Professional Service Agreement

The SESCO Report – October 2006

Employee Motivation — Your (Only) Competitive Advantage

Organizations no longer have any natural advantage over each other. Organizations that occupy the more productive and profitable positions in today's competitive economy are the ones that are able to make the best utilization of their human resources ? the only variable resource.

There are six (6) basic resources of any organization. These include:
human resources

Because the other business elements are relatively "fixed" and/or commonly leveraged, the opportunity for a competitive advantage lies in the only variable element, that of human resources. All organizations have access to the same materials, equipment, processes, finances, and markets. They even have access to the same human resource market. It's the utilization of this "variable" resource, the workforce, that makes the real difference between organizations.

The most promising source of increased productivity is not in process improvement or expense management; mainly it is locked up in the human will to perform. Appreciation of the human resource is also the most neglected factor since most of management's training and emphasis has traditionally been on the "fixed" resources and process side of business.

A veritable goldmine awaits management who succeed in moving their valued employees to increasing their productivity and improving their efficiency. It is no secret that people don't work at 100 percent capacity. Nor must they.

Also psychologists have different estimates ranging all the way from 17% ? 50%. You can make your own guess. But the fact still remains that people do not work up to 100% capacity except in isolated instances.

So how does an organization motivate employees to increase their productivity one percent (1%) or even more? A quick review of the history of motivation should make the subject more understandable. Over history there have been three (3) distinct phases of motivation:

1. Yesterday it was fear, as hard-fisted bosses constantly threatened employees (the result, unionization);

2. Today it's "more" compensation and fringe benefits attempting to attract and/or to "motivate" employees to do more (the result, turnover ? employees leaving for ever greener pastures as there will always be a higher payer in town);

3. Tomorrow it must be leadership, for a new concept is gradually emerging that recognizes employees as human entities who expect to derive some satisfaction economically, psychologically, emotionally, and socially at work (the result, satisfied employees performing at increased levels).

Motivation efforts must shift away from being task oriented to becoming employee oriented. When worker needs are satisfied, motivation becomes obtainable.

This is the frontier that managers must explore — in fact, there will be no choice. With ever-tightening margins, low unemployment, and a competitive marketplace for talent, employers cannot hesitate to explore and tap into their existing employees' motivation as this is the real source of "doing more with less." Those organizations who will be able to do this will be the ones who will ultimately have the natural advantage over their competitors and provide superior service.

When was the last time your organization sincerely asked your employees what they like about working for your organization and what they would like to see to make it a better place to work? The very fact of asking sends a very powerful message in that you care and that you want to see your employees' on-the-job needs met. The most effective way known is to conduct a completely confidential and validated Employee Satisfaction Survey. SESCO has been conducting satisfaction surveys and helping organizations in responding and following up to surveys for over 60 years. We welcome your call to discuss conducting your next survey so that you can fully understand what your employees want and need from you so that they can be motivated and provide your organization a competitive advantage.

- Bill Ford

EEOC Charges — Take Them Seriously

It is an unfortunate fact of business life that at one point or another the vast majority of employers will be the target of an Equal Employment Opportunity Commission (EEOC) charge by an employee or former employee. Many employers, however, don't understand the EEOC procedures or even why and how responding to an EEOC charge is important.

Your Defense Starts Now ? Responding to EEOC Charges

The actions that an employer takes in responding to an EEOC charge can have dramatic effects on you if the employee who made the charge institutes litigation. Accordingly, it is crucial that you approach internal investigations and response to EEOC charges thoroughly and accurately. Some things you should do in responding to an EEOC charge that could affect later litigation include the following:

? Remember, the information you provide is FOIA-able. The responses you provide to the EEOC, including exhibits, correspondence or other documents can be obtained under the Freedom of Information Act. That means if you are later subjected to a lawsuit, what you said at the time may be disclosed to the employee's attorney.

? Be consistent. Once you are involved in litigation, your representatives will likely be asked to provide certain answers and information under oath. If those answers contradict or deviate from what you said to the EEOC, your company's credibility will be diminished.

? Document, document, document. How effective and efficient you are able to defend against a discrimination charge will depend in large part on the accuracy and completeness of your documentation. Investing time upfront when the EEOC charge is first filed to collect, organize, understand and compile relevant documents will ensure that those facts will be available and coherent a year or more down the road if a lawsuit is filed.

Employers must do what they can to establish "a no cause finding." Why?

? A no-cause finding establishes a "loser's" mentality. Many employers respond to charges without the assistance of a consultant and don't fully understand that the EEOC is the "first step" in potential liability. A no cause finding is critical in convincing an employee that the employer is compliant.

? Such a finding makes the case unappealing to counsel. Although employees don't need an attorney to go to the EEOC and can represent themselves in a lawsuit, most will try to find an attorney to take the case to court. It is much easier for an employee to find a lawyer willing to take his case if the EEOC has issued a "probable" cause finding.

? It creates a strategic delay. Although the process has become faster in recent years, it still requires time for the EEOC to process and investigate the charge (normally six (6) to eighteen (18) months) and for the employer to fully participate and respond to the agency's investigation.

Bottom Line

All too often, employers go into an EEOC investigation blind ? with no knowledge about the EEOC's processes, the importance of conducting a thorough investigation, or the necessity of providing a comprehensive and accurate position statement. The result, incomplete position statements and "cause" findings resulting in litigation. Win or lose the case, the employer loses as they must pay to defend this action.

SESCO has an unsurpassed case history in representing employers before the EEOC. Our staff specialists are trained in investigating and taking affidavits, preparing position statements, and properly and thoroughly responding to the EEOC as your representative. Should you receive a Notice of Charge of Discrimination from the U.S. Equal Employment Opportunity Commission or a state Human Rights Commission, contact SESCO to ensure a timely, cost effective and professional representation.

The Facts: EEOC Charge Statistics FY 2005
Total Charges: 75,428
Retaliation (all statutes): 29.5%
Retaliation (Title VII): 25%
Race: 35%
Sex: 30%
Age: 22%
National Origin: 10%
Disability: 19%
Religion: 3%
Equal Pay: 1.3%

Note: Sex includes sex harassment which requires additional employer responsibilities to avoid more severe liability.

- Joel Cullum, Sr. Vice President and EEO Specialist

How to Avoid Wage and Hour Complaints

Wage and Hour complaints and related lawsuits are gaining significant popularity due to the amount of backwages collected. Companies must take a more proactive approach in examining how they may be affected by Wage-Hour laws.

Wage and Hour complaints are among the most prevalent workplace actions facing employers today. As a result of the 2004 revisions, the Federal Employment Standards Administration's Wage-Hour Division has recovered more than $166M in back wages for more than 241,000 employees during the fiscal year 2005 — a 26% increase.

Employers should consider:

? An annual internal audit of all compensation practices and time records.

? Conduct exit interviews with employees who leave to potentially address unknown complaints about wages.

? Pay special attention to employees performing administrative and accounting tasks who are paid on a salary basis.

? Be proactive in daily communications with employees to include confidential communications such as suggestion boxes, opinion surveys, etc. This practice will allow "complaints" to be addressed before they become official investigations.

- Clark Phipps, Senior Vice President, Training and Development

SESCO Client Inquiry — Staff Response

Question: We are acquiring another company. What due diligence issues should we be concerned from an HR perspective?

Answer: Due diligence investigates any liabilities the acquirer may incur. HR issues to be investigated include but are not limited to:

? Purchase obligations
? FMLA — current cases
? Workers' Comp — current liabilities
? Pending discrimination or other employment lawsuits
? Investigate OSHA compliance or citations
? COBRA liability
? Collective bargaining constraints
? Employee performance issues