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The SESCO Report – February 2009

Look Who's Back ? The Unions

During the month of January alone, SESCO has had more client calls concerning union activity than we have received in the past 5 years. Unions are obviously reenergized and there are several hundred thousand of paid union employees who are targeting business and industry in hopes of getting hired at a non-union employer in an effort to unionize the workforce.

We have received calls from various industries (particularly healthcare) regarding union "salts" being hired and subsequently creating an anti-employer and pro-union environment. Examples include:

Case 1 — Healthcare: Employee was hired and soon after claimed that she observed patient abuse. The employer thoroughly investigated the charge and found no wrong doing. The employee then started causing problems between employees and their manager concerning job assignments and finally was fired. The employee filed a charge with the National Labor Relations Board claiming that she was terminated due to "concerted activity." This act in itself is highly unusual as most employees will go to the EEOC, Department of Labor or unemployment if there is alleged wrong doing. Clearly, this employee was looking to create an environment the union could exploit.

Case 2 — Service Industry: Employees initially claimed racial discrimination. Once investigated and found that there was no discrimination, they started claiming "religious" discrimination because they had to work overtime on Saturdays to serve the client. This was investigated and again, the employer found to be managing their operations appropriately. Finally, the employees started pushing union cards and now have enough to file for election.

Both of these cases are highly unusual and it is apparent what the unions' tactics are which include "salting" employers and then subsequently creating compliance, safety, discrimination or other issues the union can leverage against the employer.

Over our 65-year history in battling unions with a 98% win rate, we have found without question that the majority of American working men and women want to be loyal to the organization that writes their paycheck. Why then do employees turn to unionization? The basic answer is "need frustration." They turn to unions when their basic needs, wants, gripes and complaints go unheeded, unheard or unanswered by management. Our history and opinion surveys show conclusively that employees do not usually show interest in a union until their "need frustration" has caused a critical low morale situation involving poor attitudes in key areas of their daily work experience.

With card check and other pro-labor legislation on the horizon, the question is not if but when your organization will be targeted. Subsequently, the question that management must ask itself is: "If we had a union election today, would a majority of our employees vote for the company or the union via signing authorization cards? What would happen if the union targets our organization?"

To answer these questions, management must "take the temperature" of their employees. Management should conduct a confidential Employee Attitude-Satisfaction Survey. Most organizations conduct attitude surveys on a regular basis (every 2 years). It is now more critical than ever if you have not conducted a survey in recent months to do so. Not only will the survey pinpoint favorable attitudes, but it also will pinpoint unfavorable areas of vulnerability. Whether or not your organization has been targeted by a union, organizations who have high productivity and long-term success want to know what their vulnerability areas are so that they can address them.

SESCO's survey is one of the oldest and most tested surveys on the market today. SESCO's survey is also customized to various industries to include manufacturing, retail, banking, healthcare and others. Each industry contains a national norm bank of hundreds of thousands of responses so that an employer can "benchmark" their results to what is "normal." Additionally, the SESCO survey has been validated by the University of Tennessee and is the only survey that we are aware of that has been formally assessed to determine validity. Finally, SESCO consultants are trained to help employers understand, manage and address survey results as statistics and employee feedback can be overwhelming and confusing. The survey is only one step in the process of ensuring that your organization is meeting your employees' needs and wants.

Other SESCO staff recommendations include:

Review of screening and hiring process to ensure that "union salts" are not hired.
Union Awareness/Avoidance training for all leaders.
SESCO to conduct federal and state law compliance audit including union vulnerability audit.

To assist employers in conducting their own vulnerability audit as well as to ensure awareness, we have recently published "How to Prevent and Combat Unionization Successfully" which is available to SESCO retainer clients, business and trade associations, chambers of commerce and others.

Please contact SESCO to discuss proactive measures and what we expect to be historic levels of union activity.

Family Business Succession

It is critical that the independent family business succeeds as family businesses are the vital force in the U.S. economy. Consider the following facts:

About 90% of all U.S. businesses are family-owned or controlled.

Employ 3 out of 4 workers.

They range in size from the traditional small business up to one-third (1/3) of Fortune 500 firms are family-owned or controlled.

Family businesses generate one-half (1/2) of our country's Gross National Product (GNP).

Family businesses generate one-half (1/2) of the total wages paid.

Obviously, our economy greatly depends on the success of the family business. However, it is unfortunate, even alarming, that such a vital force has such a poor survival rate from one generation to the next. Less than one-third (30%) of family businesses survive the transition from the first (founding) generation to second generation ownership. Of those that do, only 15% survive the transition from the second to third generation ownership.

To compound these statistics, at any given time, 40% of family businesses are facing the transfer of ownership issue. Business owners are continuously struggling to decide what to do with their businesses; however, the options are few. Ultimately, the family business owner can:

Retire and close the business.

Sell the business to a competitor, an outside investor or even employees.

Retain ownership and management within the family through family succession.

To be one of the few family businesses that survives the transfer of ownership requires a good understanding of your business, yourself and your family. There are various reasons why families fail to transfer the business from one generation to the next including:

The business itself is not prepared.

The owner has little desire or can't let go.

There are generational conflicts between owners and their children and subsequently differing management styles.

There is a reluctance of the children to join the firm.

There is a lack of proactive communications and planning.

These factors alone, or in a combination thereof, make transferring a family business difficult, if not impossible. Typically, based on our consulting practice in assisting families, the primary cause of failure is in the transfer of power, whereby control over the business's operations is transferred from the owner to someone else. The transferring of assets is relatively simply once a strategy is determined. Most CPA's or financial planners can determine what is the best strategy. However, the process of transferring the power is extremely emotional, stressful and often times devastating to the family business and family relationships.

Every family and family business is unique requiring customized succession planning, but consider the following staff recommendations:

Is Your Business Prepared?

Ask yourself the following questions:

How can I get my business to work, but without me?

How can I get my employees to perform the way I do, but without my constant interference?

How can I systematize my business so that it can be replicated over and over again from site to site or generation to generation?

How can I own a business, not a job?

To ensure that your business is prepared, consider the following:

A vision/strategic plan
Job/position descriptions
Operations manual
Employee handbook
Compensation system
Developed/effective managers
Good communications

Not Letting Go ? The Owner's Reasons for Resistance

10. Too many people I've known have died after they've retired.

9. Without me, the business is nothing.

8. Without the business, I'm nothing.

7. I don't have any hobbies.

6. I need someplace to go.

5. The kids want to change the way the business is run.

4. I have several capable kids and I don't know which one to choose.

3. The business is my major source of income.

2. Nobody can run the business as well as I can.

1. Somebody may run the business better than I.

Understanding Generational Differences and Management Styles

The following are the basic differences between generations:

Golden Collar ? Born 1920's to 1945: Characterized as loyal, hard working and faithful to institutions.

Baby Boomers ? Born 1946 to 1964: Invented the 70-hour workweek, hard workers deeply connected to career achievements.

Generation Xers ? Born 1965 to 1980: Only want challenging work, work isn't most important thing in their lives, although hard working, at 5:00 they pursue "fun."

Generation Y/Millennials ? Born 1981 to 2000: Materialistic, selfish, technologically literate, normally reject rigid job descriptions.

Reluctance of Offspring to Join the Company

Some of the following bullet points are the reasons why children don't join the company:

I can't succeed because I'm not as good as my father.

I do not have the desire to work as many hours as my father.

I've tried, but my father will not let go.

There's no "how to" manual — I'm afraid I can't run the business.

Lack of Communications and Planning

The bottom line in succession failure is the lack of communication and planning between family members. The following is a basic succession process for consideration:

Family retreat; use personality profiles and generational conversations in order to tear down barriers and develop a basic understanding and relationship.

Define job responsibilities for family members

Develop family business plan

Develop goals and strategies

Communicate weekly in managing the family strategic business plan

SESCO assists family businesses in developing relationships, family and strategic business plans and family succession planning. We have authored a new Family Business Succession Planning Guide which includes helpful checklists and staff recommendations. The book may be ordered through SESCO and we also welcome the opportunity to visit with you and your family about family business succession planning.

President Signs Fair Pay Act

Wasting no time in moving forward with a comprehensive labor and employment law legislative agenda, Congress passed and the President signed the Fair Pay Act.

The Lily Ledbetter Fair Pay Act overturns a 2007 Supreme Court decision, Ledbetter vs. Goodyear Tire and Rubber. Lily Ledbetter had worked for Goodyear for almost 20 years before retiring. Only in 1998, after she took her pension, did she sue for alleged wage discrimination stretching back to the early 1980's. The Supreme Court ruled 5-4 against her noting that the current EEOC statute clearly said claims must be filed within 180 days or sometimes 300 days of the alleged discrimination.

This Fair Pay Act removes the current filing requirements of 180 days or 300 days. Discrimination suits can now be brought long after evidence has disappeared or witnesses have died. So as long as an employee is being paid, she can sue all the way back to her initial employment date.

For trial lawyers, this is pure gold. The Act creates a new legal business in digging up ancient workplace grievances. It also makes it easier by the bill's new definition of discrimination. Companies can be sued not merely for outright discrimination, but for unintentional acts that result in pay disparities.

Since these supposed wrong doings could be compounded over decades of employment with the employer, the potential awards are going to be huge. Most companies will be compelled to settle such claims rather than endure the expense and difficulty of defending allegations about long ago behavior which may involve bosses who have retired or passed away, practices under old policies and simply trying to put together a case which may be 20 or 30 years old.

The results of the Act will be huge settlements. And the losers would be current and future employees, whose raises are going to be smaller as companies allocate more earnings to settle claims, pay higher insurance cost and legal bills.

What should SESCO clients do to avoid liability?

Ensure compensation practices are clearly documented — preferably in a formal compensation system.

Audit payroll practices on an annual basis — SESCO conducts employment law audits to ensure employment and pay practices are not discriminatory. SESCO retainer clients receive this audit annually at no charge.

Any employer receiving federal funds needs to ensure that their required Affirmative Action Program includes our compensation analysis.

Implement sound policies and practices through employee handbooks, ensure managers and supervisors are trained and always process disciplinary action up to and including termination carefully documenting performance and behavior issues.

Review practices of personnel file retention.

Special Thanks to New Clients

Michelin USA
Cypress Cove at Healthpark Florida
Westminster of Lake Ridge
Appalachian Orthopedic Associates, P.C.
W C Y B TV-5
Commonwealth Care of Roanoke, Inc.
Cecil M. Burton Funeral Home
Friendship Home Medical Equipment
Johnson Health Center

SESCO Client Feedback

"Thank you for the great job you did last week in your presentation to our Administrators. The material you covered was exactly what we needed and your presentation skills kept everyone engaged as we needed for them to be. We are excited about our new partnership with SESCO and the many benefits it will offer us as we move forward in these difficult times."

~ Nancy Waters, Director of Staff & Community Relations
Commonwealth Care of Roanoke, Inc.

Special Insert — Spring Seminar Series 2009

Seminar Agenda

Human Resources ? The Basic Course ? March 4-5, 2009 (Roanoke, VA)

Pre-employment Recruiting, Screening, and Hiring
The Importance of Employee Handbooks and Clear Discipline Policies
Determining Pay Rates and Developing Compensation Systems
Effective Performance Appraisal Systems
EEOC and Wage-Hour Regulations and Practices
ADA, FMLA, COBRA, Workers' Comp Compliance

Effective Leader/Manager ? March 25-26, 2009 (Richmond, VA)
April 8-9, 2009 (Johnson City, TN)

Using Your Management Style Effectively
Effective Leadership Skills
Practicing Performance Management
Setting Goals and Motivating Employees
Positive Approach to Discipline
Supervision Basics EEO, ADAAA, FMLA, EFCA, Wage Hour, Safety Compliance


2 days $350/person 2 or more $300/person
Retainer clients receive a 15% discount when one (1) person attends a seminar.

Johnson City, Tennessee Location:

The Centre at Millennium Park
2001 Millennium Place
Johnson City, TN 37604

Richmond, Virginia Location:

Wyndham Virginia Crossings Hotel & Conference Center
1000 Virginia Center Parkway
Glen Allen, Virginia 23059

Roanoke, Virginia Location:

Hyatt Place Roanoke Airport
5040 Valley View Blvd NW
Roanoke, VA 24012

8:30 a.m. 4:30 p.m.
(Continental breakfast, breaks, and lunch provided)

The dress for the workshop is casual and comfortable.

To register contact:

Lori Metcalf, Seminar Registrar
SESCO Management Consultants
P.O. Box 1848
Bristol, TN 37621
Telephone: (423) 764 4127
Fax: (423) 764 5869