A 360° SAVIOR?
It can help, but...

Gregg Stocker is an internationally recognized expert in organizational health and continual improvement practices, and the author of Avoiding the Corporate Death Spiral: Recognizing and Eliminating the Warning Signs of Decline. He is Director of Quality and Performance Improvement at ICO Polymers, a publicly traded company based in Houston. Gregg’s opinions are regularly quoted in industry publications and management trade journals and he was a featured speaker at this year’s World Conference on Quality and Improvement.

If you’re expecting 360° feedback to drive improvement, your wait may be long and frustrating. Those who have read W. Edwards Deming’s books, or experienced one of his 4-day seminars undoubtedly learned about the destructive effects that performance review systems have on people and organizations. Traditional performance evaluations are also common in organizations that undervalue their people, which is one of the most common warning signs of an organization in decline.

Despite the warnings from Deming and others about the detrimental effects of the practice, many managers continue to cling to the process because they don’t know what to replace it with. The fairly recent development of 360° feedback systems, however, has given managers an alternative to the traditional performance review. Problem solved, right? Maybe . . . maybe not.

360° feedback
A 360° feedback system is a process that enables an individual to receive feedback from his or her supervisor, subordinates and peers. The process has gained considerable attention in recent years as a way to overcome the problems associated with a traditional performance review. Although in theory the process makes sense, when implemented in an improper culture it can be just as destructive as traditional reviews. Just like many other performance improvement tools, 360° feedback is only effective when implemented in an improvement-focused environment where the leaders understand and support the theory behind the concept.

What it doesn’t do
As with other organizational improvement tools used over the years, 360° feedback has been over-hyped and promised to deliver much more than it actually can. Because of this, expectations are high when an organization embarks on a mission to implement the system. Unfortu-nately, this often leads to frustration, disappointment and further distrust of improvement initiatives, which is something that we have too much of in organizations already.

To align expectations and make sure the company’s culture is advanced enough to benefit from a 360° review system, it is important to understand what the system can and cannot do. By itself, a 360° review will do nothing. It will not improve performance, teamwork or communication, and without total confidentiality of results, it also will not lead to employee development.

What the system can do, however, is provide valuable input to a person desiring to improve. When documented as part of a development plan, the 360° feedback can be combined with other information, including the person’s career objectives and new skills related to organizational objectives (e.g., new safety initiatives, productivity improvements, etc.) to become a commitment, as well as a roadmap for improvement. It also becomes a basis for dialogue between an employee and his or her supervisor.

If a 360° system does not include some type of personal development plan and relies solely on the person receiving the feedback to act on the results, it is likely that very little will change. Personal development is unfortunately a low priority in today’s business world because people are too busy and many lack the knowledge necessary to improve themselves. When emphasized and regularly re-viewed, however, the development plan adds credibility to the process and validates the importance of personal growth to the organization.

The 360° review is obviously a key input to the development plan because the feedback comes from a person’s internal customers and suppliers. Organizations are becoming increasingly complex and success is heavily dependent on the quality of the interactions between people. As these interactions improve, an organization’s performance improves. By receiving and acting on the feedback from those with whom a person interacts through the course of business, the interactions, and hence the operation, can improve.

The necessary elements
There are several elements that are necessary to help create an environment in which a 360° feedback system can succeed. Unless these elements are present, the process has little chance of aiding the improvement effort.

• Confidentiality of results
The first requirement is to keep the results of the feedback completely confidential. This means that, unless a person decides to share the feedback with others, nobody has access to the information; not even the person’s supervisor. This is a difficult concept for many managers to accept because of a loss of perceived control and a lack of trust that some people will be honest about the areas in which they need to develop. Some managers have become so accustomed to judging the people who work for them that they feel entitled to this type of information.

Without complete confidentiality, however, the 360° process will experience many of the same problems as a traditional performance evaluation system. People will become defensive about the results and those providing the feedback will be less open and honest if they believe the exercise will result in negative consequences for the person receiving the information. As with any activity, people will be more likely to willingly participate if the process results in positive action, but shy away from it if it leads to negative consequences. Without complete confidentiality of results, a lot of energy will get directed toward defending one’s actions and performance rather than improvement.

A common concern about keeping feedback confidential relates to a lack of documentation for protection against dismissal-related lawsuits. The objective of a 360° system, however, is improvement. It is not a tool to fire people. Documenting a problem with an employee needs to happen when the problem occurs rather than waiting until the next review, which may not occur for several months later. This, along with the high level of subjectivity involved in performance evaluations, and the fact that people often use evaluations to document general issues rather than specific instances of problems, makes them virtually useless in defending the company against lawsuits anyway.

In a survey of labor attorneys reported by Tom Coens and Mary Jenkins, it was found that 7 out of 10 attorneys did not find performance appraisals beneficial in defending companies against wrongful discharge suits. It should also be noted that “problem” employees generally result from ineffective hiring practices, poor leadership, or both.

• Customer focus
A second element of an effective 360° process is a customer focus throughout the organization. This means that everyone understands their role in serving customers, both inside and outside of the organization. Without a customer focus, people will direct their efforts toward satisfying the needs of the boss rather than those of the customer. This will cause the feedback received from internal customers to be ignored (or reduced in importance), resulting in frustration and an overall lack of interest in the 360° process, and a lack of improvement activity.

• Maturity & teamwork
Another vital element of an effective 360° system is a high level of maturity and teamwork throughout the organization. If there is internal competition and frequent conflict between people and teams, the feedback will tend to be more negative and personal than constructive. To be useful for improvement, the feedback needs to be actionable by the person. The more negative and personal the information, the less the person will be able to identify specific steps to be taken to improve.

• Careful selection of respondents
To prevent 360° overload within the organization, the respondent group needs to include a sampling of the subject’s internal customers, rather than everyone with whom the person interacts.

There are many organizations that utilize the process by having the entire management team provide feedback to each other. This practice becomes extremely burdensome for people who are already overloaded and turns people off of the process. To keep the time drain on people to a minimum, nobody should be selected to provide feedback to more than three other people during a given period of time.

The only exception, of course, is a manager who is required to provide feedback to everyone on his or her team, regardless of the number of people involved (the feedback exercises need to be staggered, if necessary, to keep the process from overloading the manager). Depending on the size of the organization, the HR department may need to get involved to keep anyone from being selected for more than three assessments. If managers are not willing to take the time necessary to plan the selection activity, it is better not to embark on the 360° process at all.

• Coaching and guidance
The final element necessary for success in the process is the ability to understand the feedback and provide guidance to people in the development of an improvement plan. Although it sounds basic, there are many companies that focus so heavily on implementing the surveys that they don’t know what to do to help people act on the results. When this happens, the unfortunate result is a lot of money and time spent on a tool that provides no value to the organization.

Organizational readiness
Taking the time to assess the organization’s readiness for a 360° system before attempting implementation can save the company a lot of time, money and frustration. It is also important to understand that, like many of the tools used in an organizational development process, a 360° process cannot by itself drive improvement. When implemented correctly in an environment where improvement is part of the culture and driven by the organization’s leaders, however, the process can help people better understand who their internal customers are, what they want, and what they need to do to better contribute to the organization’s success.

(Editor’s Note: For information about obtaining the author’s book Avoiding the Corporate Death Spiral: Recognizing and Eliminating the Warning Signs of Decline, contact Employers Group’s editor, Wendy Taylor, at wtaylor@employersgroup.com. If you are interested in consulting services to help you implement a 360º feedback system, call Employers Group at (800) 748-8484 (Option 3) and ask for a professional services manager.)

1Deming, W. Edwards, The New Economics, Massachusetts Institute of Technology—Center for Advanced Engineering Study, Cambridge, MA, 1993.
2Deming, W. Edwards, Out of the Crisis, Massachusetts Institute of Technology – Center for Advanced Engineering Study, Cambridge, MA, 1982.
3Coens, Tom and Jenkins, Mary, Say Goodbye to the Performance Review: Why Dr. Deming Was Right All Along, The Human Element, Human Development and Leadership Division of the American Society for Quality, Fall 2001.

By Mark Nelson, J.D., Helpline Consultant

Every consultant on EG’s Helpline gets at least one call a week involving a leng-thy interpersonal or interdepartmental dispute that reminds all of the parties involved of behavior we all remember experiencing growing up with siblings or in a classroom – but nothing we would expect to encounter at work, among adults.

Regrettably, as HR professionals, there will be times when we are forced to don the hat of a high school principal and mediate disputes we can’t help but think we should never have had to address. Conflict is inevitable. Of course it is. But if conflict escalates every time there is a difference of opinion or competing interests, we need to investigate what is underlying that trend.

Is it me?
If the conflict is isolated to a department or the subordinates of the same supervisor, and the conflict continues time after time, HR needs to start with the approach the supervisor or department director is taking to the conflict. Are your supervisors armed with the skill sets necessary to mediate that conflict or, at least, are those supervisors aware of their obligations to defer situations that are over their head up the chain to HR?

It goes without saying your supervisory staff can both impede and enhance your employees’ performance. If the supervisor continually ignores the interests of his or her subordinates, expect that they will lash out in louder and less mature ways, just to have their complaints heard. If your supervisor plays favorites or pits employees against each other, or permits the perception of such activity, then, again, don’t be surprised what your employees will do to have their voices heard.

In these situations, initiate an investigation into the original conflict. Talk to the employees involved but don’t limit questions to the coworkers. Did the employees ever complain to their supervisor? Did the supervisor resolve the matter? Or did the supervisor at least reassure them that the supervisor was addressing it? Did the coworkers ever see results? Open the line of questioning to include your supervisory staff and you may be surprised who is really responsible for this behavior.

While you never want to open an investigation up into a free-for-all venting session for all the parties involved, expanding your investigation to include a limited line of questioning about the supervisor’s responsiveness may provide the insight you need to solve the problem.

Do I need to separate you two?
As cubicle environments continue to proliferate and manufacturing moves employees closer to each other on the production line, the notion of personal space takes a back seat. Yes, rows of desks with typewriters at full throttle are not that far off in the history of the American workplace. But back then, the lines between public and private space were clearly drawn and employees knew they could not talk at length on the phone about deeply personal matters. Today, the notion is what is public and what is private is not always clearly defined. In other words, a particle board between desks perhaps provides false comfort.

If the juvenile behavior you’re called in to investigate relates back to “space” issues, consider if it’s the environment itself. Do you need to make changes to the configuration of your office to keep your employees’ lesser selves at bay? If you can’t change the environment itself, can you restructure how employees impact their environment by shifting around who works at which desk within that environment? If you’re dealing with a production floor, can you reevaluate procedures to keep people from stumbling over each other? Would adding a floater keep employees from each others’ necks?

Sometimes we have to trust that our employees aren’t as childish as we’ve come to perceive them and accept the notion that it is, in fact, us – or at least the way we’ve chosen to design the workplace around them.

Is this over my head?
Of course, in the back of your mind, you should always be asking yourself whether the conflict is over even your head. Is the conflict too involved - too deep-seated - for any employee to feel it can be resolved in-house by HR. Alternatively, would any response to the behavior signal a potential legal minefield (e.g., employment discrimination) or worse, that there is a workplace violence issue that could be boiling over?

In those cases, bring in the professionals. Organizational development specialists, mediators, investigators, and your legal counsel are always options. Employers Group is here to help you sort out how involved your situation is and with whom you may wish to speak, if anyone. And, of course, EG’s Helpline is always here to commiserate with you and assure you that it’s not you and that your employees truly are…behaving like children.

Healthcare Costs and Wellness Programs

By Wendy Platt, CEBS, Helpline Consultant

How would you like to help your company save money? Employers can save $1, $2, $3, and sometimes more, for every dollar spent on a wellness program. Wellness programs encourage employees to be more aware of their health, making healthier choices by adopting and sustaining long-term, healthy lifestyles.

A few years ago, DuPont reported saving $5 for every dollar spent on their wellness program. Although larger companies may have an advantage, that doesn’t mean that smaller companies shouldn’t consider this option. Not only is the workforce aging, but obese youth and youth with Type II diabetes are entering the workforce.

The goal is to provide current and future employees the opportunity to prevent illness, or improve and stabilize their health while at the same time reducing the company’s healthcare costs. Healthcare costs are normally 25%, or more, of total compensation; and, according to the Government Accountability Office, healthcare costs have surpassed paid leave as the most costly benefit.

A surprisingly low percentage receive health care
Typically, employers continue their efforts to reduce healthcare costs by using networks, increasing deductibles and co-pays and increasing the employee’s share of the premiums. But costs continue to rise, and at the same time, the quality of care is often questionable. Neither employers nor health plans are efficient or have good utilization of medical procedures as reported in the June 2003, New England Journal of Medicine (and reported in the March 2006 issue of Benefits & Compensation Digest). Below are the percentages of patients receiving care as recommended by their physicians:

• Hypertension . . . . . . . . 68%
• Depression . . . . . . . . . . 57.7%
• Asthma . . . . . . . . . . . . . 53.5%
• Headaches . . . . . . . . . . 45.2%
• Alcohol dependence . . .10.5%

Notice the astonishingly low percentage of individuals receiving appropriate care! Despite increasing health care costs, patients are not getting the kind of care that they should be getting. Is this due to poor patient care, an individuals’ personal negligence or a combination of these and/or other factors?

Physician services and even their competence do vary. Hospitals too. Obviously, improvements need to be made as well as more accountability. In the meantime, employers can implement wellness programs to assist employees, their “most valuable asset,” with their health issues to reduce healthcare costs and at the same time, reduce absenteeism, presenteeism (employees coming to work sick and making other employees sick) and turnover, costs that negatively impact productivity.

After evaluating your company’s demographics, programs might include:

• Smoking: A March poll taken by BenefitNews indicated that 33% of employers have smoking-cessation programs. Dr. Knut Ringen, a consultant specializing in health risk management, states that “when an employee stops smoking, that produces a 20% medical savings and increased productivity.” According to a Division of the American Cancer Society, smokers are absent from work 6.5 days more than nonsmokers.
• Obesity/Weight Loss: A poll taken by BenefitNews in March 2006, indicated that 15% of health plans cover weight loss. Gordian Health Solutions conducted a study published in the March Journal of Occupational and Environ-mental Medicine indicating that obesity is the most costly health risk for both men, 14%, and women, 25%, at a cost of $3.55 per month for men and $5.71 per month for women.
• Depression: Depression costs businesses as much as $79 billion per year according to a U.S. Surgeon General’s report.
• Cancer Detection: The National Institutes of Health reported that cancer costs were $209.9 billion in 2005, with $17.5 billion of that for lost productivity.
• Drugs and Alcohol: According to a 2000 report submitted to the U.S. Congress on Alcohol and Health, healthcare costs are about twice as much for employees who have alcohol problems as opposed to those who do not.
• Exercise: Results of a study by Dr. William Whang of the Brigham and Women’s Hospital in Boston, Mass-achusetts states that “…exercise is extraordinarily safe for all of us....”
• Disease Management: Employees who have illnesses such as diabetes and hypertension can learn how to stabilize and control the disease.
• Screenings for hypertension, diabetes and cancer, etc.
• Healthy habits: Encourage employees to take walks instead of taking a smoke break as well as those who sit most of the day. Make healthy food, drinks and snacks available at a discount.
• Employee Assistance Programs (EAP): Provide counseling and support for employees, i.e. recovering cancer patients.
• Offer discounts for exercise equipment and health club memberships.
• Communicate: Lunch and Learns, e-mails, newsletters and health fairs, for example.
  (Note: Employees should see their physicians before beginning such programs.)

Risk management aspect
Why not equate disease prevention as a component of risk management? The Department of Health and Human Services (HHS) reports that 75% of healthcare costs are spent on chronic conditions like obesity, cardiovascular disease and adult onset diabetes, diseases that are preventable. HHS states that the typical cost/benefit ratio for a traditional employee wellness program provides $3 saving for every $1 spent on the program.

Even with Privacy, HIPAA and ADA, employers can provide employees with a voluntary program and adopt incentives to improve behaviors.

What can employers do?

• Evaluate employee needs.
• Consider options mentioned above.
• Encourage employees to submit ideas.
• Develop a program that is understandable and easy to administer.
• Monitor and maintain high standards for your healthcare plan.
• Communicate!

Use multiple strategies to reduce healthcare costs – for long term health improvement and cost containment, not just immediate, short-term goals, which are only a quick fix.

Employers are constantly trying to reduce costs and at the same time improve productivity and increase revenues to maintain a competitive advantage. Wellness programs are worth considering to accomplish this goal. If you take care of your employees, they’ll take care of your business.

Military Leave

By Dagmar Muthamia, SPHR, Helpline Consultant

Last year the De-partment of La-bor (DOL) issued regulations for the Uniformed Services Employment and Reemployment Act (USERRA) of 1994 that governs military leaves. The full text is available at www.dol.gov/vets

Protected military duty
USERRA extends rights and protections to “service in the uniformed services” whether it is voluntary or involuntary. This includes the U.S. Armed Services (including the Coast Guard), the Army National Guard and the Air National Guard, and the commissioned corps of the Public Health Service.

Application of USERRA
USERRA covers all private employers and all levels of government. Size doesn’t matter. USERRA also applies to successor-in-interest companies even when not informed that an employee was on military leave at the time of the merger or acquisition. A successor-in-interest company exists where there is a substantial continuity between the previous company and the successor company.

Employees with more than one employer have re-employment rights for all their jobs. Where there is a joint employment relationship both employers are covered.

Required notice
The employee or an appropriate office of the uniformed service must notify the employer(s) that he/she intends to go on leave. Exceptions to this requirement arise due to military necessity or when the notice period is too short. This is not a leave that depends on the employer granting permission. The employee does not need to tell the employer that he/she will seek re-employment after finishing his/her service.

Period of service
Employees on military duty have the right to return to their job under USERRA except when the job was a temporary job that would not have continued. The right to be reinstated may be extended for as long as seven years if the employee has suffered an illness or injury that prevents them from returning sooner. In most instances, it will be limited to a maximum of five years. There are exceptions that will extend the leave beyond five years, but the employee’s voluntary re-enlistment beyond five years is not subject to an extension of the right to return to the same employer. The exceptions primarily cover situations where service has been extended beyond five years due to war or national emergency.

No time before or after the service begins counts as part of the five years. Military leave includes fitness for duty exams, courses of study, travel time, and reasonable time off to arrange affairs.

Benefits while on leave
While on military leave an employee is entitled to the non-seniority benefits given to employees on other types of leaves. If employees on other leaves accrue vacation or receive full or partial pay, the employee on military leave must also receive these benefits. They must be allowed to use vacation pay they have accrued prior to the leave, but cannot be required to do so. They may be denied sick pay if employees on similar leaves are not allowed to take it.

During military leave, employees continue to accrue seniority and the benefits of seniority. Therefore upon their return, they need to be put on the benefit level that includes service credits for time spent in the military. For example, they now have enough seniority for three weeks of vacation rather than two weeks.

There is no break in service for pension benefits. Employers are required to make any contributions to their pensions on behalf of returning service members that the employer would have made if the employee had not been on military leave. For contributory plans, which offer benefits only where the employee makes contributions, the returning employee must be allowed to make up missed deferrals or contributions over a period equal to three times the period of military service, but no longer than five years. Employers are required to match any such employee contributions, but are not required to credit the employee with any interest that would have been earned.

Health insurance
Employers must offer employees on military duty a continuation of health benefits for themselves and their covered dependents for up to 24 months. If the military service is less than 31 days, he/she may not be required to pay more than the employee's share. If the period of service extends past 31 days, he/she may be required to pay not more than 102 percent of the full premium. The employee and his/her covered family members will not have a waiting period or exclusion period when he/she is re-employed.

Timeline for returning to work
Employees returning to work after their service must notify their employers of their desire to return to work and report back to work within specific time frames that depend on the length of service.

• If the service was less than 31 days, he/she must report to the employer by the start of the first full regularly scheduled work period on the first day after completion of service, plus at least eight hours after the time when the employee could be safely transported home from the location of the military service. If reporting in within that time period is impossible or unreasonable, then the employee must report in as soon as possible after that eight-hour period.
• Individuals whose service lasted between 30 and 180 days must apply for re-employment within 14 days after the completion of service. If that is impossible or unreasonable, the employee must apply for re-employment on the first day that application becomes possible.
• Individuals whose service lasted longer than 180 days must apply for re-employment within 90 days after the completion of service.

In order to have reemployment rights the individual must be have an “honorable” or “under honorable conditions” discharge. The employer is entitled to proof of service if the service period extended beyond 30 days. However, re-employment cannot be delayed because the individual has been unable to obtain documentation.

Reinstatement and retention rights
In general, the returning employee will not suffer a loss of position or benefits because of the leave. This is called the “escalator” principle. Each returning service member should be able to step back on the seniority “escalator” at the point the person would have occupied if the person had remained continuously employed. Therefore, the employee needs to be placed in the position he/she would have reasonably attained if the leave had not occurred. The employee is also entitled to receive any pay increases that would probably have been given if continuously employed. If the employee is not qualified to perform the duties of the escalator position, the employer must make reasonable efforts to help the employee become qualified.

An employee returning to work after military service may not be discharged, except for cause for a period of one year, if the service period was more than 180 days, or for six months, if the service period was more than 30 days. Discrimination and retaliation based on an employee's military service is prohibited.

Compliance Tips – Save this List!

By Matt Bartosiak, Consulting Helpline Manager

This is Part 2 in a series on compliance tips that can make administering HR easier and help to avoid some nightmares. In the first installment, tips in the areas of overtime, the exempt fixed salary rule, and pay deductions were among the topics discussed.

I caution you to use these lists as a “jumping off” point and to further research how to best implement these ideas both legally and efficiently. The Employers Group Helpline offers members a wealth of knowledge and experience from which to draw. We are here at your disposal to answer questions, guide you through situations, or simply act as a valuable sounding board. Remember, you can reach the Consulting Helpline by phone at 800.748.8484. or through our web site at www.employersgroup.com

1. Alternative Workweek Schedule: Great idea! Individual employees can have their own alternative workweek schedule by using California’s “make-up” time allo-wance each week. Detailed rules exist.
2. FMLA/CFRA: Biggest oversight is if the employer does not stipulate how the 12 month period, within which to take the leave, is calculated, then the employer must calculate this 12 month period all 3 allowable ways, and then give the employee on leave the most advantageous option. The rolling backward option is the most favorable for employers.
3. FMLA/CFRA: Include in your written notifications to the employee that the granting of the leave is contingent upon the doctor’s certification that a “serious illness” as defined by law exists.
4. FMLA/CFRA: Remember that any month that a non-FMLA/CFRA employee is on leave counts as a month towards the “on the payroll for 12 months” rule, if the employee receives at least one employer benefit. (workers’ comp, for example).
5. FMLA/COBRA: Where the leave is used for pregnancy, the employee may be put on COBRA at the end of the three months of FMLA. Even though the employee may still have an additional month of California pregnancy leave, there is no mandate on the employer to continue insurance during this leave. COBRA will also run through any continuation of the leave for newborn care as allowed by CFRA.
6. COBRA: Notification of the covered individual’s rights is the cornerstone of COBRA compliance. Do an annual address update. In COBRA notices, state that it is the responsibility of covered individuals to keep the company abreast of all address changes. On your insurance enrollment form, ask for the legal address of any dependent, if they do not reside with the employee.
7. COBRA: You do not have to prove that COBRA notices were received. The requirement is to prove that it was provided. Although not legally required, always mail COBRA notices to the home if there are any covered dependents. Big one—the legal date for timeliness on any time rule is the postmark!
8. Time Cards: Even though not legally required, always have nonexempt employees sign the time cards or time sheets. Have a statement whereby the employee acknowledges that all required meal and rest periods have been taken.
9. Travel time: Can be paid at a different rate for travel occurring outside of scheduled work hours as long as it meets minimum wage ($6.75). Travel time is hours worked for overtime purposes. When employees are relieved of all duty at the travel destination, then they are off the clock (as in personal time in the hotel).
10. Leave extensions: When it comes to leave extensions by doctors. In your employee handbook put the responsibility on the employee to call the company before the initial leave is up and ask if the doctor’s extension has been received.

The next installment will include tips on alternative workweeks, and more.

By Wendy Taylor, Editor and Legislative Coordinator

Since it's an elec-tion year, nothing major is expected to pass in the California Legislature. Legislators introduce lots of bills for publicity in an election year, but usually nothing controversial passes because no one wants to vote on controversial bills before an election.

Less bad employer bills this year
There are not as many bad employer bills in the Legislature this year. Those legislators with safe districts can still propose the anti-employer bills, because they have nothing to lose, but there are fewer bad bills for employers this year. Those that are considered bad for California businesses are highlighted below.

Minimum wage increase
The Democrats’ bills (listed below) to increase the wage and add an inflation factor may pass the Legislature, but Governor Schwarzenegger is expected to veto them. He wants a wage increase, but he doesn't support automatic inflation adjustments.

AB 1835 (Lieber) & AB 1844 (Chavez) - These two nearly identical bills would increase the minimum wage to $7.25 per hour effective on and after July 1, 2007, and to $7.75 per hour effective on and after July 1, 2008, and would provide for the automatic adjustment of the minimum wage on January 1 of each year thereafter, calculated by multiplying the minimum wage by the previous year’s rate of inflation, as specified.
SB 1162 (Cedillo) - This bill would speed up the timeline for a minimum wage increase by increasing the minimum wage to $7.25 per hour effective on and after 60 days after its enactment, and would further increase the minimum wage to $7.75 per hour effective on and after July 1, 2007. In addition, this bill would provide that the minimum wage shall be adjusted automatically every year thereafter on January 2, calculated by an indexing method, as specified.

Governor’s plan for minimum wage
Earlier in the year, the legislature failed to act on SB 1167 (Maldonado), which was backed by the Governor and contained a wage increase without the automatic inflation factor. The Governor, however, has petitioned the Industrial Welfare Commission (IWC) for a $1 an hour increase, raising the current minimum wage of $6.75 to $7.75 in two phases of 50 cent increases over the course of a nine-month period. This is the Governor’s way of increasing the minimum wage in an election year without having the automatic inflation factor contained in the above bills.

It is now up to the legislature to either: (1) pass the wage increase without the inflation factor, or (2) to pass a wage increase with an inflation factor, forcing the Governor to veto the bill—but, he can recover by having the IWC act on the matter instead. Although the IWC was previously de-funded in the State Budget, the Department of Industrial Relations is providing the necessary funding to the IWC.

Employer mandated health care
SB 1414 (Midgen) - California Fair Share Health Care Act (nicknamed the Wal-Mart bill). This would require an employer with 10,000 or more employees in the state (who does not elect to contribute the difference in support of the Medi-Cal program) to spend a specified percentage of the total wages paid to employees in the state in the immediately preceding calendar year on employee health insurance costs, as defined. It would impose civil penalties on an employer that fails to provide information or make payments as required by the bill.

AB 1952 (Nation) - Health care coverage (combined individual responsibility with employer mandate). This bill would establish the California Essential Health Benefits Program that would be managed by the Managed Risk Medical Insurance Board, which would be required to offer an essential benefit plan to employees without coverage through employers and to self-employed and unemployed individuals. This bill would assess employers who do not provide health care coverage equivalent to an essential benefit plan a fee and would make the EDD responsible for administering those provisions.

SB 840 (Kuehl) - Single-payer health care coverage. (Carried over from 2005)
This bill would establish the California Health Insurance System (CHIS) under the control of an elected Health Insurance Commissioner. It would make all California residents eligible for specified health care benefits, which would, on a single-payer basis, negotiate for or set fees for health care services provided through the system and pay claims for these services.

AB 1840 (Jerome Horton) - Health care: Employer coverage: disclosure. This bill would require that on or before March 15, 2007, the Legislature receive a report identifying all employers who employ 25 or more persons and whose employees are beneficiaries or who support beneficiaries in the Medi-Cal program administered by the State Department of Health Services, the Healthy Families Program and the Access for Infants and Mother Program, which are administered by the Managed Risk Medical Insurance Board. The bill would also require identifying qualifying employers and the information be made public as provided in the bill.

Arbitration agreements
AB 2371 (Levine) - The employer community is united in opposition of this bill. This bill would invalidate arbitration agreements between employers and employees that relate to employment practices covered by the Fair Employment and Housing Act. It also provides that (on and after January 1, 2008) an employer has the burden to prove that a waiver of an arbitration agreement was knowing, voluntary and not a condition of employment or continued employment.

Unemployment
AB 2209 (Pavley) - Unemployment compensation benefits: trade disputes: fraud or misconduct. This bill would provide that any agreement between an employer and employee, or his or her representative, prohibiting the employee from either filing a claim for, or appealing a decision of denial or reduction in, unemployment compensation benefits is against public policy and is void.

AB 2344 (Chu) - Unemployment amnesty with harsh penalties. This bill would require the Employment Development Department to develop and administer an amnesty program for a 3-month period, under which an employer may apply for the waiver of (1) unpaid penalties, and interest owed on those penalties, imposed on or before December 31, 2005, that are owed as a result of the nonpayment or underpayment of these tax liabilities or the failure to file reports, or (2) penalties imposed, or that may be imposed, and taxes required to be withheld, that are owed as a result of the nonreporting or underreporting of these tax liabilities or the failure to file reports for periods that ended on or before December 31, 2005.

SB 300 (Kuehl) - Family and medical leave. This bill (carried over from the 2005 session) would increase the circumstances under which an employee is entitled to protected leave by (1) eliminating the age and dependency elements from the definition of “child,” thereby permitting and employee to take protected leave to care for an independent adult child suffering from a serious health condition; and (2) permitting an employee to take leave to care for a seriously ill grandparent, sibling or domestic partner.

Workers’ Compensation
No one expects any substantive changes to workers’ comp this year. Even if the Legislature passes any of the 27 bills, the Governor is expected to veto them. Below are some of the ones to watch/oppose this year:

AB 1209 (Yee) - This bill would permit unlimited number of chiropractic, occupational therapy and physical therapy visits an employee is entitled to receive per industrial injury.

AB 2068 (Nava) - Eliminates the April 30, 2007 sunset date for employees to be able to pre-designate a physician for workplace injuries, removes the 7% statewide cap on pre-designation, and expands the definition of a pre-designated physician to include any medical practitioner that is a member of a medical group, medical corporation, or medical network to which the pre-designated physician belongs.

AB 2287 (Chu) - Adds a set of medical treatment guidelines for the use of acupuncture in the treatment of workplace injuries.

Good bills that failed
Two Republican-sponsored 4-day workweek bills (AB 2217 and SB 1254) were strongly supported by both employers and employees, but failed passage in committee due to the partisan nature of the Legislature.

CA Supreme Court
Foul Language Case

By Jim Kuns, J.D., Senior EG Consultant

Acomedy writers’ assistant for the TV show “Friends” filed suit after her termination for poor work performance, claiming that the writer’s coarse behavior and foul language amounted to, amongst other things, sexual harassment under California’s Fair Employment and Housing Act (FEHA). The California Supreme Court found that the foul language was not directed at the assistant and that in the context of the creative nature of that workplace it did not amount to sexual harassment. See Lyle v. Warner Brothers Television Productions (2006).

Amaani Lyle, an African-American woman applied for a position as a Writer’s Assistant for “Friends” and was hired in June 1999. Adam Chase and Gregory Malins, executive producers and writers on the show, interviewed Lyle. She was made aware that it was essential for her to take very detailed notes for the writers when they were discussing story lines. She had to be able to sort through the writer’s discussions and pick out the dialog and jokes that may be used in the show’s script.

She told Chase and Malins that she could type “really, really fast” and claimed in her application for employment that she could type 80 words per minute. No one tested her typing speed before she was hired. She worked for Chase and Malins and at times for a supervising producer, Andrew Reich, who was also a writer on the show.

One of Lyle’s claims against her employers was that she was subjected to sexual harassment by offensive comments and jokes made by Chase, Malins, Reich and other writers during writers’ meetings. Chase, Malins, et al., claimed that Lyle was fired four months after being hired, because of her poor job performance. They assert she was not able to type fast enough to keep up with the speed of the discussion at the writers' meetings. She consequently missed important jokes and dialogue.

Additionally, they claimed that even if there were offensive and bigoted comments and jokes made in her presence during writers' meetings “…these comments and jokes were not severe or pervasive enough to create a hostile work environment as a matter of law. …[L]ewd, crude, vulgar jokes and comments in the writers' room were an indispensable means of developing gags, dialogue and story lines for ‘Friends’ which is a show about the lives of young sexually active adults.”

After her termination Lyle filed a complaint with the California Department of Fair Employment and Housing (DFEH). Her initial claim alleged that she was terminated based on race and gender discrimination and in retaliation for complaining about the show's racial discrimination against African-American actors. Later, she added claims of racial and sexual harassment.

The DFEH gave her a right-to-sue letter, and she then filed suit against “…organizations and individuals involved in the production and writing of ‘Friends’ including Warner Brothers Television Productions, NBC Studios (NBC), Bright, Kauffman, Crane Productions (BKC), and producers-writers Chase, Malins and Reich [defendants].”

At the trial court level, the court agreed with the defendants and determined that NBC and BKC were not Lyle's employers and were therefore not liable on any of the claims. The court also decided that Lyle’s harassment claims were not filed in time, and that she could not prove her claims of racial and gender discrimination, retaliation or harassment. The court awarded the defendants their court costs, and attorney fees, stating that the FEHA claims by Lyle were “…frivolous, unreasonable and without foundation.”

Lyle appealed the trial court’s decision to the California Court of Appeal and the California Supreme Court agreed to hear the case. The Supreme Court noted, “There is no dispute that sexually coarse and vulgar language was used regularly in the Friends writers’ room. But the use of sexually coarse and vulgar language in the workplace is not actionable per se. Rather, we must look to the specific facts and circumstances presented to determine whether the language at issue constituted harassment based on sex within the meaning of FEHA and whether such language was severe enough or sufficiently pervasive to create a work environment that was hostile or abusive to plaintiff because of her sex.”

The Court agreed that the FEHA makes it an unlawful employment practice for an employer, “because of the . . . sex . . . of any person…to discriminate against the person in compensation or in terms, conditions, or privileges of employment. ...Likewise, it is an unlawful employment practice for an employer, because of . . . sex, …to harass an employee. [The law states that] … ‘harassment’ because of sex includes sexual harassment and gender harassment.”

The Court went on to discuss the intent of the FEHA regarding discrimination in employment because of sex, in that it guarantees members of both sexes an enjoyment of equal employment benefits. “For purposes of the FEHA, an ‘employment benefit’ specifically includes ‘provision of a discrimination-free workplace’ …which in turn is defined as ‘provision of a workplace free of harassment.’”

The Court found that Lyle could not prove there was a hostile workplace environment based on sexual harassment law and case decisions. The Court went on to caution, however, that

“In reaching this conclusion, we do not suggest the use of sexually coarse and vulgar language in the workplace can never constitute harassment because of sex; indeed, language similar to that at issue here might well establish actionable harassment depending on the circumstances. Nor do we imply that employees generally should be free, without employer restriction, to engage in sexually coarse and vulgar language or conduct at the workplace. We simply recognize that, like Title VII, the FEHA is ‘not a ‘civility code’ and [is] not designed to rid the workplace of vulgarity. …While the FEHA prohibits harassing conduct that creates a work environment that is hostile or abusive on the basis of sex, it does not outlaw sexually coarse and vulgar language or conduct that merely offends.”

Planning Ahead for Boomer Retirements

Carol Allen is Director of Corporate Development for Employee Support Systems Company (ESSCo) and a Certified Employee Assistance Professional (CEAP) with more than 20 years experience in management and organizational development, corporate training and Human Resources.

What steps, if any, is your organization taking to compensate for the loss of the Baby Boom- era employees? A recent study by Robert Half International suggests that 78 percent of organizations surveyed are taking some steps to prepare for the impending exodus of experienced workers. Statistics show that as the largest ever generation retire, shortages of skilled workers will emerge in nearly every industry. Valuable experience, knowledge of best practices, and industry contacts will be difficult to replace.

According to Robert Half International’s survey, some of the strategies and practices that some firms are taking include:

• Implementing/enhancing succession planning programs
• Providing employees training/professional development
• Implementing/enhancing mentoring programs
• Inviting retirees/future retirees to be consultants or trainers
• Increasing compensation and benefits

Identify potential skill shortages
Determining the skills and knowledge you will need in the future, as well as creating a culture for coaching and change will be essential to your success. Managers will need to be coached on how to retain star performers, attract talented applicants, create loyalty and honor experience. They will need to become more resilient and flexible in adapting to change. Management training and Employee Assistance Programs (EAP) can be helpful to managers and employees during such periods of stressful change and transition.

Identifying skill shortages or knowledge gaps within all levels of the organization is the first step. Where are you going to hire your replacement employees? Are they current employees, employees from other companies, college graduates, unskilled workers, or part-time employees? These may be some of the questions you will be asking as the impact of the boomer “brain drain” is felt in your organization.

In response to shortages, some companies are hiring process outsourcing firms to stem the loss of knowledge and experience of retiring employees. These firms partner with organizations and assess their business needs, analyze job skills, identify learning skills and gaps, and perform competency matrixing and knowledge mapping.

Succession planning
A potential shortage area of special concern is frontline leadership. The turnover of frontline supervisors should be considered when doing succession planning. According to the Biannual Leadership Forecast by Develop-mental Dimensions International, turnover of frontline leaders continues to outpace the turnover at middle and senior levels. Organizations that can identify and develop new frontline supervisors quickly may achieve a competitive advantage. Implementing carefully planned new hire programs will impact the supervisor’s performance, relationships, and effectiveness in his/her position.

Strategies to attract and keep workers of all ages
A goal for every organization should be to develop policies and procedures to establish work environments where employees can develop to their full potential. Many of the current HR policies and practices were developed in the industrial era when business assets were tangible. Since today’s economy is knowledge-based, assets have shifted from tangible to intangible. The value-added is less about inventory and more about employees.

Implementing new strategies can uphold the interests of the younger workers, older workers, employers and society. Some possible strategies for consideration are:

• Allow all age groups access to employment;
• Offer continuous training throughout the worker’s professional life, allowing the transfer of knowledge between generations;
• Provide for flexible work content and work hours to consolidate younger workers’ employment and prolong the active work life of older workers;
• Adapt work so that it is suitable to all workers, regardless of their age or capacities, and
• Create social links between workers.

Intergenerational training
Today, organizations face a unique dilemma. Four generations are working side by side in the workplace. They are the Traditionalists, Baby Boomers, Gen-Xers and the Millenials or Yers. According to Brenda A. Benedet, President of Benedet Performance Group of Toronto, Canada, bridging the intergenerational gap is crucial. She predicts “intergenerational” training will be the next hot training challenge to hit the marketplace. It means blending a generation accustomed to classroom learning with the Xbox learning style. Understanding the different generations’ characteristics, needs, career goals and motivators will be important. Capitalizing on the strengths of each generation will allow organizations to have wider product appeal and become more innovative in their marketing.

The value in older workers
There is a huge wealth of knowledge, skills, talent, and energy for organizations that retain their boomer population. Home Depot is an example of employers who have looked into non-traditional hiring practices. The retail giant tapped into the older workforce, many of whom had retired from other companies. One rationale is that older workers appeal to the older customers who frequent the business.

Studies confirm that many baby boomers will work well past their retirement age. Offering flexible work schedules and part-time employment are incentives for older workers to stay on the job longer or to return to work after retirement.

Start by evaluating current workforce
A key strategy may be to evaluate your current workforce and determine the employees who want to work in some fashion past their retirement date. Studies show that mature workers (aged 45 to 54 currently) will be better educated than retirees in the past. Also, the educational level of older workers in the future will be closer to that of their younger colleagues. Many companies, such as Home Depot, are measuring their return on experience (ROX), or experience transfer, in dollars and cents.

The impact the baby boom generation has—and will continue to have—on the labor market is an ongoing debate. If you haven’t done so yet, begin now to assess the many available practices and strategies for managing the impending boomer drain in your organization to tailor which ones will specifically work for your organization.

Not the Typical Team Building Experience!

By Jeff Hull, Director, Learning Services

22 APR 2006 0800 HRS: I arrive at base camp in fatigues on a dreary and overcast Southern California morning. No, there was no sleeping in on this typically damp Saturday! As I met with my co-workers, we began to strategize over the day’s objectives: conquer our fears, instill a sense of teamwork and learn more about each other outside of the ordinary, everyday work setting.

While the fatigues were not required gear and the day’s activity was not a military exercise, it was a unique teambuilding session Employers Group conducted for its management group. The session was focused around a “challenge course,” where participants would not only learn new things about themselves, but learn a tremendous amount about their colleagues.

The program began, as many training programs do, with a few small group icebreakers to get everyone engaged and on topic. While I will not disclose what the actual exercises were, one exercise showcased how many people limit their thinking and how safe they like to be in their environments both inside and outside of work. This exercise opened the entire group up to the activities ahead.

After being briefed by the facilitator, we began two activities dealing with strategy, individual performance and team performance. The team performance included a lofty goal. After about 10 minutes into one exercise, frustrations began to escalate because the goal could not easily be achieved. We all felt it was going to be easy to accomplish and we just jumped into the task. We did not strategize at all.

Instead, based upon the continued poor performance, the group instinctively altered the goal to make it more achievable. Needless to say, the group did not feel comfortable achieving a less than optimal goal. The strategy then began: how can we effectively work as a team to achieve the desired result? Just about everyone shared their thoughts and the group quickly came to a consensus on how achieve the goal. This session created an environment where each team member had a defined role, was able to give input and everyone contributed. The end result? We exceeded our goal by 140%!

While the initial activities were somewhat physical and warmed us up in the cool morning, the “real” activities were just beginning. The challenge course was next.

The challenge course activities focused on concepts such as teamwork, trust, overcoming obstacles and even fear. We began the first exercise on a low tightrope just 12 inches from the ground. We paired up and had to trust not only our partner, but our entire group to keep us from falling inward or outward. After the first pair, each subsequent team of two became more and more confident in their partner and the entire team. The program instilled trust with each other and we were definitely going to need it as the next challenge would be an individual performance challenge 40 feet off the ground!

It was quite surprising to learn how many people are afraid of heights – me included! The next two activities involved both an individual exercise where we had to walk across a 50-foot balance beam and tightrope, first individually and then as a pair. Each activity was suspended 40 feet in the air. After completing each exercise, participants were lowered via a safety harness to the ground by their fellow team members. This was a massive accomplishment for many team members. Among other things, many indicated a renewed sense of self, achievement and even elation upon completing the activity.

The last activity for the full-day session involved (in my opinion) the granddaddy of all exercises. One that did, in fact, scare me so much that my legs were literally trembling. It was individual in nature, but involved teammates as supporters and encouragers.

As each participant began their task, they had to tell the group a few things: (1) what they hoped to accomplish, (2) what their ultimate goal(s) were, and (3) what assistance they needed from the team. While very little direction was given on what to say, some members discussed the task at hand that was a more immediate goal, while others took the time to discuss work-related goals and how the team could help support the goals.

The physical and most challenging exercise of the day thus began. Participants had to climb a 40-foot telephone pole, stand atop it with no help, support or balancing. Once atop, if that could be achieved, each participant had to jump off to a suspended trapeze a few feet away. This was unexpectedly the most nerve-wracking and inspirational exercise for me. In fact, when we arrived and I looked at the course, I automatically dismissed this exercise as something a more advanced training session would include. I was in complete shock as I knew I would soon attempt it.

I personally had a two-stage goal for this task: If I could get to the top that would be the first. The second would be if I could simply stand on top of the pole without falling. Before climbing I indicated to the group how they can support me in my daily activities.

I then took a deep breath and began the 40 foot ascent. Nearing the top and maintaining focus, I could hear teammates from far below encouraging me. This encouragement made me push farther and pull from a strength within. I achieved my first goal!

As I transitioned from the safety of the pole rungs to standing atop the gently swaying structure, my legs began to tremble subtlety and my nerves almost got the best of me. Leg by leg, I stood atop the pole. I made it! I actually did it! I totally accomplished my personal goal. The sense of accomplishment almost drowned out the cheers from below. Wow, if I accomplished this, I bet I can actually jump off and grab that trapeze and achieve something I hadn’t planned.

After taking in the sights, sounds, smells and feelings, I was experiencing serenity on the perch, then I jumped. Time went still. I felt the bar of the trapeze. It slipped out of my hands and I suddenly felt the support of the safety harness steadily taking me down to my waiting team members. Instant exhilaration! Everyone came around me with congratulatory remarks, high-fives and jovial comments. What an experience!

While the day initially began with dampened weather and somewhat dampened spirits, the program quickly turned us all around (and seemingly, even the weather), and at the conclusion of the day everyone was glad they participated. Participants got to learn about team dynamics and interaction, but most importantly they learned something about themselves. It was certainly one of richest teambuilding and personal development activities I have ever participated in. I would highly recommend this activity for any organization to build or renew trust and teamwork within.

(Note: For more information on how your company can take advantage of programs like this, please email training@employersgroup.com.)

College Graduates Pickier than Ever

By Jennifer Shin, Research Marketing and Communications Coordinator

While studies suggest that in 2006 we will experience a record high of companies planning to hire new college graduates since the sharp job market recession of 2001, employers are finding compensation practices alone are not effective incentives in drawing this new generation of graduates to their company.

According to a study conducted by a consulting firm, NOMMOS, at the turn of the 21st century, many employers were noticing a change in the face of their workforce. For the first time, four generations were working together in the same office. Alongside the Silent, Boomer and X Generations (those born in between the years 1925-1981) were now the Millennials (those born after 1982). At the same time, many employers claimed they were observing a growing rift between their company and the young workers.

The NOMMOS report indicates that many employers found these young workers “difficult to train,” “brash” and “overconfident,” while at the same time “creative,” “ambitious” and extremely technology savvy. Issues such as absenteeism were also beginning to soar. Consequently, with the introduction of new Millennials flooding the workplace after college, employers are finding that many of these dominant characteristics found in their new high-energy and young employees are causing problems in not only retaining but also some difficulty in recruiting them.
Yet, 2006 salary data shows that college grads will enjoy the best job market in four years as a result of the expanding economy along with the first wave of baby boomer retirements. Employers reported that they expect to hire 14.5 percent more new college graduates in 2005-2006 than they hired in 2004-05, according to the National Association of Colleges and Employees (NACE). Companies are also being forced to put more resources into recruiting efforts: 54 percent of the companies who responded will actively recruit on campuses this year, an increase from last year’s 42 percent.

“We feel that with our [company] culture its best to hire younger people because they are not set in their ways. Likewise, [new graduates] are drawn to our company because we provide the experience and combine it with their youth, making it a dynamic and energetic company to work for,” said Joseph Duong, a business consultant at That One Company, an eBusiness solutions company in Northern California where 30% of the staff was hired as new college graduates.

Employers plan to target business, engineering and computer-related degrees at both the bachelor's and master's degree level in 2005-06. According to the NACE survey, mechanical engineering graduates are in the highest demand and by aerospace manufacturers, automotive and mechanical equipment manufacturers, and utility companies.

According to the survey, however, service sector firms are expecting the highest increase at 16% of new grad hires this year. Also, although new graduates with math, economic or accounting skills have long been leaders of the job market (and can expect to earn 5% more than last year’s graduates), many liberal arts and humanities graduates with strong communication and writing skills are also getting multiple offers along with prospect of quick promotions and performance based pay raises.

Most employers said they don't expect to offer incentives, such as signing bonuses they used in the past to woo job candidates. Only 44 percent of respondents reported plans to offer signing bonuses to 2006 graduates. According to NOMMOS, however, the lack of these types of incentives should do little to persuade or dissuade graduates from working for their companies. The consulting group describes Millennials’ primary concern is to find “meaningful work” that will provide them a job where they have a “voice” and “flexibility,” which can be observed in the last few years’ sudden rise in college coop programs and corporate internships.

According to Wet Feet, an online career management company for college graduates, within the past few years alone, there have been an especially high number of college students taking on summer internships, indicating that this generation is especially eager to enter the workplace.

According to the study, students’ motives of working for companies aren’t necessarily driven by money, but instead they said their ideal workplace environment would be one that provided actual tasks or work that was suitable for exempt personnel. They wanted to be exposed to the real work environment and wanted to know how their work related to the overall success of the business. Employers should also keep in mind that programs that are designed around candidates’ objectives have a better hiring rate, than those who offered solely compensation benefits.

Consequently, companies are fast learning that with this year’s batch of college graduates and students, the question of “what can you do for us?” is not being asked by the employers, but rather by the candidate.