What your boss expects HR to know about business

If you don’t know what “free cash flow” means, maybe you should – if you want to get ahead in your organization.
What if someone told you he had a key piece of knowledge that would give you an edge on most of the other managers in your company? You’d probably jump at it, right?
Well, consider that business owners and CEOs routinely expect their managers and supervisors to have an understanding of the basics of business, especially money and finances. A survey by the Harvard Business Review shows that owners’ expectation might be too high.
Asked to take a basic financial-literacy exam, a representative sample of 300 managers — from all company sectors, including HR — scored an average of only 38%. Get this: Over half didn’t know the difference between “profit” and “cash.” Many didn’t know the difference between an income statement and a balance sheet. Nearly two-thirds thought that discounts offered by sales reps had no effect on gross margin.
Does it matter? When delivering the results of the test, Harvard presented scenarios in which that lack of knowledge could cripple a business. For instance, imagine you’re hiring an inventory manager who doesn’t understand the relationship between inventory on hand and cash flow. Worse, imagine you don’t know what the applicant doesn’t know.

Cash for Employee Clunkers?

The Cash for Clunkers program ended a few weeks ago with nearly 700,000 cars taken off the road, replaced by far more efficient vehicles. While the benefits gained verses the $3 Billion spent by the government is still being debated, I couldn’t help but wonder if Cash for Clunkers might not work in the workplace, too.
Imagine how businesses might respond if the government offered a financial incentive to replace under-performing employees with more talented, efficient ones.

Which employees qualify as Clunkers? I’m referring to the employee whom you hired several years ago – the high potential candidate who arrived to work on day one filled with promise, a positive attitude, lots of motivation, even though he was a little wet behind the ears when it came to experience. After a few months, this employee became a keeper, a top performer, a cherished employee. But just like the car clunker, the shine eventually faded and the ride got rough.
The employee’s performance is inconsistent at best and you constantly seem to be fixing this and repairing that. You’ve found yourself avoiding new projects and postponing strategic initiatives because you were afraid this old clunker couldn’t make the journey. Once considered state of the art, his skill sets have become outdated and the cost of retrofitting him with new skills keeps increasing with little improvement.
You’ve tried different working arrangements, shifting team assignments, and changing managers. You’ve offered promotion, demotion, probation, counseling, and warnings. You’ve invested in trainers, coaches, workshops, seminars, and even a psychologist. With each passing day, his reliability becomes more questionable and his attitude is polluting office morale, releasing productivity-killing emissions into the work environment. But for some crazy reason, you keep him employed, just like “good ole Bessie” in the driveway. You have fond memories of good times together and you treat him like a member of your family.

Then finally the government offers an “Employee Cash for Clunkers” program, ponying up the opportunity and money to exchange tired, burned-out, and attitude-killing workers for a new more efficient, more productive, and more positive employee.
The program has a short window and it’s being offered on a first-come, first-serve basis. Inventories are also limited in the talent pool because many of the most talented people are already employed. Only unemployed and new graduates can be hired. Poaching proven employees from competitors is not covered under the Employee Cash for Clunkers program. There are a few great candidates waiting to be hired but they won’t last long. You’ve got little time to act and only one opportunity to make the right choice. And you certainly want to avoid exchanging one clunker for another regardless of the incentive program.

Which employee would you consider to be your “clunker?” Think – what’s his or her name? If any one of your employees handed in his or her resignation today, which one would offer you all relief and little angst?
What type of employee would you replace him with? What expectations would you have? What skills would he need? What new projects or responsibilities could you give him? What could you do differently if you could replace your Clunker Employee with a Cash Cow?
Now I hate to burst your bubble but it’s unlikely there will ever be an Employee Cash for Clunker program. Nonetheless, the long term rewards for upgrading your talent right now far exceed any incentive government could offer. Many high potentials as well as proven performers are just sitting on the proverbial job parking lot waiting to be picked up. Humbled by the Great Recession, many talented people are offering their services at significantly discounted salaries in exchange for an opportunity. The talent inventories are at their highest levels in years and as the economy reboots, the best deals will disappear as quickly as inventories. Like the stock market, if you’re waiting to time the bottom and the top, you’re likely miss both and regret your decision for years to come.
Start your own Employee Clunker Exchange today. Don’t wait. Identify your clunkers right now. Which employees are costing you more than you gain? If you don’t know, find out. While the right metric will be company, industry, and/or company culture specific, one measure that I found helpful in nearly all situations is Profit per Employee. While all employees do not sell, every employee is responsible to contribute to the bottom line. Develop outcomes and metrics for each employee. Don’t go crazy with this. It’s a simple exercise. Just ask this question: by the end of the next 12 months, what do I expect him or her to accomplish? (If you don’t know, you can’t expect the employee to know either. In which case, you might have a classic, not a clunker, right under your nose and you didn’t even know it.) Then hold every employee accountable for expected outcomes.
Identify your requirements for a replacement. Before you go employee-hunting, determine how much experience, education, and skills you need for an employee to succeed. Do a job analysis. Again – don’t go crazy. For most positions, this shouldn’t take more than a few hours, even less sometimes, to identify the goals, responsibilities, and core competencies.

Get the word out. It’s now time to set the recruitment wheels in motion to recruit candidates who fit your requirements. Upload your opportunity to job boards. Announce your opening on social networks like LinkedIn and Facebook. Place an ad in Craigslist. Many of the strategies I just recommended are free or low-cost. If you’re concerned about being overwhelmed with resumes, use an online applicant processing system (APS) to rapidly screen out unqualified candidates. In this market, now is not the time to compromise. Cast as wide as net as possible. There are a few needles in the current haystack but there is also a lot of hay! An APS will automatically handle the “resu-mess” caused by high unemployment and online job boards and allow you to focus your time and attention on only qualified candidates. Spend some time on LinkedIn, posting the job to groups and asking for referrals.
Time is running out. The talent market is as good as it will get for years to come. Talent inventories won’t last forever. Act now. Exchange your clunkers today.

Employers Expected to Face Additional Pressure From Department of Labor

It seems like everywhere you look there is some mention of the U.S. Department of Labor (DOL) cracking down in one way or another on businesses. Statistics indicate that there is much increased activity in DOL audits over the last few years, which should come as no surprise. In the DOL 2011 Strategic Plan Fiscal Years 2006 - 2011 the department listed four major goals, which are:

*A Prepared Workforce

*A Competitive Workforce

*Safe and Secure Workplaces

*Strengthened Economic Protections

According to the Strategic Plan, the third goal, Safe and Secure Workplaces "focuses on ensuring that workplaces are safe, healthful, and fair; providing workers with the wages due to them; providing equal opportunity; and protecting veterans' employee and reemployment rights." It is this area that prompts the majority of DOL audits of employers.
The newly appointed Secretary of Labor, Hilda Solis, issued a statement on March 24, 2009 that the DOL is renewing its efforts to enforce labor laws across the country. With the addition of 250 field investigators provided to the DOL under the American Recovery and Reinvestment Act, businesses can be assured of increased audits.
In is important to understand that the DOL is quite a large organization with far reaching regulatory authority. The DOL has 27 divisions that each has their own function. A few of the divisions that are most familiar to private employees are:
Employment Standards Administration (ESA), which includes: *Wage & Hour Division (WHD) *Employee & Benefits Security Administration (EBSA) *Occupational Safety & Health Administration (OSHA)
In 2008 the WHD recovered more than $185 million in back wages for 228,000 employees. In addition, the agency assessed $9.9 million in civil monetary penalties and concluded 28,242 compliance actions. Including the 2008 figures, the 8 year cumulative total of back wages collected by the agency was $1.4 billion dollars.

Audits are generally triggered either when a current or former employee files a complaint with the DOL or when the DOL targets a specific industry for investigation. It is a common practice of the DOL to target a variety of low-wage industries including day care, agriculture, janitorial services, the garment industry, healthcare, the hotel and motel industries, restaurants, and temporary help. These industries generally have vulnerable and often immigrant workforces, and a history of chronic violations.
Keeping in mind the many arms of the DOL and its numerous divisions, there are many areas that may be audited and some of the main areas of employee complaints (that result in an audit) are listed below:
*Misclassifying employees as exempt (Exempt vs. Non-Exempt status)

*Independent Contractor Status

*Minimum Wage Violations

*Child Labor Violations

*Overtime Issues

*Family & Medical Leave Act (FMLA) Violations

*Improper deduction(s) from wages

*Other Wage Issues such as: Bonus, Incentive, On-Call, Paid Time Off issues

*Timely remittance of retirement plan deferrals withheld through payroll deduction

*Fair Pay Issues

In addition, many states have a state agency equivalent to the DOL. For example, in California there is the Division of Labor Standards Enforcement, which can also audit CA employers for the same items as the DOL. It is imperative to know your specific state's requirements in addition to federal regulations. In California, employers should also ensure they are complying with meal and rest break requirements, properly recording meal breaks and the employees' time worked, properly paying overtime, and reimbursing employees for all business related expenses.
Liability for violation of the wage and hour laws does not require evidence of bad intent or unlawful motive by an employer. The performance of the employee is also rarely an issue, making the employer's exposure fairly straightforward in most cases.

If the DOL audits your company, a representative will visit your facility to conduct interviews, make sure the required posters are hung, and possibly examine the time clocks to determine whether your company is in compliance with the Fair Labor Standards Act. DOL will then review up to 3 years' worth of your wage-and-hour records and investigate your wage-and-hour practices to determine whether you have paid your employees the proper amount of overtime. This will include a review of your pay records, so you must make sure the records are accurate and organized.
Employers need to be proactive about complying with these complex wage and hour laws. If cost is a concern, complete an in-house audit and then have an attorney double check the policies and practices. It will cost a lot more to contact an attorney after the DOL or state agency is in your workplace or the lawsuit has already been filed.

Employee Performance: Don't Forget to Measure, Measure, Measure

Employee performance seems to be one of those "assumed things". We assume that if the work is getting done satisfactorily that an employee is performing well. But how well is the employee really performing, and even more importantly, is this employee really performing up to the full potential of the job?

How does one measure the value a team member is adding or destroying? It is sometimes quite easy and at the same time very difficult to measure. In sales-driven situations, employee performance is quite easy to observe and measure. In Customer Service situations, the evidence often lies hidden in dissatisfied Customers that leave silently and never return.

As one can imagine, data can be difficult to come by, but it is often available if one asks the right questions. Sales teams often have the best data sets for obvious reasons. Sales people are the "tip of the spear" and can cost a lot due to their compensation structure. Plus... Many sales organizations motivate performance through variable compensation. Therefore, the data is usually somewhere.

Other positions can pose challenges to measuring employee value added, however if the position was important enough to create in the first place, you will be able to find the value it adds to your organization. Regardless of how easy or how difficult it is to measure an employee's performance, it is absolutely critical that a manager be able to quantify and verify the value an employee brings to the organization.

The sad truth is that companies and managers often think they know who their high performers are, but fail to adequately measure what their performance really is. Instead they rely on anecdotal evidence, organizational politics, and biased perceptions to judge performance.

Key employee performance point - Always know the value your employee team members are adding. Regardless of the position, or how difficult it might seem to measure and analyze results, this must be done. No exceptions. Period.

Create score cards in order to track the value added in order to identify trends and problems before they become big issues. Employee score cards should reflect the 3-5 key accountabilities necessary to do the job well. A good way to identify key accountabilities is to Benchmark the Job. If you'd like, feel free to contact me and I'd be happy to share some best practices on Job Benchmarking.

Something to consider about employee performance... Over the years, I have discovered some interesting performance trends with regard to high and low sales performers.

Low performers (bottom 20 percent) typically produce between 10 and 50 percent of the high performers (top 20 percent). The typical performance gap between the top and bottom 20 percent is way too high.

Companies hang on to their low performers way too long. It amazes me. Companies often love their low performers way too much. The result is companies leave opportunity on the table - the bottom line is reduced as a result.

Final thoughts: measuring employee performance is far too important to ignore - regardless of how difficult or inconvenient it may seem. I challenge you to take a good look at the way you measure your team members' performance and carefully consider what you need to do to better understand the true value an employee brings to your organization.

What should every company do as part of their Talent Management Strategy?

Benchmark the Job
Match the Talent to the Job
Set Employee Expectations
Hold Employee Team Members Accountable
Continuously Review the Talent by asking, "Would I re-hire this person?"

Now go Maximize Possibility!

E-Verify extended for three years

E-Verify is currently a voluntary program run by the United States government to help certify that employees hired by companies are legally authorized to work in the United States. Formerly known as the Basic Pilot/Employment Eligibility Verification Program, the program is operated by the Department of Homeland Security in partnership with the Social Security Administration.
A system that lets employers check whether newly hired workers are in the country legally has won a three-year extension from Congress. But the debate over the E-Verify program is far from over. In addition to renewing the controversial voluntary program, Congress voted Tuesday to approve $137 million for it over three years as part of a $43 billion spending bill for the Homeland Security Department. The bill now heads to the White House, where President Barack Obama is expected to sign it into law soon. South Carolina is one of 12 states that have passed legislation in recent years requiring employers to use the E-Verify program as a way to combat illegal immigration. "The reauthorization of the E-Verify system is a huge step in assisting employers and the government," said state Sen. Larry Martin, the Pickens Republican who wrote the state's E-Verify law. "It provides the employers the certainty that they are following the law and it provides the government -- state and federal -- a better way to enforce the law." The Obama administration supports E-Verify, but there's deep skepticism in Congress. Lawmakers rejected an attempt by Sen. Jeff Sessions, R-Ala., to make the program permanent. House and Senate negotiators on the final version of the Homeland Security spending bill added language requiring the Government Accountability Office to once again analyze the system and its implementation.

Source: http://www.greenvilleonline.com/article/20091021/NEWS01/91021004/E-Verify-extended-for-three-years

US Department of Labor announces $6 million grant to provide Kentucky workers with health insurance payments

The U.S. Department of Labor today announced a $6 million grant to provide an estimated 1,550 jobless workers in Kentucky with partial premium payments for health insurance coverage.
"The challenges associated with a job search are enough without worrying about a lack of health insurance if you or a family member fall ill or need medical attention," said Secretary of Labor Hilda L. Solis. "This funding will help eligible Kentuckians pay for health insurance while they seek out new careers that pay family-supporting wages and provide benefits for the long term."
The grant, awarded to the Kentucky Education and Workforce Development Cabinet, Department for Workforce Investment, will be used to make "gap filler" payments for unemployed individuals who are receiving Trade Adjustment Assistance benefits and are eligible for the Health Coverage Tax Credit (HCTC) program. Under the program, eligible individuals can receive 80 percent of premium costs for qualified health insurance programs. These payments cover the months it may take a worker to complete Internal Revenue Service enrollment, processing and first payments under the HCTC program.
Of the $6 million announced today, $3.6 million will be released initially. Additional funding up to the amount approved will be made available as the commonwealth of Kentucky demonstrates a continued need for assistance.
The amount released today will be funded by resources made available for health coverage National Emergency Grants under the American Recovery and Reinvestment Act of 2009.
National Emergency Grants are part of the secretary of labor's discretionary fund and are awarded based on a state's ability to meet specific guidelines. For more information, visit http://www.doleta.gov/NEG/.

Disaster Preparedness Standards Proposed for Businesses

The U.S. Department of Homeland Security (DHS) will adopt standards to help the private sector be better prepared for disasters and emergencies. DHS is accepting comments on the proposed standards through Nov. 15, 2009.
DHS published a notice in the Oct. 16, 2009, Federal Register seeking comment on the three new standards that would be adopted under the Voluntary Private Sector Preparedness Accreditation and Certification Program (known as PS-Prep). PS-Prep was mandated by Congress with the passage of the Implementing Recommendations of the 9/11 Commission Act of 2007. Businesses will receive emergency preparedness certification from a DHS accreditation system that would help businesses enhance operational resilience, business continuity management, and disaster and emergency management.
The proposed standards were developed by the National Fire Protection Association, the British Standards Institution and the American Society for Industrial Security and were selected from a field of 25 proposed standards for their scalability, balance of interest and relevance to PS-Prep, according to a DHS news release.
“Preparedness is a shared responsibility, and everyone—including businesses, universities and non-profit organizations—has a role to play,” said DHS Secretary Janet Napolitano in the news release. “Ensuring our private sector partners have the information and training they need to respond to disasters will strengthen our efforts to build a culture of preparedness nationwide.”
DHS also is working on classifications and certifications for small businesses, according to the release.
More information about the three proposed standards:
• Language from the National Fire Protection Association establishes a common set of criteria for preparedness, disaster management, emergency management and business continuity. This standard was chosen because of its focus on planning and preparation in anticipation of a disaster and does not prescribe a program development process, according to the Federal Register notice.
• Language from the British Standards Institution defines requirements for a management systems approach to business continuity and integrates risk management disciplines and processes. It was chosen because it provides a management systems approach to business continuity and integrates risk management disciplines and processes. In addition, it addresses business-to-business and business-to-customer dealings to strengthen business resilience.
• Language from the American Society for Industrial Security defines requirements for a management systems approach to organizational resilience. It encompasses risk management mechanisms and follows a plan-do-check-act approach associated with other International Standard organization management system-based standards, the notice stated.
After DHS considers comments on the proposed standards, it will publish another notice in the Federal Register on the ones it will adopt. To comment, visit the Federal eRulemaking Portal at http://www.regulations.gov.

Despite recovery, employers aren't ready to hire

Job hunters will face long odds well into next year. As the unemployment rate inches closer to 10 percent, most businesses are nowhere close to hiring again. Uncertain about prospects for recovery - the economy's and their own - employers cut 263,000 jobs in September, the government said Friday. Unemployment crept up to 9.8 percent.
As the economy slowly turns around, sales are slowly growing and many companies are starting to make money again. But they're doing it by cutting costs, squeezing more work out of fewer employees and relying on part-timers and cheap overseas labor. Until companies are confident the recovery is here to stay, they will probably keep laying off workers. The economy lost 62,000 more jobs in September than in August, and the unemployment rate notched up from 9.7 percent to a new 26-year high.
Most economists say the recession is probably over. But the recovery isn't robust enough to embolden businesses to hire again.
"Fear is a large factor for many companies," said Michael Williams, dean of the graduate school of business at Touro College in New York. "What happens after the government's stimuli end? Does the recovery morph into something durable, or is there an abyss on the other side?"
President Barack Obama called the jobless figures a sobering reminder that progress to reverse the recession will come in fits and starts. Employers are expected to continue cutting payrolls for six to nine more months. Economists think the jobless rate will go as high as 10.5 percent around the middle of next year before declining gradually. It could take three or four more years for unemployment to fall to normal levels. The worst recession since the Great Depression has already claimed 7.2 million jobs, and analysts figure 750,000 more jobs could disappear over the next six months. The drumbeat of job losses is creating fear that Americans won't start spending again and the recovery may fizzle. Some worry the economy might succumb to a "double dip" recession - meaning it would stop growing and start shrinking again.
After the recession of 1981 and 1982, the economy added 1.2 million jobs in the first six months of recovery. By contrast, after the 2001 recession, the economy lost 1.1 million jobs before unemployment peaked two years later. It was dubbed a jobless recovery.
Economic historian John Steel Gordon says this could be a jobless recovery, too, with businesses wringing more work out of the employees they still have and relying on part-time and overseas help. "It's actually worse now," he said. "Companies aren't going to hire until it becomes obvious we're back in a lasting growth cycle." Until then, economists think, the few industries creating jobs will probably include health care, education, legal services, data processing and transportation. And early next year, the federal government will be hiring for the 2010 census. In the last economic recovery, the financial industry drove job growth, but that probably won't happen this time. Job growth should also be slow in construction, manufacturing and retail. All told, 15.1 million Americans are out of work - twice as many as at the start of the recession. Counting laid-off workers who have settled for part-time work or just given up, the unemployment rate is 17 percent, the highest on record since 1994.
People are also staying out of work longer. The number of people jobless for six months or longer jumped to a record 5.4 million. That's more than one-third of the unemployed, a record.
A key Obama adviser noted that while the job losses in September were the most since July, layoffs are way down from a recession high of 741,000 in January. A House bill to add 13 weeks of unemployment benefits for people in states where the jobless rate is 8.5 percent of higher has stalled in the Senate. Hundreds of thousands of people already have exhausted their benefits or are about to. The September unemployment rate would have been higher - perhaps over 10 percent - if not for the exodus of 571,000 people from the work force, economists said. Many of them were so frustrated over a lack of work that they simply abandoned the search. Older workers who are laid off are also dropping out and filing for Social Security benefits at a faster-than-expected pace, the government says. Applications for retirement benefits are 23 percent higher than last year. Disability claims are up about 20 percent. Bernard Baumohl, chief global economist at the Economic Outlook Group, says he's optimistic the recovery won't fizzle. But he says it will "jagged and uneven," with more pain ahead for jobseekers.
Source: http://seattletimes.nwsource.com/html/businesstechnology/2009985985_apuseconomy.html

Public option still alive as health care reform advances

A little over a week after the Senate Finance Committee passed a health care reform bill without a public insurance plan, that option appears to be back on the table. “At the end of the day we will have a public option,” House Speaker Nancy Pelosi told reporters in response to questions about the health care legislation making its way through the House of Representatives. Details of the public plan were still being worked out, Pelosi said.
The idea of a government-run health insurance plan appears to be gaining ground in the Senate as well, although the versions being discussed at press time fall short of nationwide, Medicare-like coverage. One idea is to make the public plan a fallback option, implemented only if other health care reforms in the legislation fail to expand insurance coverage.
Another proposal would create a government plan but let states opt out, while a third would allow states to participate in the federal government’s plan or try out plans of their own.
Congress remains divided on the issue. President Obama contends that a public option would be the best way to ensure that there is competition in the health insurance market.
Many Democrats agree, and they feel their case has been strengthened by a preliminary Congressional Budget Office (CBO) report indicating that a public insurance option with provider payment rates pegged at 5% above Medicare reimbursement rates (known as Medicare Plus 5) would provide greater cost savings than other public option plans and allow the total cost of the health care system overhaul to come in below the president’s target of $900 billion over 10 years.
House Democrats recently expressed confidence that they had enough votes to pass a health care overhaul bill that includes a robust public health insurance option. And some public opinion polls have showed support for a government-run insurance plan.
Yet most Republicans (and some Democrats) are opposed to any public option, arguing that a government-backed plan would have unfair advantages over plans offered by private insurers and would come to dominate the market. Some contend that a public option will also drive up the deficit, without slowing the rise in overall health care costs.
In addition, they cite a recent report that seems to support their position. Conducted for the Office of the Actuary, which handles long-range cost estimates for Medicare, the report said the nation’s health care spending will rise faster with the proposed reform legislation than it would without it.
America currently spends about $2.5 trillion a year on health care. The report says that figure will approach $4.7 trillion a year by 2019 if the legislation does not pass and nearly $4.8 trillion if it does.
The Obama administration called the report out of date, maintaining that it does not reflect the most recent versions of health care legislation that are under consideration.
Meanwhile, the return of the public option to the table caught some by surprise, since the issue had seemed all but dead just a week earlier. The health overhaul measure passed by the Senate Finance Committee on October 13 did not include a public option.
That version of the legislation, backed by Senate Finance Committee chairman Max Baucus, was a 10-year, $829 billion plan that would require nearly all Americans to have health insurance coverage. To make that possible, the plan would expand eligibility for Medicaid and create new tax subsidies for those purchasing coverage on their own.
Though that plan did not include a government-run health insurance option, it would create a network of nonprofit health cooperatives that would compete with private insurers. The CBO estimated that the bill would ensure that 94% of nonelderly Americans are covered by health insurance in 2019, up from 83% in 2010.
The Senate Finance Committee bill was significant in that it attracted one Republican vote, from Sen. Olympia Snowe of Maine. The other nine Republicans on the panel voted against the bill.
Although hardly a model of bipartisanship, the bill’s one Republican vote contrasted with the health legislation that passed every other House and Senate committee, none of which were backed by a single Republican.
The Senate Finance Committee bill won some praise from the Retail Industry Leaders Association (RILA), which counts Walgreen Co. as a member.
“RILA applauds the committee’s inclusion of prevention and wellness incentives in the bill,” said John Emling, senior vice president for government affairs. “These incentives are critical to shifting America’s health care delivery system from the simple treatment of disease toward the prevention of disease.”
The association added that the retail industry’s support for reform was contingent on the reduction of systematic costs, the preservation of the employer-based system, and changes to the proposed enrollment requirements that address the needs of high-turnover industries like retail.
Source: http://www.chaindrugreview.com/inside-this-issue/news/10-26-2009/public-option-still-alive-as-health-care-reform-advances