Private Company Forum airs range of topical issues.

FEI's semi-annual Private Companies Forum, held May 4-6 in Atlanta, drew some 115 participants from private companies around the country to the Ritz-Carlton Hotel for a wide-ranging program that tackled issues such as "lean" processes, healthcare costs, outsourcing, financial reporting and accounting, fraud and career management. The program was put together by the Committee on Private Companies' (CPC) Program Subcommittee, led by Deborah Wilson.

In one session, Orest J. "Orry" Fiume, a retired vice president/finance at the Wiremold Co., walked the audience through the basics of what a "lean" program is, and isn't.

It isn't a manufacturing tactic or a cost-reduction program, he said, but a business strategy. At Wire-mold, for instance, it was the backbone of an improvement program in the 1990s that dramatically increased assessed value, sales and inventory turns, yet sharply reduced product development time and throughput time.

Fiume argued that too many companies look for "silver bullet" solutions such as new computer systems or "quality" programs, but frequently end up with a "program of the month" approach that employees don't take seriously. For all that has been written about Six Sigma, he argued that it isn't an effective umbrella strategy and needs careful targeting.

Lean thinking does require drastic and perhaps traumatic change for the organization, Fiume said, and it requires senior management to set serious stretch goals and create an environment where it is safe to fail. Metrics are another key element, he said, because "metrics send a message to employees as to what management thinks is important."

A presentation called "The Fiscally Fit Health Plan" addressed a central issue for private companies: the spiraling cost of healthcare. Led by Nancy Blough, executive vice president of the American Health Data Institute, the session underscored the importance of collecting data on the health of the company's workforce. One key point: CFOs can't apply ordinary financial discipline to managing healthcare, especially in the absence of meaningful metrics.

While almost all companies undergo an annual healthcare budget review, Blough argued that a three-year budget is far more useful. Companies need to identify and focus on their sickest individuals, the "ticking time bombs" that generate much of their expenses, she said, and create a chronic disease program for those people. Too much time is spent looking at benefit design and shaving pennies from the costs of procedures, when the real bugaboo is sick people consuming services at an outsized rate without proper efforts at disease management, she said.

CPC's next forum will be in Boston from October 26-27.