What members are saying about forecasting and planning, the economy, staffing and personal development, and the role of investment recovery in the  years ahead. Future IR professionals must become aware of and forge relationships with a host of people outside what has normally been our realm. By that I mean the ‘bootson- the-ground’ folks. As we progress, I find we are more involved with tax departments, capital planners, infrastructure maintenance and a myriad of others. In the complexity of our increasingly ‘green’ society, we must try to ensure that we are not only returning value to our bottom line, but also to the world that we live in. The professional practice of investment recovery is challenging in the best of times, and no one seems to look upon current conditions as “the best,” yet members remain realistic, if not optimistic, about the role of IR in the months ahead. In general, they see a trend toward less direct staff, more outsourcing, more Internet auctions and more broker and consignment agreements.
Interestingly, although there may be fewer direct investment recovery staff, the majority of members said they saw improved visibility and relative importance of investment recovery within their organizations. Recently, members of the Investment Recovery Association had an opportunity to respond to an open-ended questionnaire about the business side of investment recovery. They responded to questions about how they handle forecasting and planning, staffing and job descriptions, plus the impact of the economy on their business and other issues they see ahead. Some surprising answers follow.
How would you respond to these five questions?
How do you handle the “business side of investment recovery,” such as forecasting, planning, staffing, outsourcing and the like? Responses to this question seemed to be determined by the size of the investment recovery group. On the smaller side of the equation were the “personal planning/ one-person IR department” responses.
“We don’t have a stand-alone IR department, so it is ‘hit and miss’ at this point in time,” according to one member.
Another one- person IR staffer put it this way: “No staffing other than myself, so very minimal formal forecasting and planning.”
Stepping up in size, several members with only slightly larger dedicated IR staffs responded as follows: “Forecasting is based upon prior year surplus sales/recycling/reuse/reclaim/scrap metals figures. Staffing is company set; for the most part, two employees manage investment recovery efforts, and we outsource 75% to 80% of our sales through an online auction company. Remaining sales are managed through a bid package process.”
“Looking at a five-year history, we develop some goals for the group— sometimes in planning meetings with owners of equipment.”
“We plan for upcoming projects. We outsource only when we feel it is in the best interest of the company and will give us the highest value. We are limited with our staffing, so prioritization with our projects is key. We work with managing budgeted dollars for projects also.”
“We really have no way to forecast the amount of assets we will get in a year to sell, so there isn’t a lot of planning that takes place. We have blanket contracts for certain commodities, so we administer and plan for them. Supply chain management handles IR staffing. We don’t outsource our IR functions.”
“We have become increasingly more proactive in forecasting and planning as the demands on our time have increased over the past five years and we need to allocate resources in an efficient manner. We may need to outsource some activities, as our staffing has remained virtually the same for the past 15 years, IR activities/ duties are spread out over five individuals. We do not have a full- ime IR staff.”
“We do our best to maintain open communication with cross-functional teams in terms of keeping abreast of upcoming projects that require our expertise. The only items we outsource at this time are the disposal of technology assets, disposal of retired transformers, scrap metals, and cable and wire.”
“Forecasting is done at management level and basically looks at IR results from the previous year and raises the bar a bit higher each year.”
“The business side of investment recovery is handled like the business side of other areas of the business. Planning and staffing is reviewed and adjusted based on projected business needs. We forecast sales and avoided disposal numbers. We set goals and objectives and then track and meet on them during the year. Our staffing level is fixed at two. We use an auto auction company for fleet and heavy vehicles.”
“We review the upcoming ‘work plan’ forecast and estimate investment recovery materials and estimated dollars associated with those materials from each project.”
“We have a department that looks after the management of inventory and surplus. They do the tracking, planning of surplus utilization, inventory management and sales of surplus.”
“We do a combination of activities. Forecasting is done using business models for equipment and scrap, as well as economic indicators. Planning for operations is dependent on the activity; demolition is a lengthy process, involving the facility, IR, demolition and a coalition of partners to enhance the profitability of site closures. Staffing is likewise a case-by-case determination dependent upon the length of the assignment and nature of the recovery methods. Outsourcing is an activity dependent, again, on the amount of time involved and the expertise of the outsourcing company.”
How has the economy affected your IR activities? Do you see things changing in the year(s) ahead? The quote on the front cover from Marty Owens of Dow Chemical provides perhaps the most thought- rovoking response to the impact of the economy on the investment recovery professional. Other responses—including several that indicated that the economy has not had an impact on their activities—detailed the varied situations IR practitioners are experiencing throughout North America.
“When the slowdown hit, our outside sales also fell off. Just as the vendors found themselves short of cash, so didour company. As a result, our reuse and redeployment of current surplus equipment increased accordingly. I believe that the future will see an improvement in the business, but I also believe that some of the financial restraints will remain in effect. Buying of surplus equipment on speculation of future need will remain slow.”
“Outages and projects have been cut back and pushed out for future review.” —electric utility “The metals market is on a roller coaster currently. We do expect these markets to rise and stabilize by first quarter 2012, due to China, India and Eastern Europe’s manufacturing growth. Currently, I am budgeting accordingly with these uncertain scrap prices making things difficult to estimate.”
“The slowing economy has given us more surplus assets to handle.”
“Budget cuts have caused projects to be cancelled or deferred—income is down because of this.”
“The downturn in the economy has definitely had a negative impact on sales as well as scrap value. For the past three years, our annual sales average has been reduced by 40%.”
“Because budgets are tight, our company is holding on to assets for a longer period of time so we have received fewer ‘good’ items to sell. However, some of the facilities have been cleaning out ‘junk’ in order to bring in some revenue.”
“We are receiving less income from the sale of our used equipment. This will not change until the economy improves. Virtually none of the so-called ‘stimulus dollars’ have been visible.”
“Yes, we recently decided to do a fleewide effort to leverage all the scrap metal generated across the corporation and find a scrap metal dealer that will offer the highest percentage for ferrous metals on any given day…along with other recyclable items. The results of that bid process look to be very promising.”
“Some of the material we are trying to liquidate was purchased at the height of the market, so it has a book value much higher than current purchase price. A tough calculus to overcome.”
“The economy, specifically in the US, has affected dramatically our activity. A large percentage of the value from sales is in property…and property sales in the US are almost at zero.”
“Surplus utilization internally has increased.”
“The recession had an impact on us where the metal markets dropped. We did, however, see an increase in sales after March 2010.”
“Depending on the recovery, whether there is a secondary recession, the roller coaster ride may continue. Other than ferrous scrap prices, we have not been affected to the degree that other industries have been. In the years ahead, there will probably continue to be mergers and acquisitions particularly in the recycling market.”
“Revenue for vehicles is lower than normal; scrap revenue is about normal. Lowdollar- value surplus items are no longer revenue effective, causing us to dispose of them with minimum labor. Some items are being disposed with zero dollars in exchange for the labor to remove. Next year is expected to be about the same as this year, possibly a little improved.”
A. Does your organization have formal job descriptions for all of the investment recovery functions? B. Are they reviewed regularly with appropriate feedback?
Because the Investment Recovery Association works so diligently to help foster professionalism in IR principles and practices, we wondered to what extent job descriptions played a role “back at the office.” The answers to the two questions above were an occasional “no,” best stated as follows;
“As a material services manager, one of my job functions is to effectively manage the investment recovery process. It’s basically a one-person show.”
Another comment that we would all like to see change: ”Unfortunately, asset recovery is paid very little attention within my organization.”
However, most responses indicated that IR functions as part of a larger department, so rarely are there stand-alone investment recovery job descriptions and performance reviews. Typical responses are below.
“Each of us who are involved in investment recovery performs multiple functions. We have a mention about ‘investment recovery’ in our job descriptions.”
“We do have formal job descriptions for our positions; however, they don’t go into a lot of detail with the functions that we perform. These are not reviewed regularly.”
“The IR functions are written into the job descriptions for the five staffers who have IR responsibilities (along with their other responsibilities).”
“We have job descriptions that for the most part are a subset of another function.”
And perhaps the winner for the Rube Goldberg chain of authority: “There are formal job descriptions for each position; however, we are in a union and civil service environment, so any changes to job factors must be approved and agreed to by the appropriate bargaining unit. IR employees at this organization are represented by three different bargaining units!”
Does your organization actively support employee development in  terms of investment recovery skills? Are you using the Investment Recovery Association as a resource for doing this? Any other resources for personnel development?
First, the bad news: “Not really…the IR Association and learning platforms are promoted and used by me.”
“No. Again, one-person responsibility. I only have clerical support for invoicing, bill-of-sales, accounting functions and development of RFQs, etc.”
“I seem to be one of the few people within my organization who knows what asset recovery is, so I try to make others aware of the benefits of asset recovery.”
And perhaps the most discouraging response of all, “No, no and no.”
Now the good news: “Yes. Yes. Yes.”
“Yes, the IRA is great for us. We also take classes offered by HR.”
“Our company definitely supports employee development. I anticipate IR to become an important part of our company in future.”
“Yes on IRA. No on other resources.”
“Yes. All personnel involved in IR activities are encouraged to utilize the IRA. Unfortunately due to budget cuts, we have not been able to send anyone to the conferences the past two years.”
“Yes and the Investment Recovery Association has been a resource. Other resources would be companies in the investment recovery business.”
“We use the association and monitor courses offered by other associations and when appropriate send personnel.”
“I use the IRA as a personal resource and have introduced some of our managers to the association. We also use other online training activities.”
However, because the economy has affected so-called business critical decisions for organizations of all sizes, training and personal development is unfortunately often considered a “nice-to-have” vs. “must have.” Members voiced this sentiment in various ways.
“Costs are an ongoing concern. The company is limiting travel and outside resources.”
“Our budget for training is shared among several departments and numerous employees. Training is allocated based on current needs.”
“Personally, I use the association website, ASSET 2.0 and association contacts more today than in the past. As to other resources, on occasions there may be an online training module taken to improve certain skills.”
“Since budgets are tight, training is limited. I do attend the annual Investment Recovery Association conference.”
“Our corporation does support advancing our education in the area of expertise that we are working in. But, budgets are limited, so being able to do things related to training and education has been somewhat limited. I have used the Investment Recovery Association to acquire my CMIR. I would like to get education from other sources too, but haven’t done that to date.”
What changes do you expect to see over the next few years in the operations of your department or in the disposition practices of surplus assets in general?  Answers to this question varied from hopeful (“I see a separate department being set up in future” and “We are very aggressive in managing the investment recovery process, and the company is beginning to realize the ‘bottom line’ contribution we bring.”) to hoping for continued existence (“We hope to still be a service they want.”). Several members predicted an increased level of outsourcing, with less dedicated IR staff in-house. Yet thoughtful responses also showed that members are not simply sitting back and waiting for things to happen, but are clearly looking to provide excellent value in all their activities.
“IR operations will essentially be the same, but with more cross- raining of non-IR procurement personnel.”
“I anticipate a more formalized process.”
Another person anticipates “more focused and effective efforts.”
One utility responded, “Discovery of surplus assets in places not before thought of…mostly in the service territory/power distribution side of the business.”
“With the growth of the business, I expect to see growth in the role of IR, possibly with additional resources dedicated to investment recovery.”
“I see a growing need to expand the personal expertise of people in the field. Also, there is a need in large organizations/ corporations to let the ‘we invented it here’ mentality go. A cooperative effort between departments and organizations, with a balanced mix of in-house personnel and outsourced contracted companies to lessen the burden on large and small companies will need to be worked.”
“I believe we will be very selective in the things that we try to sell, and probably will make different choices as to what we do with some of the items brought to our attention. We will have to work ‘wiser’ in order to assure we are adding value to our organization.”
“Expect to outsource more low-dollar material sales and to use service providers more to sell items via Internet bidding. Our processes will be done electronically versus paper and some Internet now.”
“Our company has trimmed the staff from five to three over the last year. We will be bringing third-party contractors in to assist in the disposal of surplus equipment and scrap. I expect that most all IR groups will hear the term ‘do more with less’ at some point in the future.”
Conclusion. This story began with a quote from Marty Owens, CMIR, Sourcing Specialist/Investment Recovery for Dow Chemical Company. We’ll end with Marty’s insights on what he sees moving forward into the decade. “I see more emphasis on ‘green’ activities with potentially higher visibility and appreciation for the added value of investment recovery. Other changes will involve process refinements and improvements. We normally operate in a state of continual improvement as we always seek to do things better.” We couldn’t have said it better!