Red Carpet Recognition
Who’s Job is It?

By Donna Cutting

The Anytown USA Finance Company was having problems. Employee retention was at an all-time low, and morale within the company was sinking. The productivity of the few remaining long-term employees was dropping and to make matters worse, recent customer service scores were less than stellar.

Leaders in the organization were stymied. “We’ve done everything right! Why isn’t it working? We’ve got a fabulous recognition system, plus fantastic benefits!”

And they did. They had a state-of-the-art gymnasium employees could use free of charge. Tickets for major sporting events and theatrical presentations were available to everyone – the best seats in the house! They gave out pins on someone’s employment anniversary; they gave out plaques at the end of every year, and they named an employee of the month at every branch (that person even got a primo parking space). And they partied! Lavish events with themes and funny hats and everything. What could possibly be the problem?

“Quick,” the leaders thought, “let’s put HR on the case and get this problem solved”!

Good solution, right? Wrong!

Contrary to popular belief, employee retention and engagement is NOT a function of the HR Department.

A Gallup Study of 12 million people in 7,000 companies found that an employee’s relationship with his or her direct supervisor largely determines the length of their stay within the organization.

The organizational leaders (including the HR managers) in the true example above threw big bucks at recognition systems, employee benefits, and technologically advanced communication systems – and still the turnover continued. Employee satisfaction scores were lower than ever and the bottom line was taking a major hit.

The problem that wasn’t being addressed? The interpersonal relationship between managers and their direct reports. Surveys and one-on-one conversations revealed that many employees felt belittled, disrespected, and undervalued by their direct supervisors.

A problem no pin, plaque, or party was going to fix. Certainly not something the HR Department could wave a magic wand over and make go away.

Retention depends on your supervisors
People don’t leave companies. They leave bosses. They also stay for bosses. The question is does your organization have the kind of bosses that people want to stay for?

While the pins, the parties, and the plaques certainly can be effective tools in the employee engagement process, they mean nothing if people don’t feel valued, respected, and appreciated on a day-to-day basis. The first place to put your energy is in making sure you are hiring managers who have the ability to inspire others. The first place to put your money is into training those managers to show effectively how much they are treasured.

Gene Perret, a comedy writer and author who wrote for Bob Hope among other comedians, often says that Bob Hope was the “best boss he ever had.” The four reasons he gives sum up the crux of my message.

1. He was understanding;
   
2. He was appreciative;
   
3. He knew his business, and
   
4. “When I was in his presence, he – the celebrity – made me – the worker – feel important.”

If every manager in your workplace kept Gene’s fourth reason in mind, you would cut your employee turnover and disengagement down significantly.

To that point, Gene tells a story of Bob keeping the Secretary of State on hold so he could finish his conversation with Gene. What a message of respect he sent to his worker!

On the other hand, one employee of a health care company had scheduled an important phone conference with her boss, weeks in advance, to discuss her future with the organization. Her boss took the call while going through a fast food drive-through and munching on a hamburger. What kind of message do you think that sent?

Oh, and by the way, that employee has moved on to another company where she feels more valued by her direct supervisor.

“When I was in his presence, he made me feel important.”
Who are the managers within your organization whose employees would say the same thing about them? I’ll bet you’ll find that those are the same managers who have the lowest turnover and the highest productivity.

How do you reach the others? By putting your money where your mouth is. Those managers who don’t “get it” will only begin to “get it” when you demonstrate how critical it is to their success in the company.

In the example of Anytown Finance Company above, managers were rewarded handsomely for their contributions to the bottom line of the company. If they made or saved the company money, they got rewarded. However, if they were losing their employees, nothing happened. Maybe they had a meeting with a superior to “address” the problem, but nothing significant happened. So why would they change their methods? They were working. Perhaps they weren’t great with employees, but they made the company money and were rewarded.

The problem with this kind of thinking is that it doesn’t last. Continue to disrespect employees and it will eventually, if not sooner, negatively affect your bottom line. Your customer service is only as good as your most disengaged employee. The Anytown Finance Company found this out when their profits started plummeting.

It’s got to start at the top. The executive team must demonstrate respect and appreciation of all employees, and send a message to each manager that it’s expected that they do the same. If you want your managers to better respect and engage their direct reports then you’ve got to hire people with that in mind, evaluate them on how well they do so, and reward – or not – accordingly.

Then provide them with training and tools to roll the red carpet out, keep it out, and lead a team enthusiastically committed to carrying out the mission and vision of your company. Here are a few easy tips that some CEO’s, HR Directors, and managers have used effectively to let their team members know just how much they are valued.

Roll out the Red Carpet
Remember your first few days at your present job? Were you excited? Nervous? Did you worry about your ability to accomplish the tasks given to you or the impression you would make on your new co-workers? Perhaps you were concerned about the impression your new co-workers would make on you.

HR professionals and other managers in the company can set the stage for how employees can expect to be treated by rolling out the red carpet during the “welcome aboard” process. In theory, this is the perfect time to demonstrate to new talent exactly how you expect your customers to be treated – by treating them the same way.

Effective on-boarding starts before the employee’s first day on the job. If you’re Jobing.com, a company that connects employers with job seekers in their local market through the Internet, it starts at the interview. “It isn’t unusual,” says the Vice President of Talent Development Nicole Spracale, “to have a candidate come into the interview room exclaiming that ‘at least 70 people welcomed me in the lobby!’” A slight exaggeration, but the team at Jobing.com make it a point to kill their candidates with kindness. Candidates who are a good fit leave exclaiming, “This is it! I know Jobing.com is the place for me.”

Once a position is offered, the HR team immediately sends a welcome letter, but the welcome does not stop there. General Managers will call with their personal welcome to let the newcomer know what to expect, answer any questions, and provide them with contact numbers they may need. The team members of the recruit also send welcoming e-mails, which helps their new co-worker feel connected prior to their first day at work.

After a two-week orientation at the home office, new recruits are treated to a special lunch, hosted by their co-workers, to welcome them to the team. Once an employee starts, their general manager receives a list of their favorites: their favorite restaurant, favorite store, and so on. This enables managers to get to know their new team members as human beings and personalize future recognition efforts.

When the new recruit has their first success, co-workers and managers will send cards and celebratory emails. Life at Jobing.com has begun.

Does their red carpet treatment work?
You bet! Jobing.com’s employee satisfaction scores have ranged from 4.5 to 4.8 or 4.9 out of a possible score of 5.0. They get better every year.

At the very least, be sure that HR professionals, managers, and even co-workers schedule time with new recruits on days they are available to spend time with them. One HR Director scheduled new employees to come in at the same time as current team members. On their first day, the newcomers arrived 15 minutes early and sat in the lobby, while their new co-workers ran in several minutes late chatting, rushing, grabbing coffee and ignoring them. To solve this problem, she now has new recruits come in a half an hour after everyone else, and ensures that plenty of people are available to provide a good welcome.

Show how much you appreciate the new people
If you really want to know how to best welcome your new employees, ASK your current team members this question: “On a scale of one-to-five how welcome did you feel when you first started your job here.” If their answer is anything less than a five (being the best) then ask, “What could we have done to have made it a five?” Then make changes accordingly.

Keep the Red Carpet out
Just as important, once recruitment is completed, continue to keep the red carpet out.
Not doing so is a sure-fire way to lose the good employees you worked so hard to hire. If employees are promised a “great place to work,” the last thing you want is for them to feel undervalued and disrespected once they settle in.

Once you roll out that red carpet, everyone on the leadership team has a part in keeping it out. You can show your employees how much you respect them by asking for, and learning from, their input.

For instance, Arthur Keith, General Manager of the Gaylord Opryland Resort and Convention Center, holds town hall meetings with each department in his hotel. He asks his employees: “What do we stop? What do we start? What do we continue”? Employees write their answers on note cards, and Keith goes through every one and starts the conversations.

Managers and direct supervisors can improve their employee recognition habits by keeping the following phrase in mind: When you see it, say it! Get in the habit of verbalizing specific praise whenever you see something you like or you think something great about an employee. Don’t let the thought stay in your mind. Say it out loud. This doesn’t take a lot of time, or even cost a cent, but it has a huge impact.

Once every leader in the company clearly understands how important it is to show respect and appreciation for each employee, you will see changes in employee retention, engagement and your bottom line. As Arthur Keith said, “Once we put our STARS (Gaylord employees) first, our customer service scores began to rise, and our profit goals have gone from $50 million to $100 million, because we are now positioned to the point where we are confident we can accomplish it.”

A pin, a plaque, or even a stellar HR Department can’t achieve that kind of employee engagement. It takes commitment on the part of every single leader in your organization to make those around them feel important. © Donna Cutting, 2008.

Festivus for the Rest of Us

In this “Seinfeld” episode, George Costanza (Jason Alexander, who always loses the wrestling match to his father) tries to get off from work for Festivus on December 23rd. He is quickly denied to take off this family holiday that is traditional to his family. George puts up an attitude with his company because he was denied his right to practice his own belief. In fact, George becomes so passionate about not being able to celebrate this holiday (although in reality he hates it) that his supervisor decides to call his bluff. His supervisor comes home with George to see the holiday celebrated. In the end, George is again beaten resoundingly by his father.

Chances are your holiday traditions have nothing to do with gathering around a pole and telling your family and friends what you least like about them and then wrestling them to the floor. But I was amazed during my research for this article how many websites are dedicated to “Festivus for the Rest of Us” idea.

How HR deals with less “traditional” holidays
Now that you have removed the last hanging ornament, you’ve realized the holidays are over. Some of us are thrilled and some of us are saddened. Some of you may have taken time off and are refreshed to start the New Year. Others of us feel we need to take an additional vacation to recoup from the one we just had. We have also put our lists of New Year’s resolutions together.

During the holiday season, Human Resources and Senior Management have been working on various incentives for the company, including the list of holidays the company will observe. Chances are you have probably already received the list by now, but a “Festivus Holiday” is not on there. Where is that holiday everyone can celebrate and feel included?

Like many of us who come from different traditions and cultures, the holiday we may be so proud of, just like George Costanza, is not celebrated. Sometimes we need to observe holidays that we don’t traditionally practice.

Diverse workforces call for consideration
Most companies observe the basic holidays, those that are celebrated by the majority of us. But, in our ever-growing diverse work force, companies may need to start thinking outside of the box of how they can make people feel welcomed and included. They need to start looking at their workforce a little closer and observe which holidays are important to their employees.

If a large number of employees are putting in for a certain vacation day because this is the only way they can observe their special holiday, the company may want to consider designating it as a company holiday. The number of holidays, and which holidays are observed by a company, helps in recruiting and retaining talented employees. If you as a company want to stand out from the rest, this may be an area you can look into.

Floating holidays could be an answer
There are quite a number of companies that have recognized that observing the non-traditional holidays are just as important as the traditional ones.

One way companies are letting employees enjoy these non-traditional holidays is by implementing floating holidays. These holidays can be taken to celebrate anything an employee chooses. The employee is not penalized to take a vacation or an unpaid day.

This kind of flexibility builds employee morale and motivation. One day, we may see companies actually implementing a Festivus holiday.

Conducting Workplace Investigations
What NOT to do!

Conducting workplace investigations is not rocket science, but there are a few clear pitfalls you will want to avoid:

Don’t delay getting started
The more you delay the process of interviewing parties involved in the investigation, the more remote – and inaccurate – their memories of the events become. In addition, you may inadvertently be sending a message to the complainant (and his/her attorney) that you don’t take their complaint all that seriously and perhaps they should avail themselves to the Department of Fair Employment Housing or Equal Employment Opportunity Commission.

Don’t let time lapse between interviews
The more time you let lapse between interviews, the more opportunities people have to compare notes about the questions you’re asking and how best to respond. People are naturally curious with this process, and even those who do not intend to fabricate their story will listen to how others responded and may unintentionally re-imagine the events in line with what they heard someone else say.

Don’t conduct interviews alone
Whenever possible, have a witness in the room with you. If there’s a dispute about what transpired in the room and it boils down to your word against theirs, your odds are better if you and the witness can testify to the same story – in opposition to what the interviewee is trying to claim. Always have one more person on your side sitting across the table from you.

Don’t conduct interviews if a potential conflict of interest exists
Know when to recuse yourself from conducting the investigation altogether. If your boss is the individual accused of wrongful conduct, it is very easy for plaintiff’s counsel to argue that your conclusions were necessarily skewed because your job hinged on your findings. In such circumstances, farm out the investigation or have the top brass conduct it to assure against any perception of bias.

Don’t interview the accused until you’re ready
You never want to speak to the individual accused of the offending behavior until after you’ve determined whether the complainant’s version of events could be corroborated. If credible witnesses relay a story similar to the complainant’s, but the accused flat out denies that anything happened, you either have a credibility problem with the accused or will want to focus your questions on how the accused could perceive the events so differently. Either way, you’ve accomplished much more in your interview of the accused than if you were to speak to the accused earlier in the process.

Don’t ask leading questions
Start your line of questioning with “what did you see,” not “did you see….” When you ask whether or not a witness agrees with a version of events that others have conveyed, even if the witness is earnestly trying to recollect the events, the witness’s brain is already competing with the mental image you’ve just put in his/her head. You can guide them with dates and times, but don’t ask pointed questions that can be answered with a “yes” or “no” until you are near the end of your line of questioning.

Don’t stray from the issue being investigated
With the exception of the complainant (for whom you want to know each and every incident that supports their allegation of inappropriate conduct) don’t allow witnesses to use the experience to air all their grievances. You should insure employees know that HR is there for them, but right now, we’re investigating other matters. Occasionally, a witness will key you into another unrelated, but equally troubling, matter. Make a note to speak with them later; you’re now on notice of that alleged wrongful behavior as well.

Don’t accuse anyone or imply that you know what happened in the interview
If you approach an interview accusing someone of wrongful behavior, you’ve just handed the accused an argument that you already made up your mind before allowing the accused to tell their side of the story. You may have also handed the employee a defamation claim. Keep your suspicions to yourself about what likely happened.

Don’t let the employee return later to edit their original statement
Typically, the interviewee will respond to questions as you type their statement – or they’ll type it themselves. When you finish, you let them review the statement for accuracy and make any changes. You then print out a copy of the statement for them to sign. Don’t let them leave the room with the statement to edit and return to you or, inevitably, the story will change. If they start to question their original recollection of events, let them file a second statement, but don’t trash the first. It still has relevance, however limited.

Don’t delay rendering a decision
Issue your decision as soon as possible. Don’t let the decision-makers sit on it. You have a complainant that needs to know the matter has been resolved expediently so they aren’t enticed to seek resolution through the DFEH or EEOC. And you have the accused who is sweating bullets, fearful that they are about to lose their job. A delay of anything more than a few days is unacceptable, except under unusual circumstances.

Recognizing a “Real” Emergency!

Wildfires, hurricanes, tsunamis, explosions or violence that occur at work clearly place us in emergency mode as employers. But what really constitutes an emergency - one that demands your immediate response?

A workplace emergency is an unforeseen situation that threatens employees or the public; disrupts or shuts down operations; or causes physical, mental or environmental damage. Emergencies may be natural or manmade.

Here are some scenarios that constitute an emergency.

An employee was sent home after divulging an urge to commit suicide to their manager. The manager insisted that the employee not return to work without a doctor’s note. What should I do?

Quite often a supervisor’s knee-jerk reaction is to send the employee away from the workplace, incorrectly requesting a “fitness for duty” to return to work, incorrectly rationalizing that this reaction will absolve the employer of responsibility.

The employer should immediately contact emergency officials (police, 911, etc.) and identify the employee as a threat to themselves. Locate the employee’s “emergency contact” or representative for further help to ensure that the employee is safe. Never allow an employee who indicates that they may harm themselves, or some else, be sent home without first ensuring that appropriate care from a health care provider is received.

My employee mentioned to a coworker that their doctor said that they have hepatitis and should not be at work. Since the employee did not tell their supervisor, doesn’t this mean that we do not have to respond?

No. Regardless of the type of infection — hepatitis A, MRSA “Superbug”, TB, etc., an urgent response is warranted. More than 8,000 employees contract hepatitis in the workplace each year. Instantaneous response is essential.

Immediately interview the employee. If the employee discloses that this rumor is true, request that the employee not return to work without a “fitness for duty” from their health care provider. Additionally, inquire if their condition is contagious and/or if co-workers must be informed of possible exposure. You may also offer to send the employee to your industrial client care provider for evaluation. Employers may not require the employee to submit to a physical, unless it is a work-related injury.

Indicate that limited or full disclosure of the infection may be necessary and only on a need to know basis. Additionally, request consent to disclose this information from the employee. If the employee is uncooperative, you should seek immediate advice from your attorney.

Parenthetically, employers may be required to test the entire workforce, and provide notification to government health officials and health care providers. If treatment is required of your employees, it must be provided at no cost to them.

Furthermore, train your employees and supervisors to adhere to good hygiene and sanitation practices (frequently wash hands with soap, don’t share drinks, wear protective clothing, don’t bite nails, etc.). California Occupational Safety and Health Administration’s (Cal/OSHA) Bloodborne Pathogens standards (California Code of Regulations, Title 8, Section 5193) may apply as well, as additional preventative procedures.

Two employees strongly disagree about who should be the next U.S. President. It has escalated from shoulder bumps while passing each other in the hallways to one of the two employees indicating that they are going to burn Candidate posters in front of the opposing employee’s home. I just found out, what should I do?

Although on the surface this may not appear to be life threatening, immediate action and investigation is still prudent to discern the severity and specifics of the situation. Workplace violence, even when it takes place outside the workplace, is a serious safety and health issue. According to the Occupational Safety and Health Administration (OSHA), homicide is the fourth-leading cause of fatal occupational injury.

When employees physically assert themselves you must first ensure the safety of all employees. This may include contacting local law enforcement, suspending the aggressor while you investigate the claim, and dispense discipline, such as termination.

“I am outside our building, calling you because employees are getting ill from fumes emanating from our warehouse. What is my obligation”?

This is noticeably an emergency where the fire department and/or emergency response officers and teams should be contacted immediately. Simultaneously, seek immediate medical attention for those individuals who are ill or may become ill due to the fumes. Further caution may be essential by evacuating all employees from the facility. Remember, employers may be required to record the injuries or illnesses in the OSHA 300 Logs, as well as administer workers’ compensation claims.

If more than one emergency arises, seek legal counsel and/or guidance from a professional consultant. Steer the emergency investigation and training with anti-discriminatory procedures and habits.

Your organization may be required, for example, to disclose to a few workers that an employee has hepatitis A as a means to protect their health. Refrain from identifying the name and identity of the infected person. If the identity must be disclosed, instruct and train supervisors and co-workers on confidentiality obligations and anti-harassment requirements. Additionally, ensure that your policies and procedures support non-discriminatory, retaliatory and harassment practices.

Employers are often inundated with unforeseen situations that threaten their employees. Employers are obligated to ensure that they maintain a safe and healthful work environment, as set forth in the California Labor Code Section 2400.

It is practical and necessary to equip your organization with an emergency preparation plan. Reacting immediately and appropriately to similar situations is responsible and simply the right thing to do to. There are no one-size-fits-all answers to these types of scenarios therefore, for further advice or information consult with your attorney, or call our Helpline consultants for questions about specific situations. Remember, lack of preparation does not constitute an emergency, but it may lead to one.

Do you Really Need a UI Service Provider?

Many employers think they do not need an Unemployment Insurance service provider. The reasons are as varied as the number and type of employers. Some think they are too small, they do not have many employees, or they do not have much employee turnover. Others think they are too large and the existing Human Resources Department can handle all the claims, hearings and record auditing. Problems arise from both of these mindsets.

Small employers
Small employers often operate on smaller margins of profit and need to keep as much money as possible within the business for expenses and expansion. In fact, one dollar paid in benefits to an ex-employee can increase the contribution tax rate for the next year. Clearly, that results in less money to the company’s bottom line.

Large employers
Large employers often do have HR professionals to handle the many requirements associated with state and federal programs. They are, however, usually generalists with only basic knowledge of the unemployment field. To complete the entire claims process, prepare for hearings, write appeals briefs, audit benefit charge statements and tax rate notices, protest erroneous benefit charges, and follow up with the state to receive refunds uncovered in those audits is an extremely time consuming process.

It is certainly wiser to outsource claims management to a company that is devoted entirely to unemployment insurance matters than to submit your overloaded HR department to even more responsibilities.

How UI taxes work
Each .1% increase in the tax rate amounts to a $7.00 increase in taxes paid into the company’s reserve account for each employee on the payroll. Based on the current Tax Rate Schedule, an employer’s tax can range from 1.5% to 6.2%. That tax is paid on the first $7,000.00 of each employee’s earnings in the year.

This tax is not paid on the position but on the number of people who hold the position. If one person holds a position for the entire year, the cost to the employer is the tax rate for $7,000.00 of wages. If three people hold the position, the cost is the tax rate for up to $21,000.00 of earnings.

California uses an average, based on the prior three years of taxable wages, to determine the tax rate for the coming year. How cases were handled in the past can, truly, affect your company’s present and future economic condition. There is a real need to either hire smart or terminate wisely. In such cases, what you do not know can be extremely expensive.

Timely response and missed deadlines
When a Notice of Claim Filed is received, showing you as the last employer, it must be protested within ten (10) days of the mailing date shown on the document. The state does not care when you might have received it. If the claim notice is received the day of the deadline and the person who usually protests claims for the company is out that day, or otherwise unavailable, what happens to that claim? Does anyone else in the office even know what an unemployment claim looks like, let alone knows it must be responded to that day? Is there a designated backup person to handle claims? Will he/she remember to look for claims if this is a secondary assignment and they are dealing with their own duties and responsibilities?

Once the deadline is missed, except in extenuating circumstance, the right to protest that claim is lost forever. It might have been a very winnable case, but now your company may have to pay unemployment benefits to someone who does not deserve them. The paid benefits are definitely going to be charged against your reserve account. Remember, just one dollar paid on that claim may be enough to push the company into a higher tax rate. It may not seem fair, but it is the law.

Smart UI management
Considering the immediate future appears to be headed toward economic uncertainty, as an employer, you have more to worry about than ex-employees filing for unemployment insurance; yet, it is the one tax over which you have some control. You might want to investigate an outside UI resource to achieve better results, such as more favorable decisions on protested claims at the initial and hearing levels, which, in turn, result in fewer benefits paid to those who are not entitled to receive benefits. The assigned unemployment insurance tax rate can have a profound impact on the fiscal health of your company.

HR Tips of the Month
California’s Garnishment Law

Periodically we ask members of our Helpline for tips in dealing with common issues HR managers face. This month, Senior HR Consultant, Matt Bartosiak, lists what you need to know about California’s garnishment laws. The following covers garnishment protocol for employers.

Withholding starts
Employers must start to withhold on the 10th day after the garnishment order is received and must pay the withheld amount no later than the 15th of each month.

Amounts subject to withholding
Except for child or spousal support, or a tax levy, the maximum amount that must be withheld is the lesser of 25% of disposable earnings or the amount by which weekly disposable earnings exceeds 30 times the federal minimum wage, currently $5.85 an hour.

Amounts for child or spousal support
The garnishment law allows up to 50% of a worker’s disposable earnings to be garnished for these purposes if the worker is supporting another spouse or child. If this is not the case, up to 60% of disposable earnings may be garnished. An additional 5% may be garnished for support payments that are more than 12 weeks in arrears.

Disposable earnings
Disposable earnings include all forms of payment for personal services, including but not limited to: wages, salary, commission, and bonuses. Not included in disposable earnings are any deductions required by state or federal law. Deductions required by law include: federal income tax, Social Security, Medicare, state income tax, and State Disability Insurance. Deductions also include withholdings for employee retirement plans, as required by law.

Priority of multiple orders
Employers are only required to process one withholding order at a time. Generally, the employer must comply with the withholding order received first. If there are multiple withholding orders, employers must honor the orders in the following priority:

1. Spousal or child support,
   
2. Taxes,
   
3. Other earnings withholding orders.

NOTE: If an IRS wage levy is received, the child support order will take priority if the support order was entered first. If the child support was not established before the IRS wage levy was entered, then the Child Support Services Department can contact the IRS to determine if the IRS levy can be modified to allow for collection of child support.

Terminated employees
The withholding order remains in place until the total amount has been withheld, or until an order is withdrawn. If the employee has terminated or terminates in the future, the order remains in effect for one year from the date of termination.

Notification to employee
Be sure to notify the employee that you are withholding funds by providing the employee with the required information and copies. Specific instructions will be provided in the withholding order.

Administrative fees
Employers can deduct an administrative fee of $1.50 each time a payment is made.

Illegal discharge of employees
Employers cannot discharge employees for wage garnishment

Steps to follow:

1. Examine the notice to determine what it demands of the employer. Make sure you understand the terms.
   
   
2. Note how long you have to comply with the order.
   
   
3. Note how much needs to be taken out of each check and when it must be remitted.
   
   
4. Make sure you understand where the money is to be sent.
   
   
5. Note what records must accompany the payment.
   
   
6. Note what to do if the employee does not work there any more.
   
   
7. Notify the employee that you have received a garnishment and that you will comply with it. Make sure the employee understands that you will be deducting money from each paycheck.
   
   
8. If there are multiple garnishments, make sure that the garnishments do not exceed the maximum that can be deducted, and if they do, prioritize which orders come first.

Employer penalties
Employers who fail to follow the directives in the Withholding Order may be required to pay damages. Employers who (1) postpone withholding, (2) accelerate payments to employees to avoid garnishing, (3) fail to withhold wages, or (4) withhold, but fail to pay the levying office, may be sued by the judgment creditor for the amount that should have been withheld and paid.

If the employer helps an employee avoid a support obligation, then the employer may be liable for three times the amount not reported. Criminal penalties include a misdemeanor, which means that an employer could be fined up to $1,000, imprisoned for up to one year, or both. Employers could also be found in contempt of court, which could lead to a fine of $1,000, imprisonment for up to five days, or both. False reporting by an employer could result in a conviction of perjury and imprisonment for up to four years.

Garnishments can be tricky. For clarification in a specific situation, call one of Employers Group’s Helpline Consultants or consult your company’s attorney.

When Arbitration Agreements are Missing

In a sexual discrimination and harassment lawsuit the employer sought to compel arbitration of the employee claims because the employee had reportedly signed a binding arbitration agreement. The company was unable to locate the agreements signed by its employees, but provided the court with Employee Handbook language that notified all employees that they would be required to sign an arbitration agreement. The court ruled against the employer, finding that the employer’s position lacked merit - see the California Court of Appeal opinion in Mitri v. Arnel Management Company (December, 2007). This case highlights the importance of keeping complete and secure personnel records.

Amanda Mitri and Eric Eppel sued Arnel Management, its owner and supervisors, for sexual discrimination/harassment, among other claims. In its defense, the company claimed that the employees had signed a binding arbitration agreement to arbitrate claims that arise from, or are related to employment. The company lost in the lower court and took the issue to the appeal court level.

The appeal court observed that: “[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.”

The employer argued that the trial court ruled incorrectly since the documentation it submitted established the existence of a binding arbitration agreement between the employer and the employees. Further, the appeal court had the authority to decide if an agreement existed. In support of its position, the company cited a prior California Court of Appeal decision holding that the: “[i]nterpretation of a written document where extrinsic evidence is unnecessary is a question of law for independent review by the Court of Appeal.” See - Romo v. Y-3 Holdings, Inc. (2001).

In an effort to convince the court of the existence of an arbitration agreement, the employer offered the testimony of Arnel's Director of Claims Administration, who stated, “[i]t is Arnel’s business practice to require all employees to sign an arbitration agreement prior to or upon commencement of employment with Arnel and to maintain a signed copy of such agreement in each employee's personnel file. I have custody of the personnel files for both Amanda Mitri and Eric Eppel, and Arnel maintains these files in the ordinary course of business. Attached hereto … are true and accurate copies of the arbitration agreements that are maintained in Ms. Mitri’s and Mr. Eppel’s personnel file.”

In reviewing information provided, the court found two documents. The first document “…appears (based on the footer at the bottom of each page) to be a copy of pages 6 and 7 of the Arnel Employee Handbook, …which states: ‘Any dispute arising out of employment with the Company, as allowed by law, will be settled by binding arbitration. As a condition of employment, all employees are required to sign an arbitration agreement. …The prevailing party in the arbitration shall be awarded its attorney's fees incurred in the arbitration process and the decision of the arbitrator shall be final, binding and non-appealable.

“Further, nothing in this policy is intended to prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. You, as the employee and the Company each have the right to resolve any issue or dispute involving company trade secrets, invention rights, non-competition and non-solicitation by court action in lieu of arbitration. Employees will be provided a copy of their signed arbitration agreement.” The court noted that there was no signed arbitration agreement in the exhibit.

The second document was an “Acknowledgment Receipt Employee Handbook,” which states: “This Employee Handbook is designed to acquaint new employees, and reacquaint existing employees, with Human Resource policies, operational issues, employee services, and benefits that reflect the desire to provide a professional work environment. The Handbook is an excellent resource for employees with questions about the Company. Employees are encouraged to carefully review the Employee Handbook and become familiar with the contents and periodic updates. “The Company reserves the right to change or revise policies, procedures, and benefits described in this Handbook, other than the employment at-will provisions, without notice, at such times that the Company determines this action is warranted. My signature acknowledges that I have read and understood the statements above as well as the contents of the Handbook, and will direct any questions to my supervisor or the Director of Human Resources.”

The acknowledgment receipt forms were signed by Mitri and Eppel in late 2004. However, the court found that: “…the documents submitted by defendants [the employer] do not show either plaintiff ever consented to binding arbitration of claims arising out of the employment relationship with Arnel. The arbitration agreement provision in the employee handbook generally states an Arnel policy that ‘[a]ny dispute arising out of employment with the Company, as allowed by law, will be settled by binding arbitration.’ …‘[a]s a condition of employment, all employees are required to sign an arbitration agreement.’ This provision completely undermines any argument by defendants the provision in the handbook itself was intended to constitute an arbitration agreement between Arnel and its employees. The provision further states, ‘[e]mployees will be provided a copy of their signed arbitration agreement’ thus reinforcing an intent to have employees sign a separate arbitration agreement to effectuate Arnel's policy of arbitrating employment claims. Defendants have not produced any evidence of the existence of such an arbitration agreement signed by either plaintiff.”

The court decided that the signed acknowledgment receipt forms did not reference an agreement by the employees to agree to the employee handbook’s arbitration agreement provision. “We cannot and will not create a term of a contract between the parties that the evidence does not show was ever agreed upon by the parties.”

Recession Continues to Affect Compensation in 2008

As Employers Group’s 2008 Professional Compensation Survey (PCS) rolls off the press, many companies are taking a second glance at the going compensation rates for their new and current employees. Economic pessimists have already begun the first quarter of 2008 by screaming recession as they look to the last month of 2007 and the first couple of weeks of 2008 as a dire prediction of the quandaries California employers and job seekers will be presented with this year.

According to the Bureau of Labor Statistics, an increase in unemployment rates from 4.7 percent to 5 percent in December 2007 points to a continued downfall. Coupled with this, employers are again facing a flat-lined salary budget change. In desperate efforts to retain their seasoned employees, companies are attempting to balance their unemployment woes by offering whatever miniscule increased compensation rates they can afford. This alone has proven to be a cumbersome situation. Due to the slightly less than idyllic salary budget increases for 2008, employers are trying to preserve a sense of stability between the costs of labor with the incentives required to retain their current employee base.

What’s the dig with compensation strategy?
As compensation is one of the largest expenses a company incurs in any year, serious attention should be put on specific elements in order to present an excellent plan for future company leaders.

The trends in California and across the U.S. continue to show a strong pattern when it comes to Finance and Accounting positions, which have the strongest increase and demand in the job market. As the Employers Group 2008 PCS reveals, Finance and Accounting positions saw an average increase of 4.3 percent in 2005-2006, which rose again to 5.1 percent in 2006-2007. Yet again, these employees in accounting positions will likely see the heaviest expected increase in compensation rates for 2008. Human Resource professionals, however, are seeing a consistently meager increase in the last couple of years, allowing them only 0.9 percent and 2.1 percent, respectively.

Merit increases
This may very well be the year for the “caught being good” type of merit increases or one-time bonuses, for those in the retail and sales markets. Still others may have to sit firmly on their hands while waiting through the salary budget slump. As the Employers Group’s HR Budgets and Human Capital Benchmark Survey previously indicated, the anticipated average merit increases will rise slightly in 2008 from 3.87 percent in 2007 to 3.92 percent (excluding figures from executives), indicating that performance based management increases and acknowledgement will persist as the trend for recognizing work well done by a slowly diminishing (yet devoted) employment base. In their best interest, employees are taking it upon themselves to investigate the popular trends of compensation in their field, keeping up with the competition and keeping the high bidders in mind.

The “Baby Boomer” exit
As the 76 million Baby Boomers born between 1946 and 1964 begin retiring this year, the economy could suffer even more, considering they represent more workers than any other single generation. The result of this exodus will leave more companies digging through resumes in search of candidates with higher education, causing the compensation competition to become tight and the eligible leaders of tomorrow to lump into larger, greyer masses.

For these job-seekers, a balanced combination of education and experience makes for a preferred candidate and excellent investments for companies – especially with the tight budgets they are facing. However, it also makes for a hard catch, and recent college graduates appear bloodthirsty as they scour the job markets with resumes in hand and little experience under their belts. Besides a higher education, experience becomes a necessity and not only a “preference” when the best positions are scant and compensation is a big issue.

What to expect
So what does 2007 reflect on this new year? A recession mode combined with retiring baby boomers point to a tighter labor market and more competition. Those devoted employees who stay during this rough hour will see slight increases in their compensation, and those coming aboard are facing rough seas for the year as they struggle to get the jobs they want at the pay they (and everybody else) feel they deserve. Given the tight budgetary pinch companies are facing, companies can expect workers willing to do the work required and worthy of the compensation they receive.

About the Survey
Data for this article comes from the 2008 Professional Compensation Survey – now available to members! To order or for more information, please e-mail us at surveys@employersgroup.com.

Is HR Lean?
Lean isn’t just for manufacturing any longer

My first encounter with Lean was in the mid 1980’s with Richard Schoenbergers’ book World Class Manufacturing, and then later, in the early 90s from a book by James Womack called Lean Thinking. Lean – in these books and in a business context – is defined as the most effective performance of a process using the least amount of materials, time and effort.

And for the last 20+ years, Lean has been mostly limited to manufacturing. So much so that companies truly embracing Lean soon found that the processes impeding optimal performance were not related to manufacturing at all, but were administrative! For the last few years, administrative departments have been asking “what can Lean do for us?” For those not asking, they are told by executives to implement Lean (or more effective) processes. Here’s how:

The “Lean” process
The basic premise of Lean is that a process is just a process and that all process can be improved. The only limit is imagination. Most companies (or employees within the company) do not really understand from beginning to end how their processes work and how everything is connected.

Another basic premise of Lean is, “you cannot fix what you cannot see.” Administrative, office, and service-related processes are, for the most part, invisible, resulting in many individuals having difficulty with Lean concepts. The resultant question is: How do you make invisible processes visual?

In Lean manufacturing, (or more specifically, as defined by the Toyota Production System), the initial tool used is the Value Stream Map, which visually documents all of the activities that are linked together (raw goods to merchandise).

Moving from this tool is called a Process Map, which documents who does what, when it is done and how long it takes to complete the activity. For accountability, process maps make everyone aware of “who” is actually responsible for “what,” and “when” tasks should be finished. Added to these sequences are the quality levels and expectations that take place at each stage (or activity) within the process and how long it takes the process to cycle (customer order to the customer receives product/service and is fully satisfied).

The point here is that if cycle time is too long, the customer cannot be fully satisfied, and thus there are endless opportunities for Lean to be utilized in an office, administrative or service environment.

Determining what IS really happening
After this process is completed, an “IS Map” is created that illustrates what is currently happening – not what should be happening or what the procedure says happens, but rather, what actually is happening. “IS” is just the way it is. This can be quite ugly; however, this is actually the good news.

The Process (or IS) Map provides an opportunity to improve! Isn’t that what Lean is all about? Upon completion, all the chronic problems experienced by those within the process that ultimately affect customer satisfaction are then measured (metrics).

Applying Lean to HR
As an example: in human resources, what is the most common complaint by employees of the services provided? Is it a process problem? Consider open-enrollment. Is this process streamlined? Are the customers (employees) satisfied with the service they receive? (Notice I said “service,” not the benefits package specifically – which may be out of HR’s control to change, but the metrics of the benefits process may be a prime area for improvement).

Other examples: hiring processes, new employee orientations, performance management, succession planning, or even exit interviews. Are there opportunities for improvement in any of these areas?

Recently an HR manager told me that their new employee orientation process was outstanding, but I asked her, “How do you know?” She responded stating they had received no complaints and when employees were asked, they had said that the presentation was informative. Are these the right metrics to measure the process performance? I suggested that some “measurable metrics” may include:

• The amount of “actionable” information and the percentage acted upon.
  
  
• The information presented to the employees was accurate, complete and necessary.
  
  
• Fewer questions to HR, the supervisor or any third parties regarding information covered in the orientation program.
  
  
• Amount of post-orientation inquiries for up to three months.
  

Needless to say, Lean isn’t for anyone – it is for only those that want to improve, succeed and improve some more. Your operations department has probably been doing it for years and HR can gain some newfound respect by becoming involved within your company’s quest for improvement.

Do not underestimate the impact that improvements in HR can have on the overall performance of the organization and employees throughout the company. It could be the one improvement that makes the difference between business success or failure.

Creating a Business Case for your HR Systems

When HR requests an investment, it is often put on the back shelf because HR may not be considered a profit center. However, don’t let that discourage you from going after a new HR system.

When looking to purchase a new software system, you should go to your CFO or CEO with a business case in hand. To get the HR, payroll, training or recruiting system you need, you will probably have to justify it.

My goal with this article is to provide the basics for creating a business case so you can win management’s buy-in for the project. How sophisticated your organization is around budget and finance matters will determine the complexity of your business case. Even if your organization is more informal about spending, you’ll still want to put together a business case so your project isn’t put on hold.

Making a business case for your HR system should include these key components: the reason for change, the benefits of changing, the cost of changing (and the cost of not changing), risks, success factors, and a financial analysis.

Reasons
Identify in summary why you are changing, especially if the project supports achieving strategic goals.

Objective – a detailed statement of what you are trying to do. Ex: The objective is to implement a core HR system with recruiting and training administration capabilities. Current HR issues – describe the problems and create a sense of urgency for change. Ex: Our current process causes inaccurate data and requires a lot of non-value added time performing routine tasks.
	Limited functionality available with spreadsheets. History difficult to maintain resulting in inaccurate reports or additional time trying to represent reality Integrity & Redundancy of data - time wasted entering data in multiple locations. Reports created manually each time Difficult to share data with colleagues without resulting in overwriting one another’s efforts
Goals – State your goals with respect to the company’s strategic plan. Ex: One call center had so much turnover that payroll was not getting the information in a timely manner and they found that the company was continuing to pay 600 employees that should have been terminated. In this case, the goal was to realize cost savings by accurately paying people.
	Accurately pay salaries Reduce billing errors for benefits Spend more time on strategic activities
Alternatives – State the options considered and discuss why they are not being pursued.
	Status Quo - Continue with spreadsheets and paper files Develop an in-house system Procure a new system Outsource

Benefits
This is the section where you’ll put all of the benefits that support your business case, even if you can’t quantify them.

Reduce expenditures – this represents savings resulting in saving hard dollar costs. Ex: By reducing benefits errors, we will save 3-4% of our benefits costs per year. Increase productivity (soft dollars) – this represents the time spent performing your job. Ex: Productivity savings from HR administration will result in a 30% reduction in time spent. Increase effectiveness – state how processes will improve with this initiative. Ex. by automating performance appraisals we expect to ensure all employees are receiving reviews in a timely manner. Or more efficient decision making with regards to budgeting by accurately knowing the headcount, etc. Increased morale – describe how this system will increase morale. Increased data or decision quality – state how data will be more accurate Ex: We will be able to produce a headcount report in one day rather than the 3 days it currently takes with the use of a common system. Increased process compliance – state what processes you will be able to improve upon. Ex: We will be able to better track I-9 compliance.

Costs
Initial project/solution search – This accounts for the time spent researching, reviewing proposals, etc. You will want to use an average burden rate for those involved in the decision making.

Project management (internal selling) – the time spent getting support for the project as well as managing the project implementation. Software – be sure to include the license and support costs or the monthly cost of using software as a service. If you are doing a multi-year analysis, don’t forget to account for price increases. Hardware – the cost of servers, network equipment, if you don’t know the costs yet, leave the line item in with a placeholder. Implementation and installation – the cost of implementing and training on usage of the software and hardware. Maintenance – cost of maintenance and support (internal and external).

Risks
Identify those items that might present problems for your organization.

Lack of resources/priorities to complete the project on time. Technological risk for complex processes. Lack of response from benefit carriers may delay our implementation schedule.

Critical success factors
When embarking on any project, it is important to understand what the critical success factors are for your project. Ex: Removing some of the responsibilities from your HR manager will allow them to participate in the meetings for the project.

Financial models
Lastly, you’ll need to put together the financial data. The methods vary in sophistication, but this article only covers the most basic approach.

Simple Analysis – First subtract the costs from the benefits to derive the total. Second determine when the investment will pay for itself. Cost of doing nothing vs. cost of making an investment – This is a critical step if you want approval in a timely manner. There has to be a compelling reason to make a change. Too many HR directors have their projects put on hold indefinitely because they simply did not quantify the costs of staying with the status quo. If you can show the status quo is more costly, then it provides a compelling reason to change. ROI Calculations - Return on Investment (ROI) – Calculations serve as a basic decision making tool by determining the return on your investment compared to not spending the money at all. Most vendors can provide you with an ROI calculator, which will determine the payback period, the internal rate of return (IRR), the net present value (NPV). Advanced Analysis – Sometimes, the cash flow statement will be used as well as economic value added (EVA). Total Cost of Ownership (TCO) Analysis – TCO is an approach to calculate the lifetime costs of acquiring, operating and changing something. Good TCO analysis brings out the ‘hidden’ or non-obvious ownership costs that might be overlooked in making purchase decisions or planning budgets. With ERP level systems that require a significant investment in infrastructure, this is a key factor.

By spending the time to create a business case, you will not only have a tool to help you gain support for your imitative, but also improve your CFO’s and CEO’s perception of your business acumen. Hopefully, this article will assist you in getting the HR system your organization needs!