• Area of a field cleared
• Rows of seeds sown
• Bushels of cotton picked
• Feet of track laid
• Number of garments sewn

Work looked like work and loafing looked like loafing. The practice of management wasn’t as tough then as today. Either the workers were cutting, clearing, hammering or sewing, or they weren’t. It was plain to see.

With the transition from a goods-based to a service-based economy, work changed from physical creation of tangible goods to intellectual creation of intangible products and services. Work is now done mostly by clicking, typing and talking. Incidentally, so is leisure. So bosses no longer can assess productivity by simple observation of workers or counting units of output. And if a manager cannot determine whether an employee is working diligently and productively, how is he or she supposed to know when intervention is needed? When coaching or corrective action is needed?

Monitoring More Difficult Now, but Necessary

We could judge a new salesperson simply by the number of sales he or she makes, or the quality of sales, but that’d be a bit like judging a new bricklayer merely by how long it takes for him or her to build a house, or the quality of the house. It’d be more prudent and less risky (and costly) if we monitored his or her work a bit along the way — particularly while he or she is new and unproven. Maybe watched and measured his or her first brick? Row? Wall? Archway? By doing so, we can spot troubling patterns before they turn into big problems. We can see signs of trouble and take corrective action while there’s still time to salvage success from what could become certain failure, even disaster.

Measuring activities that lead to success is what allows us to engage in the very practice of management.

Do you know the activities that lead to success in a certain job? You must, of course, if you are to manage. And once you do, you must monitor the employee’s performance of essential activities. If you measure and track only end results, such as sales, you are not engaging in management. Management is about monitoring performance — execution of essential activities that lead to success — and about taking timely corrective action to:

• Help cooperative and capable employees adopt behaviors that lead to success
• Spot habits or behaviors that produce unsatisfactory results
• Reassign or terminate employees unwilling or unable to perform key activities that lead to desired results

Yes, we must measure results as well as behaviors (or activities) that we know lead to desired results, but how? It is so much more difficult today. How do we know whether employees are working on their computers and phones at assigned tasks?

Keep Tabs via CRM

Virtually every successful company of any size today uses a customer relationship management (CRM) software program to track its customers, prospects, marketing campaigns, sales efforts, pipeline and sales. Popular CRM programs include Goldmine, SalesForce.com, SugarCRM, ACT, Microsoft Dynamics and Filemaker. Each allows you to track and monitor salesperson behaviors such as phone calls, in-person calls, meetings, emails, lead generation, proposals delivered, and sales won and lost. You also can track the number of keystrokes, time logged into the system and the number of entries.

So what are you waiting for? Track employee productivity, compare behaviors of your top performers and be a better manager. And the discipline of logging all prospect and customer activity into a CRM provides other very important benefits, such as lessening valuable information lost in employee turnover.

Monitor the Monitors

Many managers have begun using technology to actually “watch” what employees do on their computers. They argue that employee abuse is rampant and that managers must somehow fight back. Studies seem to support this assertion, such as the one conducted by Salary.com, which found that employees spend an average of 1.86 hours per eight-hour workday on something other than their jobs, not including lunch and scheduled breaks.

Necessity is the mother of invention, of course, and various software solutions are now available that will allow you, from the comfort of your own computer, to see or receive reports on what your employees do on their computers. Check out offerings by Spectorsoft, Track4Win and SpyTech.

If you decide to begin monitoring, you may want to talk to your lawyer about legal ramifications and also consider whether you should tell your employees. Odds are you’ll want to let them know and also add the monitoring policy to your employee manual. They’ll probably throw a fit, but such does not mean it’s not a smart move on your part.

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Monitoring employee productivity and on-the-job focus is not nearly as easy as it used to be. We can be sitting right across the room from an employee and not know whether he or she is working diligently on assigned tasks or emailing friends, checking Facebook or looking for a job. Two great tools that allow you to step out of the guessing game are productivity tracking via CRM and direct remote monitoring of computer usage. It may feel strange at first when you begin these types of monitoring and measuring, but, ah, it’s your job. Management is about monitoring and measuring performance. And, as management legend Peter Drucker famously said, “What gets measured gets managed.”

Monitor, measure, and be a better manager.

Do your employees ever get calls from creditors or collection agencies about their personal financial affairs? Certainly, this hinders their productivity. Did you know that under the Fair Credit Collection Practices Act it is illegal for collectors to contact a debtor at his/her place of employment if the collector is made aware that it is against the personnel policy of the employer for the employee to take such calls?

Smart solution – add to your personnel policy that it is a violation for any employee to accept a call from a creditor or collection agency about his/her personal financial or business affairs. Communicate such to your employees and make sure they understand that they are to tell any creditors that contact them at work of the company policy, their knowledge of the Fair Credit Collection Practices Act, and that any violators will be reported to the Federal Trade Commission. For a copy, go to: http://business.ftc.gov/legal-resources/fair-debt-collection-practices-act.

Few states require you to pay employees for time spent on jury duty, as if they were working for you. Tennessee is the only one that does.

Employers should craft their jury duty policies based on wage-and-hour laws of state(s) where they operate. In most states, exempt (salaried) employees who return to work for any part of a day in which they serve on jury duty must be paid as if they had worked the entire day. Also, night shift workers cannot be required to work on days they serve on jury duty.

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Mike Lissau contributed his expertise to this article. He is an employment law expert with Hall Estill. You can reach him at mlissau@hallestill.com.

1. Create a Good Employee Handbook. A good one makes clear what’s expected. It also clarifies company policy on important issues such as discrimination, sexual harassment, employment at will, vacation, and dispute resolution. A good handbook also helps in consistent application of policy. The result should be fewer claims and disputes.
2. Discontinue Automatic Annual Raises. The logic of annual pay raises is rooted in the need to keep pace with inflation. But there’s very little inflation today. There is talk of deflation, in fact. If you automatically raise salaries each year, you simply may be shifting profit from shareholders to employees. You’re also nurturing a culture that emphasizes survival over productivity and accomplishment. Consider a new type of annual review: pay raises and/or bonuses contingent on job performance and/or overall company profitability. Put measurable employee performance standards in place and use them to calculate bonuses and raises to avoid, and defend against, discrimination claims.
3. Lengthen Waiting Period for Vacation Benefit. A longer waiting period — such as six months — before new employees become eligible for vacation can reduce the amount of vacation pay you provide to short-term employees.
4. Reduce the Number of Paid Holidays. Employers are not required by law to pay employees for federal holidays. To save money, consider cutting back on the number of paid holidays you provide.
5. Rationalize Employee Health Benefits. Are employees bearing their fair share of premiums and deductibles? Is the plan providing adequate coverage, given the cost? Maybe it’s time to get competing bids. Finally, consider providing a stipend to employees who obtain health coverage under a spouse’s plan. Of course, this should be a stipend lower than the cost you incur by covering the employee.
6. Review Employment Status of All Employees. Year-end is a good time to assess the status of exempt and non-exempt employees and make any changes merited. Pay particular attention to office employees who perform mostly routine work, “leads” in manufacturing or service jobs, tech support, and retail managers who spend most of their time serving customers. Job descriptions for employees switched to non-exempt status should be revised to more accurately reflect their job duties.

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James J. McDonald, Jr. and Michael J. Lissau each contributed expertise for this article. McDonald is managing partner of the Irvine, California office of Fisher & Phillips LLP. Lissau is partner and employment law specialist in the Tulsa, Oklahoma office of Hall Estill.

USERRA provides that employers must continue benefits for persons on military leave similar to the type of continuation rights provided by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). Specifically, if an employee’s health plan coverage would terminate because of an absence due to military service, the employee may elect to continue coverage for the shorter of:

1. the 24-month period beginning on the date on which the employee’s absence begins, or
2. the period beginning on the date on which the employee’s absence begins, and ending on the date that the employee fails to return to the job or apply for reemployment.

A requirement of USERRA is for an employer to “provide to persons entitled to rights and benefits under this chapter a notice of the rights, benefits, and obligations of such persons and such employers under this chapter. The requirement for the provision of notice under this section may be met by the posting of the notice where employers customarily place notices for employees.” Not to replace posting of the notice, but other means of communicating USERRA rights to employees is through written employment policies and employee handbooks.

If the employee fails to elect continuation of coverage, the employer can cancel the employee’s coverage while the employee is on military leave. Specifically, an employer may cancel the coverage of an employee who gives advance notice of his/her military leave and who does not elect continuation coverage. In this situation, there are also specific provisions governing the circumstances under which an employer must permit retroactive reinstatement of coverage.

Employees are required to pay varying amounts to keep their coverage. If the employee’s absence is 30 days or less, the employee cannot be required to pay more than the ordinary employee share, if any, of maintaining coverage. If the period of absence is 31 days or more, he or she may be required to pay up to 102% of the full premium to continue coverage. The payment obligation begins on the first day of continuation coverage. The employer may cancel the coverage of employees who do not make timely payment of their portion of the premium.

A person reemployed under USERRA is entitled to seniority and other rights and benefits determined by seniority that the person had on the date of the commencement of service in the uniformed services, plus additional seniority and rights and benefits that such person would have attained if the person had remained continuously employed. Additionally, on the employee’s return from military service, his/her health insurance coverage must be reinstated without any waiting period or exclusions for preexisting conditions, other than waiting periods or exclusions that would have applied even if there had been no absence for uniformed service. According to the Department of Labor, this rule does not apply to coverage of any illness or injury determined by the Secretary of Veterans Affairs to have been incurred in, or aggravated during, performance of duties in the uniformed service.

Mike Lissau contributed his expertise to this article. He is an employment law expert with Hall Estill. You can reach him at mlissau@hallestill.com.

While I was attending a Great Place to Work Institute conference, an organizational consultant spoke about a client that displayed posters throughout its offices with the message “Our valued employees are always treated with trust and respect,” yet the employees underwent security searches before entering each day. This was an unusual practice for a civilian organization with only “normal” security concerns. The consultant questioned the leaders about the conflicting messages. The organization discontinued the searches.

Avoid Conflicting Messages

The leader of this company was oblivious to the conflicting messages his employees were receiving. Smart and successful business managers are more careful. They pay closer attention to the messages given. This is because company culture matters. You want to build a winning culture, a unique yet healthy one that breeds teamwork, loyalty and productivity.

People Strategy Is Mission Critical

When writing and executing your business plan, don’t forget the people strategy. People strategy is as important as your marketing plan and cash flow projection.

To be sure, many CEOs boast, “Our people are our most important asset,” but judging by the vast numbers of unhappy, unfulfilled and burned-out workers across this great nation, more times than not, it’s little more than lip service. When developing your business plan, address the following:

Culture. What type of company culture do you have? Keep in mind that the culture typically mirrors the personality of the leader. Be true to it and bring out its most admirable qualities. Define it and adhere to it. Build your brand and your internal and external messages around it.

Merit-Based Promotions. Do you evaluate, compensate and promote based on objective performance and results, or stick with the old “who looks the best” or “who has the pedigree” or “who sucks up to me in the most skillful manner?”

Integrity. Are you a “by hook or by crook” organization or “we succeed and win with honesty and integrity”? Organizations that seek success by the former route tend to implode eventually.

Identity. Does your organization have shared values? Shared beliefs? Guiding principles? If so, are they real or just handbook material/wall fodder?

Hiring. Do you hire impulsively and make selections yourself based on recommendations, tests or other subjective criteria, or do you place high on the list the candidates who fit with your culture and the recommendations of your existing employees?

Jerks Welcome? Do you employ jerks? Allow people to act like jerks? Or do you require manners? Ladies and gentlemen? Kindness and cooperation?

Employee Work Flexibility? Are you innovative, trusting and understanding, or strict and traditional when it comes to employee work arrangements? Keep in mind that employers who are creative in how they accommodate the work needs of talented individuals tend to be more productive and profitable.

You’re the business owner. You can build your company any way you wish. But my experience is that company cultures often are left to develop on their own. The result is often “yuk, how did we get here.” So here’s my plea: Your culture is too important to be left to develop on its own. It should be part of your carefully crafted business plan, regularly monitored and tweaked. Do this and you’ll be proud of what you create. It’ll be a place where people want to work.

Kennemer is president of The People Group ThePeopleGroupLLC.com.

Interestingly, one of the companies we looked into was Whole Foods Market. Its employees were given a choice of health care benefits or 401(k). They chose health care insurance.

Health Care Reform Hindering Retirement Benefits Programs?

U.S. legislators are floating proposals to require employers to provide health care benefits to employees or pay a penalty. One proposal in the U.S. House of Representatives would penalize employers if they do not provide employee health insurance. Companies with payrolls of more than $400,000 would be forced to pay a penalty of 8 percent of their total annual payroll. Employers with payrolls ranging from $250,000 to $400,000 would pay a lesser penalty, and firms with payrolls under $250,000 would be exempt.

Where’s the money going to come from? You have to wonder if companies might just kill other benefit programs — such as the 401(k) match — to pay for any new health care mandates.

To be sure, many companies are struggling just to keep their doors open.

Contingent Matching in Our Future?

Maybe Starbucks and Pep Boys are on the forefront of what’s to come — retirement plan matching programs contingent on company profitability. A type of incentive compensation?

Maybe it’d entice employees to work harder and smarter — to think more like owners — while giving businesses a built-in cost reduction mechanism during downturns.

Uncertain Future

It’s impossible to know what the future holds. Employers have little choice but to be very conservative. Cash is the lifeblood of the business, and managers must conserve cash at every turn. Thank goodness that employers have the ability to cut expensive programs when they feel they must. But what if the government mandates health insurance? Will they also mandate retirement programs? Could these mandates hinder a company’s ability to survive tough times?

Nancy Hwa, spokeswoman for the Pension Rights Center, says the companies have the discretion to cut these programs. “Unfortunately, we’ve seen this trend over the past 20 years, where companies are increasingly getting out of contributing to their employees’ long-term well-being plan, whether it’s a pension or retirement income or health benefits,” said Hwa.

The Rich Get Richer

U.S. employees are immensely mobile. They can change employers at will, and they do. They choose where to work based on important things such as pay and benefits. When an organization cuts pay and benefits, it’s a given that some employees will depart for greener pastures.

Where are the greener pastures? Companies making money and able to pay full benefits such as a 401(k) matching program.

So, in a way, when a company cuts benefits, it may start to lose the war for top talent. Which begs the question, how is an already marginally profitable company going to make a comeback with employees who are not the cream of the crop? Does a cut in benefits spell the beginning of the end?

Only One Way Out

As the owner of a business during a downturn, you have tough calls to make. Run out of cash and it’s game over. Fail to retain top talent and it may also be game over.

This dilemma leaves us with only one real option — find ways to raise revenue and profit. And so, even if it means running some losses in the near term or raising additional equity from investors, we have to invest in improving our business.

Are you dealing with these issues? Have you? If so, what are you doing? What have you done? Let us and your peers know by writing to us at editor@thebusinessowner.com. We would like to share with others how you handled the situation.

The primary reason for the continued rise is twofold:

1. People’s willingness to pay for health care is virtually limitless, so health care providers continue to roll out more and more expensive tests, treatments and procedures.

2. Insurance companies foot most of the bills, but patients and doctors determine the treatments, so there is little incentive to keep costs down. The only recourse for insurance companies is to raise rates.

These things you don’t control. But you DO have some control over the cost of YOUR health insurance, and of the insurance you provide your employees. It’s pretty simple.

Healthy people are cheaper to insure. Similarly, unhealthy people are more costly to insure.

Now, who doesn’t want to be healthy? Who would not like to be in an environment that makes it easier to be healthy? So do what makes sense for both you and them. Care about yourself, your business and your employees. Develop a wellness program. It’s a win-win.

Research shows that health and wellness programs reduce medical costs and lower absenteeism. Yes, you’ll spend a little money on the program, but studies show that for every dollar spent, you’ll get between $3.50 and $6 in return. That’s a heck of a return on investment.

It Starts with You
It starts at the top. You must design the program (or have it designed), participate in it and lead it. For it to work, you need to get excited about it. Sell it, enlist participants, track progress and keep the fire burning.

As The Wellness Councils of America say, “Nothing spurs attendance at an aerobics class like the chance to see the boss lead the exercises.”

How to Get Started
Creating a wellness program is not as difficult as you might imagine. The Wellness Councils of America recommend the following steps:

• Appoint a wellness team to oversee the effort. At a small business, this might be a single individual, even the boss, but involving employees is the best bet. Let it be their project. Let them get creative and be accountable for results.

• Collect data. You can’t change what you can’t measure. Data collection can run the gamut, from having employees participate in health screenings to weighing the entire workforce on a grain elevator scale to establish a weight-loss benchmark.

• Create a simple plan with simple goals. If excess weight is the primary concern, your employees might set a goal of losing 500 pounds in 12 weeks. Or if resting heart rate is the target, plan to reduce the workforce total by 50 points.

• Choose the appropriate intervention. This could be anything from providing information on healthy eating to arranging for exercise time at work.

• Create a supportive environment. Replace unhealthy drinks and snacks with healthy ones. When you go out to lunch together, make it a healthy place. And it’s important that you make it clear to workers you approve of and support their participation.

• Carefully evaluate outcomes. If the desired result isn’t being achieved, it may be necessary to make the environment even more supportive. More fun. Get a key leader involved. Post the results. Peer pressure is okay and a powerful motivator. Use it by posting individual results.

Make It Fun!
Make it easy for employees to behave in healthy ways. Encourage them to walk during the day at lunchtime and breaks. Buy inexpensive pedometers and challenge employees to walk 10,000 steps a day – equivalent to five miles. Of course, this means that you must lead the pack and set the right example. At the end of each month, reward the top male and female workers. Maybe a $25 gas card or the right to leave work one hour early.

Offer classes in aerobics or other activities that promote health and reduce stress. Maybe join an athletic league for softball, basketball or volleyball. These are sports that allow anyone to participate.

Secure membership discounts from local fitness centers for employees who decide to join. In addition, bring in certified fitness trainers for a blood pressure fair. It involves just a simple setup in your conference or break room. Most workers are unaware of their own blood pressure and how it increases with weight gain and stress. At least once a year, sponsor a health screening for employees.

Big Cost Reductions
In 2002, a U.S. government report revealed that companies with physical activity programs enjoyed a 20 percent to 55 percent reduction in health care costs, a 6 percent to 22 percent decline in short-term sick leave and a 2 percent to 52 percent increase in worker productivity.

Yes, the costs of health care and health insurance will almost certainly continue to rise, but you do have some control over the costs you bear for yourself, your family and your employees. So instead of lamenting, try implementing. Take some action. Start a wellness program for your company. You’ll find that it’s fun, builds camaraderie, reduces turnover and sick leave, adds to your bottom line and actually improves lives. What more could you want?

1 According to the U.S. government’s National Health Statistics Group, as reported by CBS Radio News.

Scams hide behind smiling faces. These are the words of Phil Mulkins, Tulsa World newspaper Action Line writer, in response to a question about how one might keep oneself from being stung by fraud.

“People who think they can spot investment scams can’t because they’re suckers for smiling faces,” says the Council of Better Business Bureaus website (according to Mr. Mulkins). “They look professional and appear successful,” it continues.

To be sure, fraud is prevalent. According to the Association of Certified Fraud Examiners (ACFE), U.S. organizations lose 5% of their annual revenues to fraud. Applied to the United States Gross Domestic Product, this 5% figure would translate to approximately $700 billion in fraud losses. Small businesses suffer disproportionate fraud losses. The median loss suffered by organizations with fewer than 100 employees was almost $200,000 per scheme, and most involve the accounting department or upper management.

Research also shows that when fraud is perpetrated by employee on employer, it’s typically carried out by the employee who is most trusted. The golden boy. Your closest confidante.

From what I’ve read and what I’ve painfully experienced, fraud – when it occurs in a single event – is made possible, in part, with pressure, stress or emotion. A skilled fraudster finds a way to bring these elements to bear on the victim, usually the person who must provide approval, access or authorization. Or the fraudster waits patiently and strikes when outside forces rise up and conveniently apply pressure, stress or emotion.

In the case of investment scams, a la Bernie Madoff (United States) or Pacific Continental Securities (United Kingdom), it might be a hot stock tip that must be seized on right away. It’s “come on, you want to get off the sidelines and make some big money, right? Here’s your chance. Let’s take down $50,000 and make a quick $100K.”

In the case of fraud in the workplace, it might be that you are under considerable time pressure and stress from unrelated matters, and the perpetrator presents you with the resolution to the problems that you have been having in your relationship with him/her. “I really want to get this resolved now. Do me a favor and just sign this. It’s not perfect and I know it’s deficient in these areas, but trust me. We’ll work the rest out later.”

In short, watch out for:

• Manipulation.
• “I’m insulted.”
• High emotion.
• Territorialism.
• “Do we really need these formalities?”
• “Don’t you trust me?”
• “Just let me handle it!”
• Unreasonable or irrational claims of “it can’t be done that way.”

Watch out when you feel yourself really needing, or wanting, to accommodate someone. Watch out when you feel yourself really wanting to make another person feel that you trust him/her or feel that you approve of his/her efforts. Finally, watch out when you find yourself listening to the assurances of others rather than the voice inside your own head that’s saying “this smells funny!”

Trust your gut instinct. If you feel pressure or uncertainty, back away!

The good news is, there are just a few basic things you need to do to reduce employee termination-related problems such as litigation. Here they are:

Have a Written Employment Policy That Contains the Following:

Statement of Non-Discrimination. To get one, just ask your attorney to send you a boilerplate policy or call your local EEOC (Equal Employment Opportunity Commission) office. Post the policy on the wall (it’s the law) in your break room and place the language in your employee policy or manual.

At-Will Employment Statement. Get one from your attorney. Add the statement to your written employment policy. Of course, remove any language from your policy that might be construed as limiting your rights to terminate.

Non-Solicitation and Confidentiality Statements. Get the language from your attorney. Place the language in your employment policy and also state that each employee will be required to sign non-solicitation and confidentiality agreements prior to employment. Develop standard agreements and enforce them as a condition of employment.

Focus on and Document the Business Purpose: The best defense against claims of discrimination is for every hire and fire decision to have a business purpose. Document the purpose and any claimants will have to prove that your real purpose was in fact discrimination.

Have All Job Applicants Sign a Written Application: Include on the job applications form a notice that only written representations and promises of the employer will be enforceable. Include a detailed job description in the application; one that lists the tasks an employee will have to perform satisfactorily to qualify for and maintain the position.

Have Written Job Descriptions: List the tasks an employee will have to perform satisfactorily to qualify for and maintain the position. Be sure the job description covers all the tasks the employee will be expected to perform. A worker dismissed for an inability to perform a task not listed in the job description may be able to file a wrongful discharge claim.

Quarterly Inform All Employees of the Following: Warn supervisors and managers not to give oral assurances of job security to applicants or employees.

Hold and Document Periodic Employee Reviews: They should be candid, concise and clear. Ambiguous, flattering comments should be avoided. Problems should be identified and remedial actions and timetables specified. Of course, they should be in writing and the employee should be required to read and sign them, and add comments if they wish. This step establishes a clear record that will be hard to deny or dispute if the appraisal is questioned in the future. Finally, if an unsatisfactory employee appraisal is inconsistent with earlier evaluations, management should investigate the matter and include a written report of the review in the employee’s personnel file.

Develop and Put in Place Uniform and Progressive Disciplinary Standards: Your attorney can help you develop a basic plan. This will help you avoid charges of discriminatory treatment.

Hire Based on Skill, Ability and Experience: The best defense against claims of discrimination is to not discriminate. Hire based on the skill, ability and experience of the applicant. Advertise the qualifications needed for the job. Interview and rate, in writing, the degree to which each applicant meets the criteria. Hire a candidate who ranks at or near the top.

Have Your New Hires Sign a Confidentiality Agreement: Your attorney can help you draft one.

Have Your New Hires Sign a Non-Solicitation Agreement: Your attorney can help you draft one.

Document Employee Misconduct or Underperformance: Record all significant employee problems so that subsequent discipline or discharge actions are documented and can be justified.

Maintain Employee Complaint Procedures: Make sure complaint resolution procedures are credible and work properly. This is one of the most effective ways to prevent wrongful discharge lawsuits because it provides opportunities to correct misperceptions and to rectify mistakes internally.

Mike Lissau, an employment law expert with Hall Estill, and William O’Connor, an attorney with Norman Wohlgemuth, each provided his expertise for this article.