Leading Through Difficult Times

I had an exchange with a reporter last week. She asked me for advice on how employers can proactively help employees through these times.

Here's my response:

1. Don’t panic. It is way too easy to make rash, and then regrettable decisions (for example, immediate layoffs).
2. Get clarity. Get away from the office, re-visit your business plan, and then decide what makes the most sense for your company – not just now, but in a 2-3 year plan. For example, terminating your highest paid employee would lower immediate expenses, but how expensive will it be to replace that employee in the future, when the economy rebounds?
3. Determine the amount of disclosure, and err on the side of too much information to employees. Employees are just as nervous as employers – and the uncertainty about their employer (and their careers) exacerbates their fears. Employees want and need to be informed and what the situation is in their company. Employees are normally just as invested in the success of their company as the business owner is.
4. Conduct team meetings and be honest. Get feedback, solicit ideas for expense reduction, or ways to increase revenue, and make this process a collaborative effort. Business owners are normally surprised by the sophistication of such responses. And they are also surprised at what comforts employees are willing to surrender in order to keep the business viable.
5. Acknowledge employees' fear. No one knows what's going to happen.
   
6. Keep an eye open for employees who appear especially troubled, and make sure to engage them. This often can assist in preventing potential violence in the workplace (although almost all statistics show that workplace violence is instigated by a relative of an employee).
7. Finally, show you’re in charge. Leadership (and resulting confidence by employees) comes from the top. Your employees respond to your emotions and words – and that is magnified to such an extent that employees sense even your subtle mood swings. Showing panic or a dark side is the worst thing an employer can do. Be as positive as possible.

Employee Morale and the Economic Crisis

From the incomparable Tom Peters:

Tough times are in fact golden opportunities to get the drop, and the longterm drop at that, on those who respond to bad news by panicky across-the-board slash and burn tactics and moves that de-motivate and alienate the workforce at exactly the wrong moment.

Tough times indeed require tough and unpleasant decisions—but thriving, not just surviving, is an option for those who mix wisdom and boldness of leadership with transparency and maximized employee involvement and engagement. Without suggesting that there is anything humorous about the pain that bad times cause, one can say that "this is when it gets fun" for truly talented and imaginative leaders at all levels and in businesses of every sort and size!

It's time to go back to basics. What were the decisions that got you to where you are today - both good and bad? The fundamentals of your success are still the same; it's the circumstances that are different.

Adjustments are necessary, but not necessarily radical ones. Don't forget where you came from and what got you there.

The Elephant in the Room

It's a pleasure to recommend a timely book from my partner, Tony Rose.

The "Elephant in the Room" is that thing - or things - which keep you up at night, which you try so hard to avoid confronting. It could be the current economic situation; a poorly performing but well-liked employee; or something in your personal life.

Tony's book, "Say Hello to the Elephants" looks to embrace that elephant; to tackle the big issue in a positive and efficient way.

He has a 4-step process for dealing with the elephants:

1. Discover and get clarity on the situation;
2. Consider and select a solution;
3. Implement the solution; and
   
4. Manage and sustain the result.

I've worked with Tony for many years, and this book is a wonderful summation of his leadership philosophy. I'd highly recommend it (even if he weren't my partner)...

www.holaelefante.com - or buy the book here.

Asking Employees For Proof of Illness

Many employers are frustrated with employees who frequently call in sick. And that frustration can lead to major headaches.

Tresa Baldas of The National Law Journal, writing in law.com, identifies several pending lawsuits filed by the EEOC where employers are apparently asking for too much information when employees use sick time. Of particular note is the 'intermittent leave' permitted under the Family and Medical Leave Act.

You've got to consult with your employment attorney or HR expert before making such a request.

In the meantime, I am an advocate of consolidating 'vacation' and 'sick' time into one broader category - paid time off (PTO). If such a program is in place, it doesn't matter why the employee is taking the time off. And once PTO is exhausted, the employee does not get paid for any additional time off - whether sick or vacation.

California Computer Professional Overtime Requirement Clarified

On September 30, 2008, Governor Schwarzenegger signed into law a bill clarifying that salaried computer software professional employees who earn at least $75,000 a year are exempt from overtime compensation requirements.

Under the new law, hourly employees earning at least $36 an hour and salaried employees earning at least $75,000 a year are exempted from overtime compensation requirements, thus defining clear amounts for both hourly and salaried employees. This new requirement takes immediate effect.

There are important additional criteria for exempting these computer professionals; Baker & Hostetler have them here.

Whoops! They Forgot To Teach Us How To Manage People!

I have several law firms as clients - and if there's one thing I see they all have in common, it's friction between young, new lawyers and their support staff.

It's because law schools forget (or worse, don't care) about teaching law students how to manage people.

The fundamental problem is communication. All managers need to understand the motivations of their 'subordinates' - what makes them come to work and why. A mutual understanding, along with frequent and candid one-on-one communication, goes a long way.

It's not about 'do this' or 'do that'. It's about working cohesively together to attain mutual goals.

If there are law schools that include fundamentals of management courses, I'd like to hear about it.

In the meantime, my validation for this argument comes from Molly Peckman of New York Law Journal, writing in law.com.

Independent Contractor Properly Classified

It's our perception that most of the time, employees are improperly classified as Independent Contractors - and the IRS is certainly cognizant of that fact.

But when an Independent Contractor is properly classified, it is a boon to the employer - especially when that person tries to sue their employer for improper termination, discrimination, etc. - because they are not actually an employee

In California's Varisco v. Gateway Science and Engineering, Inc., the 2nd Appellate Court ruled that an Independent Contractor was properly classified, and thus threw out Varisco's wrongful termination claim.

Control is the principal factor in determining whether an individual worker is an employee or an independent contractor. “An independent contractor is ‘one who renders service in the course of an independent employment or occupation, following his employer's desires only in the results of the work, and not the means whereby it is to be accomplished,’” wrote the court, quoting prior cases.

There are numerous secondary factors in determining an Independent Contractor status, very well outlined by Chris Olmstead of Barker Olmsted & Barnier.

What To Include on a Pay Stub

In California (Labor Code 226), failure to provide any one of these items can subject you to fines calculated on each pay period up to a total of $4,000.00 per employee – plus attorneys' fees and costs.

• Gross wages earned;
• Total hours worked by the employee (unless properly exempt from overtime);
• The number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis;
• All deductions (all deductions made on written agreement of the employee may be aggregated and shown as one item);
• Net wages earned;
• The inclusive dates of the period for which the employee is paid;
• The name of the employee and the last four digits of the social security number or employee identification number – not the entire social security number;
• The name and address of the legal entity that is the employer; and
• All applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate.

According to our friends at Fisher & Phillips:

California Labor Code 226 is not a recent statute, but employees have begun regularly including claims under this statute in many actions filed against employers...This is true low-hanging fruit on the litigation tree.

Benefits of Being a Kind Manager

Successful managers practice the golden rule.

And when managers treat employees with respect and decency, superior team performance is the result.

The American Management Association came out with a survey that illustrates how a boss's character affects employee performance and retention rates.

• 84% of employees who report to 'kind' managers plan to work for their company for a long time;
• Whereas only 47% of employees who report to bullies agreed.

Managing employee turnover - especially in troubled economic times - can be as simply as applying the golden rule.

When Women Work For Women

A new study by the University of Toronto says women who have to answer to a female supervisor feel more stressed than if their superior is male. They suffer from far more depression, insomnia, headaches and heartburn than if their boss is a man.

But for male workers, the sex of their manager makes no difference.

Scott Flander, writing in HR Executive Online, quotes experts as saying it may have to do with the fact that many women -- bosses and subordinates alike -- feel more vulnerable in their jobs than men do. And they say HR leaders need to work harder to change that.

My advice is generally gender neutral:

• Train your managers in the fundamentals of management and leadership;
• Conduct Employee Satisfaction Assessments;
• As a leader of your company, make sure to drive the concept to all employees of "Managing Up".

And become intimately involved in the relationships all of your managers have with their employees.

Amendments to the Americans With Disabilities Act

President Bush recently signed some significant amendments to the Americans With Disabilities Act (ADA).

As usual with such legislation, the burden on employers will ultimately be adjudicated in the courts, with little specificity as to direction an employer should take.

Here's an exerpt from a recent article by Jackson Lewis:

With the ADAAA going into effect on January 1, 2009, now is the time for employers to review existing procedures for ADA compliance at every stage, including hiring, medical testing, accommodation, leave and termination. Employers must prepare to inject flexibility into their policies and practices to meet the ADA’s demanding standard for reasonable accommodations. According to Mr. Alvarez, “Employers should train supervisors on individualized assessments and develop protocols or guidelines for responding to workplace limitations posed by injuries or illnesses. Forget about trying to discern whether someone meets the ADA definition of ‘disability’ – it’s a litigation issue at best, and, in most cases, a losing one.”

Among other things, Mr. Alvarez suggests employers review job descriptions since they are frequently a starting point for an individualized assessment. Employers also should consider implementing a formalized process for addressing reasonable accommodation requests or reviewing reasonable accommodation procedures already in place. Employers skilled in “individualized assessment” often rely on forms, internal guidelines, or template letters to help facilitate communication with individuals with disabilities and their healthcare providers. These practices will become both more common and indispensable as employers grapple with a more demanding and relevant ADA.

Nevada Company Pays $425,000 To Settle Sex Harassment/Retaliation

What's so troubling about this case is not the sexual harassment - which is offensive enough - but the retaliation. Attorneys are finding it much easier to prove retaliation charges than harassment charges. Almost anything done by an employer after harassment is alleged can be construed as harassment.

Also, you would expect to see cases like this in California rather than Nevada. With the economy in Nevada - especially Southern Nevada - sinking - all it takes is one mistake to end your business. Don't be like Scolari's.

Scolari’s Warehouse Markets will pay $425,000 and furnish other relief to settle a class sexual harassment and retaliation lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC), the agency announced on September 5.

The EEOC charged in its lawsuit that 19 female employees, several of whom were teenagers at the time, were subjected to repeated and sometimes severe sexual harassment by the company’s senior officers across multiple stores in the Reno area. The EEOC asserted that Scolari’s senior officers and managers inappropriately touched female employees, propositioned them, made lewd comments and passed around naked photos of themselves, among other acts. In addition, the EEOC charged that Scolari’s management failed to address and correct the unlawful conduct, even when the victims complained about it. Instead, the women were fired or were forced to abandon their jobs after they complained about the harassment.

All this alleged conduct violates Title VII of the Civil Rights Act of 1964. The EEOC filed suit in U.S. District Court for the Northern District of Nevada after first attempting to reach a voluntary settlement (EEOC v. Scolari’s Warehouse Markets, CV 04-229 DAE - RAM). A consent decree setting forth the terms of the agreement was approved by the court on Sept. 5.

Under the three-year consent decree resolving the case, Scolari’s agreed to pay $425,000 to the employees identified by the EEOC to have been sexually harassed or retaliated against. As part of the injunctive relief, Scolari’s further agreed to provide training to all employees; provide reports to the EEOC regarding its employment practices for a period of three years; and, to hire a consultant to review its harassment policies and procedures.

“In a case like this, where several of the victims were young women new to the work force, victims of harassment often feel further isolated and marginalized,” said EEOC Los Angeles Regional Attorney Anna Y. Park. “This case shows that employers need to investigate and act on complaints of harassment before the problem mushrooms.”

EEOC’s Los Angeles District Director Olophius Perry added, “Nevada employers need to be vigilant in protecting workers who have the courage to speak out against harassment. The EEOC is determined to protect the civil rights of all workers, and that includes protecting their right to protest illegal mistreatment.”

Managing Your Boss

I've written frequently over the past few years about the need to Manage Up. In order to succeed and grow as a manager - as well as getting your employees to equally succeed, it's essential to know how to manage your boss.

Susan M. Heathfield, writing for the HR Daily Advisor, shares some tips (you can read the article here) - and I'm taking the liberty of adding my own comments to those tips.

1. Work to develop a positive relationship.
Any successful relationship - whether professional or personal - requires effort. I've worked for people I couldn't find any common ground with. The relationship deterioriated to the point that if he said the sky was blue, I'd disagree, just on principal. Then at a seminar one day, we were asked to name the most ethical person we'd ever worked with. To our mutual surprise, we named the same person. We discussed it and were able to build a positive relationship from there.

2. Work from the boss's viewpoint.
Just as you're in it for you, your boss is in it for him/herself as well. And since they're the boss, what they say ultimately goes. Find out what their goals are and help in attaining those goals.

3. Look for the best in your boss.
You're not going to change your boss (or your partner, for that matter), so stop trying. You need to adapt to their style and behavior, not the other way around.

4. Learn from the boss.
Whether you like or respect your boss, there are things you can learn from them. Some of the most valuable management skills I've learned are from bosses I didn't like or respect. In learning what I didn't like, I was able to avoid those characteristics in my subsequent leadership roles.

5. Ask for feedback.
Don't rely on the possibility that your boss will give you feedback - ask him or her for it frequently. Bosses should like playing the mentor role, and will be able to work better with you once they've communicated their feedback to you.

6. Value your boss's time.
Schedule meetings, don't interrupt.

7. Accept that sometimes you will disagree.
It's business. He or she is the boss. Understand that when you're in a position someday to make decisions, you may do it differently; but for now, get over it.

Picking The Best Health Plan

Whenever I meet with a new client, I prepare a list of questions about their business - both macro and micro. The answers are always diverse and informative - no business has the same issues.

Now matter how many business owners I've met with, however, there is one question they all agree on:

Are you satisfied with your health insurance plan?

The answer given by all, of course, is a resounding "no".

Every October should be the time for businesses to re-evaluate their current benefits program and consider different providers or different options. Health Savings Accounts, for example, have gained some popularity but are not widely known.

And I'm constantly amazed that more businesses don't utilize a Premium Only Plan.

A good start in the struggle to evaluate what's best for your business is this article by Tom Murphy of the Associated Press.

Employee Satisfaction Equals Profitability

In an era (to put it mildly) that is economically uncertain, there is a way to bolster both productivity and profitability:

Employee satisfaction.

Employees who are happy in their work are always more productive. Yet businesses seem to shy away from nurturing their satisfaction or - worse - business owners have no idea if their employees are happy or not.

An employee satisfaction assessment (or 360 degree survey) is an easy tool to determine how satisfied your employees are. And, worked with an expert, you can use that information to take steps to enhance that satisfaction.

The downside of low employee satisfaction is higher turnover, lower productivity and ultimately business failure.

The upside is significantly higher.

Businesses with great workplace environments, such as those mentioned in this Wall Street Journal article, will improve the components so essential to success.

Measuring The Best Hiring Manager

The most critical test for any manager or supervisor is the quality of their hires. Studies show that a bad hire (or any employee turnover, for that matter) costs a company about 50% of that employees annual salary.

In fact, one of my partners now believes that employee turnover costs American businesses over $340 Billion dollars per year.

So hiring the right person is indeed a critical component of a managers success, how do you evaluate that success (or failure)?

Kris Dunn, writing in Fistful of Talent, outlines some essential values when determining how well a manager hires, including a reference to the recent Jack Welch article in Business Week.

Tracking the hiring success of your managers is essential. And if a manager has a poor record of hiring, then the opportunities for training and development are ripe:

• Teaching the fundamentals of interviewing;
• Having that manager observe other interviews;
• Conducting performance appraisals of not just the newly hired employee, but also the hiring manager 90 days after the hire.

Speaking of Fistful of Talent, by the way: Jessica Lee, who is the Employment Manager for APCO Worldwide, has a blog that's must reading for small business owners and managers. And although she's obviously skilled at her job, a book (or two or three) is obviously in her future.