By: James Swain (www.jimswain.com)

Every business that produces copyrighted material–from movies to TV to books–is facing the issue of intellectual piracy of its products. I sat down to discuss this topic with Bob and Cathy Smith to see how PAR is dealing with the important issues of copyright infringement and test security.

Question: A couple of basic questions first. When did PAR start creating its own products?

Bob Smith: When PAR first got started, the majority of the products we sold were developed externally by authors and sent to us for publication consideration. If we accepted a product, we would provide editorial and production assistance and then market the product. As the company grew, so did our ability to provide a collaborative, internal system of developing products. Today, we internally develop most of our test products in collaboration with outside authors.

Question: What do you see as being the big difference between developing tests now versus when you got started?

Bob Smith: It’s much more expensive now to develop tests than it was in 1977. Unfortunately, the potential revenue doesn’t support the development of some good products today. And because it is so expensive to develop most new tests and because our staff has great test development expertise, we most often develop tests in collaboration with external authors.

Question: Is there an average length of time for creating a test?

Bob Smith: Typically, it takes 3-5 years to develop a test from its conceptual stage to a finished product.

Question: Can you tell me how many tests are presently in the development stages?

Cathy Smith: We presently have over 40 tests and new software products in development.

Question: There is presently in our culture a philosophy among certain individuals that the Internet was intended to be free, and therefore it is not a crime to download books, music, and movies, and then share them with other people. How do you feel about that?

Bob Smith: I strongly disagree with the current philosophy that all information on the Internet was intended to be free to share. It costs a significant amount of money to develop a product.

Question:  People who steal copyrighted material often don’t understand the ramifications of their crimes. For example, the music industry has seen an enormous decrease in new music being released. At the same time, the price of tickets to live music events is skyrocketing. As a result, going to concerts is becoming something that only a small portion of our society can now do because of cost.

The same thing is happening with books. Last year, Publisher’s Weekly reported that $3 billion dollars in books were stolen over the Internet. As a result, the industry has raised prices on books a whopping 15-25%, making it difficult for many people to buy books.

Do you see the same thing happening in your industry?

Bob Smith: Thankfully, no. We’re in an industry where the sale of our products is restricted to those who have certain qualifications as well as the training to use our tests. In addition, the tests are supposed to be kept secure. People in our industry understand that a stolen test could completely invalidate its use. So stealing is not nearly as prevalent as it is in other industries, at least not yet.

Cathy Smith: We are very careful about whom we sell our tests to and how our tests are distributed.

Question: What about people who try the old-fashioned approach and illegally Xerox your tests?

Bob Smith: In addition to having the copyright notice on all our tests, we also print a warning on our tests that states that if this test is not printed in a specific color of ink on white paper, then it’s an illegal copy.

Question: Has anyone ever reported illegal use of your tests?

Bob Smith: Yes. And we follow up on every one that is reported to us. Sometimes we even have to notify the head of an organization that one of their employees is illegally reproducing our tests.

Visit our blog Thursday, May 27th for the conclusion of this blog on the topic of intellectual piracy.

By: James Swain (www.jimswain.com)

Question: There are signs all throughout the PAR buildings that say, “Customer Service Is Our Most Important Product.” That’s not just a slogan, is it?

Cathy Smith: No, it’s a way of life here at PAR. The difference between PAR and other companies is our service. PAR employees live and breathe Customer Service.

Bob Smith: I was determined that regular communication with our Customers and outstanding Customer Service would be two qualities that would distinguish PAR from competitors. Excellent Customer Service has long been a core value of the company, from answering the phones with a live person to fulfilling orders on the day of receipt, responding to Customer e-mail inquiries within 24 hours, and providing error-free shipments.

Years ago, a Customer named David Nichols wrote me a letter when a product he’d purchased was delayed in shipping. He said that “... it was not right to promote your products, take Customers’ money, and then not deliver the product... delaying product delivery is not right.” I’ve never forgotten that. And, since David wrote that letter, he and I became good friends and we remain so today.

Question: What does that mean for your Customers?

Cathy Smith: Every year we ship tens of thousands of packages with an amazingly small number of shipping errors. Our distribution staff prides itself on making sure that our Customers receive exactly what they ordered as quickly as possible. We get thank you notes from our Customers all the time, telling us how much they appreciate our Customer Service and outstanding delivery and shipping.

Question: Having once run a business myself, I learned that happy employees lead to a high degree of Customer satisfaction. Do you find the same to be true?

Bob Smith: Yes! We measure Customer satisfaction in many ways. We send comment cards in every order, which all management staff read when they are filled out and returned by the Customer. We also do Customer surveys and talk to our Customers. We also offer an excellent return policy. If a Customer is not satisfied with a purchase, we will accept the return of any item—no questions asked.

Question: Three of your competitors recently merged. How do you see that affecting your business?

Bob Smith: The merger has helped us differentiate ourselves from our competition, and enabled us to be responsive to Customer needs by continuing to deliver outstanding Customer Service and innovative new products to our Customers.

Question: PAR has come a long way since 1978. What do you see the future holding?

Bob Smith: We will continue to innovate, grow, and evolve, and we will continue to take care of our Customers. Our company is not for sale, and PAR will remain family owned.

Question: I first became aware of you and Cathy through your philanthropic work in the Tampa area. Can you tell me more about the causes you’re involved in, and why you feel it’s important to give back to the community?

Cathy Smith: Twenty years ago, Bob and I decided that it was our corporate responsibility to give back to the community in which we lived. Over the years, that commitment has grown, and last year we donated to more than 80 organizations in the Tampa Bay area, including the Humane Society, Meals on Wheels, United Way, and a scholarship program at the University of South Florida, to name just a few. We also encourage our staff to participate in community activities and to support local charities.

Question: One final question. You recently adopted a new slogan. Why?

Bob Smith: We shortened our name from Psychological Assessment Resources to PAR, because that’s what our Customers called us. We changed our slogan to “Creating Connections. Changing Lives.” It sums up not only what we do every day, but it captures what we aspire to do as well.

By: James Swain (www.jimswain.com)

I became friends with Bob and Cathy Smith, the founders of PAR, 15 years ago, when we were introduced by a mutual friend. At the time, I knew of their company’s terrific reputation, and that they were strong supporters of many charities in the Tampa Bay area. Recently, I had a chance to sit down with the Smiths and talk about the company’s origins, and what they believe the future holds for their business.

Question: What did you and Cathy do before starting PAR?

Bob Smith: I served as a staff psychologist at the James A. Haley Veteran’s Administration Hospital in Tampa, Florida, and was in private practice as a clinical psychologist from 1975 until 1986.

Cathy Smith: I worked at the VA Hospital for 10 years as a psychiatric nurse.

Question: I ran my own business for 20 years and know how challenging it can be. What compelled you to start PAR?

Bob Smith: I didn’t want to be in clinical practice forever, and yearned to do something on my own. Cathy and I thought of opening a cookware store like Williams-Sonoma, or some other type of business. PAR was more of an experiment.

Question: What was your first product?

Bob Smith: We released our first product in 1978. It was the scoring keys for supplemental scales of the MMPI. Today we sell approximately 400 products on our Web site and through our catalog.

Cathy Smith: We started out with $2,251 in capital. Initially, we ran the business on our kitchen table. Bob’s Uncle “Rip” used to come over to the house and help out.

Question: Do you still have the table?

Cathy Smith: Of course! We are very sentimental. The table is now in the break room of our distribution center. We also still have the Selectric typewriter we used to start the business.

Question: I’ve read that most people who become entrepreneurs are inspired by someone. Did you have an inspiration?

Bob Smith: My father ran his own CPA firm for many years. I’m sure that had an influence on my decision to go out on my own. I always wanted to create something of my own. I was also inspired by Tom Peter’s book, A Passion for Excellence. I still have the dog-eared copy of that book on my office bookshelf.

Question: It takes a strong marriage for a husband and wife to work together. You and Cathy seem extremely happy. How do you do it?

Bob Smith: Cathy and I are able to work together because we share a mutual respect for one another. We share similar values and are passionate about many of the same things.

Cathy Smith: Bob runs the business and the final decisions are his. Only one person is responsible in the end, and that’s Bob. That is the difference between leaders and bosses.

Question: Many small businesses don’t make it past 5 years. Did you ever think that PAR might not make it?

Bob Smith: For the first 8 years, Cathy and I took no compensation, and we reinvested everything we made into PAR. At one point in the early 1980s, we thought the business might not survive. We managed things very conservatively, which helped us survive during leaner times.

Question: PAR has grown a great deal since those early days. How large is the company now?

Bob Smith: We presently have 58 full-time employees.

Question: I’ve had the opportunity to spend time in your offices, and talk with your employees. They are a very happy group of people, and seem to genuinely enjoy working here. How do you accomplish that?

Bob Smith: We try to take very good care of our staff. For the most part, when people start working here, they want to stay, and we want them to stay. We have 24 employees who have been here over 10 years. We know that in order to expect our employees to take good care of our Customers, it is important for us to take good care of them.

Question: Which leads me to my next question. In order to succeed, a company must have a core philosophy. What is yours?

Bob Smith: We hire smart people who are very conscientious. We surround ourselves with people we want to be around. PAR employees are our extended family. You must invest up front, and find the right people to succeed.

Visit our blog Thursday, May 20th for the conclusion of the interview with PAR founders, Bob and Cathy Smith.