neck skyward, you’ll see a football-themed zipline called “The Forward Pass” that stretches across Play-Action Plaza, a 3.5-acre green space that will soon feature the old
I-X Center Ferris wheel, as well as an amphitheater, a water feature, a walking trail and more. If you’re looking for Village metaphors, you could do worse than “The Forward Pass.” It goes backward before it goes forward. It’s expensive. It probably didn’t need to be built. It’s still not ready.
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But man, it’ll be fun when it’s finished. There’s an old joke about how soccer is the sport of the future in America, and always will be. For years, the Village seemed destined for the same fate. See VILLAGE on Page 20
THE
Construction workers hired by Geis Cos. of Streetsboro and its subcontractors are starting to put the foundations in place for a five-floor apartment building at 1910 Abbey Ave. that will dramatically change the block best known for the former Abbey Market.
LAND SCAPE
It’s still known by the working title of Abbey Avenue Apartments because the final name — or, in contemporary realty developer parlance, “branding” — is not set yet. However, developer Michael Panzica, the principal of M. Panzica Development of See APARTMENTS on Page 19
A CRAIN’S CLEVELAND PODCAST
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HEALTH CARE
The Centers expands its service network Two new Behavioral Health Urgent Care locations recently added BY LYDIA COUTRÉ
The Centers — a nonprofit providing integrated health services and family support programs — aims to reduce barriers to access, build capacity, reduce stigma and ultimately prevent behavioral health crises with its two recently opened Behavioral Health Urgent Care (BHUC) locations. Overdose deaths and suicides continued to rise alongside increasing behavioral health issues through the pandemic, health issues prompting The Centers to secure a grant from the Substance Abuse and Mental Health Services Administration (SAMHSA) and the Alcohol, Drug Addiction and Mental Health Services Board of Cuyahoga County (ADAMHS) to support BHUC locations in University Circle and Gordon Square, which officially opened in July. “Demand was high before the pandemic,” said Eric Morse, president and CEO of The Centers. “Now it’s through the roof.” Allen At the BHUC locations, patients can get walk in or call and get immediate same- or next-day appointments depending on their own schedule to access a full range of initial treatment, such as managing medication, needing counseling or a medication refill when they may not be able Biscaro to get in elsewhere. BHUC serves as a touchpoint and will help coordinate a hand-off to another provider within The Centers or another provider in the community. The on-site pharmacies also can help improve compliance by allowing patients to walk out with their medication in hand. SAMHSA committed $2.5 million per year for two years and the ADAMHS board awarded The Centers a one-year, $500,000 grant, for which the organization is in the process of requesting a renewal. Morse estimates it will cost The Centers around $3 million a year to run both BHUC locations, and his hope is that a high enough volume will get them “close to self-sufficient,” but he expects there will still be a gap. Beyond the startup funding of the SAMHSA and ADAMHS board grants, he expects The Centers will have to fundraise for the BHUC facilities in the future. “The ADAMHS Board commends The Centers for addressing a need in our community to provide urgent mental health and substance use disorder treatment to individuals to deter a crisis situation,” Scott S. Osiecki, CEO of the ADAMHS board, said in a provided statement. “Individuals can be assessed, begin treatment and be connected to follow-up care directly from the urgent care centers, which will have an important impact for clients, as well as our entire system of care.” The Centers (formerly known as The Centers for Families and Chil-
dren) serves more than 20,000 people annually in Northeast Ohio with services including primary, behavioral health and dental care, addiction services, and family support programs, including early childhood development, career training and job placement. The new BHUC locations aim to, according to the release: offer timely care for those who would otherwise wait to see a specialist; offer immediate access to more intensive care if needed; reduce the burden on stressed emergency departments; provide more coordinated, comprehensive care to improve patient outcomes; and address mental health stigma by providing a safe, confidential place to access needed care. Having services accessible and immediate is “extremely important,” when someone makes a decision to seek care, said Jeffrey Allen, BHUC director for The Centers. “So by having accessible services, it really mirrors the person’s need and current intent to start getting care,” he said. People may be apprehensive for a variety of reasons, but when they have made a decision to access care, being able to do so is critical, he said, “because something may come in and interrupt their motivation to engage in care. And then we lost that opportunity to help a human being.” The organization repurposed existing office space to open the two urgent care locations at its Gordon Square office (5209 Detroit Ave. in Cleveland) and its Uptown office (12201 Euclid Ave. in Cleveland). Each has a multidisciplinary team — made up of a psychiatric provider, registered nurse, licensed social worker/licensed counselor, care coordinator and client service representative — that collaborates to address individuals’ unique goals, needs and care preferences. That staffing allows for each BHUC location to see about 12 patients a day. Morse noted that having them located within existing locations and open during normal business hours (both are open 8:30 a.m. to 4 p.m. Monday through Friday) means that additional staff in the building may be able to jump in and help as needed if there’s any sort of surge. The locations accept Medicaid, Medicare, most commercial insurances and offers a sliding fee scale. BHUC adds to the network of services in the community for people seeking behavioral health care. To ensure a coordinated continuum of care when launching BHUC, The Centers coordinated with other existing behavioral health facilities in the community, such as St. Vincent Charity Medical Center’s psychiatric emergency department, which offers psychiatric care 24 hours a day. The urgent care locations are “another piece of the puzzle,” said Mi-
Lori Criss, director of the Ohio Department of Mental Health & Addiction Services, and Eric Morse, president and CEO of The Centers, cut the ribbon at the July 22 grand opening of the University Circle location of The Centers new Behavioral Health Urgent Care.
Eric Morse talks to a group gathered for the Behavioral Health Urgent Care grand opening. | ELAINE MANUSAKIS/EVERY ANGLE PHOTOS
chael J. Biscaro, vice president of behavioral health services for the St. Vincent Charity Health Campus. Biscaro said he sees the urgent cares as a great place for individuals to get outpatient care before they have an appointment or during ongoing care when they need a refill or help managing issues and can’t get an appointment quickly. “Really, I think we’re hoping that this helps prevent crises from occurring and then for people to have to really go to more emergent costly care like an emergency department rate,” Biscaro said. “So imagine if urgent and express care centers didn’t exist for medical services — we’d all
still be going to the emergency department for everything that we needed if we couldn’t get into our primary care doctor. And this is really the issue that the behavioral health system has been facing for a number of years.” He notes that the new mental health hotline that went live this summer is also a helpful step in people getting the care they need. 988 is a three-digit nationwide phone number to connect directly to the Suicide and Crisis Lifeline for people experiencing mental health related distress or suicidal crisis. Already since the BHUC locations’ opening, a patient was re-
ferred to The Centers from the National Suicide Prevention Lifeline. They were then internally routed to the BHUC team, who met with the patient, enrolled them in benefits, connected them with primary care, scheduled follow-up appointments and developed a recovery plan to stabilize them through their crisis, Allen said. “It’s just amazing that if we’re able to engage people early on and help them, it really kind of thwarts their penetration into the higher levels of care,” he said. Lydia Coutré: lcoutre@crain.com, (216) 771-5479, @LydiaCoutre
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REAL ESTATE
Ashtabula County Port Authority buys 80 acres from Velocys
531
STATE ROAD
A relatively small acquisition of property in Ashtabula County could become part of a larger redevelopment strategy in the region. The Ashtabula County Port Authority on Friday, July 29, purchased 80.5 acres from Velocys plc, a sustainable fuel technology firm based in the U.K. The port authority paid $200,000 for the property on Lake Road East in Ashtabula Township, Mark Winchell, executive director of the port authority, said in an email. The site had been acquired by Velocys in 2014 as part of a larger acquisition, but had gone undeveloped. The county port authority operates what Winchell called “plant C” on about 20 acres across the street from the acquired property. Working with the Growth Partnership for Ashtabula County, the port authority learned late last year that Velocys was potentially looking to sell the site. The port authority’s initial concern was for a water pipeline it has running through the property, Winchell said, and what could happen to that infrastructure and the port’s easements if the parcel was sold. The port authority approached Velocys to share its interest, if the land was indeed for sale, and the two ended up entering a purchase agreement. A spokesperson for Velocys in an
RUSSEL DRIVE
BY RACHEL ABBEY MCCAFFERTY
The Ashtabula County Port Authority purchased about 80 developable acres of industrial property, shown in red, in Ashtabula Township for $200,000. SOURCE: ASHTABULA COUNTY AUDITOR
email said the company had no comment on the sale. The property was part of what used to be a large Union Carbide complex, Winchell said, so the port authority wanted a slightly longer than normal due diligence phase. “We recognized we weren’t making cupcakes out there for the last 80 years,” he said. “This is an industrial complex.” While the port’s initial interest in the land was straightforward, the vision quickly grew. Today, the goal is to clean
CRAIN’S CLEVELAND BUSINESS GRAPHIC
the site up for future industrial use. That had been the interest of the Growth Partnership for Ashtabula County from the start. The partnership focuses on economic development for the region, which means it needs “development-ready sites,” said executive director Greg Myers. The partnership had targeted the former Velocys site for redevelopment, due to its rail and water infrastructure and its proximity to the local commercial port. When Velocys told the partnership that it was ready to
divest the site, the growth partnership reached out to the port authority, Myers said. There is infrastructure on the site, like a “railroad underpass” under the road, Winchell said. And there are companies nearby, like a chlorine facility, that use and need rail, he said. Winchell also noted that a nearby former power plant was recently sold, which could be a space for future redevelopment. “We looked at this more strategically. This is not just to preserve the water asset that’s buried in the ground. But there’s a lot of redevelopment that could happen,” Winchell said. And Winchell’s not talking just about the parcel on Lake Road East now owned by the port authority. He’s thinking bigger, thinking about all the possible brownfield land available, the rail, the electricity, the water. Those are assets the region can pitch to economic development organizations like Team NEO or JobsOhio, he said. The port authority can work to help clean up sites or put multiple sites together for future potential buyers. This acquisition is a way for the port authority to be part of a “renaissance” for the region, Winchell said, a way to “reclaim” its industrial spaces and find new ways to use them. That historic industrial growth came with a cost to the environment,
he said, which is why the brownfield redevelopment is so important. It’s a way to remediate the harms of those past industrial facilities, but also encourage the growth of modern industry here. “What we created with shovels and pickaxes and just gumption and sweat by our brows is staggering to me,” Winchell said. “We created infrastructure to rival the Port of Baltimore. We have these incredible assets that are right here.” Myers said the Growth Partnership sees this site as the “first domino” that could be paired with others nearby to market for redevelopment. There aren’t a lot of heavy industrial sites available for use statewide, Myers said, which makes the properties in the former Union Carbide site particularly attractive for redevelopment. That’s important as conversations about the electric vehicle market locating in the region, or manufacturers looking to reshore, continue. “You’re going to need sites like that to meet the needs of many of those industries, whether that’s steel production or whether that’s heavy manufacturing on the chemical side, batteries and things like that,” Myers said. “You’re going to need access to those assets to be able to effectively develop those industries here.” Rachel Abbey McCafferty: (216) 771-5379, rmccafferty@crain.com
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The Ohio College Comeback Compact hopes to get more Northeast Ohio students reenrolled in college, and eventually, to graduation. | RAMI DAUD/KENT STATE UNIVERSITY
Ohio College Comeback Compact enters next chapter BY AMY MORONA
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The name of the initiative is long. But, at the core, the goal of the Ohio College Comeback Compact is simple: to get more Northeast Ohioans to return to college. All public four-year and two-year higher education institutions across the region — that’s Cleveland State University, Cuyahoga Community College, Kent State University, Lakeland Community College, Lorain County Community College, Stark State College, the University of Akron and Youngstown State University — are participating. After plans for the compact were first announced in late 2021, it’s primed to enter its next chapter. The group is targeting a specific group of people who stopped out of college and whose transcripts are being withheld over outstanding institutional debts. Think things like unpaid tuition and/or fees owed directly to the college, not student loans. This means those students can’t take classes at their home institutions or transfer to another college until those debts are settled. The credits for classes they’ve already earned are effectively “stranded.” It’s estimated about 6.6 million people nationwide fall into this category. Those at community colleges, which enroll higher populations of students of color, as well as older and/or first-generation students compared with four-year institutions, are disproportionately affected, according to a 2020 report from Policy Matters Ohio. The compact is zeroing in on about 15,000 eligible people in Northeast Ohio who previously went to one of the eight participating institutions and didn’t finish their degrees, according to a new
report out this week from Ithaka S+R. The nonprofit organization is guiding the compact’s work, along with a community-based partner in College Now Greater Cleveland, as well as the Ohio Department of Higher Education. Foundation funding is offering financial support. There’s a new website where those eligible can flag themselves to get the ball rolling. Colleges, too, will begin outreach efforts to former — and, officials hope, soon-to-be current — students this month. Before, when colleges would try to reconnect, conversations could basically be summed up in a line: “Hey. Come back.” That’s according to Heidi Nicholas, executive director of enrollment management and operations at Tri-C. But those chats can now take a different shape for this population. “It’s like, ‘Hey, you can come back now, because we have a solution for you to pay off your college debt,’” said Nicholas. Here’s that solution. Participating institutions will wipe away up to $5,000 of institutional debt once various requirements are met. For places like Tri-C, that will take care of the vast majority of students’ outstanding amounts. The average balance is estimated to be about $1,000, most often for unpaid tuition. Plus, their transcript will be released, allowing students to either return to the college where they started or enroll at another participating institution. Students will also get more in-depth advising from College Now and the institutions to help them create a re-enrollment plan. Meeting with an advisor twice on campus once enrolled is one of the requirements for being involved, too. The arrangement calls for
cross-institutional payments if a student goes to another school. That’s important. Enrollment has dipped at colleges both nationwide and locally, with the COVID-19 pandemic already amplifying existing struggles on that front. Fewer students, of course, means a decrease in incoming tuition. “The pandemic has siloed them,” Maggie McGrath, executive director of the Higher Education Compact of Greater Cleveland, said about local colleges. “It’s been about survival and how we get through it. I think they felt that way throughout the pandemic and somewhat still, honestly.” So now, even though institutions are working with their competitors, McGrath said coming together on this initiative is helping to foster a spirit of collaboration among them. After all, they remain focused on the same end goal of getting students to finish their degrees, which in turn can help the region. “Ohio companies need educated workers, and that need is growing with the unprecedented number of multinational companies moving to our state,” Randy Gardner, chancellor of the Ohio Department of Higher Education, said in Ithaka’s release. “The goal of the Ohio College Comeback Compact is to encourage adults to return to college to finish degrees so they can advance their careers in our growing economy.” As for metrics, officials with the compact believe the effort will be deemed successful “if it helps Ohioans return to college, earn their degrees or certificates, and reduce or eliminate the money they owe their former schools,” they wrote online, adding they’ll be “closely” monitoring outcomes. Amy Morona: amy.morona@crain. com, (216) 771-5229, @AmyMorona
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THE WEEK FUNDS FOR THE FUTURE: A $10 million gift from the Jack, Joseph and Morton Mandel Supporting Foundation will allow United Way of Greater Cleveland to create a dedicated endowment that will help the 122-year-old organization serve the community in the future. The gift will create the Jack, Joseph and Morton Mandel Fund, which will be part of the Cleveland Community Fund. The community fund has not historically had a large enough balance or dedicated contributions for endowment purposes, said Augie Napoli, president and CEO of United Way of Greater Cleveland. The Mandel Fund was designed as a matching grant to secure additional contributions that will invest in United Way’s urban engagement strategies, including immediate, coordinated assistance to help people in need of health, housing and economic mobility services in Cuyahoga County neighborhoods and communities. Napoli said they’ve already secured about half of the matching commitments. DOWNSIZING: East Cleveland-based GE Lighting will close two Ohio bulb plants, in Bucyrus and Logan, and will eliminate a total of 209 jobs. The company, part of Savant Systems Inc., said in a letter filed under the Worker Adjustment and Retraining Notification Act that the facilities to be closed are the Bucyrus Lamp Plant and the Logan Glass Plant. Positions “will be permanently eliminated” beginning on or about Sept. 30, the WARN notice stated, with 159 employees released on that date. It then expects to eliminate
CEO of The Sherwin-Williams Co., was leaving the board “due to his other personal, charitable and professional commitments.” Gregory R. Page, the retired chairman and CEO of Cargill Inc., will take over as lead director on Sept. 1. Page has been a member of the Eaton board since 2003.
The 72-unit Holiday Inn Express & Suites Kent, at 1215 Sanctuary Drive in Brimfield Township, sold for $5.14 million. | COSTAR
34 additional positions by Dec. 31, and the remainder by July 31, 2023. MED MUTUAL’S $90M BUY: Kemper Corp. agreed to sell Reserve National Insurance Co. and its subsidiaries to Medical Mutual of Ohio in a $90 million transaction expected to close later this year or in early 2023, pending regulatory approval and other closing conditions. Oklahoma City-based Reserve National sells accident and health insurance products in the individual and group markets with written premiums totaling more than $170 million in 2021. The deal “aligns with
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Kemper’s strategic intent,” Kemper president, chairman and CEO Joseph P. Lacher said, adding that it’s a “great fit for Medical Mutual of Ohio.” Kemper, a family of companies focused on insurance, has about $14 billion in assets. DRINK IT IN: Eastlake-based Bevcorp, a maker of beverage processing and packaging equipment, will be acquired by JBT Corp., the Chicago-based company announced. JBT signed a definitive agreement to buy Bevcorp for $290 million. The sale is expected to close in the third quarter of 2022, after regula-
tory approval and other closing conditions. Bevcorp is a subsidiary of Enprotech Corp. in Cleveland, itself a subsidiary of Itochu International Inc. in New York. BOARD CHANGE: Power management giant Eaton soon will have a new lead independent director. The company on Tuesday, Aug. 2, announced that Christopher M. Connor will retire from the board on Aug. 31. Connor has been a director since 2006 and currently serves as Eaton’s lead director. In a regulatory filing, Eaton said Connor, the retired chairman and
A LITTLE HELP HERE: Athersys Inc., the Cleveland-based regenerative medicine company that is undertaking cost-cutting and restructuring efforts, has named an interim chief financial officer. The company on Thursday, Aug. 4, named turnaround consultant Kasey Rosado to the interim CFO role. Ivor Macleod, the company’s former CFO, left Athersys on June 30 as part of a restructuring announced in early June that is cutting the workforce by 70%. Rosado, 49, has been a senior managing director with business advisory firm Ankura Consulting Group LLC since 2018. Athersys said in a regulatory filing that under an “engagement agreement” with Ankura, Rosado will continue to receive her compensation and benefits from that firm. Athersys expects to pay Ankura about $100,000 per month under the agreement. DEAL PUT TO BED: The 72-unit Holiday Inn Express & Suites Kent, at 1215 Sanctuary Drive in Brimfield Township, was acquired by Ohm Development LLC of Independence for $5.14 million. The seller was the original developer, Host Properties Ltd. of Brimfield. The limited-service property has a pool and was built in 2005. The county assigned the hotel a market value of $3 million for property tax records.
At First Commonwealth, we’re proud of the partnerships we’ve made with small business owners throughout our region who have trusted us to be the best bank for their business and help them reach their financial goals. Thanks to all of you, we’ve reached an amazing goal of our own. First Commonwealth Bank is now one of Ohio’s top SBA lenders. If you’d like to talk with one of our SBA specialists today, call Jerry Krieg at 216-906-0458 or Dale Lenzer at 216-416-2535.
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REAL ESTATE
Old building claimed for new life as home for tech companies BY STAN BULLARD
The Carnegie Avenue entrance of the six-story building at 10900 Carnegie in Cleveland will remain closed as the structure’s new owners see its Cedar Avenue entry as more aligned with the structure’s future than the past. That is because the IBM Explorys building, the Cleveland Clinic’s Global Cardiovascular Innovation Center and other ventures are nearby on Cedar. So many cutting-edge ventures are close that the Fairfax Renaissance Development Corp. calls the area its “New Economy Neighborhood” as part of the community development corporation’s plans to capitalize on the East Side’s new Opportunity Corridor. Agriplex Genomics, which works at the DNA level to improve productivity and health benefits in plants and animals, has committed to lease two floors in the building that will be renovated primarily for medical research space. About one-third of the space will continue to be used as offices. An Agriplex spokesman who declined to be identified said in an email that the company needs room to grow to 15,000 square feet from
about 7,000 square feet. It’s now housed at the Clinic’s Innovation Center. Agriplex plans to use 10900 Carnegie as its research and development center and global headquarters, thanks to Northeast Ohio’s talent pool, to provide reagents and software to support its ongoing expansion through the United States and to Europe, Brazil, Canada and China. The building’s remake follows its purchase by CedarTech LLC for $1.37 million from the Cleveland Clinic, which had called it the “DD Building.” The new owners are Brian Smith, the developer of the Tru by Hilton Cleveland Midtown and North Park Place townhouses on nearby Stokes Boulevard; Dick Pace, president of Cumberland Development of Cleveland; and a silent investor, a self-described biotech entrepreneur based in Las Vegas. Smith said in an interview that the building’s tired exterior belies its intrinsic value, thanks to 30 years of ownership by the Clinic. The prior owner converted the one-time warren of medical offices and suites to open offices, which makes it easier to revamp areas of the building as labs for researchers.
Moreover, its mechanical systems and wiring are top-drawer, and most needed improvements are cosmetic. Smith should know. He is the retired director of construction at the Clinic who is now making investments in the neighborhood surrounding his former employer. Lakewood’s Dimit Architects is working up a plan to update the building’s Carnegie side, even though the new owners will continue to use the Cedar entrance and address for the venture, Smith said. The Carnegie side of the building retains some of the 1956-vintage building’s stone at street level, but the 1970s upper floors were given a once-trendy metal-and-glass facade that is outdated. “Inside, it has offices with desks and staplers, and the Cedar side has lots of parking, although the lot needs to be repaved, which we plan to do,” Smith said. The venture also has the benefit of direct knowledge of the biotech market. Pace owns the Baker Electric Building, 7100 Euclid Ave. The building is a hive of biotech businesses now following a pioneering project in the multitenant medical research realty market in Cleveland.
The six-story building at 10900 Carnegie Ave., Cleveland, is being converted to a home for biotech and other technology-related ventures near University Circle. A dated building front will be among changes as the building is converted to multitenant from single-tenant use. | DIMIT ARCHITECTS RENDERING
“With the exception of two small suites on the second floor, the Baker building is practically full,” Pace said in a phone interview. “Another home for health startups makes a lot of sense. We’ve been approached by other companies we can’t accommodate and need a place for our tenants who might need to expand.” Pace said he has been excited by all the innovation and biotech ef-
forts sweeping the area from Midtown to University Circle in recent years. Though Agriplex is its first tenant, it may not be alone long after moving in later this month. “Things are going really well.” Smith said. “We may soon have the building half full.” Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter
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GOVERNMENT
New report says the region needs more women in STEM fields BY KIM PALMER
The female workforce
Northeast Ohio could fill a significant component of its workforce gap by steering women toward education and eventual employment in the fields of science, technology, engineering and math (STEM), according to the second edition of Team NEO’s “Lost Opportunities” report. The report makes the case that with current and impending shortfalls in skilled labor, particularly around Koehler in-demand industries, employers have to think differently about how they recruit and attract women. “Emerging supply chain tech talent opportunities continue to materialize, steering us toward a need for more STEM occupations and talent coming out of our schools,” said Bill Koehler, Palivoda CEO of Team NEO, in an interview. Of the 97,000 STEM-related jobs in Northeast Ohio at present, just under 24% are held by women, the report showed. That figure has risen, but not by much. In 2014, it was 22.8%. If the region is going to draw more women to STEM Buckland jobs, Koehler said, “We have behaviors and cultural norms that need to change. If companies don’t welcome individuals who have needs relating to various aspects of their life, then it’s going to be hard to recruit and keep these workers.”
One important step in closing the talent demand gap, Koehler said, is understanding the workforce: who is in it, and who is facing barriers in terms of education and training, especially in the case of female talent. The Bureau of Labor Statistics reported that by September 2020, during the worst part of the pandemic, American women lost or left their jobs at a rate four times higher that of men — a consequence in part of the stress women experience in managing home and job responsibilities, Koehler said. Another mitigating factor is that, according to the 2021 “Lost Opportunities” report, women earn 23% less than men even when they have higher levels of educational attainment. This gender wage gap means that in dual-income households, it’s easier for women than men to leave the workforce. The good news is that the gender wage gap, in light of recent data, may be diminishing — for some. “National data shows that between 2010 and 2020, there is a shrinking of the wage gap for women (age) 35 to 44 with increasing annual wages, even exceeding the wages of their older age groups,” said Sondra Palivoda, Team NEO’s research manager. “What
Are you building a talent pipeline?
we’re seeing is that younger women are getting paid on par with their male peers.” Women between the ages of 35 and 44 saw their incomes rise to an average of $49,088 in 2020 from less than $45,000 in 2010, an increase of nearly $4,200, according to a Pew Research Center report. Women 45-54 made an average at $48,153 in 2020, a 10-year increase of only $2,617, and for the 55-64 age range, women saw even less of an increase, at $2,543, resulting in a $47,892 average annual salary. “Where you might think that women in the older age groups who have been in their career for a long time have more opportunities, what we are seeing is that younger age groups ... gain entry to higher paying industries and jobs,” Palivoda said. Factors that help explain that trend, Palivoda said, are that younger women are seeking higher education at a greater rate, have more exposure to professional development and mentorship, and have better access to more detailed information on salaries than ever before.
Women in transition The numbers raise the prospect that older women might look to enter STEM fields. “A lot of the women in their 40s are making career transitions at that later stage in life,” said Jessica Buckland, student adviser at Cuyahoga Community College’s Women in Transition program. The program was created in 1978 to provide social services to divorced, widowed and disadvantaged wom-
U.S. earnings difference in women’s age groups 2010
$40,000
2020 $2,307
Education
Increase from 2010
$4,172
$2,617
$2,543
35-44
45-54
55-64
$20,000
25-34 SOURCE: TEAM NEO
CRAIN’S CLEVELAND BUSINESS
en. It now serves women who are experiencing any kind of transition in their life. The five-week course is free to women from all socio-economic and educational backgrounds, and it provides career, computer and personal development instruction and guidance. It’s akin to meeting with a life or career coach, Buckland said, adding, “It helps women that have been out of the workforce, underemployed or just feeling stuck in their career. We work on a personalized plan for academic and professional development.” The proliferation of IT, short-term training programs and tech-credentialed scholarships have opened up the field to women who often come to the program feeling that a lack of computer skills is an insurmountable problem. “I do see people much more open to trying these courses, even if they already have experience or a degree in another field,” Buckland said. “There’s a lot of opportunities where you can make really good money in a short-term program.”
As college enrollment rates for women age 18 to 24 continue to exceed that of their male counterparts, opportunities for women to choose a STEM education track increase. In 2019, 45% of women in the labor force held at least a bachelor’s degree, according to a 2021 Bureau of Labor Statistics report. There are “thousands of women in Northeast Ohio who are getting degrees in STEM,” Palivoda said. “It is trending upward, and we are hoping to see more over the next five to 10 years, especially with a big push encouraging young women to look at STEM degrees.” One of the motivations for women to move into STEM occupations is higher pay, since those jobs, on average, offer salaries of about $82,000 a year in Northeast Ohio. If companies want to remain competitive in a changing employment landscape, those organizations need to adopt approaches that aid women’s advancement in the workplace, Palivoda said. “There are steps that companies need to and have been taking to address the issues that women, but not exclusively women, face in the workplace,” she said. “If there is a major theme with this report it is that the leaders in our region should be encouraging women, and young girls, to look at and switch into these STEM careers that on average, have above-average, family-sustaining wages.” Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive
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PERSONAL VIEW
Should your business align with social issues?
RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS
BY RACHEL MCGANN
EDITORIAL
The heat is on O
n the low end, $1.8 billion. The high side, $5.9 billion. That’s the range of what Ohio municipalities will have to spend annually by 2050 “to adapt to the challenges of a worsening climate crisis,” according to a report released in July that was sponsored by the Ohio Environmental Council and Power a Clean Future Ohio. Those big-dollar expenditures are projected to be needed to cool hotter school rooms; establish additional community cooling centers; repair roads damaged by higher temperatures and more rapid freeze/thaw cycles; protect drinking water from harmful algal blooms; and ... well, we could go on, but you get the point. Outside Ohio, we got a devastating reminder of these types of costs in human terms when heavy flooding in Kentucky took dozens of lives. A study published earlier this year in the journal Nature estimated that climate change by 2050 is expected to increase annual flooding costs in the U.S. by 26% to $40.6 billion. The Ohio report limits its projections on future spending to 10 main areas, but it identified 40 other impact categories not included in the dollar estimate. We’re not in a position to judge whether the roughly $2 billion-to-$6 billion range is exactly right. This conclusion, though, seems on the money: “The impacts of climate change are underway and local governments will have to find a way to finance the local impacts of this global problem. As we see increases in extreme weather events and other consequences from the climate crisis unfold in real time, municipal governments will face new costs managing local recovery and adaptation efforts. As a part of this, local leaders must 1) understand the magnitude of costs that will be necessary to reduce the threat of climate change, and 2) implement preventative policies to avoid heavier retrofit costs down the line and to protect the lives and livelihoods of their residents.” The cost of addressing much of this likely would fall to taxpayers. It will require creative efforts on the part of municipal officials to both mitigate the worst of climate impacts on their cities and keep costs under control. These are not easy tasks, especially since local officials have limited ability to address carbon emissions. Cleveland, the biggest city in this part of the state and the one with the heaviest potential expenses related to climate change, is for-
How to engage with social issues depends on your type of business
tunate to have some fresh thinking at the top. As Crain’s reporter Kim Palmer noted in a profile of Cleveland Mayor Justin Bibb’s efforts to advocate for the city on a national stage, the city at the end of July was one of five selected for a Honeywell Smart Cities Accelerator, a program that uses technology to evaluate energy resiliency solutions with an emphasis on dealing with the challenges and impacts of power outages and other grid disruptions related to climate change. Bibb last week also was added to the steering committee of Climate Mayors, a bipartisan network of more than 500 U.S. mayors from 48 states who are committed to climate leadership. The organization says the work of its steering committee “makes clear that mayors across the country have and will continue to step up and lead on climate, regardless of the decisions made at the federal level.” There aren’t quick solutions for these challenges, but the consequences of inaction are heavy — and expensive.
Gamey T
he NFL excels at many things: producing a compelling product, marketing its games, and (especially) making money. Handing out discipline to players, though, isn’t one of them. In the first test of the league’s new disciplinary system, Judge Sue L. Robinson followed the letter of the NFL’s law and suspended Cleveland Browns quarterback Deshaun Watson for six games after more than two dozen women presented accounts of his lewd behavior and sexual misconduct. (Robinson wrote that Watson had “engaged in sexual assault;” he has denied all.) That punishment felt entirely inadequate, so the league now is appealing Robinson’s recommendation, which was its right but calls into question to effectiveness of what already was a drawn-out process. There’s probably no number of games in this suspension that would seem appropriate. The NFL is trying to protect its brand, not women. Watson has shown no remorse. Browns officials can’t explain themselves. No one looks good here.
Executive Editor: Elizabeth McIntyre (emcintyre@crain.com) Managing Editor: Scott Suttell (ssuttell@crain.com) Contact Crain’s: 216-522-1383 Read Crain’s online: crainscleveland.com
Social issues are at the forefront of Americans’ minds. Across the country, people are talking and mobilizing loudly about gun safety, climate change, reproductive rights, LBGTQ rights, COVID-19 guidelines and social organizations like Black Lives Matter. A host of hot-button issues are important to your consumers, but should your business publicly announce your McGann is stance on these issues and take sides? director of The answer is a definite maybe. digital Maybe is probably not what you were strategy for hoping for. BrandMuscle. Unfortunately, there is no clear-cut answer about how businesses should engage with social issues, because a course of action depends on the type of business, your brand values, and your customer demographic. Thankfully, there are clear ways to assess if and how to align your business with current social issues in our highly engaged, mobilized world.
If you are franchisee of a larger company, you will have to follow their corporate guidelines and ensure that anything you say about social issues is legally approved. Recent examples of companies taking a public stance on ALIGNING WITH ONE the controversial overturning of Roe v. Wade include Dick’s SIDE OF HOTLY Sporting Goods and Patago- DEBATED SOCIAL nia, both of which pledged to cover the costs if their employ- ISSUES CAN EITHER ees seek abortions, and brands ALIENATE like Levi Strauss & Co. and Ben & Jerry’s, which offered vocal CUSTOMERS OR MAKE support of reproductive rights. THEM FIERCELY If you own a business that is solely yours, you are not be- SUPPORTIVE OF YOUR holden to corporate policy, BRAND, IN TURN but you have to be your own safety net. So, spend some CONVERTING THEM time getting to know your cusINTO LONGTIME tomers. What is important to them? How old are they, how BRAND ADVOCATES. do they interact with businesses like yours both online and offline? Aligning with one side of hotly debated social issues can either alienate customers or make them fiercely supportive of your brand, in turn converting them into longtime brand advocates.
Know your customers
Businesses can no longer ignore this issue, because of the dramatic increase in social media use over the past decade. You must at least consider the consequences of taking a stance, whether you ultimately decide to take one or not. Consider that, in 2021, 66% of U.S. survey respondents said that they choose brands that reflect their personal values. That was an increase of 32 percentage points in less than a decade. Even though the majority of consumers expect you to take sides, that doesn’t mean you must. See SOCIAL ISSUES, on Page 9
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Abortion rights demonstrators during an “Abortion is Freedom” rally outside the Supreme Court in Washington, D.C., on July 4. Dick’s Sporting Goods and Patagonia both pledged to cover the costs if their employees seek abortions. | BLOOMBERG
SOCIAL ISSUES
From Page 8
Some of this is generational. For instance, millennials compose the largest group of consumers in the U.S., with an impressive buying power of $1.4 trillion. As consumers, millennials want to connect emotionally with brands and the overall purchasing experience. Eighty-three percent of them want to purchase from companies that have the same values they do, so one of the best ways to reach millennials is by sharing your company values and openly supporting causes. That may alienate certain customers, including customers who belong to the Gen X and Baby Boomer generations, but your gains for connecting with millennials can outweigh your losses. The majority of each generation, from Gen Z to baby boomers, believes that companies should take a stand on social issues, even if that stand does not align with their particular values. Consumers appreciate the authenticity of supporting what your company believes in, which improves the always important word-of-mouth recommendations. Think of it this way: My uncle may not agree with the stance taken by a certain company, but him appreciating their authenticity and speaking about the issue could lead to me making a purchase from that company. So that’s a win. Like millennials, Gen Z, America’s youngest consumers, seeks out brands that are authentic and support social causes that align with their values, such as protecting the environment and increasing diversity and inclusion. Recent events have both of those issues in the national spotlight, which presents opportunities for businesses that are willing to take risks to connect with these younger consumers. Millennials and Gen Z have different shopping habits, but they both spend a lot of time on social media, which is where businesses like yours can connect with them. Getting to know your customers will help you better speak their language.
How to decide whether to take a public stance
Here are five things to consider when deciding if your business should take a public stance on social issues: ` Does the issue align with your brand’s values? ` Does the issue impact your business or community? ` Do your employees care about the issue? ` Do your customers or target demographic care about
the issue? ` Would aligning with the issue help or hurt your business? If both, which is more important? After fully considering the above, if you do feel strongly about supporting a hot-button social issue on your business’ social media pages, be prepared to keep up with responses and to show that your business is walking the walk rather than simply talking the talk. Consumers are vocal on social media and quick to call out whether they think a business is just trying to look good, rather than truly supporting a cause. Be authentic. A few brands came under pressure for something as simple as changing their profile picture on social media, believing they were supporting the Black Lives Matter movement without really researching the cause’s meaning and what customers expected from them. Even more recently there was an ice cream brand that created a new flavor for Juneteenth but didn’t make any effort to donate a portion of their proceeds or support the cause in a concrete way. If your business chooses to support a cause, truly support it with measurable actions. One recent study showed that more than half of consumers want brands to take active stances on social issues, but what if your favorite brand doesn’t fall on the same side of an issue that you fall? That depends on the individual and how connected they already are to the brand.
Five tips for businesses that support social issues
` Be specific about why this issue is important to your business. ` Demonstrate what actions your business is taking and who it supports. ` Assign someone to maintain your social accounts and respond to incoming comments on your posts. ` Manage your reputation carefully; find ways address negativity toward your business. ` Don’t alienate or disparage those who feel differently. It’s important to understand that you cannot please everyone. If you choose to take a stance, be able to support your views, be authentic and explain why an issue is important to your business. It may impact your employees, customers or overall brand. Do not fight with those on the other side of the issue. Support your side without getting involved in anything too dramatic. You must also be prepared to remain firm in your support for that issue, because once your support is out there on social media, it’s public, and that debate will remain active.
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‘RUST BELT NAUTICAL’ Lakewood designer Rachael Koenig creates Shore Society, a Lake Erie lifestyle and apparel brand. PAGE 12
SMALL BUSINESS
Ohio business owners meet at Nationals Park baseball stadium for the Goldman Sachs 10,000 Small Businesses Summit in Washington, D.C. | GOLDMAN SACHS
MAKING THEIR VOICES HEARD
More than 100 Ohio small-business owners went to Washington to tell their hopes, concerns to lawmakers BY KIM PALMER
Rhoni Thompson, president and CEO of R.L. Cole Enterprise, was not convinced that it would be a good idea to leave Cleveland and her construction services trucking company in July, during the height of the building season. Eventually, Thompson and 2,500 other small-business owners across the nation, including more than 100 from Ohio, decided to to travel to the nation’s capital July 18-20 for the Goldman Sachs 10,000 Small Businesses Summit, which Goldman is calling the largest gathering of small-business owners in U.S. histo- King ry. “I was not 100% sure I wanted to go,” said Thompson, who attended the three-day event that offered the chance to meet with 400 government officials; hear talks by former President George W. Bush, Warren Buf-
fet and NBA star Chris Paul; and get a platform to advocate for solutions to the challenges small businesses are facing. “I wanted to talk about what we, as small businesses, struggle with, because I think it is important that small-business issues are top of mind (for) those representatives,” said Thompson, who was invited to the event as part of her participation in the Goldman Sachs 10,000 Small Businesses program that provides owners like her with access to business advice, financial capital and support services. Since the program’s inception in 2008, Goldman Sachs has committed $750 million to support more than 12,800 small-business owners across the country. And two years ago, the 10,000 Small Businesses Voices was created as an initiative to help business owners advocate for local and national policies.
“SMALL BUSINESSES ARE THE BACKBONE OF THE COUNTRY AND OHIO’S ECONOMY. THEY MAKE UP 99.6% OF ALL OHIO BUSINESSES AND EMPLOY NEARLY 45% OF ALL OHIO EMPLOYEES.” — Janetta King, the Midwest regional director of Goldman Sachs 10,000 Small Businesses Voices
“Small businesses are the backbone of the country and Ohio’s economy. They make up 99.6% of all Ohio businesses and employ nearly 45% of all Ohio employees,” explains Janetta King, the Midwest regional director of Goldman Sachs 10,000 Small Businesses Voices. The 10,000 Small Businesses program partners with Cuyahoga Community College, and
the program is one of the largest in the country. “Ohio and Northeast Ohio had one of the largest groups of business owners attending the summit,” King said. “There are 135 Ohio small-business owners, including many from Cleveland.” The summit comes at a time when business owners are dealing with the recovery from the pandemic, historic inflation, supply chain and workforce challenges, and still want to accelerate growth and create jobs to power our economic recovery, King said. A Goldman Sachs survey released just before the summit found that of the 105 Ohio small-business owners who participated in the survey, 89% feared the economy was heading for a recession in the next year. The state results were similar to the national results that found 93% of businesses are concerned about an impending recession. See VOICES on Page 22
10 | CRAIN’S CLEVELAND BUSINESS | AUGUST 8, 2022
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LAKE-EFFECT FASHION
Lakewood designer creates Shore Society, a Lake Erie lifestyle brand BY KRISTINE GILL
Rachael Koenig likes to say “we” when referring to her business, when really what she means is me, myself and I. Maybe it's imposter syndrome — “I still sometimes have that selfdoubt” — or a way of being modest. But if that’s the case, the full-time American Greetings designer isn't giving herself enough credit for creating — on the side and from scratch — a Lake Erie lifestyle and apparel brand called Shore Society that is at once aspirational and relatable. Her idea went from a single art print turned tank-top design in 2011 to an Etsy store in 2012 to her own e-commerce website in 2013 to an experimental brick-and-mortar shop at 2909 Detroit Ave. in 2021 with plans to renew its lease. “That's the challenging thing about being a small-business owner, especially if you're a creative — you have to take on everything else,” she said. Early on, that meant designing prints and clothing, overseeing production, packaging and shipping orders from home, blogging to draw eyes to the site, brokering partnerships with local vendors to sell items in stores, photographing merchandise, managing social media, staffing pop-up flea market events and keeping all the books. “In the beginning, I was teaching myself a lot about accounting, and even just the basic things, like how to pay your sales tax,” she recalled. YouTube tutorials helped, and the no-gatekeeping mentality of TikTokers was crucial as Koenig watched entrepreneurs share their knowledge. “Really, you don't know how to run a business. We’ve had years where it didn’t feel like a business, it was more like this is a fun hobby thing I’m doing on the side,” she said. “As it started to grow and gain more attention and get more eyes, it was like, ‘Oh, I actually do own a business now.’”
counterpart makes pearls: grit and time. In fact, you can buy an oyster print Koenig designed at her shop. There are neighborhood prints of Cleveland and Lakewood and the Great Lakes, too. This past year, she started selling her own photos, snapped from her boat and posted to Instagram. But as was the plan for the shop from the start, Koenig has mostly focused on carefully curating additional brands and products that match the aesthetic she’s after; they call it Rachael Koenig of Shore Society in her Ohio City store. Koenig has mostly focused on carefully curating additional brands and products that match the aesthetic she’s after: “rust belt nautical wear and wares inspired by the North Coast.” | CONTRIBUTED PHOTOS
Local shoppers, local brands Koenig, 36, grew up in Northeast Ohio, attended Kent State University and now lives in Lakewood. She and her husband take their 21-foot Chaparral H2O bowrider out whenever they get the chance. And she pilots the boat, too, usually in a crewneck she created herself, branded koozie in hand. “Don’t ask me to dock it,” she joked. Her husband helped build out the brick-and mortar space and was instrumental as Koenig learned SEO for her site early on, too. How a mostly one-man band grew a following strong enough to launch a physical shop post-pandemic is not dissimilar to how a clam’s saltwater
“rust belt nautical wear and wares inspired by the North Coast.” “We wanted to create a lifestyle brand that extended a little more into bringing in some product lines and brands that would support the vision of what we’re trying to create,” she said. “If I think of myself as a custom-
er, there isn’t really a place where I can buy the things we sell at our store.” Koenig snagged the spot from Harness Collective founder Anne Hartnett, who was scrambling for a way to support her lease when the pandemic hit and Harness Cycle had
support local businesses. Hartnett to stop offering its spin classes. For a while, Hartnett had an agree- plans to do more of this through Harment with Lululemon and was stoked ness Collective, which aims to supto offer a national brand to residents port fledgling businesses. The two of Ohio City. But what she soon stores are connected from within, so learned is that local shoppers want “THAT’S THE CHALLENGING THING ABOUT local brands. So Hartnett reached BEING A SMALL-BUSINESS OWNER, out to Koenig, a ESPECIALLY IF YOU’RE A CREATIVE — YOU longtime acquaintance, and HAVE TO TAKE ON EVERYTHING ELSE.” another duo: de- — Rachael Koenig, owner of Shore Society signer Adam Pastors and real estate agent Rob Oriti of shoppers can easily wander from one Him & His. They also offer chic home space to the next. Hartnett said she wanted to supgoods from local creators. Together, Shore Society and Him port local business owners as they & His comprise a fun corner in bus- made the leap to brick-and-mortar. tling Ohio City where shoppers can Together, they’re learning the deli-
12 | CRAIN’S CLEVELAND BUSINESS | AUGUST 8, 2022
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cate and incr “ over we’v post that ed t cally
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cate balance of stocking inventory and staffing a store with limited but increasing hours. “What I’m so thrilled with is that over the months they’ve been there, we’ve been able to bring back, post-pandemic, the full vibrancy of that corner,” she said. “I’m just excited to pass that baton and keep it locally owned on that corner.”
Beating an identity crisis Since opening the shop, Koenig has seen per basket prices double, meaning the amount of money each customer spends at checkout has increased in-person versus online. That was a happy surprise.
She’s also seen monthly revenue double, which bodes well for a lease renewal come January 2023. In the meantime, Koenig and her mother are staffing the store together. Koenig pops in on weekends, and her mom runs things Thursdays and Fridays. There are plans to increase staffing during the holidays, too. Even when it’s too cold to boat, Koenig’s fans are still looking for cozy crewnecks and fleece pullovers to give as gifts to one another. Down the line, Koenig sees a possibility for a second location in another lake town, possibly on the East Coast. In the short term, she’s ramping up store hours, bringing on seasonal staff for the holidays and designing more men’s apparel.
Koenig started her brand when she noticed Lake Erie fans and perhaps Clevelanders at large were coming out of an identity crisis, latching onto a CLE pride movement that spawned tons of clothing brands and goods. “I grew up around here, and I remember thinking we could be doing this better,” she said. “So there is definitely an aspirational part to it. … I post a lot when we’re out on our boat and people who follow me sometimes see my photos and say, ‘This is beautiful, where is this?’” Maybe lake lovers are experiencing a little imposter syndrome, too. Contact Kristine Gill : clbfreelancer@crain.com
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New Ohio law treats sale of a business as ‘business income’ BY JONATHAN CICCOTELLI
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Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC-registered investment advisor. Registration as an investment advisor does not imply a certain level of skill or training. More information about Sequoia can be found here: https://adviserinfo.sec.gov/
On Friday, June 24, Gov. Mike DeWine signed House Bill 515 into law. This bill is taxpayer-friendly and is intended to clarify existing law. To that end, HB 515 states the following: “The amendment by this act of Section 5747.01 of the Revised Code is a remedial measure intended to clarify existing law and applies to any petition for reassessment of any appeal thereof and to any application for refund or any appeal thereof pending on or after the effective date of this section and to any transaction that is subject to an audit by the Department of Taxation on or after that effective date.” Now that we’ve gotten the facts out of the way, what does this mean to Ohio taxpayers, and why is it taxpayer-friendly? To answer those questions, first, a little background. Dating back to 2016, Ohio changed how it taxes “business income” in a favorable way, including: ` The first $250,000 of “business income” for “Single” and “Married filing jointly” taxpayers that is included in federal adjusted gross income is deductible from their Ohio taxable income (this threshold is $125,000 for “Married filing separately” taxpayers); and, ` Any “business income” in excess of those thresholds is taxed at a flat rate of 3%. It has been unclear, until now, whether or not gains from the sale of one’s business would be considered “business income” and receive the favorable tax treatment described above. In particular, it was unclear if any such gains from the sale of one’s equity interest in a business would qualify (because generally capital gains and losses are not considered “business income”). HB 515 clarifies the treatment by stating the following in its revised Section 5747.01(B), which defines “business income.” “… ‘Business income’ includes income, including gain or loss, from a partial or complete liquidation of a business, including, but not limited to, gain or loss from the sale or other disposition of goodwill or the sale of an equity or ownership interest in a business …”
HB 515 goes on to say: “… the ‘sale of an equity or ownership interest in a business’ means sales to which either or both of the following apply: 1. The sale is treated for federal income tax purposes as the sale of assets. 2. The seller materially participated, as described in 26 C.F.R. 1.4695T, in the activities of the business Ciccotelli is during the taxable year in which the partner-insale occurs or during any of the five charge of preceding taxable years.” Meaden & What this means for Ohio taxpayMoore’s Tax ers is that they can now affirmatively Services Group. treat any gains from the sale of their business as “business income,” no matter if the transaction is treated as an asset or a stock sale for federal income tax purposes. It is important to point out, however, the requirement as stated above that if a transaction is a stock sale (and treated as such for federal income tax purposes), the seller must have materially participated (under the federal income tax rules) in the business either during the taxable year in which the sale occurred or during any of the five preceding taxable years. Finally, let your tax adviser know if you have had gains from the sale of your business in a prior year and have NOT treated the gain as “business income,” or if you have paid a tax assessment based on the Ohio Department of Taxation’s (ODT) interpretation of the law. You may be able to apply for a refund. If you have a case pending at the appeals division due to an assessment by ODT treating the gain from a sale of your business as “non-business” income, you should receive a favorable resolution of your case; at this point, it is unclear whether Ohio plans to resolve all pending cases together or on an individual basis. Stay tuned for an update on this. Please contact us or your regular tax adviser if you wish to discuss this further and to determine how HB 515 may impact your Ohio tax situation.
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FOCUS | SMALL BUSINESS
Gourmet garlic trend feeds growing harvest BY JUDY STRINGER
When it comes to cash crops, garlic has a distinct appeal. Popular gourmet varieties can average as much as $16 per pound by some estimates, meaning one acre — producing roughly 4,000 pounds per year — could be worth as much as $60,000. “People see these numbers and they want to jump right in with two or three acres,” Jacob Campbell said, “and then they are not able to handle it. Not only does each clove have to be planted and harvested by hand, there’s the mulching and weeding and cutting (of ) the scapes, as well as drying, curing, packing and shipping (the bulbs). It’s a very labor-intensive process.” Campbell knows the garlic business well. He owns BJ Gourmet Garlic, an Oberlin-based farm that specializes in providing garlic bulbs, whose individual cloves double as seeds, to new and seasoned growers. It also sells gourmet garlic for culinary use and has its own line of spices, pickled garlics and oils. Campbell credits expanding consumer palates and the trend toward organic eating as the two biggest drivers of growing demand for gourmet garlic, which often is grown without the harsh chemicals used in mass-produced store varieties. A
close third, he said, is greater awareness of garlic’s health benefits. Studies have suggested, for example, that garlic helps lower blood pressure and cholesterol and potentially may even reduce the risk of heart attack and stroke. Whatever the cause, soaring demand means booming business for BJ Gourmet Garlic and its clients. Campbell said the farm’s harvest more than doubled from 5,500 pounds a year to nearly 13,000 between early 2019 — when he took over the operation — and the end of 2021. “This year, we needed to take a little bit of a step back. It was getting hard to find seasonal workers and stuff like that, so we stepped back to about 10,000 pounds, which is what we’re going to be looking at for the near future,” he said. And, with a 2021 shipment to Hawaii, its customer base now includes growers in all 50 states. While Ohio makes up about 60% of its sales, Campbell estimates the farm “hits 30-35 different states” each growing season. “The only thing we can’t do is ship out of the country,” he said.
Garlic galore BJ Gourmet Garlic traces its roots back to 2004, when Budd Leisenring,
who had been a longtime garlic-growing hobbyist, began expanding his crop at a Carollton property he owned with his wife, Judith. As business grew and the couple added spice and seasonings to the portfolio, they moved to a farm in Mogadore. According to Campbell, a second move in 2019 — to the 15-acre Gifford Road site in Oberlin — corresponded with Budd’s retirement and the need for additional space. “We built a brand-new all-electric industrial kitchen to accommodate our spices and other garlic products,” he said. “Today, in addition to the 21 different varieties of hardneck garlic we harvest, we make nine different seasonings, five different pickled products and garlic balsamic and olive oil. The pickling and canning are the only things we don’t do right here.” Hardneck varieties, as compared with their softneck peers, are known for their more complex flavor profile. They are also harder to grow. Unlike softneck, which can be put into the ground mechanically because the orientation does not matter, hardneck cloves must be placed manually so that their flowering stalk — the scape — can find its way to the sun. Most of the commercial garlic found in stores, Campbell said, falls into the softneck class and comes from China or California.
“It doesn’t have as much flavor intensity as the hardneck garlic or as many varieties, which can range from mild like a Music or a German White to some more exotic flavors that are really spicy like a Rocambole or a Georgia Fire type,” he said. Nearly half of the company’s current hardneck stock came from the recent acquisition of Dragon’s Breath Gourmet Garlic, formerly based in Navarre. Campbell said Dragon’s Breath consisted of about “five to seven” garlic types and was primarily focused on “table” garlic (i.e., for eating or cooking) when it was rolled into the Oberlin farm in 2021. That brand has since been expanded to 10 garlic hardneck varieties and aligned closer to the seed garlic side of the business. The Navarre operation also had its own line of spices that is being relabeled and will soon be reintroduced. BJ Gourmet Garlic has four fulltime employees but is set to begin recruiting seasonal workers to support shipping that begins Sept. 1. “We always wait until September, so that way we can store it properly and not send it to the customer until closer to planting time,” he said. Bulbs deemed too small or too imperfect, of course, will find their way into the growing catalog of garlic-based products, which are sold online at bjgarlic.com, at several area
Jacob Campbell owns BJ Gourmet Garlic, an Oberlin-based farm that specializes in providing garlic bulbs, whose individual cloves double as seeds, to new and seasoned growers. | CONTRIBUTED
farmers markets (including Shaker Square’s, Solon’s and Medina’s) and at a handful of stores like Duma Meats in Mogadore and Merchant’s Market in Lyndhurst. While the private company does not disclose revenue figures, Campbell said annual gains in the last three years have hovered between 7% and 15%, a rate he anticipates will continue. Contact Judy Stringer: clbfreelancer@crain.com
An eye on growth, a heart committed to small business
By Conner Howard Crain’s Content Studio-Cleveland
When a small business thrives, the community it calls home thrives as well. This is the principle that has driven Farmers National Bank over the course of its 135-year history. Now, with a merger between Farmers and the Emclaire Financial Corp. that was announced in March, this community bank is poised to bring its services to a broader base of customers. Based in Canfield, Ohio, Farmers has cultivated a reputation for loyally serving its clients with a community-oriented approach to business and retail banking. “In my opinion, a ‘community bank’ puts the customer and the betterment of local communities first; it means knowing that your bank supports the communities it serves and volunteers to help the community thrive,” said William Shivers, senior vice president and regional president of Farmers National Bank. “As a 135-year-old institution, Farmers has a reputation for being there when a business customer or a retail customer needs us. Farmers is ‘fiercely local and fiercely loyal.’ We take time to understand the goals and aspirations of our customers all while doing it with a local team.” This steadfastly local philosophy is what fuels Farmers’ commitment to supporting small businesses throughout the communities it
serves. According to the Small Business Administration (SBA), there were 32.5 million small businesses in the U.S. in 2021. From 1995 to 2020, small businesses created 12.7 million net new jobs while large businesses created 7.9 million. Additionally, findings by the SBA indicate that $48 of every $100 spent at a small business circulates back into the local community. “Small businesses are the heartbeat of our communities,” Shivers said. “When they thrive, everyone thrives. It is our job to help them in every way we can.” To further its mission of supporting small business, Farmers has a dedicated team of experienced lenders working to provide business owners with the best credit solutions for their individual needs. Farmers also has the ability to provide commercial loans, revolving lines of credit, commercial real estate loans, construction loans, SBA loans and more. “We also participate in the GrowNow Ohio loan program through the State of Ohio Treasurer’s office. All of these products and services are delivered by a local team of bankers,” Shivers said. “All of our relationship managers can provide assistance with each type of loan listed. We know that being a one-stop shop is appealing to the business community.” Shivers added that, in order for a local bank to ensure its community reaches its full
GETTY IMAGES/ISTOCK
potential, it must invest the time, effort, skill and capital necessary to fully understand the needs of that community. Local decisionmaking in all its markets allows Farmers to better respond to the needs of its customers and prospects.
“Farmers’ goal is to grow our market share through organic growth by providing outstanding service and by being dedicated to helping our small business customers and the communities we serve achieve success.”
As of June 30, Farmers operates 46 branch locations and employs a staff of 550. With the upcoming merger between Farmers and Emclaire, Shivers said he looks toward a future of serving small business clients within new communities while maintaining the “fiercely local, fiercely loyal” attitude that is now the Farmers trademark.
Story sponsored by:
This advertising-supported section/feature is produced by Crain’s Content Studio-Cleveland, the marketing storytelling arm of Crain’s Cleveland Business. The Crain’s Cleveland Business newsroom is not involved in creating Crain’s Content Studio content.
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SPORTS BUSINESS
Which colleges and universities are upgrading athletic facilities? BY JOE SCALZO
Kent State athletic director Randale Richmond said the school would like to sell the naming rights to the Memorial Athletic Convocation Center. | KENT STATE
Which Northeast Ohio colleges and universities made upgrades to their athletic facilities during the 2021-22 school year? Which ones have projects planned for 2022-23? To answer these questions, Crain’s Cleveland recently reached out to the schools in the region. Here’s what we found:
Akron
James A. Rhodes Arena has been the basketball home of the Akron Zips since 1983. The 5,500-seat arena has undergone several upgrades over the years | UNIVERSITY OF AKRON
What are Akron, Kent State’s arena plans? BY JOE SCALZO
When you ask Charles Guthrie about the future of James A. Rhodes (JAR) Arena, he mentions that he’s a fan of classic baseball stadiums like Wrigley Field, Fenway Park, Dodger Stadium and the old Yankee Stadium. “When you go to the new ballparks, there’s a lot of bells and whistles, but when you go to Dodger Stadium, you feel something,” the University of Akron athletic director said. It’s a telling answer. As Cleveland State studies whether to spend millions to renovate or replace the 31-year-old Wolstein Center, Division I universities in Portage and Summit counties have more modest goals for their basketball arenas. “I know there’s a portion of the fan base interested in a downtown arena, but we want the JAR to feel like Dodger Stadium — an old stadium with a modern approach,” Guthrie said. The 5,500-seat JAR was built in 1983 and has undergone several upgrades over the years, including in 2002, when it got a new hardwood floor, LED display screens above the game floor and a $1.1 million sound system. UA is currently updating the floor with a new look and the school eventually wants to replace the bleachers, replace the lighting, improve the restrooms and make the facility more accessible for fans with disabilities, Guthrie said. “I feel like we underestimate the JAR,” said Guthrie, whose department is currently building a new practice facility for its men’s and women’s basketball teams. “If we invest in those (upgrades), it will make a world of difference in what you see.” Part of this stance is practical — building a new arena is a hard sell at any university, much less one than has struggled with finances and en-
rollment — but part of it stems from Guthrie’s background in California, a state where 22 of the 26 Division I basketball arenas were built in the 20th century. “Looking at it from that perspective, I have an appreciation for (older arenas),” said Guthrie, who has worked at California State University, Los Angeles; California State University, San Marcos; and the University of California, San Diego. “One of the things you always need to do as an AD is embrace tradition. It’s OK to put a modern twist on things and switch things up, but you need to understand tradition.” Few arenas have more tradition than Kent State’s Memorial Athletic and Convocation (MAC) Center, which was built in 1950, making it the oldest arena in the Mid-American Conference and the 19th-oldest in the country. The arena got a major facelift in 1992 and has also gotten its share of upgrades through the years, but one addition remains elusive, athletic director Randale Richmond said. A new name. “The ultimate goal is to name this MAC Center,” he said. The MAC Center is home to six of Kent’s athletic programs — men’s and women’s basketball, volleyball, wrestling, gymnastics and cheerleading — and there are no plans to replace it. But selling the naming rights would not only inject more resources into the athletic program, it would provide an elegant solution to the problem sports writers have faced for decades: how to differentiate between a conference and an arena that share the same acronym. “We’re going to blitz this pretty hard to see if we can get something going on within this building,” Richmond said of the naming rights. “I’m excited about that.”
Scheduled for 2022-23: The Zips installed new turf at Infocision Stadium-Summa Field and are renovating a space in Stiles Athletics Field House that the men’s and women’s basketball teams will use as a new practice facility. Akron is also updating the James A. Rhodes Arena basketball court with a new look and has plans to renovate its outdoor track and field complex and build a new dryland facility for the swimming and diving program. UA raised $4.7 million for the upgrades, which were announced in February.
Ashland
Completed in 2021-22: Ashland made $1.2 million worth of improvements to its baseball stadium, Tomassi Stadium and Donges Field at the Archer Ballpark Complex, in the summer of 2021. The updates included new turf for the entire field, a new outfield wall, an expanded AU bullpen, expanded dugouts and more. The Eagles also built a new 125,000-sq. ft. indoor facility, which debuted in the fall of 2021 and was dedicated in January. It features an 80-yard football field with end zones, a 300-meter six-lane track, eight 100-meter sprint lanes, batting cages, a conference room, concession area and more. Finally, AU built a turfed softball field, Deb Miller Field at the Archer Ballpark Complex, marking the first time the softball team will play on campus.
Case Western Reserve
Completed in 2021-22: CWRU upgraded the plaza area at its baseball field, Nobby’s Ballpark, in honor of assistant athletic director Gary Pillar. The new plaza has an arched entryway, new rod iron fencing and flower beds. Scheduled for 2022-23: CWRU is looking to upgrade the wrestling team’s practice room with new mats, wall padding and graphics highlighting past championship teams, wrestlers and scholar-athletes. Also, the school wants to upgrade the batting cage area at Nobby’s Ballpark with new cages, pitching mounds and a turf area.
Cleveland State
Completed in 2021-22: The Vikings built a new lacrosse locker room and made improvements to Busbey Natatorium, including 10 new starting blocks. CSU also added branding upgrades to the team areas in the physical education building, as well as Viking Field for the softball program. Scheduled for 2022-23: CSU will install new Daktronics scoreboards for the Wolstein Center gymnasium and the practice gyms for men’s and women’s basketball. It also plans to
Malone University in Canton recently completed King Field at the Pioneer Park complex on campus. | MALONE UNIVERSITY
add a state-of-the-art Daktronics video board for Woodling Gym, which serves the wrestling, volleyball and fencing programs. The Vikings will add new branding for the men’s and women’s basketball locker rooms and team areas, including the coaches’ offices, as well as branding enhancements for men’s and women’s fencing. CSU also plans new batting cages and bullpens for the softball program at Viking Field and lighting enhancements for the Krenzler Bubble, which will benefit multiple programs.
Hiram
Completed in 2021-22: Hiram unveiled new scoreboards at its baseball field, Fishel Field at Proverbs Park, as well as inside Price Gymnasium, which houses the basketball, volleyball and wrestling programs. Also, the Terriers are finishing a renovation of Alumni Memorial pool, which includes the pool interior, the deck and some roof work. Scheduled for 2022-23: Hiram is looking to renovate its women’s basketball and women’s volleyball locker rooms in the fall and winter, respectively, and will explore adding turf infields and new press boxes to the softball (Myrtis E. Herndon Field) and baseball fields.
John Carroll
Scheduled for 2022-23: JCU is looking to break ground for a new field house in late fall of this year, or early 2023. The hope is to have the field house completed by fall of 2024.
Kent State
Completed in 2021-22: The football team upgraded its weight room using money raised from its bowl appearance. Scheduled for 2022-23: Kent’s softball stadium will undergo a complete renovation. The outfield grass will be replaced with turf, while the infield will get an updated drainage system. Other enhancements include: a synthetic, brown warning track leading up to a new wraparound fence that will extend to the dugouts and backstop; a new padded backstop; renovated home and visitor dugouts; upgraded turf inside the batting cages and both bullpens; updated netting for the backstop and batting cages. Also, the gymnastics practice facility will install a new below-ground foam pit, as well as a proper runway. The replacement will be a singular unit
identical to the one used during competition. Both projects began this summer, with the gymnastics facility expected to be completed by the end of summer and the softball facility set for completion by the end of fall.
Malone
Completed in 2021-22: Malone completed the men’s and women’s soccer field at the newly constructed $1.6 million King Field at the Pioneer Park complex on campus. The turf facility also will serve as the home field for the men’s lacrosse program, which begins play in the spring of 2023.
Mount Union
Completed in 2021-22: Mount Union renamed its football stadium Kehres Stadium in honor of former quarterback and College Football Hall of Fame coach Larry Kehres. Mount also plans to build the Larry and Linda Kehres Plaza west of the main entrance on the south end of the stadium, which will honor Larry and his wife. The plaza also will list former assistant coaches.
Oberlin
Scheduled for 2022-23: Oberlin is spending $325,000 to resurface the six-lane indoor track at the John W. Heisman Field House. The previous surface dates to 1992, when the facility opened. The project is expected to be completed in August.
Walsh
Completed in 2021-22: Walsh recently completed the third phase of Larry Staudt Field, which is the Cavaliers’ outdoor football, soccer and lacrosse stadium. The third phase includes 1,000-seat bleachers for the stadium’s west side, as well as the William F. Braucher press box. The west side portion came after a new turf field was installed in the summer of 2020 and a new video board in the spring of 2021. The fourth and final phase does not have a timeline, but will include the east side portion of the stadium. Scheduled for 2022-23: The Cecchini Center weight room is getting a makeover this summer, with an expanded fitness center and new equipment for Walsh’s students and teams. The project is expected to be completed in time for the new school year. Joe Scalzo: joe.scalzo@crain.com, (216) 771-5256, @JoeScalzo01
16 | CRAIN’S CLEVELAND BUSINESS | AUGUST 8, 2022
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CRAIN’S LIST | NONPROFIT COMPENSATION MEGA LIST PREVIEW — TOP EXECUTIVES
Ranked by 2020 total compensation 2020 top executive
Company name
2020 Compensation
2019 Compensation
% Change
2020 Base salary Footnotes
HOSPITALS Tomislav Mihaljevic
Cleveland Clinic, Cleveland
$3,624,222
$3,308,867
9.5%
$3,253,529
Thomas Zenty (end January 2021)
University Hospitals, Cleveland
$2,402,481
$3,411,616
-29.6%
$1,408,378
Grace Wakulchik (end December 2021)
Akron Children's Hospital, Akron
$1,815,978
$1,715,973
5.8%
$936,929
Cliff Deveny
Summa Health, Akron
$1,694,349
$1,509,666
12.2%
$894,091
Thomas Strauss (end December 2021)
Sisters of Charity Health System, Cleveland
$1,100,097
$1,123,641
-2.1%
$1,009,207
Barbara Snyder (end September 2020)
Case Western Reserve University, Cleveland
$1,087,219
$1,637,406
-33.6%
$685,666
Carmen Ambar
Oberlin College, Oberlin
$559,216
$643,242
-13.1%
$497,528
Michael Johnson (end May 2021)
John Carroll University, University Heights
$540,878
$634,039
-14.7%
$512,978
Sarah Bolton (end June 2022)
The College of Wooster, Wooster
$474,685
$692,913
-31.5%
$321,751
Carlos Campo
Ashland University, Ashland
$466,105
$433,770
7.5%
$326,924
$1,398,629
$621,886
124.9%
$574,696
PRIVATE COLLEGES
SOCIAL SERVICES Adam Jacobs
Wingspan Care Group, Shaker Heights
James Lawrence
Oriana House Inc., Akron
$516,456
$570,365
-9.5%
$332,040
Lee Friedman
College Now Greater Cleveland, Cleveland
$489,287
$444,981
10.0%
$344,416
Erika Rudin-Luria
Jewish Federation of Cleveland, Cleveland
$433,321
$448,863
-3.5%
$380,800
Terry Davis
Our Lady of the Wayside, Avon
$402,522
$355,512
13.2%
$377,119
William Griswold
The Cleveland Museum of Art, Cleveland
$856,905
$876,593
-2.2%
$729,987
Andre Gremillet
The Musical Arts Association (The Cleveland Orchestra), Cleveland
$637,360
$670,356
-4.9%
$471,985
Greg Harris
Rock & Roll Hall of Fame, Cleveland
$630,241
$624,445
0.9%
$380,475
Gina Vernaci (start July 2019)
Playhouse Square Foundation, Cleveland
$493,522
$661,537
-25.4%
$451,138
Michael Oister
National Inventors Hall of Fame Inc., North Canton
$493,400
$520,132
-5.1%
$321,600
Jehuda Reinharz
Jack, Joseph and Morton Mandel Foundation, Cleveland
$997,845
$946,245
5.5%
$975,700
Ronald Richard
Cleveland Foundation, Cleveland
$750,248
$736,319
1.9%
$599,290
David Abbott (end December 2021)
George Gund Foundation, Cleveland
$450,344
$425,649
5.8%
$371,988
Mitchell Balk
Mt. Sinai Health Foundation, Cleveland
$396,971
$390,526
1.7%
$320,826
Deborah Hoover (end June 2022)
Burton D. Morgan Foundation, Hudson
$385,947
$373,620
3.3%
$348,280
Jon Steinbrecher
Mid-American Athletic Conference Inc., Cleveland
$767,487
$780,424
-1.7%
$663,111
James Newbrough
Menorah Park, Beachwood
$760,257
$647,741
17.4%
$628,736
Gordon Bowen
Lifebanc, Warrensville Heights
$552,034
$538,849
2.4%
$483,763
Ray Leach
JumpStart Inc., Cleveland
$538,658
$503,181
7.1%
$340,688
Richard Graziano
Village Network, Wooster
$493,025
$470,798
4.7%
$330,666
1
2
ARTS AND RECREATION
FOUNDATIONS 3 3
3
OTHER
Source: IRS Form 990 data, unless otherwise noted. Research by Chuck Soder (csoder@crain.com) | Includes 501(c)(3) executives who held the top role at their organization at some point during calendar year 2020. Compensation is by calendar year. Total compensation excludes deferred compensation reported on prior Forms 990. NOTES 1. 2020 compensation includes $725,418 from a supplemental nonqualified retirement plan, up from $85,465 in 2019, contributing to this increase. 2. Also received $80,720 from a related organization, Parkwood LLC, which provides administrative services to Parkwood Trust Co. The trust company provides advisor services to Mandel Supporting Foundation, which is a related entity. 3. From 990-PF. Base compensation may include fees and bonuses but does not include deferred compensation.
Get detailed compensation data on more than 1,300 nonprofit executives. Become a Data Member: CrainsCleveland.com/data 18 | CRAIN’S CLEVELAND BUSINESS | AUGUST 8, 2022
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LIST ANALYSIS
Nonprofit Compensation Mega List reveals COVID impact gaps BY CHUCK SODER
See the full list
If you’re a nonprofit executive in today’s job market, you might be able to get a raise or find a higher-paying position. But depending on what nonprofit sector you’re in, you might just be making up for lost earnings, judging by data collected for the biggest list Crain’s Cleveland Business has ever produced: The Nonprofit Executive Compensation Mega List. The Excel version of the list contains compensation data on more than 1,300 executives employed at more than 250 Northeast Ohio nonprofits. Filtering the list by industry reveals big gaps in whether or not executives were financially rewarded for all that work they did to steer their organizations — and in some cases society at large — through the first nine months of the COVID-19 pandemic. Combined compensation grew a meager 0.2% in 2020 for the 630 executives who have two straight years of compensation data included in the list. OK, technically it’s 629 executives. That calculation excludes the No. 1 executive on the Excel version of the list: former Cleveland Clinic CEO Toby Cosgrove. Serving in an advisory role since stepping down in 2017, Cosgrove’s base pay actually fell 76% in 2020, but the Clinic added $7.6 million to his total benefits because it didn’t make him pay back the life insurance premiums the Clinic paid for him over the years (common for a split-dollar life insurance plan). Without Cosgrove, compensation was roughly flat for executives in the health care sector, which is dominated by hospitals but also contains many other smaller organizations. At the
The full Excel list is available to Crain’s Data Members. To learn more visit CrainsCleveland.com/data.
same time, compensation by and large rose substantially for executives at social services nonprofits and grantmaking organizations. On the other hand, both the education and the arts and recreation sectors — both of which often need to bring large groups of people together in enclosed spaces — saw combined executive compensation fall about 5%, according to data from the list, which was built with data from the Form 990 that nonprofits must file with the Internal Revenue Service. The pandemic forced some of those organizations to make cuts affecting everyone from entry-level staff up through the top executive. For instance, the Playhouse Square Foundation enacted furloughs, layoffs and pay cuts to get through the 15-month period when it couldn’t legally fill its theaters. Thus, all executives took pay cuts, including CEO Gina Vernaci, whose total compensation fell by 25% in 2020. Private colleges, which account for most executives in the education category, made similar cuts throughout 2020. For instance, the (Wooster) Daily Record reported in 2020 that Sarah Bolton, who stepped down as president of the College of Wooster in June of this year, voluntarily took a 20% pay cut at the time, and that other senior staff also took pay cuts. Her total compensation for calendar year 2020 in the end fell 31%. Private colleges faced a double whammy: the pandemic and years-
long declines in enrollment that have hit private liberal arts schools particularly hard, said Heidi Milosovic, who specializes in nonprofit CEO searches for the Cleveland branch of Waverly Partners. “It’s been a very expensive couple of years for education,” she said. The challenges those sectors face didn’t immediately go away in 2021. Milosovic noted that the market for nonprofit executives has become more competitive as the economy has improved, but it’ll take the hardest-hit organizations time to make up lost ground. “It probably still remains flat for those art and recreation entities, because they haven’t come back fully,” Milosovic said. “We’re going to need another year or so of people going out and not getting COVID.” Still, she says many nonprofits “are paying up” to get high-level executives with the right skills. That sentiment was echoed by Al Candrilli, founder of Organizational Consulting Group, an executive compensation consulting firm with operations in the Cleveland and Detroit areas. “The number of talented people able to fill these positions is not large,” Candrilli said. And though Northeast Ohio may not be the most expensive market in the country, regional compensation differences even out somewhat when recruiting high-level executives. “When you’re dealing with executives, you’re taking a wider view. Because you can get a CEO from anywhere in the country,” he said. Chuck Soder: csoder@crain.com, (216) 771-5374, @ChuckSoder
APARTMENTS
From Page 1
Cleveland, is looking forward to completion of the upscale apartment building and 10 rental townhomes on the block next year. The more than $35 million project has gone from the design-build plan (also by Geis) approved in January by the Cleveland City Planning Commission to an ongoing building project. It did so despite escalating interest rates that are expected to tamp down the noisy apartment building boom. But the question will be when. Panzica said in an interview that he, like other real estate developers, is putting up projects with a floating-rate construction loan that will be replaced later with long-term financing. He sees the impact of rising interest rates from record low levels in straightforward terms. “The floor has risen for interest rates, yes. But the new rates are being priced into expectations of (project) owners,” he said. “They’re not planning on the rates of middle 2021 and
A rendering shows the apartment building planned for 1910 Abbey Ave. | COURTESY
are still historically low.” The other side of the equation, the run-up in material and building costs over the last year, has moderated some. And as much as costs have climbed, so have upper-scale rents. The result, for well-located and well-planned projects, is that Panzica and others of the risking-taking type known as developers see opportunity in the market. “While Duck Island (the segment of Tremont where Panzica is building) has hot substantial single-family building, it’s been relatively un-
tapped for multifamily development,” Panzica said. Although the spike in interest rates led by the Federal Reserve’s effort to tame inflation is big news, rates remain competitive for builders and developers. Such multifamily deals are getting rates in the mid-4% range, compared with 3.5% a brief time ago. And other developers are also pushing forward. Since the spring, both Aha Development of Cleveland’s plan for 12 rental townhomes on Fulton Avenue in Ohio City and Krueger Group’s new 27-suiter at
Up and down Executive compensation fell in 2020 for nonprofits hit hardest by COVID, such as private colleges, theaters and museums. Calculations show the percent change in combined executive compensation from 2019 to 2020 for executives who made at least $150,000 in 2020 and had their compensation listed on a Form 990 Schedule J. The figures only include executives listed both years. Health care
3.6%
Education −5.1% Social services Arts and recreation
10.6% −4.7%
Grantmaking
4.7%
Health care increase drops to -0.1% if you exclude Cleveland Clinic adviser/former CEO Toby Cosgrove, whose compensation increased by $7.6 million due to the Cleveland Clinic forgiving a loan on a split dollar life insurance plan. Social services increase drops to 5.1% if you exclude Wingspan Care Group CEO Adam Jacobs, whose 2020 compensation includes $725,418 in deferred compensation from a supplement nonqualified retirement plan.
Highest-paid CFOs by industry Hospitals: Steven Glass, Cleveland Clinic
$1,860,810
Private colleges: John Sideras, Case Western Reserve University $654,738 Other: Brenda Satterfield, Menorah Park $411,356 Social services: Barry Reis, Jewish Federation of Cleveland $379,435 Arts and recreation: Edward Bauer, The Cleveland Museum of Art $342,271 Grantmaking: Rosanne Potter, Cleveland Foundation $323,708 Steven Glass left the CFO position in August 2022, Barry Reis left the CFO position in June 2022 and Edward Bauer left the CFO position in December 2020.
74.3%
51.5%
of 2020 compensation consisted of base pay.
of executives work for hospitals or health organizations.
SOURCE: 990 DATA COMPILED FOR CRAIN’S NONPROFIT COMPENSATION MEGA LIST
1278 West 58th St. near Breakwater Avenue have landed a total of $7 million in construction loans and filed legal documents signaling an intent to build. Moreover, Aha’s looking at building a mix of for-sale and rental townhomes south of Lorain Avenue on West 44th Street, a clear sign of continued development appetite. Many veteran multifamily developers privately say they will not apply the brakes to slow down in the sector until rates hit 6%. However, that being said, the availability of construction labor and, for many, the run-up in building costs still remain worries. So, there may be a gradual slowing in the years ahead. CoStar, the online realty data provider, reports that the Cleveland apartment market absorbed a record 3,000 units in 2021. Moreover, it reports that new projects are 75% leased when they open. That is a sure sign new suites in Cleveland are retaining their allure. The bulk of the region’s units are in the University Circle to Detroit-Shoreway area, including downtown Cleveland.
CRAIN’S CLEVELAND BUSINESS
Rising rents, justified by the new product, are helping momentum for the time being. The effective market rent, diminished by minimal concessions, is $1,062 monthly. Rents climbed an average of 6% over the past year, topping a three-year average of 4%, CoStar said. Other sources say rents have moderated the past month. Apartment owners in the region also say the substantial growth in new multifamily units has not emptied older units, as replacement tenants are surfacing to replace higher-income tenants who occupy sharp, amenity-rich suites. Ralph McGreevy, executive vice president of the Northern Ohio Apartment Association trade group, said he believes the market considerations are balancing out. “I think the time to build is not over,” McGreevy said. “We didn’t build (apartments) here for so long that it’s going to continue here. It’s likely not the case in other, more intensely developed markets.” Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter
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VILLAGE
From Page 1
The Village idea stretches back to 2014, when David Baker, then the CEO of the Pro Football Hall of Fame, started talking about building a “Disneyland of Football” around the museum itself, which Village employees refer to as their “Cinderella’s castle.” It was an outsized vision for an outsized (6-foot-9, 400-pound) man, who tried to pull off a $1 billion project with charisma, and fell $1 billion short. “Let’s face it, David could do a lot with charisma, but not that,” said Anne Graffice with a chuckle. She’s the executive vice president of public affairs for the Hall of Fame Village. “I applaud the vision, and you have to have some level of seeing the impossible and seeing what others can see. I think that’s great leadership. “But I also think great leadership is knowing how to assemble a team, put the pieces together, how to work with folks to make it happen, and to do things that are feasible and financeable.” Michael Crawford, the CEO of the Hall of Fame Resort & Entertainment Co., was hired in 2018 to make that happen. And after eight years of delays, financing headaches and bad headlines, the project is finally gaining momentum. More importantly, that momentum has manifested itself in tangible, visible ways. Because when you tour the 120-acre campus — a footprint that’s about 25 acres larger than the Mall of America in Minneapolis — one thought keeps coming to mind: “This will be fun when it’s finished.”
In addition to the Hall of Fame Game and the enshrinement, Tom Benson Hall of Fame Stadium will also host a concert by Journey and a performance from Dave Chappelle this weekend. | JOE SCALZO/CRAIN’S CLEVELAND BUSINESS PHOTOS
Potential impact
All eyes on Canton The whole point of the Village project is to transform the Hall of Fame from a once-a-year tourist stop into a year-round destination, but there’s no denying the importance of this week. After Tom Benson Hall of Fame Stadium opened in 2017, the Village project stagnated for several years, with little more than some youth fields and empty lots where houses used to be. Consequently, when NBC or ESPN or the NFL Network visited in early August, Canton looked like a city that had just gotten out of bed, half-dressed. No more. “Seeing is believing,” Graffice said. “Until you see it, you won’t understand.” The country saw glimpses beginning on Thursday, Aug. 4, when NBC marked the unofficial return of the NFL by airing the Hall of Fame Game between the Jacksonville Jaguars and the Las Vegas Raiders at Benson Stadium. The weekend also included the enshrinement on Saturday, Aug. 6, which was televised by ESPN and the NFL Network; the Concert for Legends featuring Journey on Aug. 6; and a performance from comedian Dave Chappelle on Aug. 7. Viewers and fans didn’t see perfection, but they saw progress. “All eyes are on Canton once a year,” Graffice said. ”We want to capture that moment in time and show up and share with the country and the world what this looks like.” Benson Stadium was part of Phase I of Village construction, which cost $200 million and added five synthetic turf fields and turned an aging high school stadium into an NFL-caliber facility, one that seats 20,000 with luxury suites, rooftop cabanas and other premium spaces. Problem was, after
While Drose supports the Village’s investment in youth sports, he doesn’t believe in the overall project, mainly because he doesn’t believe Canton will draw enough outside visitors to make it profitable. In Nashville or Austin, Texas, maybe. But not Northeast Ohio. “It’s a project that has been struggling since its inception because it’s not a good idea,” he said. “Organic growth is always better than a forced idea. “You’re better off growing as you need to grow.” Notably, two of Stark County’s other main tourist destinations — Gervasi Vineyard and the Hartville Marketplace — took more conservative paths, growing to meet existing demand. The Village is taking an “If we build it, they will come” approach, Drose said. “I have no ill will toward the area and everyone I talked to was very nice, but do they have someone doing math?” Drose said. “That was my takeaway when I was researching it. I kept asking, ‘Why does this exist? Is anyone asking for this?’”
The Hall of Fame Village’s Fan Engagement Zone, which is under construction, will feature retail shops and restaurants.
being dedicated in 2017, it went four years without a permanent scoreboard in the east end zone. The west end zone was also unfinished until the Constellation Center for Excellence (which overlooks the stadium) partially opened earlier this year. The center is part of Phase II, which is projected to cost $300 million and also includes the newly opened Center for Performance, an 85,000-square-foot dome for athletic events and exhibitions; the newly opened ForeverLawn Sports Complex, which added four additional outdoor sports fields to the campus; the aforementioned Play-Action Plaza; the Fan Engagement Zone, which is under construction and will include a Don Shula’s steakhouse, Topgolf Swing Suites, Brew Kettle, Smoosh Cookies and (most likely) a retail sportsbook; a 180-room Hilton Tapestry Hotel, which is scheduled to open in late 2023 or early 2024; and an indoor, football-themed water park, also scheduled for late 2023 or early 2024. (Phase III is still in the planning stage.) The idea is to offer activities and retail options that visitors can’t get elsewhere, whether that’s at nearby Belden Village Mall,or farther out in Akron or Cleveland. “We’re not just putting restaurants and retail around the Pro Football Hall of Fame,” said Graffice, who grew up in nearby Alliance. “I’m from
here, so for me this is super personal because of what it means to the community, the job creation and the economic development potential for this project from a tax base, whether that’s property taxes or income taxes or bed taxes. “This really has the potential to be an economic generator for our region unlike anything we’ve seen for a long, long time.”
Financing problems Of course, these buildings aren’t free, and the Village’s financing issues have been well-documented, most notably in a Bleecker Street Research post that got picked up by the widely read aggregator site ProFootballTalk last year, and most recently in a cleveland.com story on Saturday, July 30. Here is the CliffsNotes version from the past few years: • One of the Village’s first and biggest sponsors, Johnson Controls, is looking to exit a $99 million naming rights agreement. • The NASDAQ has threatened to delist the Village’s stock if it doesn’t get above $1. After trading as low as 54 cents in March, it finally inched above $1 in early August. • Hall of Fame Resort & Entertainment was on course to raise $125 million through a special purchase acquisition company (SPAC)
in March of 2020 but was forced to delay going public due to the COVID-19 pandemic and ended up with about $32 million. • More than half the company’s stock is held by CH Capital Lending, a company tied to Stuart Lichter, president of Industrial Realty Group and a director on the Hall of Fame Resort board. Meanwhile, the Village project is carrying millions in debt, and much of the company’s work over the past few years has centered around securing additional loans and reorganizing existing debt into something manageable. “COVID put us back on our heels and really pushed us to think about how to finance more creatively,” Graffice said. “We only build what we know we can finance. “We’ve done our homework and because Michael Crawford has done this globally, he gets how these projects happen and the time frame they need to happen in so you’re able to pay off debt and be part of a structure that makes sense to banks and lenders.” Chris Drose, the founder of Bleecker Street Research, isn’t convinced. His story was titled, “Hall of Fame Village: Not the Disney World of Football, Merely a Midwestern Mirage,” and he didn’t back away from that assessment in an interview with Crain’s Cleveland in late May.
The answer, according to Village officials, is yes. It’s not unusual for the hall to draw visitors from all 50 states each month, and many were looking for a reason to stick around. Canton does have plenty of nearby shops and restaurants, but the Hall of Fame itself was a drive-in, drive-out stop — and not just for those visiting the museum. As of March, the youth fields were already drawing 225,000 athletes annually, with more than 85% of those visitors coming from 60 miles away or more, according to Allyson Bussey, the president of Visit Canton. Each of those athletes brings 1.7 adults on average and staying 2.2 days, which means a lot of money spent on hotels, restaurants and other activities. Why not spend that money on-campus? “We’ve now given folks who have the Pro Football Hall of Fame on their bucket list an incredible reason to come and spend a lot more time than the two or three hours they would have originally,” she said. Benson Stadium has already hosted the Division III football championship game and, as the Village grows, Visit Canton will be able to bid on more NCAA events. By adding a water park — the closest ones to Canton are in Sandusky or Columbus — and distinctive retail shops, Canton can become a destination that draws visitors to the city and the Greater Cleveland area. “I think it’s really exciting what they’re doing, and anytime you have a one-of-a-kind attraction or destination, it really sets a city or a region apart,” said David Gilbert, the president and CEO of Destination Cleveland and the Greater Cleveland Sports Commission. “We see that with the Rock & Roll Hall of Fame, which is a one-of-a-kind international destination. And the same can be said of the Pro Football Hall of Fame, which is a separate entity but is being used as the anchor to build something much more grand.” Will it work? Time will tell. But for the first time in years, the Village — zipline and all — is finally moving forward. “This is a viable thing,” Graffice said. “We plan on being here for a very, very long time.” Joe Scalzo: joe.scalzo@crain.com, (216) 771-5256, @JoeScalzo01
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CULTURE
From Page 1
By some accounts, the past two years have represented the most substantial shift in the labor market since World War II. Though media coverage has focused on people leaving their job for more money, research shows that a far bigger driver — perhaps by a factor of 10 — is the desire to leave behind a workplace that’s a bad fit or even toxic. Smart companies recognize this and are beefing up benefits and flexibility and having conversations about meaning and purpose. No company has mastered the formula, and there’s a lot of experimentation going on. Melinda Ramos characterized the new hiring environment as job candidates demanding more than just a paycheck. Ramos is the vice president of learning, development and diversity for Bounteous, a Chicago-based digital media agency. “I think that’s a reasonable expectation,” she said. “If we can provide learning and inclusion and challenges and fun and great outcomes, then I think we’re doing OK. I can’t say that that’s asking too much.
Data on ‘toxic’ cultures CultureX, a Cambridge, Massachusetts–based consulting firm, first published its findings about why workers were leaving their job in January in the “MIT Sloan Management Review.” Since then CultureX has been inundated with requests from reporters and potential consulting clients. “It seems to have really struck a nerve,” CultureX co-founder Charles Sull said. “Everyone is writing and telling their story for why it matters to them.” CultureX and Revelio Labs analyzed 34 million LinkedIn profiles of U.S. workers who left their employer for any reason (primarily quitting) between April and September 2021. Advanced language analysis of 1.4 million Glassdoor reviews mapped their employers’ culture, providing insight into what caused them to leave. “We had some idea of what would be important going in, but we were surprised when toxic culture wasn’t just No. 1 on the list but was actually 10 times as predictive as compensation,” Sull said. Five attributes define a toxic culture, according to the research: whether a diverse set of employees feels included; a feeling of disrespect at work; a lack of integrity or ethical behavior within an organization; a cutthroat atmosphere where employees actively undermine one another; and managers who belittle or bully their teams. Sull, who founded CultureX with his father, Donald Sull, a senior lecturer at the Massachusetts Institute of Technology’s Sloan School of Management, said the results gave him hope. “In a nutshell, I think the Great Resignation is about employees saying, ‘We will no longer stand for toxicity. We’re going to quit these companies that treat us as less than human,’” he said. “‘And we’re going to try to navigate a new contract of employment; we’re going to try to change the way the landscape of employment works.’” Rob Fazio is hopeful too. Fazio is a psychologist and managing partner at OnPointAdvising who counsels powerful people, including surgeons
Five attributes of toxic work cultures ` Disrespectful: The single strongest predictor of how employees rated a culture. ` Non-inclusive: Diverse groups of employees are not included in key decisions. ` Unethical: Lack of integrity within the organization. Making false promises. ` Cutthroat: Employees actively undermining one another. ` Abusive: Managers belittling, bullying or condescending to their teams. SOURCE: CultureX
How companies elevate their cultures ` Traditional methods such as higher wages, attractive benefits and perks ` Flexibility to work remotely; greater autonomy and trust ` Communicating an inspiring vision and progress ` Giving employees a way to share their ideas and opinions ` Valuing individuals; investing in personal growth SOURCE: Michael Lee Stallard, author of "Connection Culture: The Competitive Advantage of Shared Identity, Empathy, and Understanding at Work"
and financial industry executives. He is usually called upon when an executive has burned through a number of junior people. “Oftentimes, they’re brilliant, but they don’t realize how the way they interact with people can come across as bullying,” said Fazio, whose latest book, BullyProof, was published in May. “They think they’re actually helping the other person or the business.” Fazio expects that greater awareness will change this dynamic over time, and he is looking forward, in the next three to six months, to a more in-person presence lifting company culture. “People connecting and figuring out what each other’s challenges are and supporting one another — that’s been a huge loss that businesses had,” he said. “I think it took a toll on a lot of people.”
Companies getting it right Crain’s spoke to several companies that have been named to lists such as Best Places to Work, which are generally compiled from employee feedback. Some have very low turnover; others are experimenting with ways to attract talent in a competitive hiring market. Basis Technologies, a digital advertising firm in Chicago, is hiring for 70 open roles in North and South America. As of mid-June, the company had added 130 employees for the year. Advertising and marketing are fields with the second-highest turnover by some measures — so the pressure to fill jobs is ongoing, Chief Marketing Officer Katie Risch said. Risch listed employee perks that Basis is enhancing, including an emphasis on diversity and inclusion, paid parental leave, unlimited vacation days and a three-week paid sabbatical every four years. Although it has become trendy to advertise unlimited time off, Basis backs that up by making it easy to
take time, said Anthony Loredo, se- together each day, Sweetwood said. for raising the bar at work. nior director of public relations. C RWhen A I N ’ SaCnew L E Vperson E L A N Dis Bhired, U S I Nhe E Sgoes S | S E P“Thirty T E M B Eyears R 3 - ago, 9 , 2the 018expectations | PA G E 2of 9 “It all depends on what the indi- out of his way to let them know that’s a company were that you maybe got a vidual is comfortable with,” he said. not a requirement. “I’m really con- cost-of-living increase every year or “There is no pressure from managers scious of that when there’s somebody two,” she said. “You were probably to take it or not take it.” new,” he said. “I don’t want them to grateful if you liked your coworkers The company is fully hybrid now, feel like an outsider.” and your manager. Now — I think with occasional large gatherings for At the end of the day, the Great largely due to diversity, equity, incluits sales and marketing teams. Basis Resignation — and perhaps the great sion and belonging practices — the deused to offer in-office yoga classes, rehiring — may reflect that feeling of mand for the environment where you beer on tap, free snacks and other wanting to belong. Human resources work to be a healthy environment onsite perks, but Risch said that’s not executives say they are answering where we don’t tolerate bad behavior, what job candidates are seeking now. many more probing questions now that’s a completely reasonable expec“They care about having the flexi- about virtual work, growth opportu- tation.” bility to live the kind of lifestyle they nities and commitment to inclusion. want, and the freedom and trust from Ramos, the Bounteous vice presi- Michaud is assistant managing editor my employer that I’m going to get my dent, credits the national conversa- at Crain’s New York Business, a sister job done,” she said. “I think that’s a tion about diversity and social justice publication of Crain’s Cleveland. huge shift. I think we’re in somewhat of an experimental phase, not just as a company, but as a country.” Another highly rated company, Advertising Section Employers Health in Canton attributes its low, voluntary turnover of 2% to its generous benefits — fully paid health care, tuition and student Cleveland Plain Dealer loan repayment assistance, profit sharing — and the creation of a lad- July 24, 31; August 7 To place your listing in Crain’s Cleveland Classifieds, der of advancement. CEO Chris Goff built the organizaReal Estate contact Suzanne Janik at 313-446-0455 tion, which aggregates prescription Owner Directs Immediate Sale! 2904 State Rd, Ashtabula, OH benefits for roughly 500 clients in the U.S., from a team of two in 1995 to about 60 today. 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The St. Louis-based company has 19,000 branch teams throughout the U.S. and Canada. In two years, she said, the company has seen a 50% increase in applicants of color. Edward Jones has updated more than 500 conference rooms to accommodate remote work, and it has scaled back Crain’s Cleveland Business its dress code to “dress for your day,” July 25; August 8 AUCTION meaning there’s no need to dress up if you don’t have client meetings. “We have found that flexibility is just table stakes these days,” McDaniel said. “Turnover has been really, Owner Directs Immediate Sale! 2904 State Rd, Ashtabula, OH really low for us. I attribute that to our Inspection Dates: highly engaged workforce and our 8/11 @ 10:30am-12pm 8/18 @ 10:30am-12pm culture. 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Outside of Detroit, in Macomb POSITION AVAILABLE County, Allied PhotoChemical leaders have put their six core values on a slide: authenticity, integrity, customer-focused, loyalty, accountability and family-team. “We’re very proud of our culture here,” said Dan Sweetwood, president and CEO of the coatings manufacturer. The very low turnover and tight-knit team of about 85, however, can seem intimidating to new hires, he said. Most of the employees eat lunch
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The survey was based on responses from June 20-23 from 1,533 Goldman Sachs 10,000 Small Businesses participants, conducted by Babson College and David Binder Research.
Workforce and supply chain Thompson, who employs nearly a dozen employees, managed not only to survive the pandemic slowdowns and shutdowns but came through to have two of her best revenue years in 2021 and 2022. “We've had two good years with consistent work even through the winter. Most years, I have a down season with rain and snow, but these past few years have been our busiest,” Thompson said. “That doesn't mean we are operating at full capacity.”
Small-business owners from Ohio discuss policy at the Goldman Sachs 10,000 Small Businesses Summit last month in Washington, D.C. | GOLDMAN SACHS
Thompson, like so many of the other business owners she met at the summit who made it through the pan-
demic and thought that the worst was over, is now hit with a combination of workforce, supply chain and inflation
PEOPLE ON THE MOVE
Advertising Section
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LAW
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TECHNOLOGY
Brennan, Manna & Diamond, LLC
Mazanec, Raskin & Ryder Co., L.P.A.
Fortress Security Risk Management
Shalini Bhatia is an attorney in BMD’s Cleveland office, developing her practice in healthcare & hospital law. She works primarily on transactional and healthcare regulatory matters. Prior to joining BMD, Shalini gained experience in both pre-litigation and litigation work in the practice areas of family law, employment law, and technology and intellectual property law. Shalini has also worked with the Office of Medicare Hearings and Appeals (OMHA) as an Attorney Advisor on Medicare appeals decisions.
MRR is proud to announce the promotion of John D. Pinzone to Equity Partner with the firm. John has more than 16 years of experience in public sector, employment and school law. He has defended governmental entities, social service agencies and school districts throughout Ohio in both state and federal courts. John graduated from The Ohio State University with a B.S. degree and earned his J.D. from ClevelandMarshall College of Law.
Kevin Baker, formerly the Group Information Security Leader of Westfield Insurance and Post Incident Response Lead at Arete, has joined Fortress Security Risk Management as Chief Information Security Officer. Kevin has been in cybersecurity for over 20 years serving domestic and international clients. As CISO, he will lead the company’s internal security program and strategically influence Fortress’ development and execution of security services for its clients.
challenges. In the Goldman survey, 89% of businesses reported that those broader economic trends — inflation, supply chain and workforce — are taking a toll on their business' revenue. “I thought, ‘I'm not going to be hit with supply chain problems, because we don't do supplies.’ Then one of my trucks goes down and what used to take a day to fix, we were told it was taking four to six weeks to get in the parts needed,” Thompson said. It is a nasty cycle, as supply chain bottlenecks hurt the ability to keep hourly employees — and losing employees meant she was losing out on the revenue needed to hire employees once the trucks were back up and running.
Supply chain and inflation Talking to lawmakers and policymakers about programs aimed at helping smaller businesses attract and reward employees was one of the reasons Chris Fluharty, president of L.C. Fluharty Construction, wanted to attend the summit. As the owner of the Cleveland-based company that specializes in commercial renovation and newbuild construction projects costing up to $3 million, Fluharty wants to be able to recruit a new generation of workers by offering a competitive benefits package. Fluharty said in the 30 years he has been in the construction industry, it has changed from a seasonal occupation to a full-time, 52 weeks-a-year career and all that entails. “We are trying to add a 401(k) or a long-term retirement plan and, additionally, a decent health care benefits package, which as a small business will cost almost $80,000 a year for only six employees,” he said. As a disabled veteran business owner, he said he has to compete with the larger corporations that have flexible access to capital and can pay higher competitive wages and offer better benefits. “Those are the small-business burdens that I don't know that the government truly and fully understands,”
Fluharty said. Like Fluharty, 84% of small-business owners Goldman surveyed said that hiring challenges continue to worsen, and 80% said inflationary pressures continue to be a problem for their companies. Raw material and product costs have cut into Fluharty's margins and affect revenue. “The challenge has been about extreme supply bottlenecks compounded with inflation,” Fluharty said. “Unfortunately, in construction you are bidding with one cost, and six months later, when the project is under construction, it costs you more.” Above and beyond his project costs, his fuel costs for a relatively small fleet of five vehicles skyrocketed from $2,000 a month to as much as $5,000, forcing him to re-evaluate every cost to determine where he can tighten his belt, Fluharty said.
Small-business optimism Despite a bit of a gloomy outlook around the economic challenges, according to the survey 65% of business owners said they remained optimistic about prospects for their own businesses — and 65% said they were currently hiring full- or part-time employees. What Thompson discovered from her time at the summit was that she was not alone when it came to dealing with cost pressures coming out of the pandemic. “It just reinforces what you're going through, and that, unfortunately, it is the norm,” Thompson said. Although reluctant at first, after it was all over she said her time in D.C. was not wasted because it is not every day you get to speak with multiple members of your state's congressional delegation, including Rep. Shontel Brown, Sen. Sherrod Brown and Sen. Rob Portman. “It's good for them to have the ear of the small-business community,” Thompson said. “And they did listen. I believe they listened, and I believe they understood.” Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive
TECHNOLOGY LAW
Fortress Security Risk Management
Calfee, Halter & Griswold LLP Mike French is a Partner with Calfee’s Corporate and Finance group. Mike represents public and privately held companies and private equity firms with respect to transactional matters, including mergers, acquisitions, dispositions, and other commercial transactions as well as general corporate counseling. Mike advises companies across many industries, including financial services, energy, chemicals, manufacturing and industrial, and consumer products.
LAW
McDonald Hopkins An experienced trial attorney and arbitrator, Sanford E. Watson has joined the Cleveland office of McDonald Hopkins as a Member in the Litigation Department and Energy Practice Group. Watson’s practice includes litigating business disputes and products liability cases in federal and state court. Beyond his expertise in the courtroom, Watson also provides practical business counsel to clients and brings a wealth of public law experience to the firm.
Jess Walpole, formerly VP Global IT Security and Operations for Lincoln Electric, has joined Fortress Security Risk Management as Chief Technology Officer. As a technology and security thought leader for over 25 years, Jess will be responsible for the development of security technology and services to protect Fortress clients from cybercrime. Jess holds numerous security certifications and is a major contributor to security organizations like InfraGard and NEOCC. U.S. Rep. Shontel Brown talks with Cleveland small-business owners on the U.S. Capitol steps at the the Goldman Sachs 10,000 Small Businesses Summit. | GOLDMAN SACHS
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