Asset-Based Thinking Leads to
Greater Productivity

Dr. Kathryn Cramer is the Founder and Managing Partner of The Cramer Institute in St. Louis, which specializes in organizational change consulting, leadership and team development, and executive coaching. She has a Doctorate in psychology from St. Louis University and is a licensed psychologist and member of the American Psychological Association. She is the author of four books, the latest one being Change the Way You See Everything Through Asset-Based Thinking.

Viewing everyday life in a special way that yields maximum returns on the investment of attention and effort is worth its weight in gold for Human Resources leaders. Asset-Based Thinking (ABT) is a concrete, cognitive process aimed at identifying the assets (e.g., strengths, talents, synergies, and possibilities) that are immediately available in yourself, other people, and any situation. ABT focuses on: opportunities rather than problems, strengths more than weaknesses, and what can be done instead of what can’t be done.

You can use the fundamentals of ABT to inspire and motivate better performance, communication, and leadership throughout your organization. Other special applications are designed for energizing new hires to be valuable contributors starting day one; for making the “truth” motivational – even when it’s hard to say or hear; and for promoting a sense of pride and confidence for outstanding efforts and achievements.

The fundamentals of ABT
Asset-Based Thinking calls for small shifts in the way we absorb, perceive, filter and interpret. It changes the way we see everything leading to dramatic improvements in the way we live. Asset-Based Thinking promotes positive results and fosters personal satisfaction. It is a way of thinking that favors inspiration and aspiration over desperation … and it is contagious!

ABT is not DBT
With deficit-based thinking (DBT) we scan for problems, what is disturbing and not working. DBT works more like a defense mechanism, showing us the problem from a negative angle so we are able to solve or eliminate whatever impedes success. It puts us “on guard,” fostering an anxiety that robs us of confidence, hope, and deprives us of pleasure and productivity.

Even though DBT protects us under dire circumstances, for most of us it has become an addiction that dominates our way of thinking. Unfortunately, a “steady diet” of DBT leads to starvation – depletion in energy – creating suspicion that trouble, problems and disappointment lurk around every corner. We learn then to “keep our back up” as DBT fuels our insecurity. Left unchecked, DBT clouds our perceptions, blinds us to possibilities and limits our options.

Asset-Based thinkers S.O.S.
No matter whether you see yourself as a “glass half full” person or a “glass half empty” person, ABT will expand your effectiveness. With ABT you identify the assets immediately available. It’s your focus on assets that raises the waterline.

S.O.S. is recognized as the universal signal for help. As an acronym it also helps you remember where to look for assets.

• SELF: The first “S” reminds you to look within yourself for your talents, qualities and capacities that are most useful in any given circumstance.
• OTHERS: The letter “O” refers to your focus on the strengths and talents of others, as well as the positive qualities in the relationship you have with each (such as trust, respect, collaboration.)
• SITUATIONS: The last “S” stands for the assets inherent in any situation. Welcome experiences naturally provide assets such as stimulation, opportunity and synergy. Conversely, assets in the form of important life lessons, vital new information, or challenges are often hidden within unwelcome or even tragic situations. Sometimes unwelcome situations can even bolster floundering relationships.

The choice is up to you
Every day the opportunity to engage in Asset-Based Thinking shows up in all kinds of situations, good and bad, large and small. There’s no question that HR professionals are busy. Training your employees (and practicing these principles yourself) will begin to pay off immediately. It can only lead to the thrill of victory, while sidestepping the agony of defeat.

• You sit in a meeting, drained by people who are complaining and blaming others for mistakes, and decide that you will move the conversation in a different direction by asking, “How can this be the best problem we’ve ever had?”
• You sit down to dinner, and the conversation begins with complaints about the day. Then you shift and ask everyone to share the best thing that happened to them that day, encouraging them to relive the high points. Everybody at the table is engaged. Dinner becomes another high point.
• You face a serious setback in your business: Sales are down 20 percent. You bring the team together. Rather than dwell on what possibly could have gone wrong, you choose to build on past achievements and current capabilities that will move the team forward. By shifting from threat to challenge, the momentum builds.

ABT in action
Now let’s take a look at how ABT can help you build a high-performance, can-do culture. These special applications can be adopted and adapted to meet the unique requirements of your organization. Each ABT process has been validated in multiple industries, in local and global businesses.

Everyone starts with an “A”
When Benjamin Zander, conductor of the Boston Philharmonic Orchestra, teaches new students, he begins the semester by giving everyone an “A.” His tangible regard for the skill and potential of each individual propels their learning and expands self-confidence. They are motivated to do what it takes to retain the “A.”

In business, most new hires are treated as novices, even if they are experienced, highly skilled professionals. Instead of getting an “A” from the start, they are given an “incomplete” until they are able to master the company policies, strategies, norms and systems. As a result, during the first 60-90 days, not much is expected of those who are newly hired. They are given time to learn the ropes, and “forgiven” for minor faux pas and cultural transgressions. Although patience during the initial learning curve is a relief to the new hire, it is also unnecessarily limiting.

What if the organization could see the new hire as an asset – someone whom could make a significant contribution from day one? What if others valued the new hire as someone to learn from, someone who has both “fresh eyes” and fresh ideas?

With this ABT view of the new hire in mind, we developed a special ABT approach to supplement existing employee orientation and training programs called “Passports to Success.” The essential ABT ingredients include:

1. Arranging for the new hire to interview senior leaders and managers, peers and direct reports (if applicable) in order to elicit five outstanding strengths of the company (and the new hires function.) The new hire also probes for what’s on the horizon that represents an aspiration of possibilities. After the interviews are completed, the new hire analyzes the patterns in the findings (both strengths and aspirations.) Finally, the new hire hosts a discussion session with her/his immediate boss, peers and other key stakeholders. The goal of this discussion is for all involved to gain new insights into the current reality in terms of synergies and strategies going forward.
2. Giving high-value, innovative challenges to the new hire, with specific deliverables in mind. For example, ask the new hire to conduct a feasibility study complete with recommendations for implementation. Another deliverable could be a request for bench-marking research to discover best practices that could replace existing ones. Ensure that the deliverables involve key stakeholders in the information-gathering phase as well as the delivery of recommendations. (Note: the focus and scope of this process can be scaled to any level of expertise from entry level to the most senior new hire.)
3. Asking the new hire to create a vision of how five of his/her personal strengths will be most useful in contributing to the success of the company and in performing well in their particular new role.

These “passports to success” energize new hires because they see themselves as valuable contributors from the start. They don’t have to wait until they are fully acclimated to have meaningful interactions with people in key roles. When other people treat the new hire’s status as an asset to be leveraged, the new hire’s confidence grows proportionately.

Tell the truth fast for “Courageous Conversations”™

People shy away from telling the truth when it might stir up controversy, hurt feelings, trigger conflict, or disrupt a relationship. We hold back the information, ideas and feedback that could help move things forward, resolve conflict or actually strengthen a relationship because we don’t want the conversation to backfire. We created the program Courageous Conversations™ to help people be candid and constructive simultaneously. We have found that many people can benefit from the initial step contained in the more comprehensive program. Here is how it works:

When confronting difficult topics pertaining to poor performance, costly mistakes, or disruptive behavior use ABT to frame the conversation. This fosters speedy resolutions and diffuses negative repercussions. Frame the conversation by following these three steps. (Be sure to rehearse the conversation to start and end positively. Remember – it takes much longer to devise your message than it does to deliver it.)

Step 1: Mentally list 3-5 qualities that you value (and even admire) about the person that are independent of the problematic behavior. This step creates a more balanced view of the person. It helps you step into the conversation, seeing the other person as valuable and worth the investment of time and effort on your part.

Step 2: State the behavior that bothers you clearly and concisely, and state the impact of that behavior on you and the relationship. (e.g., “When you come into my office for chat time, it breaks my concentration and prevents me from getting work done. Then I get frustrated with myself and irritated by the interruption.”)

Step 3: Present the positive vision you have of resolving whatever the issue is. (e.g., “I know that it is not your intention to interrupt or irritate me. Would you be willing to discuss this issue so that we find a way for chat time to work for both of us?”)

The positive note you end on will set the tone for the rest of the conversation. Then, relax and listen closely for how the other person responds to your invitation to create new ways of working and moving forward.

Imitation is the highest form of praise
With ABT, you see the talents and capabilities of others as their true assets, and for you, too. You are drawn to learning from those you admire. The fastest way to learn anything is to imitate a role model. Think about how you learned to walk, speak, write the alphabet, and tie your shoes.

In the early years, learning by imitation dominates. However, by the time we reach adulthood we refrain from imitating others in favor of more cognitive, trial-and-error types of learning. In fact, most people hesitate to imitate others because they see it as a form of “cheating” (e.g., don’t copy someone else’s test answers). Imitating what you admire in others and want to acquire for yourself is actually completely fair, and is in fact, an act of recognition. It requires astute study and observation of excellence - not critical judgment. When you become a student of the assets of human nature you will be able to spot the best of what everyone has to offer. When you see exceptional effort, talent and achievements at work, it’s time to have a conversation about what you have observed.

Begin with the most reinforcing question you can ask anyone after they have been successful - “How did you do that?” The question affirms the value of the accomplishment, but more importantly it allows a person to reflect on what personal assets (attitudes, knowledge, and skills) were tapped in order to succeed. Whenever you recognize or praise someone in that way, it will last. Encourage conversations that begin with “how did you do that?” Then keep probing until you gain new insight.

Take this Asset-Based thought process one step further by asking, “How did we do that?” to a group. No matter what size the group, posing this question helps them to be alert to what’s working to promote satisfaction, inspire collaboration, and produce results. Bring people together in groups to discuss their answers to the question, “How did we do that and that and that and that?” Broadcast the responses. Watch the espirit de corps and collective IQ raise to new levels.

In closing…
Asset-Based Thinkers are motivated to excel. Passion shines through in everything they say and do. They go the extra mile for customers and colleagues. They show pride in what has and can be achieved. HR can create huge changes by promoting ABT within their own department and then throughout other teams and groups within the organization.

When ABT is adopted by multiple functions and groups, businesses benefit from high levels of employee productivity, customer loyalty and satisfaction. Teams become more engaged, energized and focused.

Imagine what would be possible if people at all levels of your organization, from the most senior to brand new hires, focused more attention on strengths, synergies and opportunities than on mistakes, problems and threats. Experience proves that when people learn to zero in on the positive side of life they are less apt to be preoccupied with the negative side. The impact of this shift is amazing and far-reaching – for both the individual and the organization as a whole.

(Editor’s Note: For more information about Asset-Based Thinking and how to purchase the book, Change the Way you See Everything through Asset-Based Thinking, co-authored by Kathryn D. Cramer, Ph.D. and Hank Wasiak (with a forward by James Patterson), contact EG’s Editor, Wendy Taylor, at wtaylor@employersgroup.com.)

Bruce MacKenzie is the President of MacKenzie and Associates, an insurance firm specializing in workers’ compensation and employee benefits. Bruce has 30+ years in advising CEOs and business owners on effective workers’ compensation cost control strategies and risk management issues. His company develops programs to reduce employee-related insurance costs and increase workplace productivity.

Workers’ Compensation insurance rates have a predictable life cycle that often catch unprepared employers by surprise. However, employers who understand the cycle can take steps now to mitigate the rate increases that are inevitable after such steep decreases.

With few exceptions, workers’ compensation insurance rates are in decline across the country. While this is certainly good news in the short term, it almost guarantees bad news in the long run. The cyclical nature of workers’ compensation pricing means that it is only a matter of time until we see rates move upward once again. Fortunately, employers who take the time to set up preventative steps now will be in good shape to weather the inevitable rate increases.

This article will discuss the causes and effects of the workers’ compensation rate cycle, and will then explain what savvy employers can do in the current environment.

The price cycle
As a starting point, it’s important to have a basic understanding of the workers’ compensation price cycle, which repeats over and over in a predictable pattern:

• Workers’ compensation rates rise, often with double-digit increases.
• Rising rates precipitate an outcry that triggers legislative reforms.
• These reforms create profitable conditions for insurance carriers.
• More carriers enter the “soft” market, and insurance companies engage in price wars in an attempt to gain market share.
• For a time, business owners enjoy lowered workers’ compensation premiums.
• The reduced premiums lull employers into complacency.
• Employers lose focus on injury prevention and cost containment.
• Claims costs rise in relation to reduced premiums, which quickly leads to:
• Higher experience modification factors on the part of employers.
• Lowered profits on the part of carriers.
• Meanwhile, legislative reforms begin to erode as a result of efforts by special interest groups.
• Insurance carriers’ profit margins erode, their prices increase, and unprofitable carriers (usually those that had the lowest pricing) leave the market.
• Employers are left with a costly combination of (1) higher experience modifications and (2) a “hard” market characterized by fewer carriers and higher pure premium rates.
• Ultimately, a renewed public outcry starts the cycle over again.

When viewed in historical context, a steep decline in workers’ compensation rates - such as the one we are experiencing in California right now - foretells future price increases. Indeed, businesses typically will pay back all of their savings, and then some, within a few years, as the price cycle follows its predictable course.

The frustrating truth for employers is that an increase in the experience modification can, and often does, wipe out any savings from the rate reduction. Employers may actually find their total workers’ compensation costs increasing, even though pure premium rates have decreased!
To avoid large cost increases during or immediately following a period of rate decreases, it is critical for employers to be vigilant and aggressive in reducing injury expenses. Ultimately, injury costs have a far greater impact on an individual company’s premium than do reforms and rate decreases. This understanding shifts the responsibility of cost reduction from governmental bodies, insurance companies, and the marketplace directly to employers.

Put another way, relying exclusively on legislative reforms and the insurance marketplace for permanent cost containment is nothing more than wishful thinking. While reforms may help some employers in the short term, companies who want to keep their workers’ compensation costs in check over the long haul must take a proactive approach.

What employers can do
Employers are keenly aware that maintaining a safe workplace is the foundation of prevention. However, too many businesses rely entirely on traditional loss control engineering and fail to take the secondary steps indicated below. The majority of injuries occur from unsafe acts, not from unsafe conditions. Safe conditions are required, but inspecting and addressing conditions alone will not bring desired results.

Workers’ compensation cost containment can be broken down into two primary categories: What to do before an injury occurs (prevention), and what to do after an injury occurs (management).

Prevention
The key steps employers must take before an injury occurs include:

• Create a pre-hire check list that ensures that individuals who are hired are physically fit for their jobs and are suitable for long term employment .
• Select and train an injury coordinator.
• Establish a written return-to-work program.
• Train supervisors on what to do and say when an injury occurs.
• Address HR issues before an injury occurs.
  

Mitigation
Steps employers should take after an injury occurs:

• Follow a written, repeatable, step-by-step process.
• Return the injured employee to work as soon as medically possible, even if this means modified duty.
• Maintain frequent, positive communication with the employee and the doctor.
• If an employee is not recovering according to expectations, address additional underlying causes of the disability.
  

One of the major mistakes employers make is to hand over too much responsibility to the insurance company in managing injury costs. Although it seems almost counterintuitive, insurance companies generally do a poor job of containing costs once an injury has occurred.

In summary, the most effective way to drive down workers’ compensation costs over the long term is for employers to be proactive by setting up injury prevention and management systems that function in all markets.

Practical and proven methods are available. Assemble and train your team, establish your protocols and be prepared to handle any situation comfortably. No government entity, insurance company, or even the free market will ever produce more beneficial long-term results.

Accident Investigation

By Dagmar Muthamia, SPHR, Helpline Consultant

John Russell, who works in the warehouse at MLO Company, was opening a box of office supplies with his knife and cut his hand. It was a deep cut that required three stitches. On the Accident Report, his supervisor put down the cause as “carelessness.” What would you think if you received this report?
Hopefully, you would find it inadequate. Even with the sketchy information provided above, one can think of other causes – using the wrong tool, using the tool in the wrong way, not knowing how sharp or dull the knife was—are just a few that come to mind.

Why we need accident investigations
Accidents are expensive. The costs that may be directly calculated are the workers’ compensation costs, the downtime that results in lost or delayed production and the costs of repair or replacement of tools, equipment, machinery or product. Fines may also be imposed for violations of safety regulations, which are often the cause of accidents. Harder to describe but also significant, are the costs in terms of employee morale and the impact on turnover.

Types of accidents
There are two types of accidents. The most obvious is the one that results in an injury or illness. Sometimes overlooked is the accident that was a near miss. A more comprehensive definition is an unplanned event that interrupts the completion of an activity, which may or may not include injury or property damage.

The purpose of investigating an accident or a near miss is to determine the cause or causes of the accident and suggest corrective actions that will prevent another accident occurring in similar circumstances.

On a practical level, some investigation is necessary in order to complete the Employer's Report of Occupational Injury or Illness (Form 5020), which is required by Cal/OSHA and the workers’ compensation carrier. The employer must also determine if the accident is reportable to Cal/OSHA. Fatalities and serious injuries are reportable within eight hours by all employers. Other injuries or illnesses that need medical treatment or result in restricted or lost workdays are reportable on Form 300 by many employers. Finally, accident investigation is a required element of an Injury and Illness Prevention Program (IIPP).

Who should conduct an investigation?
Every organization needs to make the responsibility for accident investigation clear. It must be included in the appropriate job description(s). In almost all cases, the direct supervisor will have the duty of making the initial investigation and report. Beyond that, it depends on the size and type of organization. The investigator may be a safety manager, a safety coordinator or the HR manager. In some organizations it is the responsibility of a committee. If there is a collective bargaining agreement there may be a requirement for union representation in the investigation.

In all cases, the person conducting the investigation should have training and experience in investigative techniques and be knowledgeable of the work processes, procedures and environment of a particular situation. The purpose of the investigation is prevention—not fixing blame.

Step one: get the facts
All of the facts need to be documented in clear and concise reports. Unless it is a very serious accident, the first report is usually completed by the supervisor using a standardized form. On the form, the supervisor will report: the employees name, sex, age, job description, how long the employee has been on the job, the time and date the accident occurred, a brief description of what the employee was doing and what appears to have been the cause of the accident. This report may also describe the nature of the injury and identify the part of the body injured.

The initial investigatory step includes interviewing the injured party and any witnesses. The interviews need to be conducted in a non-threatening manner using good interviewing techniques. Statements must be recorded or written. If a witness is unable or unwilling to write out a statement, the investigator may write it for him/her. The person writing or making the statement must review, sign and date the statement.

Physical evidence needs to be examined. Photographs are also a useful tool in some cases. The investigator may find it useful to remove the physical evidence for later review or illustration. Evidence must be kept in a marked container and safely stored.

Experts need to be identified and interviewed. Maintenance technicians, set-up persons, managers, and trainers are some of the experts whose information and expertise may be helpful. Records, such as maintenance or training records, may also need to be reviewed.

Step two: determine the cause(s)
There are many models than can be used to help determine the cause or causes. Remember that most accidents will have more than one identifiable cause. One model looks at five areas: Procedure, Materials, Environment, Personnel, and Management.

The procedure, process or task must be reviewed by asking questions like: Was a safe work procedure used? Had conditions changed to make the usual procedure unsafe? Were the appropriate tools and materials available and were they used? Were safety devices working properly?

When looking at the materials and equipment area ask: Was there an equipment failure? What caused the equipment to fail? Was it poorly designed? Were hazardous substances used? If so, were they properly labeled? Was the raw material substandard or changed in any way? Was personal protective equipment used?

Environment means looking at the conditions under which the work was performed. What were the weather conditions? Was it unusually hot or cold? Dry or wet? Was there adequate light? Was poor housekeeping a problem?

Things to consider in regard to personnel are: Were workers experienced in the work being done? Were they properly trained? Were they physically able to do the work? Were there any problems with their health that may have contributed? Were they over tired or under stress?

Finally, the management area looks at possible causes, such as whether or not there were procedures and safety rules to follow that were written and communicated. Adequate training programs, effective supervision, enforcement of proper procedures, elimination of hazards previously identified, regular safety inspections and maintenance programs for equipment are other management areas to review.

Step three: recommend corrective action
The investigation report must recommend the corrective actions to be taken to prevent future incidents. The recommendations need to be based on the root causes that have been discovered in the investigation. They need to be specific and constructive. For example, “Install mirror in the northeast corner of the hallway between the warehouse and the office” is specific. “Improve visibility in halls” is very general.

Step four: implement and evaluate
This step is the most likely to be missed by a busy manager, yet success depends on management. Management must authorize the corrective actions, provide funding when needed, check to confirm implementation and ask for periodic reports on the effectiveness of the actions.

Summary
The following summarizes the steps that are needed for effective accident investigation of an accident or near miss:

• Report the occurrence to the designated person.
• Provide care for the injured person and secure the area to prevent further injuries or damage.
• Investigate the accident.
• Identify causes.
• Develop a corrective action plan.
• Implement the plan.
• Evaluate the effectiveness of the plan.

UI and Voluntary Quits

By Sarah Rios, Manager of U.I. Services

There is a preconceived notion, especially among managers, that if an employee quits their job they are not eligible to collect unemployment insurance (UI) benefits. The truth is, however, that depending on the reason for quitting, a person can be eligible or disqualified for UI benefits. In most cases when an employee quits and is found eligible the employer is liable for charges. For tax rated employers it is important to know under what situations they can request the Employment Development Department (EDD) not to charge their reserve account even though the claimant (former employee) is eligible to collect benefits.

Because of the complexity of UI law it would be beneficial for employers to acquaint themselves with the general guidelines the Employment Development Department (EDD) uses when determining whether or not a claimant is eligible for UI benefits.

A claimant is found eligible if the EDD determines a claimant quit for good cause. To examine what constitutes good cause is to understand the purpose of the UI law and meaning of the phrase “good cause” as developed in case law and EDD regulations.

The purpose of UI law is to provide a wage replacement for workers who are temporarily unemployed through no fault of their own. To quit for good cause, according to EDD, “means such a cause would justify an employee’s voluntarily leaving the ranks of the employed and joining the ranks of the unemployed; the quitting must be for such a cause as would reasonably motivate, in a similar situation, the average able-bodied and qualified worker to give up his or her employment with its certain wage rewards in order to enter the ranks of the compensated unemployed.”

Generally speaking, if a person quits for a “compelling” reason as opposed to a “personal” reason, the person would be eligible for benefits. If an employee quits for a personal reason and did not explain to the employer what the personal reasons were, the EDD will have to contact the claimant for details to determine if the personal reason to quit was for good cause.

If EDD determines the quit was for good cause they next have to determine if the former employee sought a remedy prior to quitting. If the employer had no knowledge of the personal reason why the employee decided to quit and the employer perhaps would have given the employee sufficient time off from work or adjust their work schedule as a remedy had they known what the personal reason were, the good cause for quitting would be negated, and the claimant would be disqualified for UI benefits for failing to seek a remedy prior to quitting.

The EDD has an excellent website at www.edd.ca.gov. You can find the entire UI code as well as precedent decisions, Fact Sheets, sample forms, and a great deal of other useful information. Of course, the Employers Group website easily links you to all of the California Codes.

Eligibility tests
Section 1256 and 1030/1032 of the Unemployment Insurance Code gives some of the reasons that are considered good cause for quitting and when the employer’s reserve account is not charged. The following are situations were the claimant gets to collect benefits, and the employer’s reserve account is not charged. These would include:

1. Quit work to relocate with a spouse or domestic partner to a place that is impractical to commute to work and no transfer is available.
2. Quit to protect oneself or their children from domestic violence.
3. Discharged or quit as a result of an irresistible compulsion to use or consume intoxicants, including alcoholic beverages. This would only apply if the employer was the last employer prior to filing a UI claim.

Note these win-win cases would not apply to employers covered by a reimbursable financing system.

Also, there are many tests of eligibility beyond the separation reason that can temporarily disqualify an individual from UI benefits. It is especially important for employers using the reimbursable financing system to address these issues, for example; someone may have to stay home to take care of a family member or because of their own illness or injury, perhaps they are in a remote area lacking transportation to get to work. In these cases the quit would be for good cause however, to be eligible for unemployment insurance benefits, the person generally, has to be “able and available” for work and “actively searching for work.” The claim should be protested on those issues.

Precedent Benefit Decision P-B-8 says that the employee must show that leaving work was the only alternative and that the person gave the employer an opportunity to resolve the problem. If an employee announces a quit, ask the person for the reason. If that person refuses to tell you, i.e., doesn’t give you an opportunity to resolve the problem, that could negate the good cause for leaving.

Word of caution
If an employer or employee willfully makes a false statement or willfully fails to report a material fact concerning a termination, the employer or employee may be assessed a penalty in an amount not less than two nor more than 10 times the weekly benefit amount of the claimant. Section 1257 and 1142 CUIC.

Grief in the Workplace

By Tanya Butler, M.S., Helpline Consultant

Loss is a fact of life. We experience it from the moment we are born and leave our mother’s womb and from that moment on, we fight to not only understand losses in our life but to also learn how to better cope with them. We fight anger, depression and then miraculously we are supposed to accept it. Well, what if you or your organization’s employees never learned how?

Grief will always and forever affect different people in different ways. Some of the more common symptoms include loss of pleasure, loss of appetite, decreased initiative, sleep difficulties and tearfulness or crying. Emotional symptoms include depression and or anxiety, feelings of emptiness, irritability, anger, guilt, and finally hopelessness and lack of vision for the future. In the workplace, we normally grieve the following:

• The actual loss
• The loss of our sense of security
• The loss of the workplace as it was
• The loss of our role in the workplace as it was

We handle grief differently in the workplace than we do at home. Many will not cry or show emotions at work because we are under social obligations/requirements to act normally regardless of the crisis. We tend to view a show of emotions as a sign of weakness. When a sense of loss is expressed in the workplace, everyone typically experiences a series of these emotions through the grieving process:

• Shock/Denial
• Inward anger
• Outward anger
• Depression
• Acceptance

Some employees may not experience every emotional stage; others may have intense feelings and may even deny that any loss has occurred.

Understanding grief in the workplace
It is important to understand grief in the workplace because our jobs are part of our daily lives. It can be very difficult to maintain productive relations with someone who is angry, anxious, and depressed, and interacting with traumatized people can make others feel traumatized as well. Each of us will make our own adjustment, and deal with our own issues.

How then can you best help employees in the workplace? First, employers need to acknowledge and try to understand an employees’ loss; secondly, let employees experience the pain and reaction to it; and finally assist the employee in adapting to his or her new life. Show that you/the organization wants to understand an employee’s pain and be positive, assertive, open, and sensitive.

Returning to work
Returning to work may benefit an employee because it (1) enables the employee to be in a known safe environment surrounded by friends; (2) encourages the employee to resume a regular daily routine again; (3) takes the mind off loss and enables the employee to feel normal for a while; and (4) helps the bereaved feel part of team by finishing work related tasks, and completing work projects.

For some employees returning to the work place may seem overwhelming. They may need additional time off. Employees who return too soon may experience:

• Lack of concentration and memory
• Tiredness from emotion and sleepless nights
• Feelings of depression
• Reduced patience and short temper

Grieving employees also worry they will develop a reputation for being unreliable, unstable, taking too much time off, and bad tempered. Furthermore, they worry about losing their jobs because of poor attendance, and reduced productivity. The grieving employee often resigns for fear of failing and being terminated. They find the balance of work and bereavement—without employer support—to be overwhelming.

When a grieving employee returns to work, HR can do its best to meet with the employee before the employee begins working. Options include providing a reduced workload, additional bereavement time, personal leave, shorter work hours or work week or telecommuting if necessary to help assimilate the employee back into his/her job.

Death in the workplace
Employees go to work expecting things to be business as usual. The last thing anyone expects is for a co-worker to die in the workplace of natural causes, illness, or as a result a tragic event. When a death occurs in the workplace, the normally orderly environment can quickly turn into chaos. If the death occurred as result of an industrial incident, fire, murder, or similar incident, workers have to deal with additional concerns in addition to the shock, such as the loss of feeling safe in the work environment.

Employees and management become concerned about how and why the incident occurred and what sort of steps are being taken to ensure that another accident will not happen and/or increasing security to prevent future acts of violence. Death in the workplace may result in feelings of anger, blame and fears for personal safety.

In the event of a death that takes place in the workplace, the employer needs to consider support for the co-workers, for the family, redistribution of work load, cleaning out the workstation (perhaps by others from another department rather than co-workers, with a family member present). You must allow a format for employees to talk about the death.

Take advantage of your EAP
Determine when and how to use your EAP program and other healthcare professionals for short-term counseling, also make arrangements for conducting an immediate debriefing for accidents or acts of violence.

After a death in the workplace, some families who lost loved ones at work may desire to offer thanks to co-workers who worked with their loved one. Similarly, direct contact with the family may be helpful for some workers. Others may avoid contacting their co-worker’s family due to the painful memories it may cause. Management should also be available to answer any questions. HR can take these steps:

• Arrange for a company meeting
• Those who were particularly close with the deceased may require additional support
• If appropriate, choose someone to serve as the family liaison to organize the company expression of sympathy

When an employee is seriously ill, HR can

• Stay in touch
• Learn information that can be shared with co-workers
• Help the co-worker with practical concerns such as leave policies and related policies

Be aware that an employee death will change how the workgroup operates, it will rearrange priorities and everyone will deal with the death differently, and in many instances, be aware that coworkers may temporarily fulfill the different roles as their way of helping in the grief process.

Most individuals have difficulty recovering from the experience of loss and the subsequent anger and anxiety by themselves. Without the help of others, employees may express their feelings of loss in an inappropriate or misdirected manner.

By Matt Bartosiak, Helpline Consulting Manager

California’s new minimum wage will have effects on other employer obligations under state law. Signed into law by Governor Schwarzenegger on September 12, 2006, the new minimum wage moves from $6.75 to $7.50 on January 1, 2007, and to $8.00 on January 1, 2008. Several employer requirements will be affected by these changes. From new salary thresholds to higher employer allowances, companies will have to ensure that they meet new compensation standards. Below are increased wage and hour requirements that will have to be met.

Exempt salary threshold
California's fixed salary threshold is defined as two times the minimum wage for a 40-hour week. This requirement will result in a change from the present figure, $28,080, to $31,200 on January 1, 2007, and $33,280 on January 1, 2008.

Commissioned inside sales employees
Under Wage Orders 4 and 7, these nonexempt employees have an exemption from overtime if more than half their compensation comes from commissions, and their weekly earnings are at least one and a half times the minimum wage. Under federal law this overtime exemption is only available if products or services are sold in a retail context.

Uniform maintenance allowance
If the employer mandates that employees maintain required uniforms (instead of the employer), they must pay the employees a maintenance allowance equal to the minimum wage per week.

Tools and equipment
Employees may be required to provide and maintain hand tools and equipment customarily required by their trade or craft if they are paid at least twice the minimum wage

Split shift differential
A split shift is defined as any employer-established work schedule that is interrupted by an unpaid nonworking period, excluding meal and rest periods. If such a schedule is worked, the employee's compensation must equal at least the following: all hours worked multiplied by the minimum wage, plus an extra hour of minimum wage. Employers who pay above minimum wage may already meet this compensation minimum and need not offer the extra hour at minimum wage. This required split shift differential will only have to be paid to employees who are compensated at or slightly above the minimum wage.

Union employees
Under state law, employees covered under a valid bargaining agreement have a complete overtime exemption if their regular hourly rate is at least 30% above the state's minimum wage and the contract provides for some overtime pay. The minimum hourly wage amounts are $9.75 for 2007, and $10.40 for 2008. Federal law has different conditions that must be met in order to be covered by its overtime exception.

Learners, camp employees, and, agricultural employees
Learners and camp employees may be paid 85% of the minimum wage (rounded to the nearest nickel) under certain conditions. Minors employed as agricultural employees under Wage Order 14 may be paid 85% of the minimum wage if certain conditions are met. These hourly amounts are $5.63 for 2007, and $6.00 for 2008.

Apprentices and disabled workers
Both of these groups, under state law, may be paid less than minimum wage under certain conditions. The exact required wage is not a percentage of the minimum wage, but is determined based on other factors. However, an increased minimum wage will most probably affect what those amounts are determined to be. These employees still may be covered under the federal minimum wage requirement, $5.15.

Effect on benefits
Employers affected by the minimum wage increase should look to increases in workers' compensation premiums, unemployment insurance costs, Social Security taxes, as well as increased employer contributions to disability insurance, life insurance, and pension plans sponsored by the employer.

Wage compression problems
Increases in the minimum wage are more strongly felt in certain industries such as restaurants, lodging, and casinos. Where entry rates are tied to the minimum wage, a new minimum wage results in situations where starting employees are paid at the same rate as present employees (or slightly below) who have been with the employer for some time. This can be a serious employee relations problem for those employers who increase pay according to tenure, skill level, or a combination of these factors.

When the last series of minimum wage increases started in 1996, the Employers Group did a survey of how affected employers would react to the increase. It was found that these employers usually adjusted rates for those present employees at or near the minimum wage so that a differential would still exist between entry-level employees and present workers. It was found that adjustments were only made at the lower end of pay levels; entire wage structures were not adjusted.

(Editor’s note: Matt Bartosiak can be reached at mbartosiak@employersgroup.com)

Employers Sigh Relief on
At-Will Employment

Lloyd Loomis, a partner at Lewis, Brisbois, Bisgaard & Smith LLP, is a member of the Employers Group Legal Committee. He serves as a mediator/arbitrator concentrating on employment matters and is a member of the Judicate West Employment Panel. His practice also includes a wide variety of employment law issues involving both employment litigation and counseling.

With the California Supreme Court’s ruling in Dore v. Arnold Worldwide 2006 DJDAR 10153 (2006), the employer community can breath a little sigh of relief. At least the Supreme Court recognized that the words used by the employer to express its policy of Employment At-Will were sufficient to properly express this policy and preclude the plaintiff’s argument for an implied contract requiring cause for termination.

Facts
The facts in Dore are interesting and rather straight forward. The legal analysis that was applied to these facts by the plaintiff, the Court of Appeal and even the California Supreme Court is a little disturbing. The plaintiff in Dore worked for an advertising agency in Colorado and applied for a promotion to a position with a sister company in Los Angeles. During the promotion process, Dore interviewed with various managers but the issue of employment status or at-will was never discussed. Dore also claims that during the interview process he learned that the two predecessors in this position had been fired for cause.

Further, he claims that there were discussions concerning his new job that included statements to the effect that the company wanted someone to handle the job on a long term basis and the person in this role would play a critical role at the agency.

After the plaintiff was offered the promotion, a vice president sent Dore a letter confirming the promotion and setting forth the terms of the new position. The letter described the employment relationship as “at-will,” and further stated that this meant that the employer has the right to terminate his employment at anytime just as the employee has the right to terminate the employment with the agency at anytime. Dore read the letter and signed a copy and returned it to the employer.
Dore was subsequently terminated without cause and he then filed a lawsuit claiming numerous causes of action, including a claim for breach of contract.

Plaintiff’s claim was based upon his belief that he could only be terminated for cause. In response to the employer’s position that Dore was an employee at-will as set forth in the vice president’s letter, Dore argued that the term “at-will” in the vice president’s letter was defined by the subsequent language which only addressed the time of the termination, but did not address whether or not cause was required. The employee believed that he could submit evidence to show that he had an implied contract to the effect that he could only be terminated for cause. Dore wanted to rely on the comments and other information he learned during the interview process to support his position. The trial court did not accept this analysis and granted the employer’s Motion for Summary Judgment.

Rulings
The trial court’s ruling was based on the premise that the language in the vice president’s letter was not ambiguous or susceptible to two different meanings and therefore was the controlling factor over the relationship. (It is well-established that it is not possible to have an implied contract with provisions that are inconsistent with the clear and unambiguous written Employment Agreement. See Guz v. Bechtel National, Inc. 24 Cal. 4th 317, 340 (2000)).

The California Court of Appeal reversed and held that the language of the letter signed by Dore was not clear and unambiguous with respect to the issue of cause for termination. Accordingly, under the ruling of the Court of Appeal, the plaintiff would then be free to offer evidence that he did have an implied contract requiring just cause for termination.

The Court of Appeal accepted the argument that there could be an interpretation that the terms “any time” and “at-will” were in fact modified so as to only relate to the timing of the termination. This is a very significant ruling, because generally evidence is not permitted to be introduced to interpret a written agreement when the language is clear and unambiguous. The ruling of the Court of Appeal would allow Dore to go back to the trial court and submit evidence to the effect there was implied, in fact, a contract that required cause for termination.

The California Supreme Court reversed the Court of Appeal and, from a bottom-line perspective, held that the language set forth in the letter from the vice president was clear and unambiguous and was not reasonably susceptible to more than one interpretation. Accordingly, plaintiff could not proceed with a claim for breach of an implied contract in the face of the written express language of the vice president’s letter.

The Supreme Court carefully reviewed numerous cases interpreting the question as to whether or not “at anytime” could be found to be ambiguous so as to allow further evidence and the possible interpretation that at “any time” would still require cause for whatever termination was at issue in the case. The Supreme Court left open the possibility of further challenges to employment at-will statements based upon the Supreme Court’s ruling in Pacific Gas & Electric Co. v. G.W. Thomas Drayge etc. Co. 69 Cal.2d 33, 37 (1968). The Supreme Court’s majority opinion in Dore stated:

“Accordingly, “[e]ven if a contract appears unambiguous on its face, a latent ambiguity may be exposed by extrinsic evidence which reveals more than one possible meaning to which the language of the contract is yet reasonably susceptible.” (Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912.) “The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.”

Therefore while the court came to the appropriate conclusion in the Dore case, it still does not close out the possibility for further challenges to express written at-will language if the plaintiff can show some kind of evidence that an alternative meaning should be considered and that such alternative interpretation is reasonable.

Impact on California employers
First, every employer should make sure that their at-will employment policy clearly states that employees are at-will and that they can be terminated at anytime, with or without cause. Some employers have “watered down” their employment at-will language so is not to seem so harsh. Care should be taken with these efforts and such language should be reviewed by counsel. There is no need for California employers to go through the difficulties presented to Arnold Worldwide because of the wording of their at-will language.

Second, every employer should make sure that the policy is communicated to all employees and new hires and that it can only be modified in a writing which is signed by a specific high ranking individual. Such policy should not be subject to change as is often the case with handbooks and other company policies.

Third, employers should make sure that there are no other policies that in any way contradict the employment at-will policy separate of the employer. Particularly troublesome in this regard are “progressive” discipline and “probationary period” policies.

Fourth, employers need to be careful as to what is said and what representations are made during the hiring or promotion process. Often the employer is anxious to “land” an attractive candidate for a job and will make general representations that aren’t exactly correct. All persons involved in the recruiting process need to be trained not only with respect to discrimination, but also with respect to issues relating to employment at-will and possible implied contracts. The last thing an employee wants to hear is a member of management telling some prospect that irrespective of the policy, the company will not fire someone without just cause. That may be true, but the company wants to retain the right to terminate without cause.

Finally, the practice that saved the day for Arnold Worldwide was the follow-up written “offer” letter. This should be a universal practice (so long as it contains a proper at-will statement) and the employee/applicant should be required to acknowledge in writing that he/she has read the letter, fully understands it and agrees to its terms as set forth in the letter.

By following these rather simple guidelines employers in California can maintain the employment at-will status for all employees and be in a good position to defeat breach of contract claims.

Making a “Win-Win” of any Downsizing

Peter K. Studner is a seasoned career counselor and president of Peter K. Studner Associates, a successful outplacement firm in Los Angeles. He is author of the award-winning manual, Super Job Search, now in its third edition with more than 300,000 copies sold.

Let’s face it, every company from time-to-time has to slim down its ranks and in today’s litigious world, you better know your facts before acting. Companies faced with reduced sales and/or profits need to cut back on expenses to survive. Oftentimes, this means a reduction in staff. If downsizing is needed, what issues must be considered? Or, if a staff member is not working out, how do you let him/her go with minimal hard feelings?

All California employment relationships are presumed to be “at will.” This means that the company and the employee can terminate employment for any reason at any time. That sounds simple, but without professional assistance, significant penalties and legal expenses can result from what may be interpreted as a wrongful discharge. To avoid this pitfall, here are suggestions that you should consider before any termination:

• Select the person or people impacted carefully. If the reason is for cause, make sure that you have sufficient documentation. If the termination is part of a general downsizing, have your plans well organized before you begin. Always pass your plan before a qualified employment attorney. He will tell you where you are vulnerable and what you may need to do before moving forward.
• When downsizing, consider softening the blow by providing outplacement services. Outplacement will help impacted employees focus on their futures, not just on the bad experience of losing a job. Group and individual programs are available that are suitable for your budget, levels, and types of employees.

Assistance can also include

• Holding a job fair so other companies can review your leaving staff for their job openings.
• Working with the Employment Development Department to assist leaving employees with unemployment benefits.
• Creating a Career Center where employees can get ongoing assistance.
• Doing job development, finding actual job leads.

Other considerations

• Know who is affected by the layoff and have full details of each person’s separation conditions, including dates, severance package, EEO information, and any other relevant data.
• To keep rumors, fear, speculation and gossip to a minimum, organize the announcement so that everyone is notified the same day.
• Provide the company’s reasons for the downsizing and criteria for selecting affected people.
• Prepare an interview schedule that will cover all affected people to give them a chance to discuss their feelings with an HR representative.
• Organize in advance any outplacement benefits. Have a notice prepared (dates given verbally will not be remembered). If outplacement will take place after the person has left the company, schedule someone to call and remind each person when and where to go for the services.
• Indicate when and where they will receive their final exit papers (usually with an exit interview).

With adequate preparation, you can maintain good morale and minimize job-loss shock. Consulting with professionals before you act will prevent undue expenses, keep the company’s “good-guy” image and lead to a successful downsizing.

Case Studies

(1) A $700 million specialty retailer sold its business to another retailer. With the help of outplacement consultants, resumes were prepared of all impacted employees so the buyer could select which of the team he wanted to make offers to stay with the purchased company. The remaining impacted staff received outplacement assistance with training and collateral materials. The morale of the leaving employees was lifted by the care of the selling company in looking beyond the sale to help more than 450 impacted employees without a single incident.

(2) A manager who has been recruited from out-of-state had been in his new job less than a year when the company realized a mistake had been made in the hire. His job was eliminated in a re-organization and the company had no other position to offer. The employee and his wife were devastated having left a good job, sold their home and repurchased another to accept this position. Now, he unexpectedly faced the task of finding another job.

A special outplacement program was designed for the leaving person that included a total career assessment, defining what kind of position he wanted, verification that opportunities existed that would be of interest, preparation of collateral materials including a resume and letters, a custom recruiter mailing to more than one thousand executive recruiters, interview training and coaching every step of the way into his next job. As his outplacement program progressed, despair turned to hope and finally into a new position to success.

(3) A large privately held company with branches all over the nation was facing financial difficulties. It had to cut payroll to survive. A new CEO came on board, redefined the company’s mission and developed a turn around plan that included a large downsizing. Outplacement consultants were called in to arrange programs for all levels of impacted employees including production workers, supervisors, managers, directors and executive staff. For the production workers bilingual workshops were held, followed by individual counseling. For other staff, programs were designed to fit the level of each employee and his/her particular job-search needs.

While the company moved ahead with its turnaround, everyone understood the CEO’s plan and the leaving employees all pitched in to their final day. Even with a tight budget, no one was forgotten. High morale continues in the turnaround and leaving employees quickly resettled.

(Editor’s Note: For more information on the services of Peter K. Studner Associates, Inc., contact Katherin Scott at (213) 765-3949 or kscott@employersgroup.com.)

Becoming the Change-Agent of Choice

Morrie Shechtman is an international change management consultant, has taught at distinguished universities throughout the United States, advised CEOs and political figures, and now runs a successful management consulting company, Fifth Wave Leadership -which is also the title of his book on the new path for achieving success.

Most change management responsibilities are thrust upon human resource professionals out of sheer necessity. The internet has created an ever-evolving global economy with new paradigms and new demands. Information has created, simultaneously, the most opportunity-rich and the most threat pervasive world culture the human race has ever experienced. On a day-to-day level, business is going through a traumatic transition that we have not seen since the introduction of the factory system during the industrial revolution.

Chris Anderson, in his book The Long Tail, details the sea-change in marketing and sales, from selling more to less to selling less to more. The days are over of the big hit – of going elephant hunting for the customer that will insure your future. The name of the game now is expanding your footprint; dramatically widening your demographic. It would be an understatement to say that this changes the role of millions of people in the workplace.

Likewise, our whole apparatus of communicating is undergoing realignment. For the internet savvy generation, a fifteen minute face-to-face conversation is an agonizingly long interaction, and internet syntax looks like an encrypted espionage shorthand, focused solely on task management and transaction achievement. Building or maintaining relationships is left to different venues.

We may feel that these changes are the best things that have ever happened, or the worst things that have ever happened. And it really doesn’t matter. It has happened, and we need to help people (including ourselves) deal effectively with these changes. We need, in other words, to become change agents of choice, not change agents of necessity.

In order to become a change agent of choice, you must understand and embrace three core concepts.

1. All change is loss
2. If you can’t grieve, you can’t change
3. Change agents are disrupters, not comforters

All change is loss
Regardless of whether the outcome of a change is viewed as good or bad, there is a loss in every single instance of human change. (There is often a gain, also, and this is fairly easy to see and understand.) The loss that is built-in to every change is the loss of what we are familiar with and what has become predictable in our lives. Understand that we fervently gravitate to the familiar, not to the comfortable; and that we always seek the predictable and flee from the unpredictable. That’s why a predictable negative is almost always chosen over an unpredictable positive. And that’s why successful people experience more loss than people who fail. They are constantly challenged to abandon their familiars and adopt unfamiliar experiences and relationships.

If you want to help people deal well with change, first identify the losses accompanying their changes, then deal with the gains.

If you can’t grieve, you can’t change
Grieving may be the most essential human skill we need to survive and thrive in our era. Grieving allows you to work through the losses that come with change; integrate them into who you are; and move on to new and different experiences. We do not “get over” losses. They become an indelible part of the fabric of our identity and they are as much a part of us as our upbringing, our culture, our education, and our work history.

Nothing is more paralytic of human growth than unexpressed grief. Grieving is nothing more, nor nothing less, than the articulation of previously unarticulated feelings, within a caring and concerned relationship. It is not a solitary venture – it cries out for contact and community. The acquisition of a company, the relocation of a plant, or the downsizing of an organization all demand grieving - a platform for expressing feelings, not just tactics. It is important to note that no one resists change, but everyone resists loss.

Disrupters, not comforters
Most people don’t understand what catalyzes change in human beings. It is certainly not things going well and everything being completely satisfactory. Without discomfort and disappointment, nothing changes. That’s why low expectations and unconditional acceptance are counterproductive and undermining of people’s growth and development.

If you truly care about people and genuinely want to be a change agent of choice, you must be willing to give others the gift of your disappointment in them. What has progressively damaged our culture, in both our personal and professional lives, is the withholding of our disappointment in those whom we profess to care about. All relationships, at one point or another, are disappointing. That’s good, not bad! It is an opportunity to help someone continue their growth. There are clear, proactive strategies for helping people become victors, as opposed to victims of change. But you can only effectively utilize these strategies if you fully understand and embrace the connection between change and loss.

(Editor’s Note: Morrie is a featured speaker at EG’s upcoming WELU. See back page for more info.)

2007 Salary Forecast
What’s Holding Salary Increases Back?

By Jennifer Shin, Research Marketing and Communications Coordinator

Salary Increases for next year are expected to be slightly higher than 2006. However, with estimates that unemployment will remain low and turnovers high for 2007, employees and even some HR executives are wondering for 2007, “What’s holding salary increases back?”

According to the Employers Group’s 2007 Salary Increases Survey, excluding figures from executives, the projected average merit increase will move up from 3.83 percent in 2006, to 3.87 percent in 2007. Total increases, defined as merit plus general increases and other forms of pay, i.e., bonuses, etc, will be as follows: Hourly non-clerical 4.0, up from 3.8 percent; Hourly Clerical 4.24, up from 3.99 percent; Exempt 4.39, up from 4.15 percent; Executives 4.6, unchanged at 4.6 percent.

The average pay increases stemming from merit plans rose from 3.93 percent in 2005 to 4.01 percent in 2006. These figures include increases to executives, managers, exempt and hourly employees. Total increases, defined as merit plus bonuses and or general increases, essentially remained unchanged: From 4.31 percent in 2005 to 4.30 percent in 2006.

Although year-to-year increases were flat, the survey did find that fewer companies had wage freezes in place for 2006. In fact, for the second consecutive year, the percent of companies reporting wage freezes dropped from its previous year’s levels: For 2006 only 5.2% of companies reported them, down from 6% in 2005.

Data collected from the 210 California companies also showed that compared to 2005, the median number of separations experienced by firms in California over the last 12 months increased from 15 to 16 percent. Although higher turnover rates aren’t great news for employers, these figures surprisingly indicate a healthy job market—one where employees are rapidly moving from one job opportunity to the next.

Salary increases are a major tool to employers in retaining quality employees. However, salary increases for 2007 have reached a plateau in what seems to be a very tight labor market. So why are firms not working harder to keep employees?

Some concerns have grown from recent government data showing a 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. The participation of developing countries in the world economy has increased the overall supply. On top of all this, healthcare 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.

Effect of the changing face of the workforce
Despite these factors that are holding back salary increases, the face of the workforce is also changing. Older employees, those who are part of the baby boomer generation, are hitting retirement age. In some industries, aerospace and defense, for example, as much as 40% of the workforce in some companies will be eligible to retire within the next five years. Consequently, employers still need quality employees. So perhaps the question is not why are firms not working harder to keep employees? But more importantly, what methods other than pay increases are employers using to retain their quality employees?

Feedback from employers
Some employers have said that salary increases are no longer the sole incentive in retaining quality employees. According to studies, spending on variable pay in 2007 is projected to remain strong at 11 percent, more than three times the 2006 average pay increase.

According to member companies, gas cards, on-the-spot bonuses and other rewards have become even more attractive to employees. Employers are finding these incentives useful if merit increases will be lacking in the coming year. They reflect an understanding of the employee’s needs, as well as worth.

Obtain a Copy of the 2007 Projected Salary Budgets and Economics Trends Survey!
Published in September, the Budget Survey is our annual measure of actual 2006 and projected 2007 salary budget increases and labor forecasts from hundreds of California firms. If you need to know salary increase projections or how to gauge your labor costs against other California businesses, then this is the report for you! The book report is now available! Participating member companies will receive a complimentary copy; others may purchase the full report. For more information, write to surveys@employersgroup.com