The SESCO Report – January 2014

It's Time to Revisit Your Performance Management System

Margins continue to compress and subsequently profitability is an ever-challenging reality. This reality will continue to become even more difficult as legislation (red tape), Affordable Care Act, and a challenging younger generation emerge in the marketplace. As such, it behooves employers to refocus or recalibrate performance management systems to ensure that the system ensures an equitable return on purchased behavior — labor costs. As we all know, labor costs are all organizations' largest, single controllable cost and as such, this cost must be managed through an effective system.

Unfortunately, research by Towers Watson revealed that employees lack confidence in a pay-for-performance philosophy and system that many organizations have employed. The workforce study revealed:

Employees feel they are paid fairly compared with employees internally in similar positions: 57%

Employees feel management holds employees accountable for their performance: 47%

Employees feel they are paid fairly compared to the market: 46%

High performers feel they are rewarded for their excellent performance: 42%

Employees see a clear link between performance and pay: 36%

Note: These percentages are based upon employee attitudes and feelings — regardless of the level of pay. This means that these percentages apply in even the highest paying employer. Thus confirming that internal equity and perceptions are much more important to employee morale and attitude than the level of pay. Hence, you can be the highest payer in your region and still not receive the appreciation, productivity or retention that you deserve.

Given these basic pay realities, an employer may be inclined to just say, "The heck with it" and do away with the pay-for-performance systems and revert to an across-the-board philosophy for all employees. However, when surveying employee attitudes, SESCO has found that an across-the-board approach generates even lower attitude ratings, because ultimately they understand that no matter what they do or how hard they work, they will never be recognized either socially or via compensation. As such, SESCO recommends the following steps to all organizations no matter what size or industry in refining your performance management process:

1. Clearly define goals and objectives of every position
. Management needs to clearly align performance ratings with expectations and subsequently develop in writing a mechanism to guide execution. Provide the management team who conducts performance appraisals with tools that clearly link pay and performance of which all parties can understand and appreciate. The more objective, the better. How many, when, how, etc. all should be spelled out for each job position. "Come to work, do a good job and we'll take care of you" doesn't provide the tools to help managers truly measure and manage performance.

2. Define performance levels
. It is critical that an organization provide to managers and employees in the performance management system clearly-defined levels of performance, re: specifically what is exceptional, expected or unsatisfactory. Further, SESCO recommends three (3) to no more than five (5) levels of performance ratings. Point scales such as 1-10 or other very subjective rating tools allow for in consistency and frustrated employees and managers alike.

3. Administration guidelines. Most organizations that we audit will have some basic pay scales for each job or job category and subsequently utilize either an off-the-shelf/generic performance review form or a very informal/subjective review form. These systems inherently create a lack of trust and confidence in both manager and employee alike. Further, most systems do not contain the necessary policies and procedures that ensure reviews are conducted on time, are fair, consistent, well-documented, and do not provide the tools to connect compensation and/or require structural action up to and including termination based upon continued poor performance.

Frankly, an effective compensation system is not only necessary in today's challenging managerial times, but critical to ensure an organization's long-term growth and success in today's "new" economy. SESCO provides expert consulting in developing compensation administration systems and performance management programs to include:

Job analysis/identifying specific performance management criteria/expectations.
Customizing/preparing performance management tools.
Conducting area and regional wage surveys.
Merging external wage data with internal pay practices and budgets.
Developing policies and procedures to develop, implement and maintain compensation practices without consulting input.
Software and data systems to streamline the process.

Management training and development as well as employee communications.

Whether or not your organization has a program, contact SESCO to discuss developing and implementing and/or revising a program that ensures your organization receives an equitable/fair return on your larges, single controllable cost — labor.


Addressing Absenteeism: 8 Do's and Don'ts

Employers have heard all the excuses. My alarm didn't go off. My car broke down. My babysitter didn't show up. I have a terrible cold. Though sometimes those excuses for being absent or late ring true, chronic absenteeism and tardiness can become a major problem in the workplace, wreaking havoc on productivity as well as morale.

You would think that getting an employee to show up on time, every day, would be a simple matter. But these days, you really can't simply say, "Be here or be fired" when an employee walks through the door late or not at all. Especially when you throw in legal factors such as the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA).

For this reason, employers have to employ strategies that not only combat absenteeism, but also keep on the right side of the "law."

Coaching employees requires a delicate balancing act. Push too hard and you alienate people. Tiptoe around the core issue and you confuse people and frustrate other employees who obey policy. It's never easy.

When it comes to coaching an employee for poor absenteeism, there are several different strategies you can employ. And deciding which one to take isn't always cut and dried. You can avoid making disciplinary mistakes that could lead your company to court by following these do's and don'ts:

DO
figure out what is an acceptable level of absences, if your organization does not specify a maximum number. Think about how many days an employee could miss without significantly sacrificing work quality. Note: SESCO has found that a "point" policy does not work. Additionally, a hard and fast "number of days out and you're terminated" is also hard to manage.

DON'T penalize employees who have reason to be late or absent, e.g., they're going to physical therapy or have permission to leave early for a doctor's appointment. The same goes for employees who have a legitimate reason to be late or absent, e.g., using company benefits they have earned, like personal days. Note: Don't turn a benefit into a penalty. If employees learn to abuse the policy change the policy.

DO
make sure you understand what's off-limits and who gets the last word on any gray areas that may be in dispute in any policy that affects attendance. Note: Ensure consistency by providing managers support from HR or SESCO.

DON'T
undermine your company's absenteeism policy by ignoring any step that isn't convenient. It can lead to charges that you applied the rules in an arbitrary or discriminatory manner. Note: Consistency is critical to defending wrong doing such as an EEOC charge.

DO
recognize the difference between the employee who was out one day all year-even if you suspect it wasn't for a good reason-and the employee who has a chronic problem. Adjust your discipline accordingly. Note: A one-size-fits-all policy as noted above is not recommended. Flexibility is at times necessary and practical.

DON'T argue with an employee who challenges the interpretation of any policy that deals with attendance. Note: Clearly articulate policy and expectations and don't "bend" due to employee pressure.

DO begin documenting absences as soon as you notice a trend. Record dates, hours absent, and the reason the employee gives for them. Note: Once you notice a pattern, it will continue. Address it sooner rather than later, because it's not going away.

DO train managers of technical areas like FMLA, ADAAA, workers' comp, etc. Note: Most issues/misunderstandings arise due to managers not understanding laws or application of policy.

No manager enjoys coaching duties. But it's an important part of the job, and if you do it the right way, you can help a misbehaving employee solve a problem — or get rid of an employee who is a problem and defend a lawsuit or EEOC charge.

Contact SESCO to review and explore contemporary time off/absenteeism policies.


REALLY? Virginia Attorney Charges Client $50,000 to Settle $10,000 EEOC Charge

You literally can't make these things up. SESCO was recently informed by a valued client that prior to engaging SESCO (one of the reasons why they did) was that their attorney charged them in excess of $50,000 to settle a $10,000 EEOC charge.

We all know that most businesses are suffering as, again, margins are tight. This includes professional services such as lawyers and accountants.

Ask yourself before reviewing such a bill from your "lawyer":

1. How can I avoid such legal cost? Answer: Conduct an annual compliance audit. Be proactive, and train supervisors.

2. Are there qualified professionals available for less expense? Answer: Yes, SESCO Management provides ongoing/unlimited support to include federal and state regulatory matters through a fixed monthly fee. Employers can fix their professional budget to a couple thousand dollars per year, some less, some more pending number of employees versus contacting attorneys at $350 or more per hour.

3. Is a firm like SESCO qualified to answer and represent me in such employment matters? Answer: Yes — SESCO clients who have been audited have never been fined for non-compliance in our nearly 70-year history. Further, SESCO has authored a number of "how to" manuals that have been published and are currently being published by AMACOM Books. SESCO has a "win" ratio of 98% plus when representing employers before the EEOC and a 99% win rate regarding union activity. SESCO has represented clients in most all states before the federal as well as state Wage and Hour Divisions and as such with this experience, can represent employers efficiently and effectively when being investigated.

Time after time SESCO hears from clients, "my legal bills are more than the settlement or fine." Remember, regulations are written by lawyers for lawyers and as such, lawyers truly have a "license to steal." Utilize expert advice that is cost effective and designed to keep you out of your lawyer's office and the court room.

Contact SESCO (423-764-4127) to discuss our monthly service agreement and providing expert HR and federal and state regulatory advice.

Special Thanks to New SESCO Clients!

Rosenthal Automotive
Reston, VA

Forest Family Care, Inc.
Wytheville, VA

Marcorp, Limited

Baltimore, MD

Contractors Precast Corp.

Davidsonville, MD

Hodges, Jones & Mabry, P.C.
Blacksburg, VA

Greek American Rehab & Care Center

Wheeling, IL

Twenty Group(s)
Norm Gaither
(Nationwide)

SESCO Product of the Month

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SESCO Client Feedback

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SESCO Client Inquiry — Staff Response

Question: Can an employee moonlight while on leave under FMLA? Can I terminate the employee?

Answer: The Family and Medical Leave Act has no provisions prohibiting an employee from working another job while on leave from your workplace. However, this depends on whether your organization has a policy that would forbid employees from working secondary jobs. FMLA regulations state that if an employer has a uniformly applied policy governing outside or supplemental employment, such a policy may continue to apply to an employee while on FMLA leave. If an employee is not in compliance with an established policy forbidding secondary employment, termination of employment is an option.

Contact SESCO to review your current FMLA and "moonlighting" policies.

SESCO's Spring Seminar Series 2014

Richmond, VA

March 19-20, 2014
Effective Leader/Manager
Virginia Community Healthcare Association

April 16-17, 2014

Human Resources — The Basic Course
Virginia Community Healthcare Association

May 14, 2014

Human Resources — The Advanced Course
Virginia Community Healthcare Association

Bristol, VA


March 25-26, 2014

Effective Leader/Manager
Courtyard by Marriott

April 9-10, 2014

Human Resources — The Basic Course
Courtyard by Marriott

May 7, 2014
Human Resources — The Advanced Course
Courtyard by Marriott

(SESCO has partnered with one of our valued clients, Virginia Community Healthcare Association, to host our Richmond Seminar Series.)