Twice a year, Hawaii Business Magazine asks the Anthology Marketing Group to take the pulse of the local business community. This spring, owners and executives of 407 companies each had unique stories to tell about their firms’ financial situations – ranging from awesome to awful and everything in between.

When taken as a whole, the results of this latest BOSS Survey are worse than last fall’s survey. Much more disturbing is that optimism about the local economy’s future fell dramatically.

“We’re bruised but back on track. We have not fully recovered from 2020 yet, but we work on this every day. We tackled higher food, liquor and labor costs by raising prices, but a lot of hidden costs affect our bottom line.”

— Kaleo Schneider, Director of Operations, Buzz’s Original Steak House (O’ahu)

“We are flourishing. Our sales are strong. We have really good staffing and all our positions are full. We have a good future.”

— Leila Thompson | GM, Window Trends (Kaua’i)

“Barely surviving. We have only booked 3 new weddings since the August fires. The message potential clients get is that those who live on Maui do not want them to come. Another issue is many wedding groups can’t afford the available accommodations.”

— A Maui wedding company that asked to remain anonymous

Optimism about the future – or the lack of it – is a huge factor in business decision-making. Optimistic business leaders will hire more workers, launch expansions and offer new products and services. Less optimistic leaders may freeze or cut staff, delay expansion and reduce product lines or services.

To further probe these attitudes, the survey’s respondents were asked which of these statements best describes their companies’ spending plans for the coming 12 months.

“The economy will hold steady. There’s still a lot of willingness to come to Hawai’i.”

— Byron Kay, Owner, Kona Honu Divers (Hawai’i Island)

“It’s hard to predict… but if housing continues to rise in cost, the economy will fall, because we don’t have the workforce.”

— Nichole Hutaff-Nakamura, President, Valley Isle Excursions

“Speaking with tons of friends, vendors, colleagues in the tourism and wedding industry this year, they are all in the same boat as I am. we’re not getting new business and not sure if it will happen any time in the next few years.”

— A Maui wedding company that asked to remain anonymous

“The economy is getting worse, and I expect this trend will continue until 2026. There are many issues worldwide and until they are cleared up, it will affect our economy.”

— Kaleo Schneider, Buzz’s Original Steak House

What Changes in Hawai‘i Taxes Do You Favor?

In May, state legislators passed, and Gov. Josh Green signed into law, a major income tax cut for Hawai’i residents. However, this year’s Legislature rejected Green’s proposed $25 visitor tax and a proposed exemption to the excise tax for food sales.

Please note: We conducted most of the BOSS Survey of local business owners and executives and all of the 808 Poll of the general public during the legislative session, before the income tax cut received final approval.

“I see businesses picking up more of the tax burden, whether it’s car registrations or in our employment taxes. Visitors too. They get dinged all the time with an extra fee for renting a car.”

— Leila Thompson | Window Trends

“I strongly oppose a visitor tax. If you want less of something, you tax it. If you don’t want less tourism, which drives our economy, then don’t raise taxes.”

— Byron Kay | Kona Huna Divers

Did the Cost of Goods and Services Go up a Lot, a Little or Hold Steady?

One recent phenomenon in the news concerns inflation and people’s perceptions of it. The Bureau of Labor Statistics says consumer prices nationwide for all items rose 3.4% from December 2022 to December 2023 – a little more than half the rate of 6.5% in the previous 12 months. And though the inflation rate fluctuates from month to month, the overall inflation rate for the first four months of 2024 is similar to 2023’s.

Nonetheless, surveys show many people do not feel inflation has fallen. One commonly cited explanation: These people see that prices overall have not come down but remain much higher than before the pandemic. In this explanation, people equate today’s persistent high prices with continued high rates of inflation.

The next two questions in the BOSS Survey aim to test similar perceptions about higher prices among businesspeople. First, we asked businesses how much they had raised their own prices in the past year – something they are unlikely to exaggerate. We also asked them how much their vendors had raised prices in the same period. We compare the answers side by side.

I think that if people’s perceptions of prices were generally accurate, then the numbers in each row would be more similar. After all, the BOSS Survey includes many local businesses that supply goods and services to other local businesses. Both groups of businesses have imposed higher prices on others, and paid higher prices imposed by other buinesses.

While only 15% of businesses surveyed said they raised their prices a lot in the past year, 41% of them said their vendors raised prices a lot. Knowing a bit about human psychology, I think it only natural that people and businesses are more likely to emphasize in their minds the price increases imposed on themselves, and less likely to emphasize in their minds the price increases they impose on others. I would probably think that way myself.

Who Should Lead Lahaina’s Fire Recovery?

Methodology for These Surveys

The BOSS Survey and 808 Poll were conducted by Anthology, a Hawai‘i marketing group that is part of a global company called Finn Partners.

The respondents for the BOSS Survey were found by using a company listing purchased from a third-party business sample provider, as well as Hawaii Business Magazine’s Top 250 list and classified yellow page listings.

Interviews were done online as well as by telephone with owners, senior executives and other people at participating companies who were knowledgeable about their companies’ operations and finances. A total of 407 random interviews on O‘ahu, Maui, Hawai‘i and Kaua‘i were conducted from March 27 to May 15, 2024. A sample of this size has a margin of error of plus or minus 4.86 percentage points with a 95% confidence level.

The sample of companies was stratified based on number of employees. Businesses with one to nine employees were designated as “very small” and those with 10 to 49 employees were designated as “small.” Medium-sized companies were those with 50 to 99 employees and companies with 100 or more employees were classified as “large.” The data was weighted to reflect the proper proportions of each company segment based on numbers of employees as reported by the state of Hawai‘i Department of Labor.

A secondary goal was to complete interviews with a target set of companies that derive relatively significant proportions of their revenues from retail sales. A total of 71 were surveyed in this segment.

A separate online survey called the 808 Poll was conducted of the general public. A total of 459 surveys were conducted from March 22 to April 1, 2024. Respondents were screened to ensure they were at least 18 years of age and fulltime Hawai‘i residents.

The margin of error for a sample of this size is plus or minus 4.57 percentage points with a 95% confidence level.

The participants in this session were:

• Chase Conching, Principal and Creative Director of Library Creative
• Ryley Higa, Machine Learning Engineer at Sumo Logic
• Yolanda Lau, Consultant, Educator and Co-Founder of Hawai‘i Center for AI
• Liya Safina, Digital Design and Innovation Contractor for Google and other companies
• Moderator: Ryan Ozawa, Emerging Tech Editor for Decrypt and Founder of Hawaii Hui

Ozawa: This session is practical and hands-on. We’re going to open up that AI toolbox. Raise your hands if they have fired up ChatGPT. (scans audience) Almost everybody. Who has an AI app on their smartphone? (scans audience) About half. So rather than getting into basics, we’ll go deeper. Yolanda, what are the innovative platforms you use?

Lau: ChatGPT 4 – and I think you should start there. Before that launched I told people to use Meta AI as their introduction. I think each of the different large language models has their strengths and weaknesses. Meta is better generally for short-form content. I prefer Claude for longer form content. If I’m doing coding, I prefer ChatGPT. But the truth is I have a browser open with all of them in separate tabs. I will try prompts in all of them, and then keep iterating with a model or two before I finally pick the one for that specific task.

Ozawa: We’ll start with the text generators most people are familiar with. We’ll go through text, image, video and specialized business applications. Chase, as a branding strategist, you do a lot of writing. You certainly want to represent the client’s voice, certainly the spirit of Hawai‘i, and we learned that can be a challenge based on what the broad internet has taught people about Hawai‘i. How do you use the text tools?

Conching: There was a good question from the audience in a previous session about the lack of information about Indigenous people in these large language models. What’s really cool is we now have access to a hui of people that have access to Hawai‘i photos and offline text and are using that to inform these language models and plan to open source these Indigenous datasets.

Ozawa: A group called Indigenous AI is focused on improving that representation around the world – the availability of the datasets and the quality of the outputs. Are you using ChatGPT or another text tool?

Conching: Like Yolanda, I go back and forth between a few different large language models. ChatGPT is one; its multimodality is a game changer for me. I also use Claude. I’m on the go quite a bit, so I use mobile apps for ChatGPT, Pi and Claude for different reasons.

Ozawa: Ryley, as a software developer, what does your toolbox look like?

Higa: For generative text, I mainly use ChatGPT and Claude. I use GitHub Copilot for personal projects and I find GitHub Copilot to be a very useful tool for programming.

Safina: If you’re trying to generate imagery that’s very specific to a culture, the large language models cannot get that specific. One workaround is to leverage either OpenAI or Adobe Firefly within Photoshop to generate a piece of an image that I want, rather than trying to have it get everything right all at once. It’s like a puzzle: You get each piece individually correct first, then work on the whole.

For image generation, Midjourney of course. Midjourney will also analyze imagery you send it. For instance, if you are working with a particular photographer, style or artist, you can send Midjourney a referential image, ask it to analyze the image, so Midjourney tells you the way it would describe the image. Then you can work with the output that it provides to get your result closer to the way Midjourney describes it rather than the way humans describe it.

I also use AI because I’m an immigrant; English is my second language and the metric system is my first way of measuring everything. I needed work done in my backyard and I couldn’t estimate the area’s size in square feet. So I sent photos to Open AI with different angles and asked: Can you estimate it in square feet?

Ozawa: Yolanda, why is Claude your preference for long-form content versus ChatGPT?

Lau: I think it’s more about the style. I find ChatGPT too stiff, in the way that Gemini is too informal. Claude has a nice middle ground. I like what Liya said about starting in the corner of an image. I feel the same way about writing. If you ask ChatGPT or any LLM to provide generic content – an article about whatever – you’re going to get something generic and terrible. But if you start by asking: Can you talk about this one idea, then build off that, that’s how you get the results you want.

Left: Yolanda Lau, Right: Ryan Ozawa

Ozawa: Chase, how do you use tools so you don’t get a generic response?

Conching: Provide as much context as possible. Mike Trinh in the opening session said he uses five or six different prompts to get the output as refined as possible. That is important. So is building the expertise to then say, “This is incorrect” or “This is not my style, please correct it.” Nowadays, a lot of the large language models will remember that you like to write in one particular style, or you don’t like to use this particular language. Sometimes people feel they’re bugging the program if they prompt it over and over. But it’s really helping it help you.

Safina: With text, I find what works is reverse engineering, figuring out if there’s a particular writer you like, feeding the model that content and asking what’s so particular about it. What is different about the way this author structures sentences or uses descriptors? Tell me what’s the formula in bullet points. My most common request is TLDR – too long, didn’t read – so it gives me concise answers. I learn what makes this text different and then apply this formula to the prompt I give AI.

Ozawa: My examples of multiple iterations to AI: “You are an expert in agriculture and have a technical understanding of this and that, and are speaking to someone with a 10th grade education. How would you articulate this information?”

Higa: One technique I use when prompting ChatGPT is called in-context learning – giving examples of how to do the task. Another technique is reachable augmented generation. That means you’re providing facts and knowledge inside the prompt so ChatGPT has the information to answer your question. Another simple technique is chain of thought prompting: Ask ChatGPT to explain its reasoning.

Lau: I use Otter to record meetings when I think taking notes will be impractical or I’m likely to miss stuff, and always ask permission before recording. Then I can go over the transcript for details I missed.

Conching: Instead of Otter I use Fathom for transcription because it is HIPAA certified and SOC-2 certified (good for financial data). Also, they have a transparent policy on what data they use. They don’t use any recorded data or chat data to train their models. It’s important before you commit to a tool to read its policy on data retention and usage.

Ozawa: I am a fan of Otter. There’s also Fireflies.ai and other tools. Transcripts are useful if you’re looking for the actual words. Otter makes it easy to edit and correct, which you still have to do. But summary tools within Otter and Zoom are useful because you can come out of a meeting with the action items or a checklist like, “Yolanda will bring the chicken and Ryley will make rice.”

Let’s move to images. Liya got us started with Midjourney. Chase, what’s your image creation tool?

Conching: In my work, that’s mainly creative and by proxy marketing, etc., we do a lot of creative execution, and we use image generation tools for early ideation, but there’s still absolutely the need for a human. Midjourney is one of the tools we use quite a bit.

We are developing our own models using Indigenous faces. That’s something we’re eventually hoping to open source.

An industry standard is still Adobe. I was fortunate to work with Adobe back in 2018 on their Sensei project, their early generative AI model, and that turned into Firefly. What I like about Adobe is they are one of, if not the only major player in the space, that only sources training data from licensed or open source information. They pay artists for images they use in their training data. So even though they might be a little behind the curve in quality of output, they are the most ethical, in my opinion, when it comes to input.

Ozawa: Yolanda, is ChatGPT your go-to for image work?

Lau: I prefer Firefly, for the same reason as Chase: They’re not using data they’ve sourced illegally. You feel safer using content created by Firefly versus ChatGPT or Dall-E.

Higa: I use Firefly and Dall-E usually, but I only use it mainly for personal flyers for meetings and such. I often use something like Magneto, which is free and casual.

Ozawa: Canva has options like that.

Safina: Yes, Canva. For each industry, there’s one tool that tries to be everything, your Swiss Army knife, and in marketing Canva is that, allowing you to generate your own images. For presentations, you can simply drop in three photos of your team members and it will give you four different options of beautifully designed slides, biographies and names, all well designed.

I’m a designer, so I will never advocate for “Let’s replace all designers with Canva.” But there’s a time and place for AI. You will never find a designer who says my joy in life is creating presentations. We want to free designers to do higher level work. But something as simple as a flyer for social media or a presentation, use Canva. Canva is the number one tool that I would encourage all businesses to try. Tell your marketing department: “See how much time you can save to actually be more creative.”

Conching: For entrepreneurs and businesspeople who don’t have full marketing departments, Canva will save time and money. I recommend it.

Lau: I agree on Canva. Another one I use is Ideogram, which gives 100 free images each day. These image generation tools help anyone become an entrepreneur. You used to need a designer to make a starter logo for you. Now you can have AI do it. Anyone can use AI to start their own business pretty much overnight, something that would have taken months before.

Safina: One more tool specifically for presentations: Gamma AI. I used it for a conference and it took me half the time that it normally takes me to prepare a conference presentation. Gamma was easy to use. And there’s Beautiful and 10 others that cut your time in half while creating presentations that are better than templates.

Left: Chase Conching, Middle: Ryley Higa, Right: Liya Safina

Ozawa: Let’s move to video generation. Ryley, what’s your favorite?

Higa: I used Pika, which turns text into video, but the quality was poor. For text to video, we’re not there yet.

Conching: But there are more limited tools that save tons of time for video editors. Premiere now can automatically remove objects from moving scenes so you don’t have to do it manually.

Lau: We can’t access Sora as everyday people, but you can use tools like Canva or Synthesia to make training videos. Take your pages and pages of written training content and turn them into a talking head that people can learn from. It’s easier for employees than reading and they’re likely to retain more of the information.

Ozawa: Let’s talk next about business applications. What about Zapier?

Lau: (turns to the audience) Who has used Zapier? (only about half a dozen raised hands) That’s surprising to me. Zapier is free – you can pay to get more – no coding and it allows anyone to automate almost anything. So you don’t need to write the code to call the API (an application programming interface between two applications), you just use Zapier to call whatever and you can hook up Airtable to literally anything. There’s so many uses. Everyone should have a free account.

Ozawa: Basically a translation tool between different platforms. What common applications do you see for Zapier?

Lau: Use it for anything repetitive, time-consuming, that you don’t want to do yourself. I use it to call data from standard emails into spreadsheets, which is a format I want. Magical.

Safina: If there’s one takeaway from this panel, I highly encourage anybody who’s dealing with marketing, sales or customer relationships or automation, to check out Zapier. A feature called Zaps allows you to write algorithms. If my company gets an inbound email or a form submission, we can segment who submitted this form. Is this an existing customer or new? If existing, do we want to send them a message or Slack or notify our rep to call them? It talks to Slack, Salesforce, Intercom, texts. You don’t need to add new tools, you can link existing tools to automatically do actions that normally a human oversees. It’s an amazing tool to experiment with.

Ozawa: I want to mention a couple of AI companies with Hawai‘i ties. Legislature.ai started here about a year ago and allows you to track legislation that might impact you or your company. A company called Sudowrite has a writing tool focused on creative writing. I know a group that got a grant that AI wrote the application for. And finally Segment X, if you’re looking for marketing and business development help.

Lau: And Reef.ai for understanding your customers. And I just want to mention the founder of Sudowrite, Amit Gupta, lives in Honolulu.

Audience question: The website theneuron.ai ranks AI tools, but is there a platform that replicates this panel and tells me, “You should be using this and that.”

Safina: There’s a newsletter I love called “You probably need a robot.” Every day or every other day, it sends you the latest business tools to use.

Higa: I find it useful to see if there is an AI integration for apps I already use and then test it. There’s good and bad AI integration, so test first.

Audience question: How do we learn to trust that these products are not uploading our data?

Safina: Every time I accept a privacy policy, I copy the whole policy and throw it in ChatGPT and ask, “Summarize this in 10 bullets,” so I know what I’m agreeing to.

Ozawa: All of these AI tools have a switch where you can tell them, “I don’t want you to use what I’m submitting to you to further train your bot.” They hide the switch but you can trigger it.

For more AI tips, see here.

This audit was especially useful, says City Auditor Arushi Kumar, because it was published in June 2023, during the City Council’s budget hearings.

“It was a great conversation starter for the budget hearings, as vacancies dominated the conversation,” recalls Kumar. “Every department director was asked about their vacancies and what their plans were to fill them before June 30. So, while it was nice to get recognition at a national level, the ultimate goal is to have an impact at the local level.”

City Council adopted five pieces of legislation related to the audit’s findings and recommendations that affected both city and state agencies.

The city’s auditor is one of many people working behind the scenes in Hawai‘i and across the nation to ensure companies, nonprofits and government agencies follow standards and best practices in finances, operations, IT, HR and other important areas. Auditors aim to provide independent, objective evaluations of operational business activities, and report to senior management.

The judges for the Association of Local Government Auditors awards cited the Honolulu audit’s focus on an issue that was both timely and full of significant risk – risk in terms of dollars at stake and breadth of services affected.

The audit was even more impressive considering the absence of reliable data. The city’s Department of Human Resources couldn’t even provide a timely record of actual vacancies that passed the auditor’s reliability test. While most audit shops would understandably conserve resources and terminate the audit due to unreliable data, the city’s office forged ahead, justifying the decision by pointing out that stakeholders were making critical staffing and budgetary decisions based on faulty data. This helped convince city officials to take action to improve data reliability.

The report also dove into process bottlenecks. For example, it found the city’s HR Department was using four separate unlinked databases for hiring, onboarding and terminating personnel. The department also had no formal process for abolishing old positions that would likely never be filled. This meant that, for an unknown number of vacancies, their related funding could not be released for other priorities.

Beyond Scathing

While “scathing” audits may grab headlines, Kumar says, the perceived friction is necessary to define a problem, unearth its root cause and help fix it: “We are part of government checks and balances. The City Council uses us to hold executive departments accountable for how they’re spending taxpayer money.” But tracking agency spending, according to City Audit Manager Christine Ross, is “just step one.

In order to add value, auditors have to be able to answer, ‘So what?’ ” Ross says this requires persistence, curiosity, critical thinking and creativity.

Government performance auditing has been embedded in Hawai‘i’s Constitution since 1950, even before Hawai‘i became a state. But the first state auditor, Clinton Tanimura, was not appointed until 1965. This activation coincided with a nationwide trend reflecting public concerns about increased government spending on welfare and regulatory programs in the 1960s and 1970s. The public demanded information on how governments planned to ferret out waste, fraud and abuse, and whether public programs were meeting their stated objectives.

In Honolulu, the Office of the City Auditor was created within the city’s charter in 2002, after similar voter calls for accountability following scandals involving government officials and lack of transparency over public funds. That mission continues, says Kumar:

“ ‘Government performance auditing’ has less to do with spreadsheets and checking every dollar than trying to assess the outcome of programs and processes. The term ‘performance’ is right there in the title.”

While that may sound like a check-the-box exercise, Kumar says, audits help the public understand the role that government agencies play in their communities: “We’re trying to increase trust in government.”

A similar crisis of confidence spurred the evolution of private sector audits. Former auditor Gina Woo Anonuevo, now Chief Human Resources Officer at First Hawaiian Bank, recalls the transition came in 2006, when large accounting firms began to fail. That was the era of corporate financial scandals featuring Enron, WorldCom, Adelphia and other prominent companies. Stakeholders demanded more accountability from leaders of publicly traded companies. “That’s when audit became a true career profession where you needed specific skills, knowledge and experience to do the job, not just follow a checklist,” says Anonuevo.

Cops or Partners?

Because the audit industry has grown during periods of public scandal, the common perception is that auditors are like IRS agents or police officers who uphold hard-coded laws, shining the spotlight on violators. To be fair, there are similarities: auditors rely on structured frameworks and standards to scope their work, and note any discrepancies based on collected evidence. One difference: auditors recommend improvements but don’t enforce policies – that’s management’s job. And they try to have collaborative relationships with the people they audit.

Former auditor Addie Lui, now Director of Information Security at Aloha Pacific Credit Union, says leaders are not required to follow an auditor’s recommendations to the letter. “It’s up to management to accept or manage the risk, whether or not to implement the recommended control,” he says.

The auditor’s job is to clarify risks and make recommendations based on a thorough understanding of business processes and objectives: “When you write the recommendation, you let them know that if this isn’t being done, their business objectives may not be met,” he says.

As Anonuevo puts it, the auditor’s job is “to proactively identify potential issues so that we can self-correct.”

According to First Hawaiian Bank Chief Audit Executive Kristi Lefforge, “Historically, the audit practice has been more compliance focused. But it has really morphed into more of a consulting arm. It’s not necessarily that we’re punitive. In all cases, we are there to make sure that we’re safe and following rules and practices.” This is known as the assurance side of audit – examining systems and processes and reporting whether they are on track.

“But there’s another side to us: we’re trying to make sure we’re adding value,” notes Lefforge. Because auditors have a high-level view of all the risks and potential obstacles faced by an organization, they also see the other side of the coin: opportunities for improvement. This is where the consulting side comes in.

Adding Value

One example of a consulting engagement is a management review, when managers ask the audit department to lend their analytical skills and tools for an emerging need, or a specific project outside of the prescribed audit calendar. “Management could ask us to come in and do an assessment, without it being an audit,” says Anonuevo.

She and Lui worked together as First Hawaiian auditors in 2008, when Aloha Airlines filed for bankruptcy. Banks were faced with an onslaught of millions of dollars in related credit card chargebacks. Because employees had to manually type in long transaction codes to process refunds, being off by one digit could mistakenly flag a transaction as invalid. In that case, the manager of the business unit asked internal audit if they could help automate data entry and process these massive claims.

Fortunately, Anonuevo had just purchased audit software that could ingest all the transactions at once and deploy an automated filter to weed out duplicate or invalid claims. “Remember, this was 16 years ago when systems were not as advanced as they are today. It really did make the work easier; it reduced the mistakes from manual inputting and processing. Luckily our IT audit team knew how to program it, so they went in and helped them with that.”

Another example of assistance provided outside of the traditional audit is to examine incidents for potential fraud exposure, says Anonuevo. “I remember one incident where a manager called me and said, ‘I just opened up my employee’s desk and there’s tons of general ledger tickets in there that haven’t been processed.’ ” Damage control measures were clearly called for, but how much? “We sent an auditor down to look at what the scope and potential exposure were and advised management on the next steps based on the assessment. A lot of managers appreciated that.”

Overcoming Resistance

Of course, not every agency or department head welcomes an audit. In these instances, support from the top executives helps. The auditing term “tone at the top” means a body of evidence that demonstrates leaders’ commitment to ethics and internal controls throughout their organization. For auditors, this translates to responsive and collaborative auditees.

Kumar shares that, within weeks of starting her term at the city, the mayor and his management team visited her Kapolei office. “I really appreciated their show of faith and willingness to work together. They’ve set such a good tone in their dealings with my office, and a lot of that has trickled down.”

Similarly, Lefforge says she appreciates how First Hawaiian Bank’s senior leadership has a strong governance and control mindset. “I have worked historically with clients who didn’t have that tone at the top, and it’s challenging to get your work done when it’s not there.”

While leaders may support the idea, individual auditees may view auditors as non-experts intruding on processes that are working just fine – breaking what doesn’t need fixing to justify their existence. Kumar acknowledges that having virtual workplaces has hampered their efforts to build relationships: “When we are able to visit in person, we seem more human.” But not everyone wants to have auditors in the next cubicle, if they can avoid it.

Lefforge suggests the key is finding opportunities to educate potential auditees on what internal auditors do and connecting with them outside of the audit process. This shows that auditors are invested in supporting their success. “Sometimes it’s checking in with them periodically throughout the year to see what they’re doing, being aware of any new processes or systems they’ve launched, and building relationships.”

Like her private sector counterparts, Kumar tries to find common ground with resistant auditees. “We each have a lot of pride in our work because we know we’re serving the public. Sometimes it takes a bit longer for some people to realize that I mean it, but we’re all working toward the same end.” However, she acknowledges, “Some of these relationships can take a long time to change. It’s kind of a long game, right?”

Sometimes, she says, it means being hyper-vigilant for any opportunity to connect on a personal level with someone who was unhappy with their audit reports. “There was one director I didn’t have the best relationship with, but we were able to have an informal conversation – I think it was about K-dramas or something.” While it might have seemed frivolous, Kumar felt a slight thaw in the relationship. “We just kind of had a moment of understanding: we’re both just people doing our jobs.”

Over four days, the cohort visited Japan’s Tohoku region, the site of 2011’s Great East Japan Earthquake and the resulting tsunami and nuclear disaster.

“The Japanese people are very resilient,” says Kim Ball, owner of Hi-Tech Maui, which has four Hi-Tech Surf Sports locations on the island. He was part of the Hawai‘i delegation and knows a thing or two about resilience himself – he and his family lost three Lahaina homes in the August 2023 wildfires. “I don’t want to say the Japanese are used to disasters, but they have had a lot of calamities hit their island nation,” he says.

One of the worst occurred on March 11, 2011. A 9.0 earthquake triggered a tsunami that reached up to three miles inland and triggered radiation leaks and disabled the Fukushima Daiichi Nuclear Power Station. This triple disaster caused nearly 28,000 reported deaths and missing persons, as well as $210 billion in damage.

Feeling Understood

“I used to have this mental block, like no one could understand (what we’d been through), but of course they understood,” says Maui County Councilmember Tamara Paltin, who represents West Maui and was among the delegates. She says understanding the magnitude of what Japan went through helped persuade her “to stop making comparisons. It doesn’t matter if it’s 80 people or 101 people or 20,000 people. To the individuals affected, a disaster is a disaster. If it’s horrific, it’s horrific.”

Program delegate Maui Mayor Richard Bissen says that after the trip, he felt renewed optimism.

“I’m confident that we will recover. That was my biggest takeaway, and it was reinforced, at every turn, in every presentation. The loss of life and the amount of devastation they had, what it’s taken to get to where they are now, is just Herculean, really. But it puts things in perspective.”

Rebuilding Thoughtfully

During the trip, the group toured facilities such as a university and a hospital, and new businesses that developed in the disaster’s wake, including a hydrogen production plant; a textile factory that creates fabric for both fashion houses and aerospace uses; and a hydroponic lettuce farm created in a former elementary school.

Ball, who serves on the Lahaina Advisory Team, sees an opportunity for similarly creative economic development on Maui. “Everybody on the west side is looking for alternatives,” he says. “Obviously, tourism is what turns our wheel, but additional things so that we wouldn’t have to rely quite so heavily on tourism.”

In Japan, he says, “the private sector has led recovery efforts, whereas in the U.S. we expect the government to take the lead and then the private sector to fill in the gaps,” says Ball.

Another delegate, Kūhiō Lewis, was impressed by Japan’s forward thinking in education, housing, mental health and infrastructure. Lewis is the CEO of the nonprofit Council for Native Hawaiian Advancement.

“Japan builds for the future; they don’t necessarily build for today,” he says. “We are spending billions of dollars on Maui for a lot of temporary stuff. What could that mean, utilizing those resources to think about the future? So, when you look at Lahaina, it’s a lot of ‘in the moment,’ it’s not necessarily thinking holistically about what our needs are for the generation that is yet to come. … As leaders, we need to be mindful of how the decisions we’re making in this moment can support, positively, the future.”

Community input is vital, notes Paltin. She learned that in Namie, a town on the coast of central Fukushima, all households were surveyed as part of the disaster recovery.

Different Japanese prefectures, or provinces, had different approaches to recovery, she explains. “In some prefectures, they wanted a buffer, with nothing built near the ocean; other areas wanted to rebuild, but they did a rebuild higher than what the tsunami affected, with efforts to mitigate. That largely depended on community feedback, and you don’t want to do anything without community buy-in.”

Disaster Sciences

The group learned about the disaster training degree at Tohoku University. Similar programs could be developed at Hawai‘i colleges, say the attendees we spoke to, who believe disaster preparedness and response training could become a workforce development opportunity for the state.

At Tohoku University, they’ve aggregated some of the standard challenges and common outcomes of calamities and studied them within an emerging field of disaster sciences, explains Paltin. “To create a disaster sciences program here, if we could have that type of data sharing, a shared data platform, analysis of what goes right or wrong in the aftermath of a disaster, it would serve not only the state, but also the next step could be to create programs on this throughout the country.”

Having that type of training and expertise, agrees Ball, “means we could be boots on the ground right away, no matter what has happened.”

Mayor Bissen says he has invited the Tohoku University team to visit Maui so they can share the program’s concepts in depth. “They’re a very resilient community and nation,” says Bissen. “They probably every three to five years face another disaster. I hate to say it, but they expect it. I think that that should be our mindset, too.”

In a rapidly changing climate, he notes, it’s not a matter of if but when a natural disaster will happen.

“Pre-disaster preparations are top of mind,” says Bissen when asked about rebuilding for resilience. “Whether we are talking about practicing evacuation routes, reducing fuel sources, or constructing fire-retardant, wind-resistant buildings.”

For example, he mentions a potential evacuation drill in Pā‘ia, along a route that used to be for sugarcane haul trucks. “They are private roads, closed, but during an emergency we’d have another route out of Pā‘ia. Having a backup to the backup to the backup.”

Another possibility is burying utilities, he says. “It is something that Lahaina has asked for, for a long time. It may be cost prohibitive, but at what point do you learn the lesson and say ‘let’s not put up a wood pole’ anymore? Newer subdivisions in Hawai‘i have solar on the roof and power underground.”

“Kibou means hope and if we’re going to give kibou to our people, we have to give it to our people with demonstratable action,” says Bissen. “To be able to say, hey, look, we have power lines underground, the tall grass has been cut down, there’s a fire break put in, sensors put into the fields.”

In addition to learning from past disasters, both at home and abroad, Paltin notes that “global partners are key, too. Japan had its first treaty with the nation of Hawai‘i in 1871, so there’s a long history of friendship and exchange. We were told that part of the reason for the program was the aloha Hawai‘i gave to Japan in the immediate aftermath of their earthquake and tsunami.”

A Continuation of Culture

Lewis found that despite the challenges Japan has faced, “their culture has thrived. It’s the underlying spirit of their people that allows them to be resilient. I think you see that on Maui, too. Hawai‘i is very ethnically diverse, much more so than Japan. But what grounds us is that culture, the Hawaiian culture, the spirit of aloha, the connection to land. You see that sense of connection to the place in Japan. They’re not just about money; it’s about way of life.”

“Post-trip, I’ve been thinking about resilience,” Lewis says, “and to me, it’s ‘What are the underlying things that make Lahaina special?’ Those are the things that we need to hang onto. I don’t think we should be building back Lahaina to what it was; I think it needs to be something completely different. But holding on to those core values and that cultural history of the place, no matter who lives there. Everything else is superficial.”

Workers’ compensation claims can be filed for a variety of injuries and illnesses that occur at work – from cuts and strains to repetitive-use injuries like carpal tunnel syndrome to skin disorders due to chemical exposures.

Workers’ compensation benefits can include compensation for lost wages and medical expenses. In the worst cases, workers’ compensation can pay permanent disability or death benefits.

The National Safety Council says the top three occupational injuries involving days away from work are 1) exposure to harmful substances or environments (36% of such cases), 2) overexertion and bodily reaction (22%), and 3) falls, slips and trips (18%).

Keeping workers safe helps companies avoid expensive workers’ compensation claims and higher insurance rates. It can also boost morale, improve worker retention and increase productivity.

Here are eight tips to cultivate a safe environment:

• Build and maintain management support. This can take many forms: Managers need to be alert to potentially unsafe actions at work and should take active roles in safety training. And they should ensure adequate staffing to meet production and service goals, and invest in measures and resources to prevent injuries, such as providing personal protective equipment and training programs and repairing faulty equipment.
• Model and encourage safe behavior. Unsafe habits can develop if workers are pressured to cut corners to meet deadlines or if they see their supervisors acting unsafely.
• Train your workers to do their jobs safely. Training and education are especially important for new workers, but everyone benefits from refreshers and reminders. Provide updated training when new processes are implemented or changes in safety requirements take place.
• Conduct safety inspections. Regular inspections give you the chance to mitigate workplace hazards before they lead to injuries.
• Train with personal protective equipment. It’s not enough to have PPE on-hand – workers have to be familiar with the equipment and know how and when to use it.
• Promote safe driving. Make sure your requirements don’t pressure employees to drive unsafely. Keep your vehicles in good condition (that will usually save you money too). If you operate a fleet, telematics programs that use GPS to track drivers can encourage them to act safely behind the wheel. Most importantly, ensure your drivers are qualified to operate your company vehicles.
• Know your industry’s regulatory requirements. Depending on your jurisdiction, you may fall under Hawai‘i or federal occupational safety and health standards. Following these standards can help you avoid both injuries and fines.
• Proactively manage workers’ compensation claims. If a claim is reported, encourage prompt treatment using telehealth if possible. Offer injured workers modified duties if needed until they recover and stay in touch with proactive communication. Staying on top of these cases can ensure workers aren’t away from their jobs longer than necessary.

It’s also important to partner with an insurer that can help you navigate safety concerns in your industry. Consult with your independent agent for guidance.

While you may still embrace the cherished legacy of the family and the company, it’s important to know when it’s time to be liberated from it too, to pursue your own goals. If you are considering breaking free, keep these steps in mind.

1. Clarify Your Exit Goals: Start by defining your personal goals and motivations for leaving the family business. Define your ideal timeline, financial needs and long-term goals. This clarity will guide your decision-making and inform your exit strategy.

2. Evaluate Business Readiness: Assess the readiness of the business to function effectively without your day-to-day involvement. Evaluate the leadership and management team, organizational structure and operational processes. Identify areas that may require improvement to ensure a smooth transition.

3. Consider the Four Most-Common Options:

a. Family Succession: If there is a capable family member or members willing to take over your role, consider how to make that happen. You may need to prepare them, establish a succession timeline, and address potential conflicts or challenges.

b. Management Buyout: Explore the possibility of selling your ownership stake to key managers or a management team within the business. This maintains continuity and creates an opportunity for existing management to take control.

c. External Sale: Selling the business to a third party, such as a strategic buyer or an investor, may provide liquidity and allow you to exit the business entirely. It typically requires a valuation, identifying potential buyers, negotiating terms and executing a sale agreement.

d. Merger or Acquisition: Consider merging your family business with another company or being acquired by a larger organization. This option can provide growth opportunities, synergies, and a smooth transition for both the business and its employees.

4. Seek Advice: Don’t do this solo. Engage a team of professional advisors: attorneys, accountants, business valuation experts and consultants experienced in family business transitions. Exiting a family business is complex and you need objective advice to assess financial implications, facilitate negotiations, and ensure compliance with legal and tax requirements.

5. Develop a Plan: Once you have chosen an exit option, develop a comprehensive succession plan with specific steps, timelines and responsibilities. It should address ownership transfer, management transition, employee communication, and any legal or financial considerations.

6. Communicate: Open and transparent communication with family members, key employees and other stakeholders is essential. Discuss your plans, manage expectations, and address any concerns or challenges that arise during the transition. Encourage constructive dialogue to maintain family harmony and business continuity.

7. Execute the Exit Plan: Follow your outlined steps while coordinating with your professional advisors, and ensure all legal and financial aspects are addressed. Monitor the progress of the transition and adjust as needed to ensure a successful exit from the family business.

Everyone knows that happy employees lead to happy customers and growth, so most companies say employee satisfaction is a big part of their mission. The reality is that employee experience, EX, is usually an afterthought, says Tiffani Bova.

Bova, the former global growth evangelist at Salesforce, is among Thinkers50’s list of the world’s top management thinkers. She was born and raised in Hawai‘i and graduated from Punahou School. She says companies tend to do what they need to for the customer and assume “the employee will figure it out.” She says the pandemic shined a light on that EX disinvestment.

What follows is an edited excerpt from her latest book, “The Experience Mindset: Changing the Way You Think About Growth.”

A majority of employees have been disengaged from, or indifferent toward, their work for decades. They’re frustrated by inadequate pay, limited career advancement opportunities, unrealistic productivity expectations and long commutes that have become increasingly unnecessary.

As shown in the first chart, employee productivity and compensation were in alignment until the Digital Revolution, and have diverged wildly since. Between 1948 and 1979, productivity (measured as how much total income is generated in an average hour of work) and compensation (employees’ average pay) rose in close tandem.

Productivity and Hourly Compensation Growth, 1948-2020

The gap between productivity and a typical worker’s compensation has increased dramatically since 1979.

Between 1979 and 2020, productivity went up 61% while compensation only went up 17.5%. With productivity increasing, it is only natural to assume that income increased for businesses as well, and you’d be right. But that money wasn’t making it into the pockets of most employees. Instead, it went to the C-suite, other corporate and professional employees, and higher shareholder profits – not to a majority of their employees.

Beyond compensation and productivity, companies need to pay attention to employee engagement when considering how to improve EX. Engagement is currently at a miserable 32% – and hasn’t budged in the U.S. since 2007.

U.S. Employee Engagement Trend, Annual Averages

The engagement element that declined the most from early 2021 to 2022 was employees’ level of agreement that they have “clear expectations, the right materials and equipment, the opportunity to do what they do best every day, and a connection to the mission or purpose of their organization.”

The percentage of actively disengaged employees – that is, workers who are disgruntled and disloyal because most of their workplace needs are going unmet – is slowly climbing and was at 17% in 2022. Even more telling is that from early 2021 to 2022, there was an 8-point decline in the percentage of employees who were “extremely satisfied” with their organization as a place to work.

Unhappy or disengaged employees can still “do their jobs,” check the appropriate metric boxes and get paid. They may also be miserable.

Disengagement shows up in places like a disinterest in collaboration and an unwillingness to go above and beyond or take on extra work. That ends up negatively impacting employees who are actively engaged.

Digital productivity can also mask engagement issues. So much of the inner workings of any business – the tedious, mundane tasks – are now handled by technology and automation, which can result in higher productivity numbers. That doesn’t mean your employees are engaged.

Lack of engagement means employees are less likely to invest discretionary effort in organizational goals or outcomes. They are also more likely to quit or be fired due to poor performance, further exacerbating the talent crunch. Those lost employees are expensive to replace.

It is no surprise that organizations that are the best in engaging their employees achieve more than four times the earnings-per-share growth of their competitors. If you don’t have employee engagement, how could you possibly expect to see high productivity, innovation and organizational agility? How can your company expect to provide superior EX when employee engagement is so dismal?

Focus on EX: Employees are begging for it, your customers are feeling the consequence of its neglect via poor service, and it’s showing up in your bottom line.

Photo: courtesy of Tiffani Bova

This month’s expert:
Tiffani Bova
Global Growth Evangelist
Salesforce

As a general rule, always safeguard vital records, including accounting and staff data and customer and inventory lists, by storing them in the cloud with a trusted service. Alternatively, create backups of essential files, ensuring they’re also uploaded to the cloud for easy access if you cannot reach the office.

Here is a brief guide on reconstructing essential HR files and continuing employer responsibilities during this difficult period.

Essential HR Files to Reconstruct

1. Form I-9, Employment Eligibility Verification: This form is mandatory for every employee. Lost or damaged forms must be replaced as quickly as possible. If files are lost, reverification must be done for each affected employee. Learn more at tinyurl.com/FormsI9.
2. W-4 Forms: Employees need to complete this form to determine tax withholding. More information at tinyurl.com/FormsW4 and tinyurl.com/StateHW4.
3. Employee Contracts and Agreements: Consult with employees to obtain backup copies of contracts and agreements. If no backup exists, consult legal counsel to help reconstruct the documents. Payroll records, tax submissions and other financial documents (if they exist) can provide details like employee compensation, job titles and length of employment, which may be helpful when reconstructing contracts.
4. Payroll Records: Essential for determining employee payment and benefits. Include all pay stubs, time sheets and related documents in your backup files. Victims of the wildfires have until Feb. 15, 2024, to file various individual and business tax returns and make tax payments. Learn more at tinyurl.com/IRSwildfires.
5. Benefit and Insurance Documents: Vital for continuing benefits like health insurance, retirement plans and other employee benefits. Where to get more information: Check with your insurance carriers and benefits plan administrators and visit tinyurl.com/ReliefInfoGov.

Employer Responsibilities

1. Paying Employees on Time: Even if catastrophes happen, the Fair Labor Standards Act and Hawai‘i wage and hour law require payment of at least the full minimum wage and overtime compensation due to a covered employee for hours worked. If employers anticipate paychecks being delayed because of a disaster, they should contact the Department of Labor’s Wage and Hour Division and the Hawai‘i Wage Standards Division for guidance. Learn more at the Wage and Hour Division’s fact sheet on disasters: tinyurl.com/DisasterFacts.
2. Layoffs and Unemployment Insurance: If layoffs are necessary, employers must provide terminated employees with information on how to apply for unemployment benefits. Learn more at labor.hawaii.gov/blog/mauiwildfires.
3. Health and Safety: Employers must provide a safe working environment. In the context of a disaster and anticipated hazards associated with recovery operations, this might mean remote work or temporary locations. Learn more at osha.gov/wildfires and labor.hawaii.gov/hiosh/home/for-employers.
4. Communications: Maintain a list of 24-hour emergency numbers for all employees and develop a call tree to keep employees informed.

Rebuilding your business after such a devastating event is challenging, but attention to your HR responsibilities is crucial for a smooth transition. Keep the lines of communication open with your employees to keep them informed and connect with government agencies to ensure you meet all legal obligations.

For general guidance on reconstructing business records after a natural disaster, visit the IRS at tinyurl.com/b6f298na. For personalized assistance, consider contacting local employment law experts and the government agencies mentioned above.

Reconstructing files and documents is important, but true rebuilding begins with the people. Be mindful of your employees’ well-being following traumatic events, recognizing that stress and trauma can show up weeks or months later in unpredictable ways. Open discussions about employee wellness and mental health create supportive and safe workplaces where employees are more likely to seek support. Employee assistance programs and behavioral health support are crucial to supporting employees’ long-term well-being.

If HBO’s popular series “Succession” has taught us anything, it’s that poorly planned leadership transitions are riddled with drama and risk. These decisions can be daunting, and its impacts can be all-encompassing. Every business, regardless of industry or organizational structure, needs a succession plan.

Succession planning is a proactive approach to cultivating a pool of talented individuals, identifying potential for growth and developing action plans for organizational change. This should start two to three years ahead of change at any level of the business, not just among executives. It is a crucial part of ensuring continuity and maintaining revenue.

As we prepare to step down from our leadership roles at Servco, our succession planning will allow for a smooth transition. We are confident that the company’s next generation of leadership is well-equipped to continue to build on Servco’s success.

Based on this experience, here are our recommended steps for preparing and implementing a smooth succession plan.

1. Determine Decision-Makers

Identify decision-makers and engage them early in the succession planning process to ensure the plan aligns with their needs and goals. Objectivity is important to eliminate emotional or relationship-based biases, often found in family businesses.

2. Identify Key Positions

Think critically about the current structure of your teams and how that compares to your aspirational strategic needs. Understanding what the key positions are, the duties performed in those positions, the skills needed to fill them, and the functions of those roles in three to five years will help provide an outline of potential successors.

3. Assess Your Talent

This is not only an objective and critical review of existing talent, it’s also about creating and examining key tests of that talent. We found psychological assessments, such as personality tests and leadership style assessments, very helpful. Based on your findings, you may want to consider doing a full search with both external and internal talent. In Servco’s case, we concluded that we had strong internal candidates.

4. Refine and Adapt

Ideally, succession planning should be an annual topic reviewed by both executive management and the board of directors. It’s important to start early and continuously reevaluate your succession plan to evolve with your company. There may be unforeseen situations and changes along the way, so be prepared for the unexpected.

Peter Dames becomes the company’s President and CEO on Oct. 1. Fukunaga will transition to executive chair of the board. On the same day, Ching will retire as president and COO but remain a director of Servco’s Global Mobility Board.

This month’s experts:

	Mark Fukunaga Chairman and CEO Servco
	Rick Ching President and COO Servco