Crazy as a, um, Fox

In the fall of 1994, James Fox was faced with a dilemma not all that uncommon in today's business climate. After more than 16 years, he'd risen to the top of Ernst and Young's compensation and benefits division, become a partner in the company, and oversaw 20 people in 11 states. But following a corporate restructuring, the company no longer had an interest in Fox's area of specialty - compensation consulting - and decided to abandon the division. Fox knew the scenario well. His position was in jeopardy and his career in question. He'd had a non-compete contract, and all his clients belonged to Ernst & Young.

So, he did what any good compensation consultant would: He bargained hard for just compensation. He bargained so hard, in fact, he walked away with the division, the clients, and the methodology. He and two partners ended up essentially buying off the division and forming a new company. Fox, with the blessing of his former employers, had turned impending doom into an opportunity for a new life.

Now, just a year later, Fox Lawson and Associates, like Ernst and Young, has 10 consultants in the Twin Cities, several of them formerly with Ernst and Young. The new company's success has exceeded the expectations of the current owners and employees. According to Fox, his firm did not lose a client in the transition, and fiscal 1995 revenue reached seven figures, meeting third year projections. They have already sold much of their work for 1996, and - remarkably- they've sold more services than the division ever did at Ernst and Young.

So, less than 12 months after being faced with a career crisis, Fox and his partners, Bruce Lawson and Bob Bjorkland, are looking at a different set of problems all together - questions of growth and expansion. Thus far they have won between 50 percent and 60 percent of their proposals in a field where 33 percent is considered good.

"We had talked for several years among ourselves at Ernst and Young about starting our own company, "says Fox. "But the timing either wasn't right, or we didn't have the gumption."

The company helped force the leap, however, when it decided to reorganize and focus on major clients - organizations in larger cities, such as New York, Atlanta, and Chicago. That put the Minneapolis compensation office out of the loop. "Ernst and Young realized, correctly I think, that they could not service Minneapolis as well from Chicago, so they decided to sell the division." With no market needs in the Twin Cities, Ernst and Young, the second largest accounting firm in the United States, had no need to enforce non-compete contracts, or protect their clients. Fox and his partners negotiated to take everything from files and equipment to surveys and background documents with them. "We gave them a whole laundry list of wishes, and they said 'fine,' " says Fox. There was about two months of down time s the new company informed clients and found office space in Roseville. The break was uncommonly friendly; in fact, both companies now refer potential clients to each other.

James Turley, area managing partner for Ernst & Young, agrees the split was amicable.

"We had decided to regionalize our human resource consulting, and needed to relocate to Chicago to meet the needs of our big corporate clients," he says. Turley , in fact, helped Fox, Lawson, and Associates make the transfer from employees to entrepreneurs. Though few of their clients overlap, "it will be interesting, because I know Jim wants to work with some larger clients. There are times we help each other with clients, but there will also be times when we compete."

"Our clients were extremely positive." says Fox. :We told them we were going to actually lower fees because our overhead was lower. They said 'What's the downside?' I said, 'We don't see any.' "

Fox has a doctorate in sociology from the University of Minnesota, and has more than 18 years of experience in executive compensation, employee pay, job evaluation and organizational analysis. He has taught and lectured widely.

Fox, Lawson and Associates, LLC, focuses mostly on compensation issues , including helping corporations deal with pay at all levels during reorganization and downsizing. Private contracts include Blue Cross/Blue Shield, First Bank System Inc., and Dayton-Hudson Company Inc. The company also does business in the public sector. They also help companies with other emerging issues, such as health and benefits consulting, but to keep overhead low, they subcontract with several other companies that specialize in those areas. "With a larger company, you don't have as much flexibility. We now find we can offer our clients the very best expertise in every field, "says Fox.

Fox says many of the problems his company addresses are due to corporate restructuring. Businesses have changed how they operate, and need to realign how they pay. "The main question is now that we've restructured, we're not sure the way we pay is appropriate." He sees many more companies basing pay, at least at the higher levels, more on merit. Because of concern about excessive executive compensation in recent years, base salaries have lowered, but pay based on profitability outcomes has increased. " Shareholders don't seem to mind if an executive is getting paid well, as long as the company is performing, and the stock is going up," says Fox.

Tying pay into productivity gets less effective the lower you go in an organization, however. Employees who do not get massive salaries have a harder time accepting fluctuations in pay based on the company's success. "They say, ' I worked as hard as I did last year, why didn't I make as much?'" says Fox.

The other change is in benefits as compensation. "Companies are trying to squeeze more bang out of their buck, "he says. The more "enlightened" corporations, according to Fox, are beginning to see compensation as a "pool" of benefits which includes salary, health and life insurance, and other perks as part of the pay package. "They are trying to move away from the seniority-driven system process and break the entitlement system. instead, they want employees to see themselves as partners in the company's success."

Back to top

< Back