Experts tell us the economy is in recovery. They also admit that hiring will probably be the last economic indicator to improve. If you are uncertain if you should hire (or rehire) employees, even though business is picking up, consider an alternative: temporary employees.

These employees can be used for special projects or to address increased activity during a peak season or as business begins to increase. Temps supplement your regular workers; they go to work for you with the knowledge that the job will last only a short, specified duration.

Alex Campbell

Another way to hire and use temporary employees is “contract to hire.” This is a “try before you buy” option offered by staffing firms, says Alex Campbell of Capital Staffing Solutions (www.capitalstaffingsolutions.com). “It’s the best way to build your staff. You use a contractor (temporary employee) for an agreed period. If you like the contractor, after the contract is over, you can make an offer of regular employment for no additional costs.”

This type of temporary employment situation provides a win-win-win situation: You win, because you get a tried-and-true employee. The staffing agency wins, because it earned a fee while the employee was on contract; and the employee wins, because he or she gets to work for a known entity.

How to hire temps

Hiring temporary employees requires careful consideration. Here are several things you should do to ensure the best outcome:

1. Prepare a job description. The job description validates your need for extra help; it also identifies the skills, knowledge, and abilities needed on the job. Campbell suggests, “The better the job description, the better the staffing firm will be able to find employees who are a good fit for you.”

2. Find a staffing agency that understands your business. Some agencies specialize in particular industries; others may have recruiters who have worked in your industry. Once you find a possible fit, invite the recruiter to tour your business and talk with you onsite. Knowledge is power in making good matches.

3. Discuss your goals. As you explore the possibility of using an agency, discuss your business goals, long and short. “Find a firm that is interested in helping you work with your budget, interested in you hitting your numbers, and understands what you are trying to accomplish,” advises Campbell.

4. Negotiate the contract. Beware of sticker shock; you will be paying a premium to use the agency, so be prepared for it. The contract you sign with the agency should designate the responsibilities of each party, including outlining the hiring process (who will interview; who will make the final hiring decision). You’ll also want to make sure it indicates how the contract can be terminated; who is responsible for withholding taxes and payment of taxes for the employees; who is responsible for workers compensation insurance; and any benefits that will be provided by the staffing agency.

5. Don’t forget your supervisors. Your supervisors should understand how the temp process works, their role in selection and training, and their role in supervising the work performed by temporary agencies. They need to know who to notify in case of an accident and workers’ comp claim and how to handle problem employees.

Finally, supervisors should have a role in evaluating worker performance and give feedback to the temp agency about its performance. Your supervisors are in the best position to judge if the agency met your needs.

SIDEBAR

After the hire, what’s next?

Although by definition a temporary worker will only be with you a short time, that person(s) still needs orientation and training in order to accomplish what you need to have done.

Here are some tips on how to use a temp worker effectively:

1. Ask the temp to report late the first day. The beginning of the work week is often chaotic. On the first day, ask the temporary employee(s) to come in 30 minutes after regular starting time. This will allow you or your supervisor to give the attention the person needs that first day.

2. Orient the new employee. Although the person will only be with you a short time, give him an overview of the work that your company does, and go over in detail the job description. Make sure he can see how the job fits into the big picture. Give a tour of facilities; tell him where he should park, eat lunch, and take breaks. And then introduce him to fellow workers.

3. Assign a trainer or ‘go-to’ person. Tell the temp who she can go to for more information and additional how-to information.

4. Train. Even if the temp comes into your workplace with experience in a similar company, take time to train him on your equipment and—just as important—your expectations.

5. Check back. Don’t park the new employee and forget her. Check back during the day to see how she is doing.

6. Make the agency earn its keep. Although you determine the work that is done, the agency is responsible for any problem areas, such as attendance issues or tardiness. Don’t hesitate to call the recruiter and discuss the problem as soon as it arises.

By Brad Long       

Small-business owners are a special breed, willing to take on financial and professional risks for the promise of building a great enterprise from the bottom up.

If coping with the “normal” problems of a sluggish economy weren’t enough, small business owners have another concern to be weary of—litigation. Employees who have been laid off are turning to the courts to find recompense by filing discrimination and wage and hour claims in record numbers, said attorneys Nancy A. Johnson and Scott S. Cairns of McGuireWoods LLP (www.mcguirewoods.com) in a recent workshop sponsored by the law firm.

In 2008, the Equal Employment Opportunity Commission (EEOC) received the largest number of claims ever—95,402, which was 13% higher than the previous high in 2002, and every category of discrimination experienced a double-digit percentage increase from 2007 to 2008.

Scott Cairns

Age discrimination claims went up 29% from 2007 to 2008, said Johnson. Retaliation claims increased 23% from 2007 to 2008. “Retaliation is the most dangerous type of claim,” said Cairns, explaining that people are human, and it can be hard not to let employee allegations taint judgments, or at least to convince a jury to believe that judgment was untainted.

In addition to discrimination claims, wage and hour claims—that is, claims concerning unpaid or underpaid overtime or working off the clock—are also on the rise, with a 77% increase since 2004. Alleged job misclassification—erroneously classifying an employee an exempt from overtime

Nancy Johnson

 provisions and therefore not paying that employee overtime —is one of the most common types of wage and hour claims, but claims concerning falsified time cards are also common and are increasing.

The reasons for increased activity in employment claims are believed to be directly related to the recession. More terminations, demotions, denials of promotion—in other words, adverse employment decisions—create a greater risk for disgruntled employees to lodge complaints. Also, when workers are unemployed for long periods of time with little prospect of gaining employment, they look for other means to acquire money and take a harder look at available remedies which might otherwise not be worth pursuing.

Cairns explained that often terminated employees rush to an attorney with allegations of discrimination not necessarily knowing if it was discrimination or not. “Even if people don’t have a discrimination claim,” said Cairns, “an attorney they consult may convince them that they have a [wage and hour] claim.”

How to avoid litigation

Florida is an at-will state, explained Cairns, but that status does not give employers the freedom to do whatever they want. All employment decisions should be made with care to avoid inviting litigation down the line.

Johnson and Cairns outlined a number steps small business owners can take to ward off claims:

• Review each layoff or termination decision. Always use objective and measurable criteria before terminating someone, and document the decision process. You don’t have to tolerate poor performers, said Cairns, but document feedback and decisions.

“One of my clients does not permit any termination on the spot,” he said. “The supervisor can put an individual on leave with a recommendation to terminate. This gets the employee off site and gives the company time to examine the termination decision.”

Best bet: Consult an attorney before making any decisions. This is especially important if you are terminating employees who are in a minority in terms of a protected class such as race, gender, religion, age (at least age 40) or disabiltiy.

• Examine exempt job classifications. The Fair Labor Standards Act (FLSA) defines exempt and nonexempt positions. Make sure you have employees classified properly.

“It’s the exempt classification that gets you into trouble,” said Cairns. “I recommend every employer take a look at exempt classifications. This isn’t that hard, because if you have 100 jobs, you probably only have five or six jobs that need to be reviewed. Remember, though, that it’s not the job title; it’s the duties that affect exemption.”

“If you find you’ve made a mistake in classification, you want to correct it as soon as possible,” said Cairns. “The Department of Labor can be cooperative if you are trying to fix things.”

• Review your timekeeping procedures. Make sure you keep records of hours worked for each nonexempt employee—even if you pay them a salary.  

• Train supervisors in appropriate timekeeping. Do not tolerate working “off the clock” or any other falsification of time cards.

Scott S. Cairns is a partner with McGuire Woods in Jacksonville. He can be reached at scairns@mcguirewoods.com or 904-798-3223. Nancy A. Johnson is an associate. She can be reached at njohnson@mcguirewoods.com or 904-798-3234.

 SIDEBAR

Beware of theft

Employees are human, and when fear of layoffs or other economic stressors weigh on them, they may resort to “getting back” at their employer by whatever means they can, such as by taking things that don’t belong to them.

“People almost always take something with them when they leave an employer,” said Cairns. Generally, they steal by taking:

• Property and/or products. They may take things that don’t belong to them, from stationery supplies to laptop computers.

• Money. They may embezzle, take cash, accept illegal kickbacks, or even falsify sales transactions.

• Company data. Company data is particularly difficult to control today, since people can download databases and customer files onto an inexpensive thumb drive or a Blackberry.

• Time. They stop working but don’t clock out.

To anticipate theft:

• Do thorough background checks prior to hiring;

• Put into place controls on merchandise, cash, and assets that can be converted into cash;

• Perform audits;

• Talk to employees about the situation and let them know what steps are being taken.

By Daniel C Dearing    

True or false? Retirement plans are a benefit only large companies can afford. The answer is false. Small businesses can afford to offer their employees a retirement plan—and it makes good business sense to do so.

Having a retirement plan helps you recruit and retain good employees (and thus cut down turnover costs), and it can be a way for you to defer a large amount of tax liability—always a nice “surprise” at the end of the year.

The more difficult decision to make is not if you should offer a retirement plan, but what kind of plan should you offer? A number of different kinds of plans are available such as 401(k), profit sharing, defined benefits, SIMPLE, and SEP. (Others are available but these are the most common types.) Each of these plans has its pros and cons; here are some to consider:

• 401(k) plans. The most common type of retirement plan offered by employers today, a 401(k) allows employees to make tax-deferred contributions to their retirement account. Some plans—a Roth 401(k) — also allow for contributions to be made on an after-tax basis. Each employee is permitted to defer up to $16,500 ($22,000 for employees over age 50) into their account in 2009.

Note: The employer may match employee 401(k) contributions, but this is not required, so it is possible to offer a 401(k) plan without incurring expenses other than administrative costs.

In 2001, Congress passed the Economic Growth and Tax Relief Reconciliation Act (EGTRRA). This act benefitted small businesses by creating the Safe Harbor 401(k). In a Safe Harbor 401(k), the company offers a specified amount of contribution for each employee (3% to 4%, depending on plan type) in exchange for being exempted from discrimination and top-heavy testing. A Safe Harbor 401(k) thus allows an owner over age 50 to defer the full $22,000 into a 401(k) plan regardless of the voluntary participation of their staff.

The typical annual administrative fee for a 401(k) plan with 15 employees ranges from $800 to $1,500 and some pension companies offer a discount for using the Safe Harbor provisions.

• Profit sharing plans. These plans are very popular among companies whose revenues fluctuate, because the business has the flexibility to make significant contributions in good years and little or no contribution in lean times. (If a plan makes a $0 contribution for too many years, the IRS may terminate it; however the IRS does not have a set rule concerning termination.)

In a traditional profit sharing plan, the company makes a contribution of an identical percentage of salary for every eligible employee.

In 2001, EGTRRA created an improved version of this plan called a “New Comparability Profit Sharing Plan,” which allows employers to give certain classes of employees—typically owners or managers—a higher percentage of contribution than they give to other classes. The disparity is limited by certain non-discrimination rules and requires the work of a third party administrator (TPA), but this type of profit sharing can be very attractive in companies in which the owner is older than most of the staff.

The contribution limit on a profit sharing plan is 25% of the total eligible employee payroll, up to a maximum contribution of $49,000 per participant. Contributions to a profit sharing plan can be placed on a vesting schedule of up to six years before an employee becomes 100% vested in the employer contribution.

Profit sharing is commonly used in conjunction with a 401(k). This combination allows the employee to defer income and the employer to make contributions in good years. Surprisingly, a company does not need to have profits to be able to make a profit sharing contribution.

• Defined benefit (DB) plans. DB plans give a specific benefit (for example, 50% of an employee’s final salary) to an employee at retirement.

The amount of the annual contribution by the employer is whatever amount an enrolled actuary calculates to be sufficient to fund the prescribed benefit. Needless to say, the calculations and administration of DB plans can be complex.

Although these plans are much less popular than their 401(k) counterparts, they are still very useful in certain circumstances. Defined benefit plans have no annual contribution limits. The only limit in a DB plan is the limit on the amount of retirement benefit provided to an employee ($195,000 per year for 2009).

An important disadvantage in all types of DB plans is their rigidity. A company does not have the choice of not funding the plan in a down year. For this reason, you should certainly consult with a pension specialist and your accountant before proceeding with a DB plan.

Tax law changes in the 2006 Pension Protection Act (PPA) gave a big boost in popularity to a specific type of DB plan called a cash balance plan. Although cash balance plans are complex, they are likely to replace traditional defined benefit plans in small to medium companies that want to make higher contributions to a retirement program.

• Savings Incentive Match Plans for Employees (SIMPLE). This type of plan allows employees to defer some of their salary—up to $11,500 annually ($14,000 if over age 50). Employers must make contributions of 2% to 3%, depending on plan options chosen, and all employer contributions are immediately vested.

If you are looking to offer an employee benefit at the lowest possible administrative cost, SIMPLE is a good choice. The lower contribution limits and inability to pair this with any other type of plan are disadvantages that should be considered, however.

• Simplified Employee Pensions (SEP). This plan closely resembles traditional profit sharing since each employee receives an identical percentage of salary from the employer. Employees are not permitted to make salary deferrals. All contributions are immediately vested, and most part-time employees must be included once they have enough tenure.

Similar to a SIMPLE, this plan can be offered with almost no administrative costs, but there is also no opportunity to take advantage of the design benefits offered by EGTRRA and PPA.

Which of these five types of plans—or others, which are also available—is best for your company? To help you decide, you should consider:

• Do you want the plan to be primarily for the benefit of employees or will it be used mostly to provide tax deferred savings for the business owner?

• Can you fund the plan at a consistent level each year, or do your revenues fluctuate such that you will need significant funding flexibility?

• Is it important to allow the employees the ability to defer some of their own income into the plan?

• What are the demographics of your company? Are you much older or younger than the average age of your staff? Do you have high turnover? Do you employ a number of part-time or seasonal workers?

Answering these questions (in consultation with a pension specialist and your accountant) is the first step in deciding which type of plan is best for your business. Other issues to consider include ongoing operation of the plan, employee education, and investment monitoring. Although these issues may sound intimidating, most of them are resolved by choosing a good plan record keeper and a servicing agent who specializes in retirement plans. These individuals can help you avoid making basic mistakes that could trigger an IRS audit.

Daniel C Dearing, MSM, CRPS, is president of Professional Retirement Services, Inc. and is a Chartered Retirement Plan Specialist. PRS (www.professionalretirement.com) is a full-service financial service company located in Jacksonville, Fla. Dan can be reached at 866-479-401K or 904-381-9080.

By Bob McKenzie    

New businesses know they must have an accountant, insurance agent, attorney, and other business advisors to operate their businesses efficiently. The often missing piece of the management team is the human resources expert, usually because hiring a full-time HR specialist is not cost-effective.

Unfortunately, if you don’t comply with governmental regulations you place your company in a position of risk of lawsuits and government fines. Fortunately, maintaining compliance is not difficult. Once you “know what you don’t know,” you can fix your greatest risk problems—negligent hiring, I-9 documentation, new hire reporting, and wage and hour compliance.

Negligent hiring

Don’t jeopardize your business with negligent hiring, which can occur if you hire someone who has a criminal history of theft or violence and put them into a position of trust involving customers. If that employee steals from a customer or commits a violent act on a client, your company may be liable for negligent hiring.

For example: A small business owner wanted to hire a computer technician, who would be required to go into customers’ homes and businesses to set up and repair computer systems. The business owner made a conditional offer of employment to the technician, and then ran a criminal history background check. The background check found that the applicant had convictions for domestic violence, kidnapping, employee theft, violations of his probation, and several other charges. Needless to say, business owner rescinded the job offer and dodged a major bullet.

To protect yourself from negligent hiring:

1. Have the applicant complete a job application. Be sure the application answers all questions about convictions.

2. Interview the applicant. Take at least 30 minutes to talk to the individual and ask open-ended questions that elicit responses from the applicant.

3. Do reference checking. Make a reasonable attempt to call past employers for references and document what they tell you.

4. Run a criminal background check on the applicant. This is best done before offering the applicant a job. To reduce your liability for negligent hiring, the state of Florida recommends a minimum of a Florida Department of Law Enforcement (FDLE) check, which can be done online at https://www2.fdle.state.fl.us/cchinet/ or through a reputable background screening company. It is recommended, that you check an applicant’s background for the last seven years, including a check in other states where he or she lived.

If the job requires the employee to drive a vehicle, check the driving record of the applicant. If the driving record does not meet your minimum standards, then the applicant is not qualified for the position.

I-9 documentation

According to the Immigration Reform and Control Act of 1986, employers can hire only individuals who show proof of eligibility to work in the United States. Proof of that eligibility is a review of certain documents and the completion of an I-9 form, which you are required to keep on file. Examples of eligibility documents include a U.S. passport or permanent resident card or a combination of documents, such as a driver’s license and Social Security card. (The full list of accepted documents is listed on the back of the I-9 form.) 

I-9 documentation is enforced by the Department of Labor and the Immigration and Custom Enforcement (ICE) offices. The fine for non-compliance is $1,000 for each missing I-9 form. Since it takes no more than two minutes to complete the form, there is no excuse for not having these on file. ICE is hiring an additional 600 investigators to randomly inspect I-9 forms. The newest version of the I-9 form is available at www.uscis.gov/files/form/i-9.pdf. Learn how to complete the entire form. If there are questions, contact an HR expert.

New hire reporting

Whenever you put someone on your payroll, you must report that hire to the state. The reason for this requirement is to track individuals who have not paid child support. Again, this is an easy thing to do and the information on how to do this is available at http://newhire-reporting.com/FL-Newhire/default.aspx.

If your business is using a payroll service, the service usually does this reporting for you. If you do your own payroll, make sure you report new hires to the state. The reporting can be done online or via fax. Just make sure to do it.

Wage and hour compliance

Nearly half of the wage and hour lawsuits filed in the United States originate from the state of Florida. The Wage and Hour Division of the Department of Labor (DOL) estimates that 75% of the companies in the country are in violation of the wage and hour laws. With smaller businesses, that percentage is probably closer to 90%.

Personal injury attorneys seeking to increase their business are also aware of the high rate of noncompliance and are now advertising on television. Their commercials ask, “Are you not being paid for overtime when you work more than 40 hours a week?”

Compliance with wage and hour laws, known as the Fair Labor Standards Act (FLSA) is critical for every business, and virtually all organizations are bound by its regulations. Unfortunately, this law is complicated and misunderstood because of its many rules and exemptions.

To help unravel some of its mysteries and avoid wage and hour violations, here are some guidelines to staying out of trouble:

1. Salaried employees must be paid at least $455 per week. If they are paid less than that, they must be paid on an hourly basis.

2. Putting an employee on salary does not automatically make an individual exempt from overtime. FLSA specifies that duties determine if an employee is exempt—not being on salary or having a job title (such as “manager” or “supervisor”). (See www.dol.gov/esa/whd/regs/compliance/fairpay/fs17a_overview.htm, a basic overview of determining exemption status.) If you are audited, the wage and hour investigator will review the work that is actually performed to determine exemption status.

3. Do not dock exempt employees for hours not worked within a workday. For example, if an exempt employee leaves an hour early, you should not dock her pay for that hour. However, if you have a paid time off program, you can charge the time off to the employee’s sick, vacation or paid time off bank.

4. Do not let nonexempt employees work “off the clock.” Employees who clock out because they know they are not allowed to work overtime and then go back to work to finish a job are not doing you any favors. Make sure your employees get paid for all hours actually worked.

5. All overtime over 40 hours in a workweek must be paid—even if it is unauthorized. If an employee works unauthorized overtime, he/she must be paid for the extra time worked even though it was not approved. However, you can discipline the employee for working the extra unauthorized hours.

6. Don’t let nonexempt employees eat lunch at their desks. Nonexempt employees who eat lunch at their desks and answer phones or do other work while eating are considered working. They must be paid for their time.

7. Make sure employees record all hours actually worked.

8. Piecework does not exempt employees from overtime compensation.

9. If nonexempt employees are required to attend training programs, they must be paid for the time spent in the training.

10. Nonexempt employees who must travel must be paid for the time traveling from one job to another. Time spent traveling to work or to a work site is not paid, but if they are required to travel after getting to work, that time is paid travel time.

11.  Florida does not require you to give breaks to employees 18 years of age or older. Therefore if an employee works through a lunch break, it is counted as time worked and there is no violation of any law.

These are just the basic wage and hour laws. The bottom line is that the HR compliance is becoming increasingly complex. In this world, what you don’t know can hurt you. To ensure you are in compliance, have an audit done by a human resources expert. Fix the things that need to be fixed and then you will have one less thing to worry about and the peace of mind a government official knocks on your door.

Bob McKenzie is president of McKenzieHR, www.mckenziehr.com, a full-service human resources management firm. He can be contacted at 904-861-2903 or by e-mail at bobm@mckenziehr.com.

Benefits are good for employee relations. They also give companies a competitive edge in recruiting and retaining the best employees. Benefits, however, come at a cost, which too often is a well-kept secret, Serrena Bennett, an account executive with Colonial Life (www.coloniallife.com) , told an audience of small business owners at the September Jacksonville Advantage Knowledge Is Power breakfast workshop.

“Many times employees don’t understand that their employers are paying a large portion of their health premiums,” she said. And, they don’t know they are receiving many other benefits, let alone the value of those benefits.

Medical coverage is the first thing that comes to mind when people talk about benefits. Unfortunately, the cost of traditional medical benefits is escalating at a rapid pace. And that presents a dilemma to employers: How to offer benefits yet keep costs under control?

 One way is to provide a consumer-driven healthcare plan, said Randy Hallman, district manager with Colonial Life and co-presenter at the workshop. These plans require a higher deductible. Since consumers (employees) manage their own healthcare dollars, they quickly learn that a doctor’s visit costs much more than the $25 co-pay they were used to paying when they had a traditional medical plan, Hallman said. “What a consumer-driven healthcare plan is designed to do is to put responsibility for healthcare back on the employee so that they make good choices in spending their healthcare dollars.”

Another option available to employers who want to offer benefits to their employees is voluntary benefit ancillary products, said Bennett, who explained that these are stand-alone products that are paid out to the insured directly. They are in addition to any other plan an employee has. One example of an ancillary product is a hospital confinement indemnity insurance plan, which acts as a bridge to offset a high deductible medical plan. Other examples include accident insurance, disability insurance, cancer and critical illness coverage, and life insurance.

All of these ancillary products are paid for by employees, through payroll deduction. “Most of these are portable,” said Bennett. “Employees can carry these wherever they go. They own them.”

Employees may wonder how they can pay for these benefits. If your company is set up to take advantage of Section 125 of the IRS code, which allows employees to pay their contributions to benefits with pre-tax dollars, employees can use these savings for ancillary benefits, said Hallman. It’s like “found” money. (Click here to see chart.) Section 125 itself is a benefit and should be communicated as such, said Hallman, since it saves employees money. “Most employers have section 125,” he said, “but they aren’t getting credit for it as a benefit.”

Communicating your benefits

The value of the benefits you offer your employees should not be a secret; it should be communicated at least annually, as well as at the time of hire.

Conduct group meetings during your annual enrollment period, said Hallman. At that time go over any changes you are making to your plan and give an overview of the ancillary benefits available to employees. Group meetings are also the time to highlight all of the other benefits you offer. These may include, for example, dental, vision, 401(k) and pension plans, disability insurance, paid-time-off and sick leave, as well as the value of cell phones, laptops, uniform allowances, and other similar things. These benefits make up your comprehensive compensation plan, he said.

As important as they are, “group meetings are not enough,” he said. “Because plans are complicated, a few days after the group meeting, schedule one-on-one sessions with employees to go over the plans and answer questions.” The benefits provider should be able to handle these personal counseling sessions for you.

The individual meetings should have a couple of objectives. One is to help employees make elections, such as for ancillary products. “It’s important to show employees how the election would affect their paycheck,” said Hallman. And, assuming you have complied with Section 125 and employees can pay for benefits with pre-tax savings, another objective is to show what their salary would look like with and without the pre-tax savings for the elections they make.

Another objective of the individual meetings is to provide a single statement to the employee, listing anything you consider part of the compensation package. “Showing the value on an individual basis allows employees to have a better appreciation of their total compensation,” said Hallman.

Serrena Bennett can be contacted at 305-742-1236 or Sarrena.Bennett@ColonialLife.com. The Knowledge Is Power workshop was sponsored in part by Eola Capital, www.EolaCapital.com.  

SIDEBAR

Fill your benefits gaps

1. Assess, with the help of a benefits professional, your current benefits. List each benefit and its value.

2. Identify the gaps. In which areas are you weak?

3. Find products to fill the gaps. Many are available at no cost to you; they can be benefits voluntarily purchased by employees.

4. Look for a benefits provider who can conduct group meetings, provide individualized and customized counseling, and provide enrollment services.

If your employees are not giving you the results that you want and need, take a look at what you are assessing. “Change your measure, and you change employee behavior,” said Harold S. Resnick, PhD, CEO of Work Systems Associates, Inc., a Ponte Vedra Beach, Fla.-based consulting firm.

“People will respond to whatever it is you are measuring,” Resnick told a group of business leaders at a recent meeting of Executive Advantage (www.theexecadvantage.com), a professional- and business-development group for Jacksonville-area CEOs. “Measurement is your most powerful feedback and control tool,” he stressed.

But, measurement cannot be done haphazardly. He told the group about an organization whose accounting department provided monthly reports on 35 different measures. “Unfortunately,” he said, “they had no projective sales measurement, no operational performance measures of any substance, no human-factor measures, no customer-satisfaction measures at all.”

What that organization needed—and all organizations need, he said—were measures to assess the organization, individuals, and departments. These types of measurement are essential to entrepreneurial companies because:

• It’s not possible to understand something until you can measure it;

• You have to understand something before you can improve it; and

• You cannot respond to threats and opportunities unless you know where you stand.

“People respect what you inspect,” he summarized, “and what gets measured gets better.”

Organizational measurement

“Folks don’t realize how much their success in the company is driven by measurement,” said Resnick. “Most companies unfortunately drive behavior only from financial results. The problem with financial results is that they tell you nothing. Financial information does not tell you why your performance was great or poor. So financial measures by themselves don’t give you any guidance about what actions to take — or prevent — in the future. It’s like driving a car with no windshield and only a rear view mirror.

So, if financial measures by themselves are not the answer, what is? Resnick said businesses should first identify and assess their critical success factors. “To figure out what these factors are, ask yourself what you would want to know first about your company if you had had no contact with it for three months. What would be your first questions?” Those questions identify your critical success factors.

For each critical success factor, ask yourself:

• What will this measure tell me about my business?

• How can I use this information to impact the future?

• What behaviors will the act of measurement likely create?

• What are intended consequences of this measurement?

• What are the likely unintended consequences of this measurement?

“The act of measuring changes behavior,” he explained. “So for every measurement you take, consider, ‘How are the people in my organization going to start to behave? What are the intended consequences of what I want? What are the unintended consequences?”

Some of the most common key measurement categories include:

• Financial progress and results,

• Sales and/or revenue and/or margins,

• Market share,

• Customer base and customer satisfaction,

• Cost of manufacturing,

• Operational performance (cost and process),

• Human resource measures,

• External benchmarking, and

• Other special categories peculiar to your business.

Resnick said that measures should be objective, obtainable without great difficulty, generated automatically output from existing systems whenever possible, and able to be tracked over time so that trends become apparent.

Individual performance

The second type of measurement every organization should make is individual performance. “If you could shift the performance of your organization one standard deviation to the right,” said Resnick, “you would get a 34% improvement in productivity!”

And it is possible to get that gain, he emphasized, stating that on average, employees spend about 1.5 hours each day not working. Instead, they are shopping online, updating their Facebook page, or answering personal e-mails. “Are they doing these things and falling behind in their work? Or, are they doing these things because they do not have enough productive work to do?”

Only a small percentage of people get fired because they are not performing to the standards set for them, said Resnick. The problem is that the standards are set at a baseline level—the minimum employees have to do to keep their jobs. “The assumption is that a worker’s performance should improve over time,” he said. “Your job is to raise the bar with every employee every year, because you are paying more for that employee every year.”

Peer measurement

Individual measurement is further strengthened by adding peer assessments to the process. “If you have a number of employees who do the same or very similar work, it is statistically impossible for their performance not to resemble a bell-shaped curve,” said Resnick. What this means is that some people will be low performers, some high performers, and most will be “average” performers. The implication of the bell-shaped curve is this: First, you should either get dramatic short term improvement or remove the lowest performers. Second, you should focus on the high performers; that is, leverage your best people to give you really great performance. Then work on consistently raising the bar and performance levels for the middle third.

Honest peer assessment depends on understanding and factoring in three variables: talent (skills and attributes an employee inherently brings to the job), competence (the ability to perform), and performance (what is actually done).

A relatively new employee may have low competence (because she has a lot to learn), but high performance, judged relative to her competence. On the other hand, a 10-year veteran is probably highly competent, but if he is delivering the same amount and quality of work as the one-year person, his performance should be considered low in comparison to his peer group.

When you look at employee performance in this light, said Resnick, you are then able to compare experienced employees with less experienced ones. And, if you have a number of employees who do the same type of job, you can create a forced bell curve—something that is critical if you want to reward people for their actual performance.

Harold S. Resnick, PhD, is CEO of Work Systems Associates, Inc., www.worksystems.com, located in Ponte Vedra Beach. He can be reached at 904-273-2558.

Executive Advantage is a business development and networking group. For more information on joining a group, call 904-704-5058.

SIDEBAR 1

Align your mission and measurements

Although having a vision for your company and a stated mission are important to success, making sure that you are measuring the right things is crucial, says Resnick. “If your measurement system is different from what you are intending to accomplish, then your measuring system is going to control behavior more than your vision statement. That’s a pretty compelling message that people don’t really think about.”

A story illustrates: A company boasted that it focused on quality, but its employees were incentivized by the number of completed shipments they made.  Employees knew their pay depended on sending out complete orders, so they made sure each order had the necessary number of boxes. Unfortunately, some of the boxes were empty or partially filled or filled with defective parts. Customer complaints pointed out that quality was not driving employee behavior, despite the company’s mission verbiage. The company’s measurement (and reward) system was in conflict with its mission.

SIDEBAR 2

Common measurement errors

Many companies make a number of common mistakes in their measurements, said Resnick. Their measurements:

• Focus on the financial and do not look at other criteria;

• Are historical, but the past data provides no future-focused help;

• Count transactions, but do not show trends over time;

• Are easy to capture, but are not necessarily important to the business’ success;

• Look only at hard data and ignore soft data;

• Focus on final results, but do not explore process for improvement.

By Sarrena Bennett                 

It should come as no surprise to you: Benefits are important to employees. As confirmation, consider the results of the 2009 Job Satisfaction Survey from the Society for Human Resource Management (SHRM): In this survey, which was completed by 605 employees from all sizes of organizations (including 34% from small companies), employees rated benefits as the second most important factor influencing their job satisfaction.  Since 2002, they have ranked benefits either No. 1 or No. 2 as the condition affection their job satisfaction.

And make no mistake: Happy (or at least content) employees affect their companies’ bottom lines. Consequently, when you improve the benefits communication process, you stand to gain a competitive edge in recruiting and retaining quality employees who will make your company successful.

Although the vast majority of employers agree (90%) that understanding and appreciating the benefits they provide is important, few (21%) think their employees actually comprehend the extent of the benefits they get, according to a 2008 survey conducted by Colonial Life and SHRM. Furthermore, the same survey showed that nearly 5% of employers think their employees know nothing at all about their benefits!

It stands to reason that if you want employees to appreciate the value of their benefits, you must have a comprehensive communication program—something that is generally done by the benefits provider to your organization.

Your benefits communication program should:

• Identify the benefits you provide. Sounds simple, but do your employees know what benefits you give them? Healthcare is the benefit most everyone thinks of—and its value is considerable. But how about other “hidden” benefits that you may provide? (See sidebar for a list of common benefits that SHRM surveys.)

• Explain the value of each benefit. Every benefit has a value. Your communication program should be comprehensive enough so that any employee in your organization can calculate the value—either in a dollar amount or as a percent of his or her pay—of each benefit provided.

• Provide various methods to teach the value of benefits. Some basic methods to use in your education program include one-on-one meetings with expert consultants, group meetings, and Internet or self-enroll methods. Other ideas to supplement these methods include online resources, printed benefits booklets, printed enrollment guides and interactive multimedia tools.

• Be interactive. People learn in different ways. Some comprehend written messages; others prefer audio-visuals. And most learn best through interactivity. Today’s benefits education involves more than just developing a message and delivering it. It’s about creating employee participation. Using tools such as workbooks and interactive needs analysis helps create true engagement and participation. 

• Be ongoing. Communication experts agree that messages you want people to hear need to be sent repeatedly and consistently. Technology today allows for education to be given 24/7 through online support, where employees can access information to their own personal benefits as well as gather information about benefits in general.

• Be convenient. Your education program should be convenient for employees; they should not feel they are inconveniencing an administrator to get information or to make changes due to marriage, divorce, births, or death. Programs that employ best practices make use of the Internet for convenient communication.

With the right voluntary benefits partner and enrollment strategy, you can implement a strong benefits communication and education program that will help you realize competitive advantages.

Sarrena Bennett, an account executive with Colonial Life & Accident Insurance Company (www.coloniallife.com) is responsible for marketing Colonial Life’s products, programs, and services in Northeast Florida. She can  be contacted at 305-742-1236 or Sarrena.Bennett@ColonialLife.com. 

Job satisfaction from your employees’ point of view

According to the 2009 Job Satisfaction Survey conducted by the Society for Human Resources Management, the top workplace conditions that affect their job satisfaction are:

• Job security (63%)

• Benefits (60%)

• Pay (57%)

• Opportunities to use skills and abilities (55%)

• Feeling safe at work (54%).

The age of employees, however, dictates what is more important to them. For example, the survey showed that employees who are 35 or younger, put pay at the top of their list, followed by benefits. Those who are 36 to 55, put job security at the top of their job satisfaction list, followed by benefits. And those who are 56 and older, put job security first, followed by the ability to use their skills and abilities. Benefits followed in third place.

Which benefits do you offer?

Do your employees know what benefits they have? Here is a partial list of benefits many companies offer their employees, broken down by categories.

• Health and welfare benefits. These include such things as health coverage, dental, prescription drug coverage, chiropractic care, mental health coverage, accidental death and dismemberment, vision, short-term disability, long-term disability, dependent care accounts, and flexible spending accounts. (This list is not comprehensive.)

• Preventive health and wellness benefits. Some of these are wellness resources and information, on-site vaccinations, wellness programs, CPR/first-aid training, health fairs, smoking cessation, weight loss programs, fitness programs (onsite or membership, and massage therapy at work.

• Compensation and pay programs. Included in these benefits are payroll deductions, life insurance, retirement plans, onsite parking, tuition reimbursement, cell phones, cars, employee referral bonus, incentive or bonus plans, spot bonus programs, individual investment advice, retirement planning services, computer-purchase programs, and matching charitable donations.

• Paid leave benefits. Included are paid vacations and holidays, floating holidays, paid personal leave, family leave, sick leave, and eldercare leave.

• Family-friendly benefits. Some of these include bringing a child to work in an emergency, lactation room, domestic partner benefits, child and/or elder referral care services, subsidized daycare, and adoption assistance.

• Personal services benefits. These include such things as direct deposit, professional memberships, certification fees, cross training, mentoring program, and subsidized cafeteria.

• Housing and relocation benefits. Included are location visitation, temporary housing, and rental assistance, among others.

• Business travel benefits. Among these are frequent flyer miles, per diem for meals, paid long-distance when away from home, and car service to the airport.

• Other benefits. Some of these are office parties, milestone rewards, company picnic, community volunteer programs, discount ticket services, and pets at work.

By Ashley Cisneros

Following the Golden Rule is usually deemed as a nice principle for living one’s life, but can a company use the rule to become more profitable?

Dwight Cooper, CEO of PPR Healthcare Staffing, would probably tell you “yes.” Cooper says that building a positive corporate culture can yield a significant return on investment. The corporate culture at PPR in Jacksonville Beach, Fla., has developed from a foundation based on the Golden Rule in the company’s early years, to a robust structure of systems and processes today.

Business texts and human resources consultants offer several definitions of corporate culture, but most agree that corporate culture encompasses the values of a company and guide its business practices. Some references cite corporate culture as the character of an organization, reflected from the vision of the founders.

Dwight Cooper

Whatever the definition, PPR has been doing something right. The Society for Human Resource management (SHRM), the largest of all HR organizations with more than 250,000 members, has named PPR one of the “Best Small and Medium Companies to Work for in America” for five consecutive years. Only three other companies share this distinction. SHRM’s “best company” designation is derived from independent, confidential employee surveys. Using these surveys, employees offer honest feedback on their workplace experiences.

“We’ve been in business for more than 13 years, during which time we have outgrown our market in multiples of 10,” Cooper says. “Today our market has become commoditized, and we have literally hundreds of competitors. But our ideology has allowed us to outgrow everyone. It speaks to our vision and the execution of our most important mission—to create a great place to work.”

People often assume that PPR has great benefits, compensation, and flexible scheduling. But what really makes it a great place to work is something else. “We do fun stuff, but what we really focus on is building trusting relationships,” Cooper says. “You nurture these relationships by being a great communicator and by implementing processes and systems that ensure transparency companywide.”

Culture not an accident

PPR’s success wasn’t an accident. Cooper has been intentional and strategic about the development of PPR’s corporate culture. “We manage it every month, every week, and every day,” he says. “This has allowed us to attract better people who work better in teams. Because of this diligence, we win.”

PPR employees speak with one another every day, and every employee has complete clarity about their role within the company, Cooper says. “PPR’s corporate culture is one in which efficient two-way communication allows us to be dynamic and nimble,” he says. “This communication helps us perform better and make better decisions.”

Every work week begins with a 20-minute standing meeting held Mondays at 8:31 a.m. Employees receive and share information about metrics, financials, strategies, and tactics. The meeting also presents an opportunity for peer recognition and presentations from local organizations.

Cooper believes that it is difficult to have too much communication if done right.

“Our 8:31 a.m. meetings are attended by about 70 employees. Ten of the 70 may not care are financial statements, and five may already know every detail of those statements. The remaining 55 fall everywhere in between,” he says. “In theory, we may be wasting the time of 10 people, but without the meeting process in place, we don’t have the opportunity to talk to the rest who actually may be interested. The face-to-face time is essential to business performance.”

Cooper says that PPR has a lot of meetings, but they are short, often stand-up meetings, and their purpose is to provide incremental clarity.

“These short meetings save us from junky stuff down the road. Without the short meeting, we risk going in different ways,” he says. “I’m a big fan of lots of meetings, making sure they are done in a very efficient and smart way.”

Culture one person at a time

Since PPR is a staffing company, it really has two sets of employees— the company employees, plus the healthcare professionals who are placed with PPR’s clients.

“In our home office in Jacksonville Beach, we’re able to see each other every day. But we also have 300-500 healthcare professionals in 42 states at any given time,” Cooper says. “We try very hard to incorporate our healthcare professionals into the systems we use to create a great corporate culture. This means being great communicators, touching them on regular basis, and being very transparent.”

Cooper says he has hired 80 people in the last six years without ever running an advertisement.

“If we send information to our 70 employees who then turn around and email it to 15 contacts, we’re able to attract the right kind of people simply through referrals,” he says.

Cooper says that the most important thing in PPR’s selection process is determining if a job candidate has the right values to fit into the company’s corporate culture.

“Through our screening process we look at a candidate’s experiences to find out whether they are passionate about their work and whether they are good team players,” he explains.

Those applicants who make it through this screening process enjoy unique benefits, such as eight hours a year to volunteer in the community. In addition, PPR subsidizes fitness programs to support employees who wish to work toward health goals.

“Three years ago, it was about recruiting folks who may have already had jobs. Now, this has obviously changed,” Cooper says. “I’ve had people tell me it has been their dream to work for PPR.”

Cooper says managers must genuinely care about employees in order to be successful. “Everyone has different emotional intelligence. Some people may argue that I care too much,” he says. “Some companies may not view building a positive corporate culture as a priority. To me, it’s very important.”

Great culture yields success

The value of PPR’s corporate culture has manifested itself through positive financial returns and national recognition.

“We attract very talented people who are awesome teammates,” Cooper explains. “If my best people are better than my competitor’s, and if these people work together in an efficient and powerful way, then we win. We benefit financially and intrinsically.”

He describes the Best Companies to Work for in America honors as validating. “I already knew that corporate culture led to better results, but having employees confirm this through confidential surveys is a testament to the power of great work experiences.”

The awards have led to a new core competency at PPR. Cooper has been asked to offer seminars about the principles of corporate culture. “This has provided us with a unique opportunity to be thought partners with our clients,” Cooper says.

Advice for CEOs and executives

Building positive corporate culture takes time, Cooper says. “Implementing corporate culture processes and systems wasn’t always readily accepted by management,” he says. “But once they saw the positive results, any resistance diminished.”

Great corporate culture will not protect a company from the realities of the current market conditions.“No business is immune to the effects of our economy,” Cooper says. “At a time when employees are fearful about job security, it has never been more important to be transparent.”

Cooper encourages CEO’s to avoid catching employees by surprise. “Share the good, bad and the ugly. At the same time, always lay out path to good circumstances. This communication is vital for keeping people motivated,” he says. “If we have to lay off employees, we treat them with respect. We show them that we care. We do the most we can in terms of severance and providing support in helping them find other employment.”

Dwight Cooper, CEO of PPR Healthcare Staffing (www.pprhealthcare.com) can be contacted at 904-241-9231.

Ashley Cisneros is a Jacksonville Advantage contributing editor. She can be reached at ashleycisneros@gmail.com.

SIDEBAR

How you can create a great corporate culture

Think of your corporate culture as your corporate identity, suggests Richard Hadden, a Jacksonville-based workplace expert and partner in Contented Cows Partners, www.contendedcows.com. He explains that corporate culture—that is, corporate identity—is driven by the assumptions a business’ leader has about people. “Assumptions leaders have about their employees drive their behavior, and that behavior drives the culture,” he says.

Hadden suggests four steps to build a strong corporate culture:

1. Identify your assumptions about people. How do you view them? Are they assets or liabilities? “Organizations that see people as assets to be capitalized seem to get more from those people than those that view employees as expenses to be minimized,” Hadden observes.

He notes that if you realize your assumptions are less than optimal, you can change them and subsequently change the culture of your company.

2. Create a sense of mission in your organization. Once you clarify your assumptions about your employees, it’s time to provide a mission. “Mission is not to be confused with a mission statement,” he says. “We see mission statements manifested in plaques and logos, yet they do a lot to create a sense of mission. A mission answers the question, “What are we all about?”

To find out if everyone in your business is working with the same sense of mission, he suggests asking 10 employees to list the three top priorities of your company. “If you get 30 different priorities, you probably have a culture that is not highly defined,” he explains. “People may be working very hard in a lot of different ways, but nothing comes to a critical mass.” But if you get no more than five or six priorities, then you know people are focused on the same mission.

3. Go for it! Whatever culture you decide to develop, go for it all the way, he urges. Strong cultures are felt throughout the company, from top to bottom. He cites Chick-Fil-A as an example of a company with a strong culture. “Whether you work in one of their stores or at their corporate office, you see assumptions borne out in behaviors, and the behaviors are consistent.”

In cultures with weak or diluted cultures, behaviors are inconsistent, and it difficult to know the organization’s identify.

4. Hire people who fit the culture. “This does not get in the way of diversity,” he explains. “Organizational culture transcends all of the diversity elements, such as race, gender, age, background, and education.” Hire people who are comfortable with your culture. “

The real test is, ‘Does this applicant have the potential to be happy, productive, and successful in our culture? If yes, then there is the potential to perform well. If no, it is not a good fit. The person will constantly struggle against the organizational culture, spending a lot of time trying to fit in and not putting as much into performing,” says Hadden.

Richard Hadden can be contacted at Contented Cows Partners, 904-720-0870.

Tough business conditions may cause tempers to flair at work, but that’s no excuse to swear. A survey conducted recently by online payroll service SurePayroll found that most small business owners prefer to keep workplace language clean, no matter what the economy is doing.

According to the survey results, three out of four business owners find workplace swearing offensive and believe it’s unprofessional for employees to curse while on the clock.

The survey also found that 80% of respondents believe that even seemingly innocent swearing on the job can be interpreted the wrong way and have negative consequences. Only 11% said swearing on the job could act as an office morale booster.

Despite their desire for profanity-free work environments, 40% of respondents admitted to swearing at work at least occasionally, indicating that language in their offices isn’t always as clean as they want it to be. They don’t blame the added stress of a down economy for their or their employees’ swearing, either. More than 80% believe the amount of swearing in their businesses has nothing to do with the recession.

“Considering how often we hear profanity in pop culture and everyday conversations, it’s a bit surprising that so many small business owners are strongly opposed to profanity on the job,” says Alter. “Still, it’s clear that no matter how commonplace swearing is outside of the office, business owners feel it has no place in a professional environment.”

How to deal with workplace profanity

What can you do if employee profanity is disrupting the workplace? SurePayroll President Michael Alter shares a few tried-and-true tips to keep language clean in the office:

• Discuss the issue in private. If a particular employee has trouble completing a sentence without using choice four-letter words, it’s a business owner’s right to confront that employee — but never in public. Work the problem out in private to spare the employee the embarrassment of a “slap on the wrist” in front of co-workers.

• Explain why it’s a problem. Many employees who use profanity often don’t understand why it could be disruptive to the office. Be clear about the problems up front. If employees know right away that swearing is frowned upon, they will be more cautious about the language they use at work.

• Start an office ‘swearing fund.’ Make it into a game in which every time employees are caught swearing, they must donate a dollar into a fund that will eventually finance an office-wide outing.

• Use code words to cuss. It might sound silly, but in a recent New York Daily News column, writer Harriet Cole explained how a group of co-workers eliminated profanity and lightened the mood by using alternative terms instead. “The staff began to use many of these kooky terms and laughter began to replace anger,” she wrote. “The terms included such things as ‘What the French toast!’ and ‘Brother trucker.’ Creativity is a great tool for inspiring uplifting communication.”

• Seek outside help. If workplace profanity becomes so out of control that business owners simply can’t contain it, they can look to a third party for assistance. The Lake Forest, Ill.-based Cuss Control Academy, for example, offers tips, classes, and presentations on why swearing can be detrimental to the workplace and how to control it.

Source: SurePayroll, www.surepayroll.com