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The SESCO Report – January 2009

Special Report — Effect of Economic Crisis on Human Resources

The current economic crisis continues to effect business and industry according to a recent survey:

Most companies surveyed believe that their human resources will be effected by the current financial crisis, however, they are avoiding dramatic changes in the short-run.

Three (3) out of 10 employers (28%) have reduced their merit pay budgets in the wake of economic turmoil. Of those employers that reduced their budgets, the projected raise for 2009 is 2.5% — down from 3.7%.

Twelve percent (12%) of employers are planning to freeze salaries.

One (1) in four (4) employers are planning layoffs (26%), hiring freezes (25%), or raising employee contributions to health plans (25%).

Note: The survey was conducted by Watson-Wyatt Worldwide ? released October 2008.

As reported often by our Compensation and Benefits Division, labor costs are an employer's largest, controllable expense. Therefore, when facing financial challenges, it only makes good business sense for an employer to challenge staffing and related cost such as compensation and benefits.

As SESCO clients consider reductions in workforce (RIF's), there must be considerations made to federal and state employment laws as well as "best practices" to ensure that the RIF is handled in such a way as to maintain a positive relationship with those employees and families affected, the community in which you operate, current employees as well as customers and vendors. The RIF should be carefully planned and communicated to avoid what can be devastating and expensive compliance issues as well as long-lasting cultural and reputation stigmatisms.

When layoffs are unavoidable, the manner in which the terminations are carried out can greatly influence how laid off and surviving employees react. Please consider the following SESCO tips when considering a RIF:

Selection Process

1. Select decision makers — Typically, department supervisors or managers are best able to assess past performance and predict future performance and should be included in the selection process.

2. Evaluate employees — It is essential to build solid and well-documented cases for individual decisions. It is generally not a good idea to rely solely on one factor such as past performance or evaluations, because evaluations are often written in highly complimentary terms and are not designed for comparing employees with respect to the skills, knowledge or abilities required for a job. It is more appropriate to prepare ratings to assess past and present effectiveness on the job; the ability to adapt to the changing work environment; unique skills; supervisory competence; and an ability to adapt to a restructured job or assignment. When possible, multiple evaluators who have personal knowledge of the employee's performance should provide input. All ratings should be reviewed for thoroughness, apparent consistency within the organization and consistency with past evaluations. SESCO has developed a selection process and forms.

3. Analyze and adjust selections — Once the preliminary selection process is completed, it is recommended that management review the proposed list of employees selected for layoff. This audit process will allow the company the opportunity to make appropriate adjustments to the selections to avoid liability for disparate impact such as discrimination.

Once the company has selected employees for the RIF, you must determine if the number selected requires compliance to federal and state regulations — specifically to include the WARN Act. Briefly, the WARN Act requires advance notice of 60 days for covered employers and the notice must be provided to employees, local political units and state agencies. Although the legislation is complex and it is suggested that employers considering a RIF contact SESCO to determine compliance with WARN, facilities who have 100 or more full-time workers and layoffs will affect at least 50 full-time workers with layoffs lasting over six (6) months must provide notice. Furthermore, employers closing a plant or unit with the prerequisite number of employees must provide notice. If the total number of employees to be laid off exceeds one-third (1/3) of the workforce or a total of 500 or more workers, notice is required.

Finally, when executing the RIF, employers should consider:

Well planned and proactive communications to include:
Press release statement
Internal company-wide meetings prior to the RIF
One-on-one or small group meetings with those employees who are selected for the RIF

Consideration of severance agreements and packages with proper and legal severance agreements and releases (contact SESCO to discuss the development of these agreements).

Job search workshops.

Organized assistance in conjunction with local and state agencies to help process unemployment claims as well as assist in finding employment.

Provide references and other support to employees being laid off.

Prepare Q&A handouts to address the separation process which would include COBRA, employee benefits, unemployment and other information that will help the employee and their family through the process.

Counseling assistance through an EAP or other healthcare providers.

RIF Tools for SESCO Clients

SESCO provides compliance manuals, outplacement training and consulting services to assist employers through the RIF process:

"Employer's Guide to Advance Notice of Closings and Layoffs" (WARN)

"SESCO's Guide to Conducting Layoffs"

Development of severance agreements and releases

Development of "window" or early retirement incentive plans

RIF audits and WARN compliance

Finally, SESCO conducts job search workshops. Workshops run from two (2), four (4) or up to eight (8) hours. Programs are customized for both employees and managers as well as specific industries and states. Assistance in networking and resume preparation along with copies of resumes for each employee are provided.

Please see the special insert providing an overview of SESCO's outplacement assistance.

SESCO's Tips for Controlling Unemployment Insurance Cost

Unemployment insurance cost has risen 73% from 2003 to 2007 (American Payroll Association). Subsequently, SESCO provides the following tips to maintain a good unemployment experience rating:

? Become familiar with the non-charging provisions of the UI State Law. It is important to quickly and effectively contest improper claims lodged against the employer's account.

? Keep track of statements of accounts furnished by the state agency that reflect the charges on the account of benefits paid to employees. Check the statement carefully for mechanical errors. It is not uncommon that statements are sometimes incorrect.

? If the rate has been incorrectly determined, immediately notify the state agency.

? Do not allow unsatisfactory employees to build up base-wage credits. In states where a former employee's base-wages are charged in whole or part against the base-employer's account, do not allow unsatisfactory employees to build up wage credits and thus increase potential charges to your account. Remove unsatisfactory employees as soon as possible to avoid this build up of wage credits.

? After hiring new employees, carefully follow their progress and dismiss them promptly if they prove to be unsatisfactory. Most states do not deny benefits to employees dismissed for mere inefficiency or incompetency, which means that the longer an inefficient employee remains employed, the greater the potential charges against your experience rating record when he or she is ultimately separated.

? Give every employee who leaves a separation interview. Whenever an employee is dismissed or leaves employment voluntarily, be sure to conduct a separation interview. Inquire carefully into the reasons for leaving or the circumstances surrounding dismissal and, of course, document thoroughly.

? Keep accurate records concerning the circumstances surrounding an employee's dismissal or leaving. Include any dismissal, severance or vacation payments made at separation, and, if possible, secure a signed statement from the employee as to the reasons for leaving. Often a good employee can be persuaded to stay if the employer can find cause, personal or otherwise, of his or her dissatisfaction.

? At the time of separation, the employer should notify the separating employee of his or her rights to unemployment insurance. Many employees resigning or quitting will file for unemployment regardless.

? Be careful in the selection of new employees. The discharge of an employee for inefficiency or because of inability to perform the duties on the job does not ordinarily disqualify the employee from receiving unemployment benefits. Therefore, the best way to avoid unemployment cost is to hire the right person the first time.

? Contest or appeal unemployment claims. Most states process unemployment claims without challenging the ex-employee or claimant. Many times states will grant unemployment benefits without considerations for the separation. Of course, voluntary resignations should always be challenged. Employers should challenge terminations based upon "gross misconduct." Finally, employers should always challenge or appeal when terminated for insubordination or other willful acts. Willful acts include absenteeism, ignoring a request or job assignment, willfully or intentionally not adhering to company policy or job standards or expectations — simply just not caring or other willful disregard for the job can be grounds for loss of UI. We at SESCO have been very successful in representing our clients before state agencies by thoroughly explaining and articulating that the employer did its part — the employee just didn't do his or her part and wasn't making a reasonable attempt to improve performance or perform the job as expected.

? Develop and provide a thorough and complete employee handbook, job description and other standards and expectations of employment and have the employee sign for these employment documents.

What Motivates Employees?

Employers are in agreement that today's employees are less conscientious about their work and are not as loyal to their employer as they were a generation or two ago. Many of the calls and complaints managers we work with are related to the lack of motivation in their workplace. Subsequently, a great deal of attention is given to employee motivation to include numerous books, motivational seminars and surveys. So, what's the solution?

Many companies are trying to provide or create motivation by attempting to give employees what they think they want from their jobs rather than what the employees really want from their jobs. This thinking is verified by a recent survey which asked a great many supervisors to rank, in order of importance to workers, 10 factors that affect their morale.

The answers given by supervisors were ranked as:

1. Good wages
2. Good benefits
3. Job security
4. Promotion opportunities
5. Good working conditions
6. Ample time off for personal reasons
7. Good training
8. Appreciation of work
9. Sympathetic help/leniency for personal problems
10. Effective leadership

To benchmark these answers by supervisors, the following answers have been given by 396,000 employees who have taken SESCO's Employee/Management Satisfaction Survey:

1. Appreciation for work done
2. Feeling "in" on things
3. Fairness/no favoritism
4. Job security
5. Good benefits
6. Good wages
7. Promotion and growth opportunities
8. Good working conditions
9. Effective communications
10. Sympathetic assistance on personal problems/flexibility

Obviously, the results are quite different when you ask supervisors what employees want vs. what employees really want. Therefore, it is suggested that your organization consider conducting an Employee Opinion/Attitude Survey to determine how your employees really feel about your organization. Your prosperity and future operating freedom may depend on the answers. Contact your SESCO consultant to plan and schedule this important communications program as more than ever, you must attract and retain a highly motivated workforce to be successful in today's challenging and competitive environment.

Welcome New SESCO Clients!

Alleghany-Highlands Community Services Board
Bob Boyt Honda
Sunnyside Communities
Rose Mortuary
Bloomingdale Utility District
D.R. Henderson Funeral Home
Holland Christian Home
Florida Association of Homes and Services for the Aging
Carolina Meadows
Westminster-Canterbury of Blue Ridge
Fairhaven Corporation
Graceland Rentals
Episcopal Senior Care
Brooksville Healthcare Center
Citizens National Corporation
Blue Ridge Behavioral Healthcare
Tri-City Extrusion, Inc.

Upcoming SESCO Events

January 15, 2009
Family Succession Seminar
Michelin Independent Tire Dealers
Palm Desert, CA
Bill Ford

January 21, 2009
Diversity and Harassment Awareness
Bristol Chamber of Commerce
Bristol, TN
Aubrey Lee

January 26, 2009
2008 in Review and What to Expect in 2009 ? Webinar
Virginia Community Healthcare Association
Stephanie Peters

February 15-18, 2009
Human Resources
Painting and Coatings Expo
New Orleans, LA
Joel Cullum

February 19, 2009
How to Reduce Liability in Screening and Hiring Practices
Virginia State Feed Association Annual Convention
Roanoke, VA
Bill Ford

March 4-5, 2009
Public Seminar ? HR Basic Course
Roanoke, VA
Stephanie Peters

March 7, 2009
Complying with Wage and Hour Regulations
North Carolina Tire Dealers and Retreaders Association
Raleigh, NC
Bill Ford

March 25-26, 2009
Public Seminar ? Effective Leader/Manager
Wyndham Virginia Crossings Hotel & Conference Center
Glen Allen, VA
Stephanie Peters

April 8-9, 2009
Public Seminar ? Effective Leader/Manager
The Centre at Millennium Park
Johnson City, TN
Stephanie Peters

May 2, 2009
Wage-Hour Compliance
Virginia Automotive Association
Winter Green, VA
Joel Cullum

May 12, 2009
How to Comply with Wage and Hour Regulations
North Carolina Funeral Directors Association
Raleigh, NC
Bill Ford

State and National Business and Trade Associations, Chambers of Commerce and Human Resource Associations are welcome to contact SESCO to book a professional speaker for annual conventions or other meetings. Contact Bill Ford at 423-764-4127 or by email

Special-Insert — An Overview of SESCO's Outplacement Training Program for Employees and Managers

In difficult economic times many employers find that reducing their workforce is a painful necessity. SESCO's outplacement program is available to help our clients provide downsized employees with resources to conduct a systematic and effective job search. Major components of the program include:

Provide tools to help participants maintain a constructive attitude through the process by acknowledging their feelings, accepting change while profiling their accomplishments to develop a personal marketing campaign.

Evaluate career goals to understand what they want from a job and how to best utilize their skills and past experience.

Prepare for the job search by developing a resume best suited for the type of position they are seeking that effectively presents their experience and capabilities.

Understanding the job market and how to identify through formal and informal channels suitable positions. The importance of networking, how to best respond to advertisements and the importance of conducting the job search in a systematic fashion are stressed. Participants will learn how to identify "hidden" positions never known to most job seekers.

Interviewing skills are developed including reviewing difficult questions often asked in interviews that can often mean success or failure in landing a desirable position.

Developing a personal marketing campaign to include creating a weekly plan to maximize time spent in the job search. Participants learn that finding a job is now their "job" until they land a new position.

Many helpful job search resources are available but not known to those with little recent job search experience. Participants are given information on free resources that can help them broaden their job search to areas previously unknown.

Programs will be customized to the employer, industry as well as state. Length of program can be customized to run from two (2) hours, four (4) hours or up to eight (8) hours, or on a one-on-one basis.

Contact SESCO Management Consultants to discuss our outplacement training program and other resources to assist employers in conducting compliant and effective reductions in force.

Special Insert — Client Alert: New Federal Posters Are Available

The Wage and Hour Division of the U. S. Department of Labor has issued amended regulations for the Family and Medical Leave Act (FMLA) that are effective January 16, 2009. The regulations include the expansion of FMLA for military families that was signed into law by the President in January 2008.

In addition, the Wage and Hour Division has issued a new FMLA poster with a revision date of January 2009. Employers with 50 or more employees are required to post the FMLA poster, along with five other federally required posters.

SESCO has revised our "six-in-one" poster to include the new FMLA poster in addition to the federal posters for:

Fair Labor Standards Act (minimum wage)
Equal Employment Opportunity
Uniformed Services Employment & Reemployment Rights Act (military leave)
Employee Polygraph Protection Act

The new SESCO "six-in-one" laminated poster is available for $14.95 plus shipping.

SESCO ensures that the federal and state posters we provide are current and include the most recent revisions to reflect any changes to applicable employment laws and regulations.

Posters can be ordered by calling 423-764-4127, by faxing this form to Jan Fleenor at 423-764-5869, or online at

(#)_____ Five-in-One Posters (Less than 50 employees)

(#) _____Six-in-One Posters (50 or more employees) (Family and Medical Leave Act)

(#)_____ State Kits (includes all required state posters). List state(s):

Client: ___________________________________________________

Shipping Address: __________________________________________
P.O. Box / Street City State Zip

Billing Address: ____________________________________________
P.O. Box / Street City State Zip