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Monthly Archives

March 2010

FORM OF THE MONTH:

By Your Employee Matters | No Comments

RETENTION PROGRAM POSSIBILITIES SPREADSHEET
(PDF)

Use the time-tested marketing formula: Cost, ease, and impact to ask yourself, “What’s the cost of this item, how easy is it to implement, and what’s the bottom line impact?”

HR That Works Members can also access this document in Word format by logging on to the site

THE EMPLOYEE FREE CHOICE ACT – DEAD OR ALIVE?

By Your Employee Matters | No Comments

Although many employers might believe that the Employee Free Choice Act (EFCA) is dead, it isn’t. As with many other legislative initiatives, Congress pushed EFCA aside to focus on two other major pieces of legislation: Health care reform and cap-and-trade. Although EFCA appears headed for some compromise, it remains organized labor’s top legislative priority and a major objective for the Administration and Congressional Democrats.

EFCA was introduced in the Senate (S. 560) and House of Representatives (H.R. 1409) in March 2009. Since there were more than enough votes to pass it in the House, the focus of debate was in the Senate, where 60 votes are needed for cloture. Last spring and summer, a number of conservative Democrats expressed concern over a union’s ability to organize an employer without a secret ballot election. This is the so-called card check provision, which would force an employer to recognize and bargain with a union if a majority of employees in the bargaining unit sign cards supporting it. The opposition to card check by five or six Democratic Senators, together with the focus on health care reform and energy legislation stymied EFCA’s passage, which many commentators had thought would happen by the August recess.

Unfortunately for employers, it would appear that EFCA has been waylaid, but not forgotten. Although unions still are pushing for a bill which includes card check, a group of Senators, including Senators Brown (D-Ohio), Carper (D-Delaware), Harken (D-Iowa), Prior (D-Ark.), Schumer (D-N.Y.) and Specter (D-Pa.), have been working on a compromise, which they reportedly “think will bring 60 votes for cloture.� Indeed, Senator Specter reported the existence of such a compromise to AFL-CIO convention delegates in September.

Although the details are still sketchy, what appears to be emerging is a bill that would replace card check� with a quickie� election. Employers now normally have 42 days from the date a petition is filed with the NLRB to the date of the election to run a campaign. This period reportedly would be changed to just seven days under the compromise, which in most instances won’t be enough time to run an effective campaign. For sake of comparison, unions usually win a little over 50% of the elections in the U.S. (but only about 30% where the employer mounts a strong campaign opposing the union), compared with a win rate of more than 70% in the Canadian Provinces of Ontario and British Columbia, which require elections within five to 10 days. The EFCA compromise also reportedly includes a provision permitting union access to the employer’s premises during the campaign under certain circumstances, which currently is prohibited.

Perhaps even worse, the compromise in the works continues to require binding arbitration for a first contract. This means that if there were no contract agreement within 120 days, an arbitrator would impose a contract of two years duration. This is a huge change from current law, under which neither party can be forced to agree to any contract provision, and would prevent an employer from even attempting to remove a union until after the contract has expired. Under current law, if there’s no contract, a union can be removed one year after its certification as a bargaining representative.

Thus, while employers might have dodged the card check bullet, something almost as bad appears to be on the horizon. This means that employers desiring to remain union-free need to implement such measures as: (1) Effective group and individual communications mechanisms; (2) understandable and consistent personnel policies and procedures; (3) supervisory training on how to manage employees and avoid unionization; and (4) confidential employee surveys designed to measure objectively the effectiveness of an employer’s human relations program and uncover issues that could lead to unionization. Although you now have the ability to uncover and correct such issues, the law severely restricts your ability to do so once union organizing activity begins.

Article courtesy of Worklaw Network firm Millisor Nobil (www.millisor.com).

TOP TIP

By Your Employee Matters | No Comments

Companies that impose automatic time deductions for meal breaks risk exposure to class-wide liability under the FLSA if they end up shorting nonexempt employees for hours worked due to interrupted or skipped lunch breaks. A recent spate of lawsuits against healthcare employers for alleged failure to pay wages due to such policies demonstrates this.

Companies use meal break auto-deductions for a variety of reasons. Sometimes it’s because automated timekeeping systems require a default meal period to be input. In other instances, the time expended getting to and from a remote time clock might be so great to make a default deduction preferable. In still other cases, employees might view punching in and out for lunch as motivated by employer micromanagement, making auto-deduction a kinder and gentler method of accounting for time. The FLSA risk arises when the employer fails to adopt practices that account for actual variation (i.e. the shorted lunch hour interrupted by work). If auto-deduction is the only practical method available of accounting for unpaid lunch breaks, companies should be able to help avoid FLSA liability by taking these steps:

  • Inform employees that they’re required to report any variation in the length of their lunch break to their supervisor so that their time record can be adjusted.
  • Require supervisors to review and sign off on time records to ensure that they reflect actual hours worked.
  • Make sure that the employee handbook advises employees that they should report any improper deductions or errors in their pay to their supervisor or to human resources promptly so that appropriate corrections can be made.

Finally, if you’re only using auto-deduction to avoid the “micromanaged employee” syndrome, consider explaining that punching in and out is not required for punitive reasons, but to ensure that employees are fully and fairly compensated.

Article courtesy of Worklaw® Network firm Shawe Rosenthal (www.shawe.com).

WORKING “ON” HR

By Your Employee Matters | No Comments

Companies nationwide are struggling to survive. One of the greatest mistakes they make while in this mode is to stop working “on”� their business and think that the only answer is to work harder “in”� it. This is a classic entrepreneurial error. Just ask Michael Gerber, author of “The eMyth.”� The competition is intense today and if you don’t distinguish yourself from your competition, how can you expect to recruit clients and customers from them? To succeed, we have to work not only on improving our sales and marketing acumen, but our workforce management acumen as well. The greatest “variance”� at any company involves sales and marketing. If one salesperson outsells another salesperson two-to-one, that’s a 100% variance. What many companies fail to realize is that the second largest variance has to do with how well they manage their workforce. As the HR That Works Cost Calculator shows, it’s usually 10% or more of payroll. For example, if you have a $1 million payroll, a variance will cost at least $100,000 the revenue equivalent of more than $400,000.

Here’s the point: This is no time to give up on improving HR practices. Doing so is a huge mistake! This doesn’t mean that you need to make an overhaul overnight it means that you should engage in constant and never-ending improvement, taking at least one proactive step a month. In today’s economy, I’d recommend working on improving productivity, motivation, making proper termination decisions, and stepping up your compliance effort. Given the doubled rate of unemployment, workers are filing more wrongful termination, sexual harassment, ADA, FMLA, and similar claims than ever. The average employee win-rate is the highest on record, as is the average verdict. Failing to get your compliance act together literally can put you out of business.

THE 1099 TIME BOMB

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We’ve been advising HR That Works Members to get their independent contractor act together. This is an exploding risk exposure driven in large part by the need of federal and state agencies to make sure that they collect all their taxes. The IRS estimates that the 1099 misclassification problem, due primarily to poor controls, has led to more than $8 billion in unpaid taxes.

As we advise members, “If it walks like a duck and talks like a duck it’s a duck, no matter what you call it�. If you have any independent contractors and you’re an HR That Works Member, look at the new Independent Contractor Training Module, which includes a video, IC agreement, analysis worksheet, and a guide to many state and federal resources in this area.

Don’t take this lightly! In November of 2009, the IRS launched an audit of 6,000 companies, essentially to prove the value of hiring more auditors to collect more money. I can tell you what their conclusion will be: That they should hire more auditors because there will be a greater return on investment given the amount of unpaid taxes out there. This exposure is significant, not just from a taxation perspective, but as a liability and risk management issue. Bottom line: It’s far better to pay the additional taxes, workers comp premiums, and medical expenses than to run afoul of the misclassification analysis.

For more information, click here, and visit the Independent Contractor Training Module on HR That Works.

GET THE BIGGEST BANG FOR YOUR MOTIVATIONAL BUCK

By Your Employee Matters | No Comments

Much of what I share with HR That Works Members comes from my study of marketing. Take any marketing book, replace the words “client� or customer,”� with “employee”� and you’ll learn a lot about improving the HR function. Consider the time-tested marketing formula: Cost, ease, and impact (which you’ll find in the Form of the Month spreadsheet) and ask yourself, “What’s the cost of this item, how easy is it to implement, and what’s the bottom line impact?”

For example, a hand-written thank-you note provides a low-cost, easy to implement, high impact motivational tool. In Harvey Mackey’s “Swim with the Sharks,”� he shares how he built his business from thank-you notes. This raises two questions: (1) How many thank-you notes to your employees have you written lately? and (2) Have you mailed these notes to their homes which shows the employees’ families that you acknowledge the contributions they make at work?

The Retention Program Possibilities (Form of the Month) document offers dozens of ways to show your employees that you care. How you do this is secondary. A final bit of advice: The greatest benefit is the one that’s least remembered. It’s usually the frequency of showing you care that matters the most.

EDITOR’S COLUMN: KEEPING YOUR EMPLOYEES MOTIVATED

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During my recent workshops, a number of employers have asked me, “How do I keep my folks motivated?”

What they really mean is “How do I keep them focused on growing the bottom line?”

I remind them of two things: (1) Maslow’s Hierarchy of Needs and (2) the formula for using our motivational dollars effectively. I mentioned Maslow last month. This column will have more to say about Maslow. Another article in this newsletter will discuss the retention formula to consider.

In 1954, Maslow wrote a paper entitled “The Hierarchy of Needs.”� As I like to kid: Peter Drucker referred to it, Peter Senge refers to it, and everyone else named Peter refers to it. The reason: There’s no room for improvement Maslow nailed it! The paper laid out five levels of need, as shown below. Let’s review each in turn.

1. Survival

This is the greatest need of many employees and many companies given today’s economic stress. This stress is largely self-induced, due to poor financial acumen and practices. Having said this, the most important question becomes “What money am I earning today?” That’s what it means for an individual or company to be in survival mode.

Smart companies such as In and Out Hamburger (an incredible California-based private business) and Costco realized the value of paying entry-level employees at a rate above their competition. Consider how paying a few dollars above your competition will affect who you attract, how hard they work for you, and how long you retain them.

2. Security

Unfortunately, many folks still believe that the only form of job security is a union. Just ask the people at United, Delta, American, GM, Chrysler, and Ford. In fact, there’s only one form of job security: Doing a positive job, in a positive manner, where there’s a positive cash flow. Our responsibility, as leaders, is to make sure that our employees understand this by opening up the books and sharing the numbers. I encourage you to watch the Webinar we did with one of Jack Stack’s trainers on the Great Game of Business.

3. Belonging

You might as well substitute the words “company culture”� here. Are you trying to maintain a positive attitude in tough times? Are you trying to make the work fun? Are you taking the time to brand your company to your employees? One low-cost way to do this is through company uniforms — whether work clothes, sports teams, or recreational clothing. If I walked into your company today, would I be able to define your company culture just by walking around? If not, why not?

4. Ego Gratification

The biggest mistake I see employers making here is ignoring the ego need, especially those of their superstar employees. Here’s an example: “Bob brings $200,000 to the bottom line every year and causes me no drama. I am so glad I don’t have to worry about him.� What an incredible mistake! Unfortunately, most organizations spend 80% of their time on the 20% of employees who don’t bring it every day and ignore the breadwinners; when in fact they should be doing just the opposite. The ego needs stroking. Give these folks awards, get them in the Business Journal or other industry publications, highlight them on your Web site, upgrade their titles, and so on.

5. Self-Actualization

Although I realize that it’s hard to worry about being self-actualized when you’re in a survival or security mode, this need still remains. I believe that self-actualization has to do with knowing that “you make a difference.” Do this by engaging your clients or customers in the conversation. How do you make or break their day? How does it affect them when they receive good or bad service? Have you brought some of your clients and customers and perhaps even prospects in for a focus group with your employees? Do your employees understand the “precessional”� impact of their daily work?

For example, when I finally realized the precessional impact of my litigation career, I had no choice but to quit. Now I know that the work I do makes a positive difference.

This is what it takes to motivate employees. This probably won’t be the last time I mention Maslow. Within each of these categories, we have to be careful about how we spend our money. The next article will address this issue.

CONSIDER WHOLE LIFE INSURANCE AS AN ALTERNATIVE TO THE STOCK MARKET

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As the stock market has endured several difficult years, many people have realized their tolerance for risk is not as high as they originally believed. In fact, at this time, you might be searching for a place to set aside money that is safer and more secure than stocks. If you already have a Term Life insurance policy, or have been thinking about applying for one, you might want to consider a Whole Life policy instead. Unlike Term Life insurance, Whole Life insurance gives you coverage for your entire life, together with the chance to build cash value. Whole Life insurance allows you to save a portion of each premium payment into a tax-deferred, low-risk portfolio managed by an insurance company together with the opportunity to borrow against your policy at anytime, while still protecting your loved ones.

With Whole Life insurance you will get coverage for your entire life. Your beneficiaries will be protected and your policy will stay in effect regardless of health issues. You won’t have to worry about affording the premiums as you get older because the premiums will remain level throughout your life (depending on the contract). These advantages alone make Whole Life insurance a wise choice, but a Whole Life policy has even more to offer.

Having the advantage of cash value makes Whole Life insurance an excellent choice. After you take out your Whole Life policy, a portion of each premium payment goes toward your cash value. As the years pass by, the percentage of each premium payment placed into your cash value increases. Your cash value is invested in low-risk investments and as with most insurance companies, there is a minimum guaranteed return that you will receive regardless of what happens in the market. Having the advantage of cash value not only gives you the comfort of financial security, but you will gain borrowing power against your cash value.

There are also tax advantages that come with Whole Life insurance. With Whole Life insurance all of the return on your cash value grows tax-deferred. This means that you will not have to pay any taxes on what you earn until you decide to withdraw it. Not only will your money stay tax-deferred until you decide to use it, but you can also choose to borrow against it. Incidentally, the interest rates for your Whole Life insurance policy loan are usually lower than current market interest rates. All of these benefits are in addition to supplying your loved ones with the security of an income tax free death benefit if you choose to keep your Whole Life policy in force.

Choosing a Whole Life insurance policy will give you the peace of mind and security of life long protection. If you currently have a Term Life insurance policy, we can show you how simple it is to convert to a Whole Life policy. If you don’t have any Life insurance coverage, now is the best time to get started and start letting your insurance premiums work for you!