Unlocking Behavior Means Unleashing Profits

Leslie Wilk Braksick, Ph.D. is a leading expert in behavioral science and the Co-Founder and Chair-man of CLG, a reknowned behavioral consultancy with an international clientele. Her new book, Unlock Behavior, Unleash Profits (McGraw-Hill, 2007) is rich in tools, success stories and case examples demonstrating the power of behavioral science to dramatically unlock leadership, performance and profitability in organizations.

Leaders want to be successful - not just through their own eyes, but in the eyes of others. Indeed, the success of leaders is measured by their ability to get things done through others. We all know this... so why is there still so much untapped potential in the workplace?

Most leaders have not learned that there is a science to why people do what they do. . . a science they can learn and use to guide their own actions and those of others, without fail. It is called Behavioral Science, a practical method that teaches how to “unlock” their behaviors in a way that will “unleash profits” by bringing out the best in everyone.

A fact of real life is that nothing changes until behaviors change. Nothing can improve until people do things differently. So, understanding the science of why people do what they do can be the most important step in your career.

The science of behavior and the link to results
The science of behavior relies on honest and direct communications, based on objective statements of what actually occurs. Behavioral Science tools cut through many of the “soft” factors, such as

personality and motivation - and focuses on what people actually say or do... on things we can directly observe and objectify (these are characteristics of any science). For example, rather than saying a person was “motivated to do a good job” (how do you know that?) you cite the evidence: they “worked late for three nights to ensure the Board presentation was completed in time for the team’s review and comment.” Rather than say a person was “not a team player” (how do you know that?), you describe their actual words and actions that led to that interpretation.

The Science of Behavior The Science of Behavior (why we do what we do, and say what we say) has the same properties as other natural sciences, like chemistry or biology. Those properties include careful observation and description of what occurred, data collection, reliability of occurrence, replicability, measurability, laws and rigor.

The ABC model At the core of Behavioral Science lies the ABC Model. It illustrates that Behavior is prompted to occur by what comes before it (called Antecedents) and by what follows it (called Consequences) that either encourage or discourage the behavior. The ABC model (Antecedents-Behavior-Consequences) gives us a consistent technique for analyzing behaviors— both current ones and the new ones we desire.

The following figure shows important characteristics of Antecedents, Behaviors, and Consequences:

Are events that precede or prompt behavior Have only short term effects, unless paired with consequences Have much less impact on behavior than consequences Are overused compared to consequences	What a person says or does Pinpointed behaviors correlate with business results Arrow points right because consequences follow behaviors, and left because consequences determine whether the behavior will recur	Are events that follow behavior Increase, maintain or decrease behavior Have great influence on whether behavior occurs again Positive, encouraging consequences are the most desirable and effective
Example: Training, vision statements, individual abilities, behavior of others, past events, requests, goal statements, pep talks, safety posters.	Example: Attend a meeting, place a call, complete a form, record time spent on a project, correct an error.	Example: Acknowledgment, feedback, bonus, awards, completion of a task, token of appreciation.

It is ironic that in business where bright people always seek better ways to do things, consequences are greatly underused as a means of influencing behaviors, especially positive, encouraging consequences. In corporate settings, leaders often rely on antecedents to foster new behaviors. When things don’t go as planned, or when people do not perform as they should, managers pile on more antecedents (get a bigger hammer): issue memos, pep talks, training manuals, and restate expectations.

How does behavior become “locked”?
In so many organizations, people’s behavior is locked. This means that their behavior is constrained by cultural norms (such as how people get treated) or by people systems (reward, recognition, promotions). These constraints act to keep people doing their jobs at minimum acceptable levels of performance. People in such performance-constrained organizations—whether a team, department, or the entire corporation—feel “locked” or stuck, and their performance is compromised as a result. Often, this minimum performance becomes acceptable and expected, and so the organization chugs along adequately, but far from optimally.

Locked behavior becomes an insurmountable problem when the organization attempts to implement a new strategy, or to make a big change that requires people to alter how they work—to exhibit new behaviors to get new performance. These locked behaviors become big obstacles to implementation, keeping people from embracing the new way.

How does behavior become locked? So often, it is the result of unintended consequences—despite leaders’ good intentions. Many organizations unwittingly reward the wrong behaviors and discourage the right behaviors! Employees often describe it as “the difference between what my organization says it wants (via vision statements, stated values, etc.) and what we see actually practiced and encouraged every day by people around us.” This clash of words and actions weakens commitment and causes distrust of leaders—and of the company as a whole.

This is where unintended consequences begin to harm performance and morale. The organization gets less than what its individuals are capable of giving—and the employees experience less satisfaction from a work environment that has the potential to be so much better. When an organization locks its people’s behaviors, everyone suffers—individual employees, managers, top leaders, customers and shareholders.

The “right” leadership is the key to unlocking behavior
The good news is that leaders who understand and practice the science of human behavior can unlock behavior and encourage people’s “discretionary performance”—their “want-to” performance. If you arrange antecedents and consequences to fully engage people, and maximize their performance and contributions, you can enable peoples’ success—and coach them along the way in a positive, helpful manner.

Your ROI? You will get back from your employees (and others) the very level of performance that your leadership actions produce. There is a powerful cause-and-effect relationship that your leadership actions produce—and it is almost entirely under your control.

The goal is to unlock behaviors in your organization so you can unleash profits—not only monetary, but also the vast wealth of talent and capability that is trapped within the people in your organization.

You can dramatically empower your own leadership if you are willing to be a good practitioner of Behavioral Science. The bottom line is that effective leadership, superior execution, and engaging work environments all depend on your leadership words and actions. Your behavior—everything you do and say—is the key to unlocking behavior and unleashing profits—in yourself and your people. No new fancy IT system is needed. No new capital investments. No new equipment of any kind is needed. Just the commitment of a leader to lead well—and to learn and apply the science of human behavior at work and at home. What could be more important?

Case Example
How Focusing on Behavior Made All the Difference
One of my clients, Brian, who retired as President of a major oil company when it was acquired by a larger peer enterprise, tells of an experience that changed his leadership approach forever. Brian explains how some workers unintentionally taught him a great lesson in leadership: about the impact that his leadership behavior has on results, and about tapping into the discretionary performance of his people.

In Brian’s Words:
An experience changed my life some years ago. I ran a refinery in England. Times were tough, and the entire management team labored to save the plant from closing. We frantically bailed the boat.

It was the hundredth anniversary of our UK operations, and someone decided we should celebrate. Our Board provided money for a celebration for a thousand people—£30 each (roughly USD$60)—so we had £30,000 to spend on this celebration.

Honestly, I was more interested in whether there was even going to be an organization next week, than in a celebration! So, I delegated the celebration planning to a small group of blue-collar workers. I gave them the £30,000 and said, “Organize something—have a good time.” And I went back to bailing the ship.

So what did the celebration team do? They organized an event equivalent to a county fair in the United States! About 50,000 people came. It was beyond belief! They leveraged that £30,000 and probably got the value of about £1,000,000.

Frankly, we would not have put this little team in charge of £2.50 in their daily work. Yet, here was this group, left to their own devices without any interference or direction from management, and they ran this magnificent event. I mean, it was just incredible!

So my management team and I analyzed this experience to understand how these people had accomplished this tremendous task. It was obvious that they succeeded more than we thought possible, because they were able to exercise their full capabilities. At work they had boxes and barriers all around them.

Ever since this experience, I’ve been trying to figure how I can tap people’s capabilities like that. Why was this team so successful?

• They succeeded because they owned the project, including the consequences of their decisions.
  
  
• They had encouraging feedback from their peers, who would evaluate their success using criteria they all understood. (You only celebrate a hundredth anniversary once, and their friends and their families were going to be very rough on them if the event had fallen short!)
  
  
• I unwittingly encouraged their behaviors, by simply getting out of their way. I was too busy to deliver any discouraging consequences, intended or unintended! I am positive that if I’d had more time, I would have told them that their plans were unrealistic!

This team had put forth great discretionary performance—the effort people want to contribute above and beyond what is normally required to keep their jobs.

So, if we always were to manage this way, would it encourage people’s continuing discretionary performance? If I were to ensure that employees saw the direct link between their efforts and what they could achieve, then either got out of the way or encouraged them, would it lead to more discretionary performance?

I believe the answer is unequivocally “yes.” That’s why I’m a leader committed to creating the conditions that encourage these behaviors! It’s not always easy, because I have lots of old behaviors that I need to change myself. But I am committed to getting there—for the success of my organization, my people and myself.

Takeaways from Brian’s Story and about unlocking behavior...

1. People often have capabilities that are buried or hidden on the job. Our job as leaders is to encourage them—and to create an environment where their capabilities are brought out.
   
   
2. The work environment is primarily defined by management, and maintained by the encouraging/discouraging consequences that people experience. Oftentimes, this work environment unintentionally inhibits discretionary performance and “locks in” minimally acceptable performance.
   
   
3. Brian’s antecedents (his instructions: “organize something—have a good time”) were very general, compared to the highly specific consequences to the employees of success or failure (expectations of their peers, family and community members, Brian’s evaluation of their performance, etc.). This demonstrates the power of specific consequences.
   
   
4. Brian could have been an even more effective leader if he had specified the behaviors needed for success and created encouraging/desirable consequences. In this story, he did neither, so it’s doubtful his people felt like they were “led” by Brian in any meaningful way as they pulled together the event.

The bottom line
You can unlock behavior and unleash profits in your organization by creating an environment that prompts the right behaviors (using the right antecedents) and encourages the right behaviors (using the right consequences), and removes barriers to discretionary performance. Ensure that your antecedents are prompting the right behaviors. Ensure that your consequences encourage the desired behaviors and discourage unwanted behaviors.

Most importantly, understand your role as a manager of antecedents and consequences in your environment. Never underestimate the impact of your words and actions as a leader. You, too, can unlock behavior and unleash profits in your life and in your organization—it’s as easy as ABC!

(Editor’s note: For information about Dr. Leslie Braksick and her new book, Unlock Behavior, Unleash Profits, contact Employers Group’s Editor, Wendy Taylor, at wtaylor@employersgroup.com, or go to (www.unlockbehavior.com. 2007 Leslie Wilk Braksick. All rights reserved.)

By Kimberly Nwamanna,
Helpline Consultant

The U.S. Equal Employment Opportunity Com-mission’s (EEOC) Joint Reporting Committee requires that the Employer Information Report EEO-1, commonly known as the EEO-1 report, is to be filed annually.

Private employers with 100 or more workers, federal contractors with 50 or more workers and $50,000 or more in federal business, and some financial organizations, regardless of size, are to report the racial and ethnic composition of their workforce.

Employers in Puerto Rico, the Virgin Islands or other American Protectorates are not to file reports for these establishments. Also, state and local governments, primary and secondary school systems, institutions of higher education, Indian tribes and tax-exempt private membership clubs other than labor organizations are excluded from filing. (41 CFR 60)

Due by September 30
The EEO-1 final rule states that all covered employers must file the EEO-1 Survey by September 30, 2007. (Although, the final filing date falls on a Sunday this year, there is no grace period extending the filing deadline date to Monday, October 1st.) Notification letters to employers who previously filed were mailed beginning in July 2007.

Completed the report
The preferred method for completing the 2007 EEO-1 report is the web-based filing system. In fact, if you are filing for the first time you must first file using the web-based system, which will also establish a login number for your organization. In subsequent reporting years, an employer may request to submit a paper report, which must include the login number, via fax to (202) 663-7185. The EEOC will respond via mail with a paper form for submission.

Employers may not use figures from any pay period to file the EEO-1 report. Alternatively, employers must file figures from any one pay period between July and September of the survey year.

Changes to the EEO-1 report
The final revisions to the EEO-1 report were posted on January 27, 2006. For the first time since 1966, new revisions will be reported on by employers. The race and ethnicity definitions were revised from five to seven categories; one ethnic group and six racial groups. See Changes for the EEO-1, EG Newsletter, January 2006.

As a practical matter, employers should leave plenty of time to collect the data required for reporting. Although, employers may not have enough time this year, it is prudent that employers comply with resurveying the workforce for the 2008 EEO-1.

For more information regarding the EEO-1 report, including report changes and filing requirements, please visit the EEOC website at http://www.eeoc.gov/eeo1survey.

Vacation and Holiday Pay
During layoffs and shutdowns

By Sarah Rios,
Manager Unemployment Insurance Services

Both vacation and holiday pay may be considered wages for unemployment insurance (UI) purposes if there has not been a termination of employment. Where there may be confusion is when vacation pay is made as a result of a layoff. The Employment Development Department (EDD) must first determine if the employee is on an indefinite or definite layoff.

If, at the time of layoff, the employee is not given a definite date to return to work, it is considered to be an indefinite layoff resulting in a termination of employment. Any vacation or holiday paid in connection with an indefinite layoff is not considered wages for unemployment insurance purposes.

Vacation pay
On the other hand, if at the time of layoff, the employee is given a specific date on which to return to work, it is then considered to be definite lay off (temporary lay off). Any vacation or even holiday pay during the temporary lay off or shutdown would be considered to be wages for unemployment insurance purposes. EDD will allocate the vacation pay to the days requested during the shutdown. If an employee chooses not to request vacation pay, he/she would be paid UI benefits if otherwise eligible.

If the vacation pay is allocated to the week of the shutdown, but the employee does not have sufficient vacation pay to cover the entire period of the shutdown, the “excessive earnings” test would apply. Meaning whichever is greater, the first $25 or 25% of the weekly gross earnings would be subtracted from the weekly UI benefit amount collected. This is the same formula used when someone is partially unemployed and eligible for UI benefits.

Holiday pay
Generally, holiday pay is considered wages for UI purposes if the employee is on a definite layoff. The allocation of the holiday pay depends on when the holiday is paid relative to the date the employee is scheduled to return to work.

If the holiday pay is paid prior to returning to work, the holiday pay would be allocated to the week in which the holiday(s) falls using the “excessive earnings” test to determine the benefit amount for that particular week. If the holiday pay is paid after the employee returns to work, the holiday pay would be allocated to the week in which the employee returned to work.

Waiting period
The first week after a new claim is filed is considered a waiting period. Unemployment benefits are not paid during a waiting period. There is only a one week waiting period per claim. There would be no waiting period if a claim is reopened during the 12-month period following the opening of a new claim.

Responding to the claim
If the employer disputes the payment of UI benefits because of holiday or vacation pay during a definite layoff, the employer should respond to the notice of claim with the amount the employee was paid, whether it was vacation or holiday, when the wages were paid and the date the claimant returned to work or is scheduled to return to work.

Long Distance Leadership
Part 2 - Virtual Management

By Tanya Butler, M.S.,
Helpline Consultant

Technology has created new paradigms for leadership. Virtual Management is about managing people at a distance via technology.

Technology permeates every aspect of the workplace, from cell phones to videoconferencing, and new frontiers in e-learning. In spite of changing technology, the foundation of effective leadership can remain stable. As leaders, managers still need to build relationships, establish trust, and unify employees, as well as instill a vision or a clear idea of the mission so that employees can perform their jobs successfully in the absence of “in person” management. Managers can also build upon shared values to strengthen a long distance network and give people a sense of purpose in their work.

In the end, technology is a powerful tool to facilitate leadership, but it’s not a substitute for “live” leaders.

In the old economy, power and information were held securely, strategies were planned well in advance, and organizations moved steadily ahead. Today, power and information must be distributed, strategies must be designed on-the-fly, and decisions must be quick and approximate. The redistribution of power has redefined the role and tenure of leadership itself.

Impact of technology
Leadership can emerge from anywhere in the organization and power may shift according to the context. The impact of technology has caused traditional managers to rethink their roles. Hierarchies are giving way to multiple networks that share information freely. ‘Knowledge ecologies,’ or cross-functional teams, are replacing structured departments. Board rooms are moving to online virtual meeting rooms.

There is the critical need for good communication with geographically dispersed teams. Before launching a project:

• Identify how progress will be measured, what success will look like, and what roles each group member will play. Long distance collaboration requires leaders and group members to be clear about their purpose and expectations.
  
  
• Physical presence is important to motivate and reinforce company direction/goals. An email can mask employees’ true state-of-mind. Managers can not see tone in an email; can not hear frustration. It is important when an email is in question, to pick up the phone so the manager can get the full message – not just the words.
  
  
• Discuss symbols of reward and gratitude with teams before launching a project.
  
  
• When collaborating online, establish cues that indicate group members are listening, confused, or laughing.
  
  
• Track group communication. Create a synthesizer role to pull long distance conversations together for the team.
  
  
• Foster a virtual team atmosphere. Managers need to be purposeful about establishing a culture across distance to capture interpersonal connections that bind teams.
  
  
• Maintain a virtual persona. Remember that online personalities can be perceived as cooler, task-oriented, and more abrupt without the interpersonal cues that occur in live conversations.
  
  
• Good leaders enable people to do more than they thought they were capable of doing.

Communication is key
Take the time to clearly communicate with employees. If the mission is critical, the manager should deliver the message in person. Leaders of the digital age will not succeed if they extol the glories of technology while ignoring their greatest resource—their people.

Old management models are: “if in doubt, go travel to sort it out.” But this is highly inefficient in a rapidly growing global organization. Many corporations are at the limit of what they can manage without huge structural changes, unless they develop a different way of working altogether.

Teams that can bridge the distance gap will win a clear competitive advantage - traveling less but with greater impact during each visit, backed up with regular videoconferencing, shared space technologies, chat, e-mail, telephone conference calls and other digital tools. And forget old-style video-links in board rooms. Think wireless, everywhere, anytime, video links that can start as spontaneously as a telephone call.

The human factor
Often new technology applications fail to achieve what is promised because of very simple human factors. There are constant complaints of information overload and a real risk of serious error. Managers state that the majority of their written communications are electronic - a huge change in the last three years - and yet they also say their typing speeds are just as slow as they ever were, typically less than 25 words per minute.

What is the point of spending a fortune on new computer systems for people who cannot type? The single most important technology tool for increasing productivity may be a typing course, and managers whose typing speed grows in three weeks from 20 to 40 words per minute can literally double their output.

Another example of human techno-concern is videoconferencing. Managers and employees alike say it is no substitute for a personal meeting, that it feels impersonal and it is impossible to build trust without eye-to-eye contact. Relationship building is looking directly at the person you are talking to.

Pay attention to the basics and the fundamentals of human life when installing technology. Solutions must be practical, time-saving and fit into every-day life. Let employees make their own choices. For example, travel budgets should be combined with communication budgets. Fax, phone and other communication costs should compete with air fares, taxis, hotels and the rest.

Let managers decide whether they need videoconferencing equipment in their home rather than travel. When people can choose, they often invest in more technology to "get a life.” On the other hand, occasional travel for in-person meetings can be a boon to working relationships.

Human resources, information technology, corporate real estate - all these areas need to think together about how teams of tomorrow can operate in the most efficient and “human” way. Virtual Management is vital to corporate growth. Technology is a tool to communicate, not a substitute for leadership.

Insubordination
You know it when you see it!

By Mark Nelson, J.D.,
Helpline Consultant

Sitting on the Supreme Court of the United States, Justice Stewart wrote in an opinion published in 1964 that while he would not expound on when he understood pornography to cross the line into obscenity (and lose any protection as “free speech” under the First Amendment), he nonetheless indicated that “I know it when I see it.” Much like the difficulty defining obscenity, ask anyone in the HR community if they can recognize “insubordination” and they will most likely answer in the affirmative; ask them to define the term, and you will encounter a variety of answers.

Employees terminated for insubordination have committed what many employers consider to be a capital crime in the context of labor relations. Employees who will not follow reasonable rules, clearly articulated, are of little value to employers. Because those very same individuals may be compelled to disclose the reason for discharge to future employers – and be denied employment on that basis – it is critical that employers not use the term too loosely (i.e., the tort of self-compelled defamation is recognized in California courts).

Definition
In 1963 (a year before Justice Stewart’s famous quotation coincidentally), a California appellate court addressed the term insubordination in Coomes v. State Personnel Board. In the case, three psychiatric technicians were fired for using excessive force to subdue a patient who brandished a piece of furniture as a weapon. As state employees, they appealed their terminations to the California Personnel Board and later the trial court, both of which upheld the hospital’s decision to terminate on the grounds that the employees’ actions constituted insubordination and willful misconduct

On appeal from the trial court, the District Court of Appeals for the Third Circuit overruled, stating that insubordination “implies a general course of mutinous, disrespectful or contumacious conduct” that carries with it “volitional coloration which excludes the notion of accidental or even negligent conduct.” In plain terms, there was insufficient proof the employee acted with any deliberate intent to disregard the rule prohibiting excessive force. While the employees’ responses were admittedly extreme, so were the actions of the patient whom they subdued. Mr. Coomes was ordered to be reinstated.

As the above example illustrates, insubordination is reserved for only those situations where employees engage in willful disobedience of a reasonable rule or direct order. In situations where the employee can later argue they: (1) misunderstood a rule or order, (2) encountered difficulty executing it, or even (3) forgot to follow it, insubordination is overstating the employee’s infraction. In those cases, the employer should resort to lesser statements like “poor exercise of judgment” and downgrade their disciplinary response accordingly.

Application
Employers must be careful that all the elements are in place before classifying an employee’s actions as insubordinate. In cases where an employee has indicated their initial refusal to follow an order, bring in a witness and restate the directive. Ask the employee if they understand what they are being told to do, and then determine why the employee is refusing to do it. If the employee has objections on grounds the employee believes the directive is either an illegal one or a threat to health or safety (or even an unreasonable request), dispose of the employee’s concerns first. If the employee does not offer a justification why they are refusing the order, clearly articulate that the employer understands the employee to be insubordinate. If the employee still refuses the order, take whatever disciplinary action is appropriate. Especially in union environments, these steps will be familiar ones.

Of course, if an employee is refusing an order, they will not likely have the patience to endure a lengthy back-and-forth. At the very least, dispose of any objections based on concerns for health or safety or legality and make sure you reiterate that the company understands the employee’s refusal to constitute insubordination. And if at all possible have a witness present.

(Editor’s Note: If you have any additional questions on this topic, or wish to discuss specific situations, the Employers Group Helpline is available.)

By Matt Bartosiak,
Helpline Manager

One of the most sensitive issues to address in the workplace is odor. This problem can be unpleasant and awkward for all concerned- the offender, other employees and Human Resources. And it’s not a rare situation. Some HR managers have to deal with the matter once or twice a year in offices, as well as in manual labor settings.

Nevertheless, it’s a problem that has to be dealt with. Even if the person involved is not in contact with customers, potentially diminishing sales, leaving co-workers to tolerate the situation can tangibly affect productivity. The following are key steps and concerns in handling this touchy problem:

Avoid legal problems
Don’t ask about the cause of the body order nor offer a diagnosis of the cause. This could lead into an Americans with Disabilities Act of 1991 (ADA) related conversation where specials protections and reasonable accommodations are claimed if the employee brings up a medical condition, stop talking and listen carefully. Employers have the right to have a physicians’ confirmation that the claimed medical condition exists. Because of privacy rights, be careful in California not to request detailed diagnosis or prognosis. Once protection under the ADA is established, an analysis of reasonable accommodations is in order.

Again, if the employee volunteers that the body odor is caused by a medical condition, it is permissible to ask them for a letter from their doctor or some other documentation to prove the medical condition is causing the body odor. If this happens, and no hopeful remedy is being offered, consulting an employment attorney may then be in order. Depending on the particular situation, you may or may not have to endure the situation, but under no circumstances should the problem be tolerated if the employee is in contact with the public or with customers.

Another legal pitfall to avoid is mentioning cultural difference related to diet and suggesting dietary changes. Such statements could foster discrimination claims under both federal and state law.

Ensure against harassment
An important component in addressing this issue is to avoid any co-worker teasing. Watch for ill treatment that may lead to ostracizing the worker that has (or had) the problem.

I-9 and Immigration Reform
“No Match” letters

On August 10, 2007, the Department of Homeland Security (DHS) issued final rules relating to the unlawful hiring or continued employment of unauthorized aliens. The reform describes the legal obligations of employers when “no-match” letters are received from the Social Security Administration (SSA), or when employment verification letters are received from DHS. Included are step-by-step actions that would be perceived by the DHS as a reasonable response to no-match letters and provide a safe-harbor for employers.

Employers are instructed to review documents within 30 days of receipt of a “no-match” letter, and resolve the “no-match” with DHS and SSA within 90 days of receipt of this letter. Additionally, employers are encouraged to document and retain all communications and correspondence gathered throughout the review and resolution process.

You may visit www.ice.gov for safe harbor information or view text of the final rule at http://op.bna.com/dlrcases.nsf/r?Open=vros-75xrzu.

NOTE: A full article on this topic is scheduled for next month’s (October) issue of the EG newsletter.

Paul Palkovic, ARM, CPCU, a Vice President at Bolton & Company, has 25 years of experience in the insurance industry as an underwriter, a direct writing producer and broker. Supported by Bolton’s Risk Services Department, he specializes in controlling his client’s total cost of risk by taking a sophisticated service-driven approach to risk management and insurance placement.

Whether real or perceived, the health insurance industry is faced with a healthcare crisis in California and nationally. In the midst of all the angst and turmoil, patient advocacy groups, consumer groups, unions, business leaders, documentarians and the media have, in general, painted health insurers as “Public Enemy Number One,” the greedy profit driven villains at the very core of the problem.

In the war of words and in the court of public opinion, the health insurance industry is taking a public relations beating. So what, if anything, are the state’s health insurance carriers doing to address the “crisis” that so directly and profoundly impacts them?

The healthcare crisis is driven by the ongoing interrelationships between costs, quality of care and access to coverage. There are approximately six million uninsured Californians who find it nearly impossible to receive proper treatment for even the most basic aliments. The cost of treating uninsured individuals has caused trauma centers and emergency rooms to close and pushed the public health care system as it is currently configured to the brink of collapse.

The cost of insurance coverage for individuals and businesses continues to rise by double digit percentages each year, while the availability of coverage for individuals who have ongoing health issues, even minor ones, is extremely limited. At the same time, the cost for providers to deliver high quality health care continues to rise each year due to technological advances and improved pharmaceuticals.

The cost issue
The main driver of health care will always be cost: the cost to provide the high quality, cutting edge health care that our society has become accustomed to and the cost to pay for it. When premiums go up, it’s because the cost of providing care went up. And the increases in health costs have significantly outpaced inflation and the growth of employee earnings over the past decade, contributing in part to the current crisis.

As they have since the 1980s, the insurance industry continues to try to control and manage the cost of insurance coverage by limiting payments to providers through negotiated fees.

But the industry is also promoting cost control through the introduction of consumerism and individual wellness via the implementation of Consumer Directed Health Plans (CDHPs). The overall concept is that by causing individuals to become engaged in the administration of and payment for their initial medical care with personal funds, they will be more cost conscious and motivated to keep themselves healthy. Fewer visits to the doctor coupled with accruing value in an HSA or HRA account and decreased premiums, should go a long way towards keeping individual and family medical costs down.

Additionally, if the insured individual is healthier they will be less likely to use the coverage paid for by the insurance carrier for major illnesses in excess of the deductible. Lower utilization of coverage should theoretically allow the carrier to keep insurance rates down, which lowers the employer’s cost of providing coverage to his employees.

On the topic of accessibility, it’s interesting to note that in the midst of the current crisis roughly 94% of California’s citizens currently have, or have access to health insurance coverage. Nevertheless, the key issues for most insured individuals are the ever increasing cost of coverage and their uncertainty over whether they could access coverage on their own should they ever have to in the future.

Individual health insurance plans and the issues surrounding them are topics unto themselves. In addition to the cost of coverage, the biggest issue in this arena of the health care crisis is the accessibility of coverage for those with ongoing health issues (pre-existing conditions) and who do not have access to coverage through their employer or other entity.

The current legislative approach
Some state legislators are promoting the concept of requiring carriers to issue coverage to anyone who submits an application; even those with serious ongoing health conditions. This approach has been attempted in other states, with the results being significant increases in the cost of care and in the cost of coverage.

The underlying reason for these results is “adverse selection” a situation in which only those individuals who are at high risk for utilizing coverage buy it, while those at low risk opt not to buy coverage until they become sick or injured. Adverse selection undermines the basic concept of insurance and requires carriers to raise rates to make a profit.

California’s major insurance carriers are supportive of healthcare reforms that address the uninsured problem, particularly in the area of individual health insurance. They are currently lobbying for a compromise that would implement comprehensive reform mandating both a requirement for guaranteed issuance of coverage -- even for those individuals with ongoing health conditions – and the requirement that everyone who is not insured purchase coverage -- even healthy individuals who may not feel they need health insurance.

This is a concept most closely paralleled by mandatory auto insurance, which has met with mixed results. This approach would make coverage available to everyone, while at the same time limiting adverse selection; theoretically allowing carriers to keep rates down. This approach would also help to address the concerns of individuals who lose their employer provided coverage and those who are self-employed.

In the end, questions of how to provide high quality health care and who should pay for it, will be with us long into the future. And there is little doubt that the employer-based delivery system will be looked to more and more to provide coverage for a significant number or California’s citizens. The financing of America’s Health Care – all two trillion dollars of it – is an enormously complex undertaking. How to reform it so that every American has coverage without raising costs and limiting people’s access to actual high-quality health care will require everyone’s input, including the insurance industry’s.

Must Employers “Force Employees to Forego” Meal Periods to be Liable?

Richard J. Simmons, a partner at Sheppard, Mullin, Richter & Hampton LLP., represents employers in labor relations, state and federal wage and hour laws, wrongful discharge, affirmative action and related areas. He is a member of Employers Group Legal Committee, is a popular speaker and trainer at EG workshops and events and has published many manuals on employment law.

California's meal and rest period rules are the source of major concerns for employers in every line of business. As a result of the practical and legal issues regarding compliance with the law, the new California Labor Commissioner, Angela Bradstreet, has conducted forums in different cities to gain a better understanding of the issues. The magnitude of the problem increased on April 16th, when the California Supreme Court determined in Murphy v. Kenneth Cole Productions, 40 Cal. 4th 1094 (2007), that the sanctions for violations of the rules are "wages" rather than penalties.

As a result of this case, the sanctions must be treated as “wages” for all purposes and can be pursued for a period of three years under one theory and four years under another. However, the Supreme Court did not lay down definitive guidance about compliance standards or the circumstances under which the sanctions are owed.

Eicher claimed he was improperly classified as an exempt employee and sought missed overtime pay for hours worked while he was employed at ABI. Eicher lost his initial claim before a California Labor On July 2, 2007, a Federal District court in Northern California addressed several important wage-hour issues in White v. Starbucks, 2007 WL 1952975 (N.D. Cal. 2007), including the question of when a violation of the meal and rest period rules will be found. The court evaluated an employee’s claims that Starbucks violated his rights by failing to provide (1) pay for off-the-clock work, (2) rest periods, (3) meal periods, and (4) accurate wage statements. The court granted the employer’s motion for summary judgment on all four claims. Because the court had not certified a class action in the case, it was able to rule on the single employee's claims.

The meal and rest period claims
The court's discussion of the meal and rest period rules was particularly interesting. It examined California's statutory provisions, including the monetary sanctions in Labor Code Section 226.7 that apply where an employer violates the meal or rest period rules. It also reviewed the Supreme Court's April 16th decision in Murphy v. Kenneth Cole.

Based on this analysis, the court first determined that the employee could not pursue a rest period claim against the employer where he chose to forego rest breaks. It noted employers must simply “authorize and permit” employees to take rest periods, and need not compel them to do so.

The court also rejected the meal period standard advocated by the employee, who argued that employers “must affirmatively enforce the meal period requirements.” In essence, the employee advocated for a “strict liability” standard that would create liability for employers whenever a meal period was not taken, even if it resulted from the employee’s actions or improper refusal to take a mandatory meal period.

The court found the employee’s interpretation unsupportable and raised the bar that employees must hurdle to establish meal period violations. It stated, “In short, the employee must show that he was forced to forego his meal breaks as opposed to showing that he did not take them regardless of the reason.” It reached this conclusion based on similar language appearing in the Supreme Court's decision in Murphy v. Kenneth Cole. There was no evidence that Starbucks pressured store managers to work through breaks and no records showing that the employee had missed meal breaks.

The court resisted an interpretation of the law that would permit “employees to manipulate the process and manufacture claims by skipping breaks or taking breaks of fewer than 30 minutes, entitling them to compensation of one hour of pay for each violation.” The court reasoned that this “cannot have been the intent of the California legislature, and the court declines to find a rule that would create such perverse and incoherent incentives.”

Future cases may follow the court’s rationale
The Starbucks decision may assist employers in defending meal and rest period claims, whether brought as class actions or individual claims. The court concluded that an employee “must show that he was forced to forego his meal breaks” to prevail. It is not sufficient merely to show “that he did not take them regardless of the reason.” Future cases will eventually determine whether the principles in the Starbucks case will be followed or whether the case will be given limited deference by other courts.

(Editor’s Note: All of Richard Simmons’ employment law manuals – including his book California’s Meal and Rest Period Rules and the 12th Edition of his Wage & Hour Manual – are available from Employers Group at member discounted prices. Go to this link on our website to find a complete listing under his name: http://www.employersgroup.com/products/books/.)

Detecting the Ticking Time Bomb
and protecting workers from violence

Ron Williams is CEO of Talon Companies, a professional security and risk management firm, where he leads a team of highly trained and experienced agents and consultants to assist companies and corporations in mitigating and managing risks with a host of security services. Ron developed training programs using the methodology he learned as a United States Secret Service Agent – a background that includes 22 years protecting six U.S. Presidents and countless foreign Heads of State.

For most of us in the United States, church is a sanctuary for individuals and families to congregate and celebrate the sacred in peaceful serenity. But for the congregation of the Living Church of God in suburban Milwaukee, the serenity of those attending church on August 11, 2007 exploded into a frenzy of destruction and annihilation. Forty-four year old, Terry Ratzman, described as a buttoned-down church member, walked in and opened fire at the Sheraton Hotel where parishioners held church, transforming the service into a shooting rampage that left the pastor, the pastor’s son, and five other members dead, before turning the gun on himself.

Most who knew Ratzman said his violent behavior was completely unexpected, but neighbors indicated he suffered from depression and would isolate himself from others and drink. Police say he had no criminal record and no history of making threats against anyone. Just two weeks before the shooting, congregants who survived the blood bath saw Ratzman stomp out of a church meeting upset about a sermon emphasizing the idea that peoples’ problems were of their own making. It was surmised that this topic escalated his own feelings of facing an upcoming job loss.

Did this incident set off the ticking time bomb inside Ratzmann? Were there indicators he was about to unleash his wrath on the congregation? In the Virginia Tech massacre, there were signs that the shooter, Cho Seung-Hui, was a ticking time bomb, yet there was nothing done to prevent him from exploding on campus. Killing 33 people, along with himself, this incident is considered the deadliest shooting rampage in U.S. history.

As a former Secret Service Agent, I investigated numerous threats against U.S. Presidents and interviewed the culprits involved to decipher whether or not they were dangerous. As you can imagine, many of these individuals lived on the fringes of society and were disturbed in one way or another. But the question is, how did I detect whether someone posed a significant threat to the most powerful person in the world?

What to look for
One common denominator and key indicator in the hundreds of cases I covered is anger. Almost without question, every person I’ve addressed, profiled or interviewed in these cases has been significantly angry over a period of time. Anger manifests itself in many ways. Some of the obvious ways are objectifying and dehumanizing others, challenging authority and regularly becoming argumentative. Some may internalize their anger but will not be able to contain it all the time and will unexpectedly respond in rage when set off.

Those who threatened the President of the United States are no different from employees who threaten others in the workplace. For the past 13 years, I’ve responded to, intervened and interviewed ticking time bombs in corporate America and have come to the conclusion that violence in the workplace is a process, not an event.

Unchecked, aberrant dysfunctional behavior leads to an escalation of aberrant dysfunctional behavior and eventually violence. A person who does not care about him or herself or the consequences of his/her actions is potentially dangerous to others. A person who has lost all hope is a time bomb ready to detonate.

Protecting the workplace
Though certainly not as significant as the loss of life, companies face financial loss even if the threat of violence is only a perceived one. Everyone in the workplace is responsible for a safe work environment and required to report warning signs, threats, and acts of violence. If there are no policies and procedures in place to report dysfunctional behavior and protect employees in their work environment, the employer can face significant consequences, both financial and emotional if violence erupts.

Employer responsibility
In a recent case, Franklin v. The Monadnock Company, the plaintiff sued for wrongful termination in violation of public policy. This lawsuit was based on numerous complaints made to the company’s HR department saying a fellow co-worker was threatening to have him and three other colleagues killed. The company failed to take action and a week later, the co-worker in question attempted to stab the plaintiff with a metal screw driver along with another unidentified weapon. This employee continued to make complaints to the company and even to the local police.

Instead of taking action against the alleged aggressor, who was accused of making threats and actual attempts on his life, the company terminated the plaintiff’s employment. The court sided with this employee stating, “It’s an employer’s legal responsibility to provide a safe place of employment and requires them to address credible threats of violence in the workplace.”

The court ruled that the perception of the employee who felt threatened mattered, rather than the opinion of the company’s supervisors, human resources department and management. This case is a reminder of employer responsibility to address allegations of potential violence and their mandate to maintain a safe and crime-free workplace.

(Editor’s Note: For information about Talon Companies’ professional security and risk management services, contact Katherin Scott at Employers Group, kscott@employersgroup.com, 213.765.3949.)

Build Rapport, Gain Influence

By Susan Peahl,
Staff Training Specialist

Human Resources professionals often serve as mediators in conflicts and misunderstandings between co-workers, between supervisors and subordinates and even between executives. Building rapport between the conflicting parties can turn irrational statements into rational discussions, turn conflict into collaboration, and influence even the staunchest opponents.

Creating a harmonious relationship with another can be a fairly easy two-step process. Although the following process takes thought, tact and time to practice, it will prove effective in almost any situation.

Pacing and cross-matching
The first step in building rapport is called pacing, which involves taking on the other individual’s external behaviors as much as possible without being noticeable. If there are physical postures, gestures, breathing, facial expressions, tone of voice or emotional states that are quite noticeable, these can be taken on subtly.

As an example, an employee has an argument with another employee and comes to you very upset, breathing heavy, speaking loudly and speaking fast. To pace that individual you may find a level slightly under theirs and also speak a little loudly and somewhat fast. Don’t try to exactly match their level and tone, as this will only exacerbate the situation. In seeking to subtly parallel their external behaviors, the individual subconsciously feels that you understand their plight. Empathy leads to trust; trust leads to rapport.

While pacing, cross-matching will help you pace more subtly, which involves taking on a part of their expression. If the individual from the example above is waving their arms about, you may occasionally move an arm or hand when you speak. If they have their arms crossed defiantly, you may gradually intertwine yours, or your legs or ankles. If they are tapping their foot, you may move your foot more, or tap a finger inconspicuously. Tapping a finger is also a great way to pace their breathing rate.

It is, however, important to note that this is not a mirroring game. Your movements should not be an exact replica of theirs. The objective here is to subtly and inconspicuously let them know that you are with them in their predicament and that you want to help.

Leading
Leading is the second step in building rapport. This can be done gradually, only after pacing has an effect on the other individual and he or she is beginning to trust you. In leading, you begin to control of the situation by having the other person begin to unconsciously pace or mirror your behavior. From the example, you are leading when you uncross your arms and if they follow and uncross theirs. They are now pacing you, and you are in full rapport.

Other examples of leading include: (1) when you begin speaking softly, breathing more calmly, the individual likely will, in turn, speak softly and slow down their breathing or emotional state; or (2) you lean back in your chair and they sit back as well. At this point, you have led them to a more resourceful state, where they will be more receptive to your ideas and suggestions.

While this may sound overly simplistic, these small actions can disarm most. In addition, creating rapport in this way can be done in just about any business situation, such as job interviews, performance evaluations, sales calls or networking functions, even on the phone (pace vocal tone/breathing/emotional state).

Tips to keep in mind
There are some important things to remember when using this method of building rapport:

• Don’t be too literal in mirroring someone else’s behavior. This can be taken as mocking another, which can make a situation worse.
  
  
• Don’t take on negativity. Initially allow the other person to be negative until you are able to disarm the negative emotions, creating understanding and rapport.
  
  
• Don’t ask them “why” they feel the way they do. Instead ask “what exactly makes it hard to do your work, how exactly, when, who exactly?” “Why” tends to throw an individual back into rationalizing their feelings and continuing the negativity. You want them to move toward solutions and solving the problem with your support.

NLP works in many situations
These tips are Neuro-linguistic Programming (NLP) techniques. NLP is a science in the Cognitive Behavioral field of Psychology, a field that studies how people individually take in, store, encode, process and recall information, events and feelings. In a business setting, NLP techniques can be used not only to gain rapport and diffuse conflict, but also to influence people, enhance communication skills and provide better customer service.

(Editor’s Note: Susan Peahl, one of EG’s Training Specialists, is a licensed Master Practitioner of NLP, and is happy to answer any of your questions regarding NLP or your training needs. For more information, email training@employersgroup.com.)

Maybe Money can’t Buy Happiness
But, it can be a great work incentive!

By Jennifer Shin,
Research Marketing and
Communication Coordinator

Stagnant 2007 projected salary increases had many employers scratching their heads. With low unemployment rates and a booming job market, many HR professionals found themselves scrambling for ways to retain and recruit star employees. According to Employers Group’s 2007 Management and Non-exempt Compensation Survey, employers have found a new way to draw out high performance levels in today’s competitive market: bonuses.

Bonuses steadily increase
Ten years ago, the number of Fortune 1000 companies offering performance bonuses to middle managers and professional employees rose from 56 percent to 64 percent in 1992 to 1996, while at the same time, the percentage of firms offering bonuses to clerical and support employees grew from 26 percent to 35 percent.

According to the 335 California employers who participated in Employers Group’s 2007 Management and Nonexempt Survey, these figures have remained steady. Up to 64.36 percent of California managers in the engineering and technical field receive bonuses that are, on average, 14.46 percent of their pay (an estimated annual $15,987).

While the bonus figures for management have remained steady from 10 years ago, the numbers for hourly employees have made a dramatic jump. Computer operations employees see the highest increases for 2007, while 44.27 percent of employees are paid annual bonuses; they also receive the highest paid bonuses in California, at a rate of 6.09% base (an estimated $2,712).

Quality and performance count
While retention and recruitment are still a priority, so are quality and performance. Performance bonuses, once offered solely to top level executives, are obviously no longer so exclusive. Increasingly, companies are giving performance bonuses to junior workers. An explanation as to why performance bonuses are on the rise may be simply due to today’s competitive job market and economic boom. Salary increases are a major tool to employers in retaining quality employees. On the other hand, salary increases for 2007 have reached a plateau in what seems to be a very tight labor market.

Relationship between productivity and pay
So why are firms not working harder to keep employees? One key answer may be found in the growing concern among employers regarding the discrepancy between worker productivity and salary pay.

According to a report by the Economic Policy Institute, the number of jobs has increased, but factors such as global trade, immigration, layoffs and technology have depleted the worker’s pay. On top of all this, health care is more expensive than it was a decade ago; causing companies to spend more on benefits at the expense of wages, adding that these forces have caused a growing share of the economy to go to companies instead of workers’ paychecks.

Bonus and incentive plans
With all the high costs of trying to keep employees, it would make sense for employers to find alternative forms of pay from salary increases to ensure that companies are getting the bang for their buck. Bonus and incentive compensation plans follow a formalized program based on predetermined goals or achievements. The purpose of bonus and incentive plans is to encourage employees to exceed normal job expectations in support of departmental and institutional goals.

More and more employers are hopping on the bonus trend, because (1) bonuses allow organizations to link employee compensation to performance (employers can expect gains in productivity) and (2) performance bonuses can help reduce or eliminate annual salary budget increases.

HR professionals face tough retention and recruitment challenges in today’s competitive job market, but many have realized that salary increases are no longer the sole incentive in retaining quality employees. Creating a motivating yet reasonable compensation package is crucial in drawing the best employees. A strong and comprehensive bonus plan may be just the solution in building such an environment.

About Employers Group surveys
This year’s Special Edition: the 2007 Management and Nonexempt Compensation Survey, includes over 150 Supervisory and Non-Executive Management jobs, plus more than 200 hourly production and nonexempt office jobs in the following categories: Marketing, Human Resources, Customer Service, Call Centers, Engineering, Manufacturing, Administrative, Computer Operations, Maintenance, Shipping, and Production. Participating member companies will receive a complimentary copy; others may purchase the full report.

To order, or for more information on all salary and budgets, such as retention, recruitment, referral programs and bonus programs, call our Research Services at (800) 748-8484 (option 4) or write to surveys@employersgroup.com.