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October 2012


By Your Employee Matters | No Comments

Although I don’t pretend to be a financial expert, I have disciplined myself to learn basic accounting principles. The more financial news and literature I read, the more I want to pound my head. Here’s why:

The global economy remains shaky. The industrialized world, the U.S. included, has fallen deeply into debt. To maintain our affluent standard of living, we have mortgaged our countries, states, cities, and households. Debt is crushing us. Despite their best efforts, many nations will have to devalue their currencies eventually. Japan is one such example. In countries with aging populations (such as Japan, the United States, and Western Europe), demographic trends are upside-down. For the foreseeable future, fewer and fewer workers will be supporting more and more retirees, an unsustainable situation. Something will have to give.

Keynesian economists argue that we can keep going into debt because sooner or later we’ll have boom times and be able to pay off our obligations. For example, at the crest of the dot.com boom, governments were actually running surpluses and we thought we were rich. Those days are gone, at least for a while, until the demographics change once again.

I speak in front of many private company CEOs. Most of them are feeling shaky, even the ones with a positive cash flow. They don’t like the tea leaves either. Collectively they’re highly reluctant to put any of their cash into making investments, including hiring new employees.

Here’s why I’m sharing this gloomy prognostication: You need to prepare your company and clients in case the economy tanks by 10%, 15%, 20% or even more. I believe that such a downturn is only a matter of when, because I see no reason for things to be anything but “flat” at best.

To help prepare you and your clients for this economic crisis, I’d recommend that you follow these guidelines:

  • Change all the time. How do we continue to differentiate ourselves is the question we constantly ask ourselves at HR That Works. Being ordinary, being like your competition, being the same company you were five years ago, won’t cut it moving forward. When the shoe drops, your image needs to be progressive and forward thinking — and yet offer stability.
  • Generate a Plan B under which you can survive a 20% drop in revenue. It would be smart to scale this plan assuming a drop of 10% to 40%. If you don’t have the expertise to generate such cash flow projections on your own, you can easily find someone to do it for you on https://www.elance.com/r/contractors/q-excel%20spreadsheets/cat-finance-management. I did this for my company and it cost roughly $500. That’s money well spent. Knowing that you have a plan to address the worst that could happen offers great comfort.
  • Tighten up performance benchmarks to improve your performance in general. This is no time to stand for subpar performance because somebody has either been there for a long time, is related to someone, is very likeable, etc. Results are what matter.
  • Have your entire team watch The Accounting Game webinar on HR That Works. This is the best accounting webinar I’ve ever seen. Also, have the team watch Brad Hams’ Ownership Thinking. Bear in mind that Accounting is the course most often dropped or failed in college.
  • Conduct “what if …” workshops with your management team and employees. Remember, none of us are as smart as all of us!

The primary goal of risk management is preparation. Don’t let yourself get too comfortable — and thus vulnerable. Have a plan to keep well prepared in case the economy tanks again.


By Your Employee Matters | No Comments

Keeping with this theme, an excellent article by John C. Maxwell in a recent issue of Success magazine identifies the key factors in “intentional growth.” Here are my recommendations on using these factors to help yourself grow as an HR professional.

  • Start today. Your power lies in the present. Although it’s important to create strategic plans, you need to begin where you are. What will you do today to have a greater impact on your company and help you grow in your career?
  • Take complete responsibility for growth. I’m not a fan of blame or justification. As the Buddha stated, “What comes to you, comes from you.” Your HR career and its impact on the company is what you’ve chosen it to be — at least up to now. It’s your responsibility to grow your career and make bottom-line decisions where you work.
  • Learn from mistakes. I did a training program on Making Mitsakes (the misspelling is intentional). One of the best ways to prevent making mistakes is to “model” people who have been successful before you. For example, who are the most balanced, effective HR executives you’ve ever met — and what are they doing right? Chances are, if you do the same things they do, you will be equally successful.
  • Rely on hard work, rather than good luck. In this economy, you need to work both hard and smart. One important caveat: Don’t think that working longer hours than everybody else is smart.
  • Persevere long and hard. There are no quitters on the way to success. Expect bumps in the road. As I often state in my workshops, how we deal with what feels unfair to us determines our personal culture. People who adopt a survivor mentality, as opposed to a victim mentality, will come out on top.
  • Stick with good habits. The worst habit I see in managers is poor time management (see the article “1,500 Hours of Your Life … Wasted on Busywork”) How many of you have taken a disciplined approach to how you use your time? If you’re an HR That Works Member, take advantage of the Time Management Training Module.
  • Follow through, rather than talking big and doing nothing. It’s far better to get something done and then publicize it afterward, than to brag about what you will do and then trying to justify why you failed to deliver. As the saying goes, “Under-promise and over-deliver.”
  • Take risks. This is a real challenge for the HR community. Having coached many HR executives, I can tell you that most of them tend to follow the rules, rather than taking risks. I encourage you to read Orbiting the Giant Hairball by Gordon MacKenzie. By the way, the term “hairball” refers to company policies and procedures — something that HR is great at developing.
  • Think like a learner. Whether it’s from mistakes or study, life is one big learning lesson. To earn more tomorrow, you must learn more today. This holds true for both the individual and the company as a whole. To what degree are you enhancing your education?
  • Rely on character, as opposed to talent. Having integrity, doing what you said you were going to do, when you said you were going to do it, shows character.
  • Never stop growing. Don’t let yourself get comfortable for too long. You’re either growing or you’re fading. How would you describe what’s going on with you? Where do you have to coax, encourage, and inspire yourself to take the next step toward your growth?

None of this should come as news. It’s about taking action! As Maxwell reminds us, “Growth doesn’t just happen — not for me, not for you, not for anybody. You have to go after it!”


By Your Employee Matters | No Comments

“Work can be a life-draining affair.” – Joseph Campbell

Effective time management is essential if you wish to be a successful HR executive — and have a life at the same time. According to CEO surveys, when HR professionals focus their time on administrative and compliance duties (positions in which one is particularly likely to say “no”) their companies don’t see them as being strategic partners to the business. The problem is that HR executives spend an average of only 25% of their time on strategic activities. From a career and company goals perspective, this is akin to orchestrating their own demise.

When I advise HR executives to manage their time more effectively by minimizing administrative and compliance activities, I get a variety of “reasons” why they don’t do so:

  • This simply has to get done.
  • Somebody has to do it.
  • I don’t have the time to delegate this right now.
  • There’s nobody else here to do it.
  • I’m not sure I would know how to delegate it properly.
  • I can’t manage the person to whom I delegated it.

These are all poor excuses that can block your career success.

Let’s think about some numbers. Suppose you spend an average of 10 hours a week managing payroll and other administrative tasks. Let’s say you earn $40 per hour (roughly $80,000 per year) and administrative tasks such as this are the least valuable work you do. In fact, it’s work that $20 an hour people can do. On the conservative side, every hour that you do this work, the company loses $20 an hour — which comes to $800 a month or $9,600 a year. If you put this same effort into doing $60 an hour strategic work instead, the company would gain $20 every hour — and you’d be in a far better position to ask for a raise.

Think about it: if you waste 10 hours a week for the next three years, that’s 500 hours this year, and 1,500 hours during the next three years of your life that you’ll never get back! What’s more, this waste will cost the company at least $30,000.

If you label your work as “A”, “B,” and “C” work, you should be spending 80% of your time on A Work, 20% on B work — and zero time on C work. Otherwise, you’re spinning your wheels.

C work basically wastes time completely. It’s nothing you can delegate; it’s just something you should stop doing. B work is administrative and can be delegated or outsourced — such as payroll and benefits administration. Focus on A work: What the business needs and what you want to get great at doing. A classic example would be training in a company that’s focused on technological advances.

To determine where your time is going — and should be going — use this checklist:

A-Level Activities:

  • Meeting with the executive team to understand their vision, mission, value, goals, etc.
  • Studying and understanding the company’s strategic plans, financials, succession plan, markets, branding, and other operations.
  • Identifying the critical human resource needs for this organization (surveys, observation, focus groups, interviews, etc.).
  • Input into the company’s overall compensation plan, including pay rates, incentives, bonuses, rewards programs, etc.
  • Creating strategic plans and processes for carrying out top objectives.
  • Developing training plans to support implementation.
  • Input into the company’s overall risk-management plan, including assistance with the purchase of benefit programs, Workers Comp insurance, Cyber Liability insurance, and Employment Practices Liability insurance (EPLI).
  • Creating systems for hiring, performance, retention and compliance.
  • Facilitating creativity, branding, suggestion systems, etc.
  • Implementing any other company strategic objectives to which you can provide input.

B-Level Activities:

  • Payroll and benefits administration.
  • Implementation of hiring, performance, retention and compliance systems.
  • HRIS management.
  • Delivery of training.
  • Creation of employee handbook and executive contracts.
  • Personnel files management.
  • Attendance, vacation, and leave management.
  • COBRA administration.
  • Compliance posters and handouts.

C-Level Activities:

  • Employee dramas.
  • Meetings that go nowhere.
  • Doing any $10-20/hour work.


By Your Employee Matters | No Comments

Every month we receive dozens of calls from employers asking whether they can terminate an employee with an attendance problem. In most circumstances, they have every right to do so — especially if there’s a well-defined attendance policy and the company holds other employees to a similar standard. Employers get in trouble when the attendance problem results from a work injury, disability, serious medical condition, pregnancy, or other protected category that impacts the employee or a family member. All too often, employers don’t ask why somebody missed work. In one case, an employer told us the employee was late for work on a repeated basis because she had been having flu-like symptoms and getting sick. The employer never asked what might be causing the problem. It turns out that the employee was pregnant. Terminating her would have been a huge, and costly, mistake.

The law does not expect employers to be doctors or psychiatrists. However, it does create a standard of liability that requires managers to determine, if there is a disability, serious medical condition, or pregnancy involved. In the end, a judge or jury will determine whether the employer met this standard.

In most circumstances, employers don’t face lawsuits for their compliance failures. But bear in mind that it only takes a single employee bringing a claim to expose you to hundreds of thousands of dollars in damages (not to mention legal costs). This is another good reason to make sure that your company purchases Employment Practices Liability Insurance. HR That Works Members should take advantage of the training modules and other tools on leave management.


By Your Employee Matters | No Comments

An excellent article in the October Backpacker Magazine discussed five emotional aspects of preventing deadly threats. Although the “threats” facing human relations professionals might not be as extreme as dangling from a cliff, we’re certainly guaranteed a turbulent future. Here’s how the five emotional intangibles in the article might apply to the survival of HR:

  1. Assess risk — As the article asks, “What’s the worst thing that could happen if I do this?” Another good question to consider is “Whose judgment would I be concerned about if things didn’t work?” You should also ask, “What’s the worst thing that could happen if I don’t do this?” This gives a broader understanding of the risk. For example, the real risk that our economy can go south again would affect your entire company, as well as you. If the risk of the economy going south is greater than the risk of improvement — and the downside is extreme — have a contingency plan. How would HR help to manage a 15%-30% drop in revenue?
  2. Stay calm — The article recommends that you “Take control by forcing yourself to slow down.” When you’re used to running 75mph, it’s important to stop, breathe, and think. Give yourself the opportunity to find that safe, calm place for observation and reflection.
  3. Set priorities — According to the article, “You need to be able to survive the conditions you’re in. Assess your situation and determine your most pressing needs.” Not all HR risks are equal. For example, the risk of making a poor hire is perhaps the most serious in terms of frequency and severity. Another significant risk is failing to get rid of a poor performer or an employee who is sabotaging your brand on social media. What are the three greatest risks your company faces and what plan do you have for addressing them?
  4. Be a leader — In risky times, resist groupthink by discussing possible scenarios up front. Give each employee a specific assignment to focus on in risky times. What tasks can you assign to HR subordinates, other managers, or employees?
  5. Stay positive — According to the article, “A powerful desire to keep living leads directly to successful survival stories. You don’t have to be comfortable to survive this situation.” I can supplement this statement by adding “A powerful desire to be a strategic HR executive leads directly to successful career stories.”

Risk management is an exercise in logic and emotion. To reduce their exposures, HR professionals must use both.


By Life and Health | No Comments

To stay afloat in today’s tough economy, millions of people are taking on more and more debt to pay for such items as home mortgages, car loans, college education, or credit cards.

If you died unexpectedly, leaving your debts unpaid, your family would be left owing thousands or tens of thousands of dollars — unless you’ve taken out Credit Life insurance. In this traumatic situation for your loved ones, the financial peace of mind that Credit Life coverage provides can be invaluable.

Here’s how it works: You take out insurance on your life, naming a creditor as the beneficiary (for convenience, the policy premium can be added to your loan payments). On your death, the creditor will receive the balance of the debt or the maximum coverage under the policy, whichever is less. This will protect your heirs by eliminating, or reducing, the burden of debt on your estate.

As with Term Life insurance policies, Credit Life can be written to pay the beneficiary (creditor) if you suffer a critical illness, job loss, or disability that leaves you unable to meet the debt.

To be eligible for coverage, you must be:

  • Employed full time
  • The only person on the loan
  • Below a maximum age set by the insurance company

For more information on the invaluable “peace of mind” financial protection that Credit Life can offer, please get in touch with us.


By Life and Health | No Comments

The nation’s 76 million Baby Boomers (born between 1946 and 1964) need to prepare themselves for financial security in retirement — and that includes making wise decisions about their Health insurance needs. The National Association of Insurance Commissioners (NAIC) recommends that Boomers consider these options:

  • Convert a Group Health plan. If you’re employed and have Group Health insurance through work, but expect to retire soon, find out if your company has a Group plan for retirees or if you can convert your plan to an individual policy.
  • Choose a High-Deductible plan. Because these plans require high out-of-pocket payments — a minimum of $1,200 for an individual or $2,400 for a family — you should be in good health and be able to afford the expense. You can also pay for most appointments and prescriptions through a tax-advantaged Health Savings Account HSA) A high-deductible plan will provide coverage for major medical care such as surgery or disease treatment.
  • Qualify for a Pre-Existing Insurance Condition Plan. Starting in 2014, the Affordable Care Act will prohibit Health insurers from denying coverage or charging you a higher premium because you have an illness or health condition. In the meantime, you might qualify for a Pre-existing Condition Insurance Plan (PCIP) if you have a pre-existing condition and have been uninsured for at least six months. These policies provide comprehensive coverage, including primary and specialty care, hospital care, prescription drugs, home health, and hospice care. Also, you won’t pay higher premiums due to your health condition.
  • Consider Long-Term Care insurance. Some seven in 10 people (70%) age 65 or older will need long-term care services at some point in their lives, at an average cost of $80,000 a year, according to the NAIC. If you don’t have the financial resources to pay for nursing home care or suffer from a chronic condition or disability, consider buying Long-Term Care insurance (LTC). However, be aware that many insurance companies are limiting LTC benefits or dropping this coverage altogether.

Our Health insurance professionals would be happy to offer their advice — just give us a call.


By Life and Health | No Comments

The most recent figures from the National Center for Health Statistics show that 18.6 million American adults (that’s one in 12) suffers from asthma, If you’re one of them, buying Life insurance can be costly — depending on the severity of your condition and your reaction to treatment.

However, asthmatics with a good track record of controlling their symptoms can have a near normal life expectancy. So, if it’s been more than two or three years since your asthma led to an ER visit and your condition hasn’t caused you to miss work, you shouldn’t have much trouble getting Life coverage at or near a “standard” premium. Before you apply for coverage, it makes sense to:

  • Have your physician monitor your condition at least twice a year.
  • Follow the medications the physician prescribes.
  • List these medications on your insurance application.
  • Provide a comprehensive medical history for the application.
  • If you’re a smoker, kick the habit!

We’d be happy to review your situation and recommend the coverage that’s best for you. Call us today for more information.


By Personal Perspective | No Comments

Your daughter is playing in the yard with friends. Suddenly she runs in, crying that her best friend fell and appears to be hurt. You rush out to find the young girl lying on the ground, screaming, and holding her arm that seems to be broken. Just then her mother runs up — and, as she scoops up her daughter, snaps at you angrily, “I hope you have good insurance!” She then rushes her daughter to the emergency room. Although the mother was clearly speaking in anxiety and anger arising from seeing her child hurt, she has raised a good point.

Fortunately, your Homeowners insurance comes into play in a situation like this, Every Homeowners policy includes Medical Payments (or “med pay”), which covers medical expenses from an injury to a person on your premises with your permission, regardless of who was at fault.

By stepping up immediately to help with medical expenses, admitting no more than that the child was in your yard at the time of the injury, you might well avoid a lawsuit for damages. Rather than infuriating an already angry parent, med pay allows you to show your concern and offer financial support in a stressful situation.

Note that med pay coverage does not apply to everyone injured on your property. For example, it won’t pick up the medical expenses of someone insured under the policy (such as a family member) or for an injury arising from a business conducted on your premises (such as a day care center).

Your Homeowners policy helps protect you against a wide variety of losses. Give us a call and our insurance professionals will be happy to fill you in!


By Personal Perspective | No Comments

According to the National Highway Traffic Safety Administration (NHTSA), of the more than 5.4 million auto accidents in the U.S. during 2010, 1.54 million resulted in injuries, killing 32,788 Americans. Although improved vehicle design and tougher road safety standards have reduced these figures dramatically during the past two decades, they remind us of the need to stay safe behind the wheel.

A high percentage of accidents and deaths behind the wheel take place on the nation’s freeways, for obvious reasons. To reduce your chances of becoming a victim or harming others on the freeway, we’d recommend taking these precautions:

  • When you merge onto the freeway, get to the average traffic speed as soon as possible.
  • When you’re in the right lane of the freeway and see drivers merging from an on-ramp, move one lane to the left. If you can’t do this, slow down to give the entering driver more room.
  • Allow plenty of room between you and other vehicles. Driving experts usually recommend using the “two second rule” — when you see the vehicle in front of you pass a fixed object, count “one thousand one, one thousand two.” If you reach the fixed object before “two,” you’re following too closely.
  • Try to maintain average traffic speed. Vehicles going much slower or faster than the flow of traffic are a recipe for an accident. However, also use common sense in observing posted speeding limits.
  • Use extra caution when driving at night or in bad weather; many drivers don’t adjust their driving habits for weather or road conditions.
  • Avoid any sudden moves; give other drivers time to react.
  • Scan the road ahead continuously for signs of trouble, such as construction and traffic slowdowns.
  • Be aware of the positions of other drivers, particularly beside you or slightly to the rear. Adjust your rearview mirrors properly before you drive your car.
  • Remember that your reaction time and overall driving skills decline as you get tired. It’s essential to take a break every two hours or so.
  • When exiting the freeway, signal well in advance. Do not slow down significantly until you start to turn off the freeway.