The Management-Investor Catch 22: McGrath

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Published in U.S. 1 Newspaper on July 12, 2000. All rights reserved.

Building Customer Loyalty: Angela Deitch

Maybe you don’t have a "customer relations"

department or your sales department is too short-staffed to coddle


Tough. Only companies that nurture their customers — and this

goes well-beyond just offering a product, by the way — prevail

in this competitive market, says Angela Deitch, a management

training consultant who specializes in customer relations, communication

skills, and sexual harassment policies (609-883-6327). "In the

past the companies that provided products and services drove the economy,"

she says. "Today customers are driving the economy. The more enlightened

companies get really top-notch people in their customer service departments."

Deitch speaks on the process of managing customer relationships at

the Institute of Management Consultants meeting on Monday, July 17,

at 6 p.m. at the Doral Forrestal. Cost: $60. Call 609-520-1188.

Also on the program is Hugh J. Devine, of Hugh J. Devine & Associates

(609-799-8170). Devine was president of Total Research from 1993 to

1996 and he will cover the strategy of customer relations, such as

how to increase profits by concentrating on high-value customers that

fit your brand position and that you enjoy working with.

Deitch, based in West Trenton, has worked with such clients as Wyeth

Ayerst, American Cyanamid, Johnson & Johnson, and Merck, covering

training issues, avoiding harassment, problem-solving, decision-making

and project management. Prior to starting her own firm, she received

a masters’ in education from Rutgers and worked several years on a

program for the prevention of sexual harassment for New Jersey’s 70,000


Companies have to make a decision that they are going to be customer-

focused, says Deitch. "Someone in top management has to have a

vision and the will to see to it that the entire company is focused

on the needs of the customers, not just what you’re going to provide,"

she says. Companies must know what the customers want, when they need

it, and how to provide it to them.

Interpersonal contact, says Deitch, is key. "The process is not

just high-tech, it’s also high-touch," she says. Large companies

can use software programs such as FirstWave ( with

onscreen scripts for capturing customer data. Another firm (

allows customers to type a question and receive a quick, relevant

response. A third program ( helps identify what

is unique about the customer, sets up rules for the company to act

by, and reports on how effective it is. Still another program available

at deals in financial services and has active data


Small companies won’t be using — and don’t need to use — these

high tech call centers with fancy software. For instance, says Deitch,

take her own company. "I don’t have a lot of technology and applications

that larger organizations might have. When I talk to somebody I try

to get that person to understand that I care about them personally

and let them know that I care about achieving their goals. I educate

them, because sometimes when they ask for something they don’t know

that other options exist. I share information with them and I honor


Constantly stay in touch with your clients and get feedback from them

whenever possible, says Deitch. "It takes a long time for a company

or culture to get on board," Deitch says, "and realize we’re

going to do this for our customers because — if we don’t —

the competition will."

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The Management-Investor Catch 22: McGrath

You have heard the paradox — a start-up wants investment

capital but needs a hot chief technologist or CEO to get it, but in

order to attract the best talent, they need money in the bank.

There are ways around this problem, says Stephen McGrath of

McGrath & Associates, an executive search firm at 993 Lenox Drive.

"Suggest that in order to accept those terms they have to pay

a premium, a high salary, or a bigger equity stake," says McGrath.

"It’s all about the total package."

McGrath speaks on Tuesday, July 18, at noon at the Venture Association

of New Jersey’s meeting on "Strategic Human Resources for the

Fast Growing Company." Diana Krajewski of Technoforce

LLC (a technical search firm) will moderate the panel, which also

includes her cohort at Technoforce, Robin Berg Tabakin. Ron

Hahn of Early Stage Enterprises, and Marc Gross and Rachel

Coe of Greenbaum Rowe Smith Ravin Davis & Himmel will also add

their expertise. The event is at the Westin in Morristown. Cost: $45.

Call 973-631-5680.

Preceding the luncheon meeting, entrepreneurs can attend a workshop,

"Business by the Numbers: Validating the Business Model,"

with Ron Hahn, Alan Wink, director of management group, Amper

Politziner & Mattia, and Randy Harmon, director of technology

commercialization for Rutgers Small Business Development. Cost: $40.

Call 973-631-5680.

A VANJ sponsor and member, McGrath spent 20 years with PA Consulting

Group in England prior to starting his company in 1995. He has a BS

in chemical engineering from Wooster Polytechnic Institute, Class

of 1974, and an MBA from Wharton. "I almost went for a PhD program

in engineering and then later somebody asked me if I’d considered

business school," he says. "The decision was made pretty quickly

once I knew what business school would do."

McGrath, whose company has filled chief positions for several Internet

start-ups and new media companies, claims to be busier this year than

last, and doesn’t see any end to the talent shortage. Fortunately,

his firm has a database of people with the right credentials: someone

with 7 to 10 very focused years of experience in their field, and

a high tolerance to risk. "They’re maybe in the mid-point of career,

have some entrepreneurial orientation, a desire to hit the big time,

and a willingness to take risk," he says.

Some current vacancies: McGrath has been hired to find a chief

sales officer for a local web design company, a business development

officer for a company in New York that specializes in delivering items

to homes, and a chief marketing and financial officer for a company

that does job placements over the Internet. McGrath is also short

on help as well; the firm is seeking two research associates who can

help track down candidates.

Since many of today’s start-ups are still waiting for funding to come

through, McGrath has redesigned pricing schemes to accommodate the

fast-growing company. "Particularly in start-up firms, they’re

not in a position to pay," he says. "Clients have asked us

to build a management team and defer their compensation until the

funding comes through. In return for doing that we’ll ask for a premium,

maybe twice the normal fee."

Like many of today’s executives, McGrath is also learning that a little

equity can be better than cash up front. "It helps the client

company from a cashflow standpoint, and it means that we have some

skin in the game, too," he says. "Then it’s in our best interest

to find the best candidates because we’re part owners of the company."

There’s an element of risk to these creative pricing schemes, however,

and as McGrath admits, funding only comes through 75 percent of the

time, and "it always takes longer than anyone expects. I do think

we’re going to see some repercussions of the Internet boom," he

says. "We read a lot of business plans and it’s clear to us that

there’s only a 10 percent probability of success. There’s going to

be a lot of casualties."

The availability of talent is perhaps one of the major reasons, he

says. "They’re all looking for the same people: chief technology,

chief financial officer, chief executive," he says. "You have

to hire quickly, because they’re talking to 10 other firms."

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