Tag Archive for 'employees'

New DOL overtime rules: One good outcome and seven bad ones

Do you have employees who are on salary? Do those employees ever work more than 40 hours in a week, for whatever reason? If the answer is yes to these questions, your world is about to get more complicated and probably more expensive.

Please stay with me. I need to get into the weeds, but just for a minute.

The current Department of Labor (DOL) overtime exemption threshold for “white collar” employees is anyone with a salary of at least $23,666 annually, or $455 per week. Exempt means the employer is not required to pay overtime if and when this class of employee works over 40 hours per week. This threshold applies to all businesses, regardless of size or number of employees.

Here’s the news: The DOL has announced that as of December 1, 2016, that overtime exemption threshold will essentially double, to $47,476 annually, or $913 per week. So anyone currently receiving a salary of less than this new amount will soon convert to non-exempt status, and must be paid overtime when they work more than 40 hours a week.

The reason I’m concerned about this change is because of the size of the increase. I feared this new threshold is going to catch and hurt a lot of unaware small businesses in its net. So I took this concern to my small business audience in our online poll recently and asked if they knew about the new overtime exemption changes. Alas, with less than three months before taking effect, my concerns were justified: Almost three-fourths of our respondents said they either didn’t know about the change or how it would impact them, or they knew about it and it was going to be detrimental to them. The rest, just over a fourth, said they either had determined the change would not affect them or they were prepared.

Here’s the good outcome: You might be surprised to hear me say that I think a new threshold is not unfair. In 2016, a weekly salary of $455 is too low to be expected to work overtime without additional compensation, unless it comes with a leveraged compensation factor that allows them to earn more if they work more.

But while an increase in the overtime exemption threshold is not unreasonable, doubling the threshold all at once is. And like so many government creations, the devil’s in the details. And this devil will create more problems for both employees and employers than it will solve. For example:

1. Increased recordkeeping burden: Because the doubling of the overtime exemption threshold will significantly increase the number of salaried non-exempt employees in Main Street jobs, small businesses will be burdened disproportionately with additional time and attendance record-keeping.

2. Increased payroll expense: For small businesses in a lower cost-of-living area, an immediate doubling of the exemption threshold will create an employee re-classification burden that by definition will result in increased payroll expense, perhaps prohibitively.

3. Flexibility becomes expensive: If an employer requests of a non-exempt salaried employee to work over one week and take off those hours the next, or that employee makes the same request of the employer, under the new rules, that goodwill gesture will cost the employer overtime for the week with the extra hours. A good deed should not be punished.

4. Employee hours cut: Businesses in certain industries will respond by splitting a previous 50 hour/week job into two 25 hour/week jobs in order to prevent their payroll from increasing, hurting the original employee.

5. Bad news for managers: I’m already aware of companies that will react to the new threshold by laying off some managers while increasing the responsibility of a smaller number of exempt managers, without increasing their compensation.

6. A morale downer: Being put “on salary” has been considered a professional accomplishment by generations of employees. But HR professionals tell me they’re recommending converting any employees with salaries remaining below the new threshold to hourly status. There are millions of Main Street employees whose weekly income falls between $455 and $913.

7. More lawsuits: Because of the steps some businesses will have to take to prevent these new government-imposed costs from getting out of hand, experts I’ve talked with are predicting an increase in Fair Labor Standards Act lawsuits.

When the federal government does things like doubling the overtime exemption threshold in one fell swoop, it hurts Main Street businesses disproportionately. In this case, it will create a new administrative burden, increase payroll expense without adding a penny of new productivity, and possibly hurt morale.

For four years, polls show small businesses reporting that the mandates of Obamacare disproportionately hurt them. Within a year, small businesses will regard the new DOL overtime exemption threshold increase as the little brother of Obamacare. Another example of the ham-fisted regulatory overreach of the federal government that hurts the job creators and suppresses the economy.

Write this on a rock … Buckle up, small businesses. If you like your current payroll structure, you won’t be able to keep it.

Three important people you want to be close to you

Why do birds suddenly appear
Every time you are near?
Just like me, they long to be
Close to you.

In 1970, the brother/sister act, The Carpenters, took these lyrics and the rest of the song, “Close To You” to the top of the charts. Velvet-voiced Karen sang lead, with brother Richard contributing lyrics and sweet harmony.

Out here on Main Street, small businesses should hum that tune every day to remind themselves about the three most important stakeholders they want to be close to.

Customers
Every business, large and small, longs to be close to its customers. But getting customers to return the favor is the challenge. Time was, when a business was a critical link to certain products and services for customers. Longing to be close to us, customers – and their loyalty – weren’t so illusive. Today, almost everything needed by customers can be purchased within a few miles of your business from competitors that didn’t exist when the Carpenters topped the charts. Throw in the Internet and e-commerce and what isn’t a commodity today?

The good news for Main Street is that small and nimble increasingly trumps big and strong. With few exceptions, we can’t compete with the big guys on price, selection, or brand intimidation. But we can make customers want to be close to us is by scratching an itch the big boxes can’t always reach: customization.

If you want customers to suddenly appear, find out what keeps them up at night. And don’t expect the answer to be a burning need for your product or service. If you deliver a customized solution, customers will long for your business because you added unique value they can use. And here’s the silver bullet of customer longing: Help your customers help their customers.

The other good news is that customization justifies higher margins than off-the-shelf offerings. If it’s truly focused on the customer’s solution, they’ll pay for it and come back for more.

Vendors
Once-upon-a-time, a vendor was a company from which you purchased inventory, raw materials, and operating supplies. Today, if a vendor isn’t longing to be your partner, you’ve got the wrong vendor.

Of course, we’re at once a customer to vendors and a vendor to customers. Consequently, we have to find vendor-partners as well as be one. In these roles, it’s important to understand a concept that has become part of the romance between 21st century vendors and customers: seamless.

In a world of outsourcing as a management strategy, the goal is not merely to reduce in-house staff. If outsourcing is to work, products and services MUST be delivered so seamlessly to us by our vendors, and by us to our customers, that operating efficiencies actually improve.

Small businesses have a greater opportunity today to accomplish the hand-in-glove level of closeness required for seamless delivery. And we can’t deliver seamlessly to customers unless vendors long to be seamlessly close to us.

Employees
Back when the Carpenters were belting out hits, the employer/employee relationship was based largely on the Dominator Management Model, which is to say, not much closeness. Employees longed for the perceived job security and benefits of a paternalistic employer. But in the 21st century, employees are drawn closer to leaders.

Today, employers must be able to show employees that we long for them. The best way to demonstrate our longing is to close the gap between what the company needs and what employees want. This means finding and keeping employees who become stakeholders.

If you want employees to long for you, you have to suddenly appear as a partner longing to support their professional and personal fulfillment. And no one can do this better than small business.

Write this on a rock … Find and keep customers, vendors, and employees who long to be close to you.

Why I Thanked My Boss for Firing Me

In 1989 I was managing the national ad sales effort for a sports magazine, based out of my home office. Having designed that office space as part of the house I’d built a dozen years earlier when I was a territory sales rep for Xerox, I was home-based long before being home-based was cool.

At 8:30am one Monday the phone rang – of course, I was at my desk. The caller was a boss who got to the point: They had a new plan for how they were going to market, but I wasn’t going to be part of their plan. The call was over by 8:35.

As I collected my thoughts, the first clear one was that I’d better dust off my resume. After all, I had a pretty good one: 23 years of successful corporate employment, from sales rep to C-Suite. And then there were those five other details: a wife, two teenagers and two mortgages.

But for some reason, I couldn’t pull the trigger. I remember thinking, “I don’t need any help screwing up my life; I can do that by myself.” So at 8:36am, my Macintosh and I designed the logo and business cards for my new business, Jim Blasingame & Associates, Business Consultants. At that moment the Mac and a laser printer were my associates.

Reinvention was nothing new to me. I had successful tenures in more than one industry over the years. But this trip was new because I was now going to work the high-wire act of entrepreneurs, which by definition means without a net. A professor friend calls it, “Living by your wits.”

That life-changing phone call came 26 years ago this week and I’ve since reinvented myself as a business owner at least one other time. Along my entrepreneurial journey there have been good times and bad times. Speaking of the latter, there were times when I didn’t know if I would be in business one more hour, let along another day. Entrepreneurship is not for sissies.

But in all the time since that momentous call I’ve never looked back – even when offered a job during one of those tough times. I’ve loved being a small business owner for the past 26 years, warts and all, for one prime reason: ownership. But not just business ownership.

This might sound strange, but I love that I have ownership of the challenges, too. All of them, against all odds. Because when you own the challenges, by definition you own the opportunities you turn them into.

Money and stuff are just ways to keep score. Claiming ownership of a Tyrannosaurus Rex business-eating challenge and turning it into your advantage is, to me, what being a small business owner is all about.  Perhaps you can relate.

By the way, within a year I called that boss and thanked him for firing me.

Write this on a rock …

Ring, ring … “Hello. Oh, hi, boss. What? I’m fired? Okay. Thank you very much.”

Jim Blasingame is author of the award-winning book, The Age of the Customer: Prepare for the Moment of Relevance.

Mentoring employees can lead to small business success

Since those whom we manage look to us for guidance, we should think of ourselves as teachers.  We teach others what we have learned so that knowledge can be leveraged through their performance.

And don’t be afraid to show your passion for your ideas. Allowing employees to see passion and conviction in our words, actions and style is a good thing, and it’s also contagious.

The market is a rude place, indifferent to our very existence let alone whether we succeed or fail. Perfection has never been attainable by mere mortals. Excellence is possible, but only those with high standards are capable of achieving it and only as a result of positive critical evaluation of our own efforts and those we manage.

Humans work best when they know that there is a safe harbor where redemption is available to those who fail while trying their best and where they will be encouraged to continue to take initiative in the quest for excellence.

Find work you love and enjoy

Whether work is a blessing or a curse depends on what you are working on and your attitude about it. James Matthew Barrie, the Scottish novelist said, “Nothing is really work unless you would rather be doing something else.”

Many hard working entrepreneurs were once unproductive employees, but now, with their wagon hitched to their own star, work is the stuff of their dreams. Many productive employees understand the blessings of employment and become the most valuable of resources: the entrepreneurial employee who loves his or her work.
Work feeds our stomachs with food and our spirit with accomplishment. Work creates, produces, energizes, and fulfills all things humans need for survival and happiness.
If work is not a blessing for you — whether owner or employee — the problem is not work itself, but the work you are doing. The Lebanese-American artist, poet, and writer Kahlil Gibran wrote, “Work is love made visible.”
Life is short.  Keep searching until you find work you can love.  I did.

“Thank you” is golden, “No problem” is a problem

It has happened to all of us: You’re being waited on at a restaurant, buying a product or returning something to a merchant, and as an employee is delivering some kind of service you say, “Thank you.”

Good for you; your mother would be so proud.  But she wouldn’t be impressed by what has become an unfortunate response to thank you. After you say thank you for having your water refilled or your order completed, there is sadly a good chance the employee will say, incredibly, “No problem.”

So, from this response are you now to think that simply allowing service to be delivered is some sort of problem you’ve created, for which forgiveness should be granted?  Should you feel relief that you’ve been redeemed by this person with “No problem” absolution?

Clearly, American English has devolved to a level that makes many of us nostalgic for casual. It’s difficult to pinpoint where things ran off the rails. But somehow the sublime “it’s my pleasure” has deviated into the subpar “no problem.”

Well, my friends, let’s get one thing straight: No problem is a problem. When small business employees say no problem to a customer instead of you’re welcome, it’s a serious problem that over time could be the equivalent of a business death wish.

Think I’m overreacting?  How much money do you spend getting a customer to do business with you?  How much energy and resources do you invest into making sure your products, pricing, display, etc., are just right?  How many sleepless nights do you spend worrying about how to compete with the Big Boxes?

Now that we’ve established the enormity and consequences of these answers, are you sure that no employee of yours ever causes one of your customers to think — even subliminally — that the mere fact that they do business with you could be some kind of problem?

In The Age of the Customer, the only thing unique about your relationship with a customer is the experience they have with you — how they FEEL about doing business with you.  Everything else is a commodity. Everything!

So, pray tell, in what universe does “no problem” help your business maximize the positive emotions of an excellent customer experience? Stop saying it, and train your employees to stop saying it.  If success is your goal, this is non-negotiable!

There must be 39 different ways in the English language to express your delight in serving a customer without saying “no problem.” Use one of them.

Write this on a rock… In The Age of the Customer, “Thank you” is golden, “No problem” is a problem.

Jim Blasingame is the author of the award-winning book, “The Age of the Customer: Prepare for the Moment of Relevance.”




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