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Wednesday, December 24, 2008

Learning from Retail's Wage & Hour Day of Reckoning

In every burst of an economic bubble you find where legitimate profits were made, where smoke and mirrors substituted for profits as in the Bernard Madoff scandal, and where profits were made by short-cutting laws and cheating honest people. To quote Warren Buffett, "Its only when the tide goes out that you see who's swimming naked."

The naked truth behind double-digit retail profit growth was unmasked this week for two major retailers. A huge wage and hour settlement at Wal-Mart (estimated at $350 - $620m) and the upholding of a $35m judgement against Family Dollar indicates that both companies engaged in wage and hour fraud and cheated low-wage employees out of earned wages.

I'm a pro-business guy and these companies are customers of ours, but this is justice long overdue. In the Wal-Mart case lawsuits had erupted in multiple states claiming the same offense; hourly workers forced to work without breaks and lunches and compelled to clock out at the end of their shifts and go back to work. Other than blatant safety violations, this is about as low as a management team can go in the business world.

Remember, those making the decision to force workers to engage in this activity are much more highly paid and are in essence stealing earned wages from low-wage, often minimum-wage workers and giving that money to a multi-billion dollar company. The fact that Wal-Mart faced not just multiple lawsuits, but multiple class-action lawsuits in multiple states suggests how widespread the practice was for the nation's largest retailer. Company spokesmen denied the allegations right up until they settled, now stating that Wal-Mart is "no longer the company we once were."

The Family Dollar case is similar. This retailer operates small Dollar General type stores in small communities. In this case the Store Managers were actually found to be misclassified hourly employees. Their duties were 80 - 90% stocking shelves, running the cash register, and cleaning the store. They had no authority to hire employees; they didn't even have the authority to recommend employees to be hired. True authority rested with the District Managers. Working 60+ hours per week, the $35m settlement is for unpaid overtime, lunches, and punitive damages.

Both of these companies have HR departments, and both have Legal departments. Unless both departments in both companies are intimated and ineffective, the presence of such wide-spread wage and hour violations suggests a conscious decision somewhere in the upper levels of management to cheat low-wage employees. Of the four "sins that cry to heaven" this represents two: Injustice to the Poor (Exodus 2:32) and Defrauding a Workman of His Wages (James 5:4). It will be interesting to watch both companies' profits and behavior going forward to see if they will turn from these practices (and if so, can they maintain their earnings) or continue to attempt to skirt the law. If the latter, watch for increased union organizing activities as the pro-labor Obama Administration takes over next month.

For other companies and their management these cases should serve as a warning. If these two companies with well-financed legal resources can't get away with this, you can't either. Clock-in/Clock-0ut discipline, hourly classification guidelines, and meal/rest-break regulations are old-school, unsexy, and fundamental to operating within the law. Trying to get around them is only successful for so long, and not worth the risk.

Tuesday, December 23, 2008

Nashville For All Of Us

I have been putting off commenting on the regrettable "English Only" initiative currently on the ballot for Nashville voters. This is an important if not critical decision for this community and I wanted to wait until I had time to get the facts right and make a compelling case. Well, a coalition of religious and business groups has formed under the name Nashville For All Of Us and they have put together a great white paper on all the reasons this initiative is wrong for the community. You can get the facts at this link:

I try to shy away from politics in this blog because my mission is a harmonious and successful workplace and political conversations work against harmony. Unfortunately, this referendum is so bad for the culture and business climate in our community that we can't sit back in our business cocoon and let bigotry kill what is one of the strongest local and regional economies in the nation. Passage of this bill, and the subsequent national and international negative press that will come with it, will insure that there will be no more Nissans relocating to our community or Volkswagen's relocating to our region.

I hope you are or soon will be taking some time off for the holidays. While off, take a few moments and read why groups as diverse as Catholic Charities, the Metro Council, and the United Steelworkers all agree that this is a terrible initiative for Nashville. Early voting starts January 2nd and I urge you to vote "No" on both questions.

Sunday, December 14, 2008

Rumor Patrol: Thursday Outplacement Meetings

The week of the staff reductions, which were implemented on that Tuesday, we conducted outplacement meetings on Thursday. We held two sessions, both conducted by members of the HR staff including me. There were no current employees present other than the HR staff. I stepped out for literally 20 seconds to check a voice mail message, during which time a presenter was speaking, so I can accurately say that I didn't miss any discussions during either meeting.

Those two meetings are now being cited with some authority by a person or persons in our current workforce as the basis for two pretty ridiculous rumors. The first is that there were comments made that indicate a third round of staff cuts coming in February. The second is that one of our departing sales reps got up and made an angry rant against the company. Here are the facts.

1. There was no discussion of additional staffing cuts. None. Zero. There was no question asked to that regard, none answered, no speculation made either on the part of the presenters or the attendees who were there to ask questions. This is a rumor at the Lakeview Place building (surprised?) and nobody who works in that building was in attendance. Whoever tells you this either made it up or heard it from somebody who heard it from somebody who made it up.

2. One of our departing Ministry Sales reps asked to speak, and from the back of the room told the group how generous the company was being with their severance. He cited neighbors on his streets who had been let go that week with no severance or benefits, and thanked the HR staff for their care and service during this difficult time. There was nothing angry in his tone or comments and it was a touching moment for those of us who had been working on this project for so many weeks.

That's all until the next rumor. As always, feel free to comment publicly on this blog or contact me privately at

Wednesday, December 10, 2008

Rumor Patrol: PTO and Staff Reductions

Its been a week since our last round of staff reductions; long enough hopefully for a little dust to settle. I want to address two rumors that went around last week in the emotions of the moment and make sure that the air is cleared and facts are known as to the role that our Paid Time Off (PTO) program played in these terminations.

For those of you reading from outside the company, about three weeks prior to these terminations we made an intentional move away from paying for unused PTO; converting instead to a "use-it-or-lose-it" policy. This move will save us hundreds of thousands of dollars next year, or the equivalent of about 40 jobs. We announced this change both in writing and at informational meetings, most of which I conducted, a few days prior to our staff reductions.

The two rumors or comments that I've heard about this policy change are (1) that we said we'd do this instead of cutting jobs but then cut jobs anyway, and (2) we did this to avoid having to pay terminated people their PTO. Here are the facts:

1. We said this move "saves 40 jobs", and it did. We never discussed staff reductions in the PTO meetings or communications, nor did we play cute with our language in order to infer that we wouldn't cut staff. This policy change did reduce the body count from last week, and I continue to believe it was the right move.

2. Every employee who was terminated last week will receive full payout for their accrued but unused PTO on the December 12 pay date. The changes in the PTO policy came mid-year with a forfeit date of December 31st, 2008 for all unused PTO hours. As such, we believe this time is considered wages earned under Tennessee Wage and Hour law. The policy change did not cost any of these 54 terminated employees one dime.

I hope this sets the record straight. If you have any questions or comments that you want to say to everyone, please comment below. If you want to communicate directly with me, please use my company email address:

Friday, December 05, 2008

Good People One and All

As most of you know we lost over 50 really good people this week due to a reduction in force. This event was strictly driven by the economy and the nosedive in book sales we've seen in September and October (I haven't seen November numbers yet). I am gratified that six companies have contacted us looking for great talent, and we have established an email distribution list in order that we may send all job opportunities to those separated this week. The job titles and length of service for all of them are listed below.

I have not listed names as I have not had an opportunity to ask each individual for their permission to do so. However, if you are interested in some of the best talent in our industry and in the Nashville market please contact me at I will put you in touch with the candidate of your choice.

Yrs Service

Sr. Acquisitions Editor
Director, Marketing
Senior Publicist
Admin Assistant
VP, Publishing (Bibles)
Admin Assistant
Financial Assistant
Associate Editor
Marketing Specialist
VP, Marketing (Trade Book)
Director, Marketing
Brand Manager
VP & Publisher (Gift Books)
Associate Publisher
Director, Sales
Assistant Editor
Marketing Coordinator
Packaging Mngr, III
Web Designer II
Graphic Designer I
Imaging Clerk
Asst Director, Facilities
Database/App Admin
Sr. Programer Analyst
Warehouse Assoc IV
Warehouse Assoc III
Warehouse Assoc II
Warehouse Assoc II
Warehouse Assoc II
Warehouse Assoc II
Royalty Coordinator
Reconciliations Specialist
Manager, Production
Mngr, Key Accts
Product Tech Support
Product Tech Support
Admin Assistant
Sales Rep III
Telesales Rep II
Sales Assistant
Telesales Rep III
Mngr, Key Acct Sales
Mngr, Key Acct Sales
Admin Assistant
Mngr, Key Acct Sales
Dir, Sales Support
Sales Manager
Mngr, Key Acct Sales
HR Coordinator
Permissions Specialist

Tuesday, November 25, 2008

A "World Class" Misread of "WOW"

Where should a company spend its money? Logically, you would answer that it should invest where it gains its greatest return. After all why would a for-profit enterprise make discretionary investments with little or no hope for incrimental return? If it were your business, if you were the CEO, would that make sense?

Let me suggest, gently, that this is exactly the same flawed logic behind misinterpretations of Wow and World Class Talent in our company. I'm grouping these two different leadership initiatives into the same category, even though they are different initiatives, because they generated the same unintended reaction from the same areas of our company. If it happens here, I'll bet it happens in other companies as well.

The theory goes that to get great people or great products you must by definition spend a lot of extra dollars. That theory is just plain wrong.

A few years ago the Executive Leadership Team, even before we started calling ourselves by that name, set out to define a set of core values and operating principles. It was a necessary step in updating our company culture; articulate what we stood for and then let that inform all manner of decisions from what we publish (or won't publish) to our goals and policies. One of those values was "World Class Talent".

Almost immediately my phone began to ring and my email lit up. I can sum those communications up something like, "Well now that we want world class talent we're going to need to pay more. We need world class wages to get world class talent." Mind you, nobody was ready to step aside for a better qualified person. Rather, some just wanted more pay for their current job. In other words, an additional investment with no potential incremental return.

Were these people, who wrongly felt that they were getting paid only 60 or 70% of market value, putting forth only 60 or 70% effort? That's not what they said at review time when they wanted a raise, but that was the insinuation around World Class Talent.

The truth about talent is that the right person for the job is such a combination of elements that its a subject all its own. For now lets just say that it is a combination of intellect, a skill set that is in line with the needs of the organization (not necessarily the best in the market), work ethic, and dedication to the profession or mission.

Anything less is a typical employee. Mind you, companies need typical employees to get the work done and should value them and the dignity of their work. The typical worker, however, is not the same as world class talent.

For further debunking of the "world class wages" fallacy, you have to go no further than Stephen Collins "Good to Great". Read the section on Level 5 Leaders and see what a small role that compensation plays in the motivation of the best people. Spending incremental dollars almost never results in incrementally improved performance.

Lately I see this same logic applied to Wow products. The idea that our products should stand out in the market and be excellent experiences that create enthusiastic customers is dead-on. But like World Class Talent, the definition of what is Wow and what it takes to create it is subject to misinterpretation.

Unfortunately the thinking sometimes goes that the greater the expense, the greater the Wow. I have specific examples but I'll keep them to myself since whether you work at Thomas Nelson or somewhere else you probably have your own examples.

Besides, even ill-thought spending is done with the best of intentions; nobody comes to work saying, "I think I'll waste money today." The point here is not to call out any individual or bad decision, but to call out the bad thinking. Expense equals Wow like sizzle equals steak.

Wow is the content of a book, like "The Shack", that makes people pass it from person to person after reading it in Sunday school. Wow is content that sustains; it not only sells in to the marketplace, but sells through and gains momentum like "Total Money Makeover" or "Same Kind of Different as Me". Wow is coordinating the sales, marketing, and distribution of a product (any product, not just a book) to the point that customer interest and inventory meet at the point of sale.

I'm looking at my own bookshelf at home tonight and for the first time am taking notice of the covers of those books I've elected to keep over the years. I see the various volumes of H.G. Wells "The Outline of History" in their solid burgundy covers with simple black spine designs and lettering. I see my collectors' edition copy of Moby Dick in its off-white fabric cover, burgundy spine, and simple whaling ship picture with the name of the book above and author's name below.

From "The End of the Affair" to "On the Road" to "Tropic of Cancer", the better the book, the simpler the cover. The simplest covers on my book shelf belong to my various bibles, which have the greatest content of all.

Just like World Class Talent, investments in creating Wow that don't make the content better or drive customers to great content are incremental dollars lost. Its like paying more to the same people and thinking their work will improve.

You can decide if I'm overstepping my area of expertise, or if this concept is so simple even the HR guy gets it. The main thing that Wow has in common with World Class Talent is that the quality is on the inside.

Monday, November 10, 2008

Slow Poke

I'm going to rant here just for a few words. Its been coming for a long time and I'm overdue so forgive me just this once.

I am fed up with unresponsive people.

I bet you know what I'm talking about. Those people who are supposed to return your calls but don't. Those people who receive your emails and may send you a reply a week from next Tuesday. Now, if they want something from you its urgent, maybe even a matter upon which rests the fate of the free world. Its a culture issue in some places; nobody gets back to anybody else. In other places, its an individual attitude: their time is more valuable than yours. They are more important than you.

If you call out this behavior you'll hear some interesting excuses: too overworked, don't have a laptop, don't have a blackberry, wasn't properly trained, technical problems so they didn't get your call (or email, or the post-it note you left on their desk, or the pink message slip from their colleague who took your call). I'm just waiting to hear, "My dog ate your Twitter."

Here's a reality check; slow response time has two root causes and only two. They are the result of poor work habits and/or poor leadership.

Work Habits
Most people who know me and have worked with me for very long know that I don't carry a blackberry, nor do I own a laptop. I use a Nokia flip phone similar to the one pictured to the right, except that mine is much older and Nokia doesn't carry a picture of it on their web site any longer. I use web mail from home and stay in hotels with business centers where I can use web access.

People also know that my "brand" is that, for all my many faults, I respond quickly. If you work in HR you know that part of your performance expectations are that you return calls and emails and give great customer service. And Gentle Reader, if you ever find that not to be the case you can contact me at ext. 1400 or and tell me all about it.

So if I can return all phone calls in the same day and zero-out my inbox each night, why can't staff members with laptops and blackberrys not get back to you sometime before the spring rains? It comes down to how bad they want to get back to you, how much of a priority that they place on communication, and how hard they want to work. Responsiveness is a choice and a work ethic and a measure of how much a person respects their colleagues. It has nothing to do with technology and everything to do character.

Poor responsiveness flourishes where its allowed to, and that's a leadership issue. A business unit leader who values collaboration and mutual respect will insist on responsiveness. If they don't, their boss needs to hear about it. If their boss doesn't get it or the situation doesn't improve, their boss needs to hear about it and on up the chain until you reach Mike Hyatt. Our CEO models responsiveness as well as anyone in the workforce.

Remember, when someone contacts you they are probably waiting on an answer. When you don't answer, you cause them to make repeated contacts, or go around you to get what they need. This is inefficient and just plain unnecessary when you could just as easily have answered the phone or returned an email. And remember that whenever a phone rings its usually a customer on the other end; either an internal customer who needs you as a colleague or a paying customer who needs assistance. As such, nobody is too important to answer the phone.

Ahhh....I feel better now.

Monday, October 27, 2008

Why Politics Has No Place in Christian Workplaces

When I joined the Church some eight or nine years ago I was fortunate enough to go through several months of classes in moral theology. While I was an occasional guest in Sunday School as a child, this was the first time someone intelligently laid out for me the relationships of God to man, and man to his fellow man. For the sake of brevity I'll summarize it like this: we have a responsibility for our own personal moral conduct as an example to our children, families, and community; we have an equal moral responsibility to the greater world around us in helping the least among our fellow man and to be good stewards of the world given to us.

When I learned this I immediately recognized a fact of organized politics; that both major parties have developed their own civil religion that is about half of moral theology. Each uses its civil religion as its own moral high ground against the other party while ignoring the moral whole.

On one side we have a Republican civil religion that seems intensely interested in peoples' personal moral conduct, less interested in charity (outside its Evangelical wing), and looks the other way on matters of environment so as not to offend its Big Business donor base.

On the other side we have the civil religion of the Democratic party. Very interested in people's responsibilities to each other and to society, dedicated to government as an instrument to achieve charity, but it looks the other way on matters of personal conduct so as not to offend the activist wing of its party that includes NOW, NARAL, and various gay and lesbian activist groups.

Realizing the moral vacuum of professional politics, I dropped any political party affiliation and became a politically independent Christian. By that I mean that I decide which candidate's direction best promotes the common good regardless of party. I've not voted a straight party ticket since and find that very liberating.

The fact that each party claims part of Christian values sets the stage for endless conflict over who represents God. The answer is, of course, both and neither. Remember that politics is the art of consolidating your base and splitting the other party's. Nothing splits people like religion, and its become the number one wedge issue in American politics. The presence of that wedge remains after the election is over, and the lingering divisiveness works counter to teamwork, cohesion, and the harmony necessary in effective workplaces.

This election cycle adds another reason to keep it out of the workplace; people need some place to get away from it! By election day we will be two years in the process and sometimes work is the only place where you're not bombarded by political news.

On my way home from work last Tuesday I saw a bumper sticker in traffic that said, "God is not a Republican or a Democrat". Driving to work Wednesday morning I saw another bumper sticker that said, "God may not be a Republican, but Satan is surely a Democrat". Last night when I checked my home email account I had 51 emails from family and friends, about half of which were anti-Obama prayer requests and one unique interpretation of Revelation that "proves" Obama is the Anti-Christ. What prompted the post you're reading now was an immediate sense of thanks that I don't have to see this base and contentious content at work each day.

During these next seven days, I encourage all of us to keep it this way. Let's keep politics out of our workplace and especially off our email system. Let's use our values at the polls to inform our vote. If we don't divide into political teams now we can still play on the same business team when the shouting dies down. I took advantage of early voting last Saturday and am thankful that, for me at least, its over for another four years.

Thursday, October 16, 2008

What I Did On My Work From Home Day (and what it means)

As part of the Work From Home (WFH) project test I have tried to work from home every Thursday morning unless I was out of town. This was a great time for me to get "head space", but also to test how you lead a staff while not there. Today was different; I started out planning to just work the morning and, by lunchtime, was in such a groove that I stayed home all day. There are those in our company, and outside it, who don't believe you can be productive from home. There are others who think that its fine for staff members, but not someone in leadership. To all of you I offer my day today. Some details are generalized for confidentiality.

Because I didn't have to commute in I was in the kitchen when my wife and daughter left for their respective jobs. I never get to see them in the morning and this was nice. After they left, I went upstairs at 8:30, fired up the VPN connection, and the day began. Roughly in this order my next eight hours were:
  • Took care of my overnight email
  • Long conference call with the leadership team of one division regarding a major project
  • Follow-up call with staff member to redirect their work for today in support of that project
  • While on the same call, took time to catch up with staff member on status of another project
  • Placed follow-up call to another staff member and left instructions in support of same project
  • Reviewed documents on Web Ex site set up for this project
  • Resolved an expense report issue
  • Corresponded with colleagues on 401(k) issue (unclaimed former employee assets)
  • Mopped-up relocation reimbursement documentation issue
  • "Met" via email with various colleagues to approve on-site vendor solicitation (we monitor these carefully)
  • Consulted with staff member on a job offer; to make it or not to make it.
  • Reviewed and approved Predators Faith Night offer for distribution to the workforce
  • Consulted with staff member on benefits cost analysis research and how to conclude task
  • Drafted disciplinary action for VP to administer to one of their staff members
  • Consulted with SVP on special recruiting project, status, candidates, and next actions
  • Conducted call with staff member on tomorrow's actions needed for that SVP's search.
  • Fielded a series of questions from a member of management regarding a proposed promotion for one of his staff.
  • Collaborated/edited follow-up survey from all-employee meeting before it was distributed
  • Consulted with SVP on short-term sales incentive program.
  • Consulted with staff member on "on the floor" feedback from yesterday's all-employee meeting
  • Fielded data request from CEO/CFO (to be completed tomorrow)
  • Polled ELT members for alignment on proposed policy change

In the midst of all this, I managed to walk the dog twice, meet the lady who delivers the dry cleaning, the mail man, the UPS man, finalized arrangements for Saturday night's monthly guitar circle, and made dinner. I ended up the day with my inbox at zero, one unreturned phone call (the caller was gone home by the time I could return it), and two items undone but queued-up for tomorrow morning. During the course of the day I directed the work of or at least spoke to five of my six staff members and corresponded a half-dozen times with my CEO.

What does this all mean? It means that those of us in leadership can leverage the technology we have to direct the work of our teams and service our internal customers from somewhere other than our offices. Some of the same members of our leadership team who don't believe this travel extensively and do believe they effectively lead their teams from hotels and airports. I propose to them, and to you, that all of us can lead more effectively from our home office than from Hampton Inn. This means that we can include certain members of the leadership team in the space sharing program, which we should expand as quickly as we can without disrupting our business.

Given this capability, its time to leverage WFH to drastically reduce our space costs, sublease LVP and the ground floor of the Plano office, and put that money on the bottom line.

Monday, September 22, 2008

Another Work From Home (WFH) Update

In this picture Kristie Cantrell is sitting next to her empty cubicle in the space she now shares with Jack Leichty. The two started today working on alternating days in the office and working from home the rest of the work week. The big move was Friday but has been in the works for weeks. Note that both their name plates are now affixed on the same cubicle wall. To make sure that two people could work from the same space, we required that Kristie's former space be completely emptied, wiped down, and that it not be used for storage. Both of them now have 100% of the materials they need for their immediate work area in one cubicle, or at their home offices.

This was no small feat. Since neither uses a laptop IT moved both of them from their desktop PCs to a virtual desktop on the company server. That requires software that's in its evaluation stage and will expire in two weeks. After that, a second 60-day software evaluation will run the virtual desktops and buy us time to make a decision as to if this software is an appropriate purchase. We moved one under-counter filing cabinet into the newly shared cubicle; otherwise the fixturing is the same.

Last Thursday we had another virtual staff meeting; the first to feature three staff members joining via video and the first to include Tom Davies, our HR Director in Plano, Texas. The video was perfect while the audio was distorted and distracting. Next meeting we're going to hook everyone up via conference call using the telephone for audio and Oovoo just for the video. We'll report back on how that works.

In a related project, we've begun going through all our file drawers, file by file, and purging/shredding/archiving whatever isn't needed for daily operations. In two weeks our goal is to move all our files into one file room, move Amy Lindsey into Kristie's vacated cubicle, and move Payroll into an empty space next to the file room. With some help from Facilities, our goal is to empty eight cubicles in one block to make way for new neighbors, whenever that need arises. The starting point for this move, however, was the extra cube made available by WFH.

We have always resisted close neighbors in the office given the confidential nature of what we do in HR. What we've discovered, however, is that our use of Pandion Instant Messenger (IM) to communicate with each other while working from home has translated into IM use with each other while in the office. Also, the digitization of much of our files and the purge I mentioned above will open up more work and meeting space in our file areas. The verbal communication in the department has decreased to the point that we're confident that we can communicate with each other without being overheard even by those over the wall in the next row of cubicles.

So what's the critical learning, the next step, and the future of the WFH test?

1. Cubicle sharing is possible now - Any two people in the test who have a laptop and a two-line capable desk phone could move in together. This requires a change in scheduling, but not much of a change in fixturing or anything else. Sharing desktop PC resources is still a few weeks off, but if the test shows a positive cost-benefit then I believe its coming.

2. Nothing Beats a Good Purge - Its worth your time (and space charges) to look in those files nobody ever opens, in those old documents and you haven't seen in years, or to archive off-site (with a two or three year destroy date) those documents that you "might" need "someday". They don't have to be in the desk drawer at your fingertips if they're "just in case" files.

3. Digitize! - We cleaned out the recruiting files from 2002, the last year that we weren't on an electronic application system. Those files took up more space than all the recruiting files for all the years since 2002.

4. Open Every Drawer - Those 2002 files were in a cabinet I thought was being used for payroll, until payroll said that wasn't their cabinet. How many of these do we have company-wide at $17/sq. ft.?

5. Use IM - This minimizes the chatter in your office, drastically reduces your email load (and therefore email server space requirements), and increases communication speed both for those at the office and those at home.

6. Set up a Meeting Area with Web cams and Oovoo - Some areas in the test are "just" using no-meeting Fridays as WFH days, and that won't lead to space sharing. To truly test the WFH concept people need to be working at least two days from home a week. In order to have meetings as-scheduled and test WFH requires that meetings will often include those joining via web cam. We use my office, and we have a shared departmental laptop with a camera that we can use in shared conference rooms when my office isn't available.

New Business

  • We welcome the Law Department into the WFH test; three of their six staff members are now working part-time from home as of last week. This brings the total number in the test group to 145.
  • We are continuing discussions with Nashville's Metro Transit Authority (MTA) regarding ways that we can combine WFH and mass transit as a strategy to combat fuel prices and shortages.

Tuesday, September 16, 2008

Don't Mess Up Your 401(k) in a Down Market

Okay, this is not investment advice. If it were, why would you take it from an HR guy when you have so many registered financial advisers at your disposal? This is just a set of observations about mistakes I've seen people make in knee-jerking to a falling market. Take this for what its worth, research your own 401(k) investments, get competent advice, etc...before making investment decisions. Meanwhile, consider this premise; that the market has been here before and come back, that Phil Graham is right in his assessment that as a nation we could be a little more resilient, and that television news coverage is sensationalism detached from the reality of the market. In other words, this isn't a market for the faint of heart but neither is it a meltdown, a historic depression, or any of the other hyperbole you've heard on television.

1. We've Been Here Before- Check out the historical chart of the Dow Jones averages starting in 1900 and continuing up to the present day. Two things to note; look at all the big drops along the way, and take a look at the difference between where it started and where it is today. The market always rebounds; always rebounds. In my working lifetime we've had three major corrections; the junk bond correction or "Black Monday" in 1987, the "Dot Bomb" correction of 1999/2000, and the "junk mortgage" correction of this week. This happens every few years when greed and speculation come before the underlying value proposition of an investment. When the bubble bursts there's a sell-off, market values correct, and then the market value recovers. On Black Monday Sam Walton lost $1m; when asked how he felt about it he said, "So what, it's all on paper". He died a billionaire, by the way.

2. Its Just On Paper Until You Act - When you trade mutual funds after a loss you make those losses real. Up until that time you hold the same number of shares or fractional shares as you did before the price dropped, they're just worth less. Once you move from that fund to another within the plan you've sold those shares for the lower value and bought others at their low value. If that's what you intend to do because you think the other fund will fall slower or rise faster, that's up to you. Just know what you're doing before you react to the falling price of that fund.

3. You're Probably Not Retiring Today - Unless you are, you don't need your 401(k) money. No action is required on your part in reaction to a falling market. Think about the number of years between now and when you retire, go back that many years on the historical chart above, and see how much the market has risen in that time. This is the appreciation in value that you'll miss if you panic. AOL's Finance page had a great article on this topic earlier today that's worth the read.

4. Consider Increasing Your Payroll Deduction - Remember, your 401(k) is not a bank account where you track the dollars. Its a collection of mutual fund shares that you purchase over decades and watch them appreciate. If the price of cars drop and you need one, that would be the time to buy, right? Same with houses or any other "thing" that you need. Well, you need mutual fund shares to sell when it comes time to retire. If they're selling at a discount, you might consider buying more while the price is right. The only way to do that is to increase your payroll deduction going into your 401(k). That sounds counter intuitive when food and gas prices are rising and CNN's financial guru's are shrieking like little girls, but its not always a bad idea.

In my experience, the people who've made a bad market into a bad retirement move are those who react by selling their shares, going to cash or stable value funds, and/or stopping their deductions into the plan. Personally, when the news is this bad I just stop checking my fund balance for awhile and remember that I have 23 1/2 years before I'm social security eligible, that activity is not progress, and that motion is not necessarily forward movement. Often the smart move is no move at all, or a move in the opposite direction of the herd.

Again, seek competent advice before making investment decisions.

Saturday, September 06, 2008

Slow Economy is an Opportunity to Build Loyalty

Financially I'm a contrarian; when times are good I try to save, and when times are bad I purchase. Every down economy is an opportunity to gain value. The same is true about customer and employee loyalty; this economy is providing us a period of great opportunity.

Like practically every other company operating in this country, the economic environment of the past few months has been challenging. In my HR position I'm involved, as you might expect, with efforts to control our employment costs which included a staff reduction in April. As a department head, I've also been involved in controlling costs including attempts to cancel or negotiate my way out of contracts charged to my department. We also manage fully-insured employee benefits plans that cannot be changed until the end of March, so we're making sure that both employees and the company get the most for the money that we are obligated to spend. Watching vendors and others outside our company operate in this tough environment reminds me of a wise saying from one of my colleagues, "Its every American's God-given right to be stupid". In the scramble to get every dollar possible in a tight environment, I see people making short-sighted decisions and missing a huge opportunity to build customer and employee loyalty. Here are a few examples.

Job Boards
Literally 48 hours after I signed our annual agreement with a national job board company, word came down that we were going to have to reduce staff. The contract period didn't start for 45 days, we had been a loyal customer, paid timely, for years, and the contract ink was not yet dry. I immediately contacted that company and told them we would have to cancel the contract. Their response; the contract has no provisions for cancellation. I offered to pay a reasonable cancellation fee of $1,500 for their time and trouble, and they refused. I consulted with our General Counsel and we agreed that our notice was timely and that this company would incur no damages if we breached. I wrote them a letter cancelling the contract and offering again to pay a cancellation fee. This was February.

After months of nasty-grams and threats and phone calls, this now ex-vendor sent their "Final Collection Notice" from their litigation department; $1,525 in cash in two weeks and pay the balance if we ever use them again. I took it. Now think it through; they could have worked with us, collected $1,500 in February, kept a loyal customer, and had our business next year when (I suspect) we'll be back in hiring mode. Instead, they spent untold hours of staff time, including staff attorney time, to collect $25 more in September, offended a good customer, and provided us a financial incentive not to use them ever again. Am I missing something here?

We similarly cancelled a local job board subscription, worth about $4,500 per year. We offered to pay 1/4 of that as a cancellation fee, and were informed that the cancellation fee would be $9,500, or more than double the cost of the annual subscription. We're still dancing with these guys, but the really bright thing they did this week was turn down a pre-paid ad from us because we owed an outstanding balance. Again, they could help us out in a tight year, keep a good customer whose always paid in full and on time, have our business on a pre-paid basis this year and have us back on board next year. Instead, they've offended us (these folks are particularly nasty over the phone), won't take revenue from us (I placed the ad elsewhere in 10 minutes), and may or may not collect anything more than what we've offered.

We've been dealing with an insurance carrier of late whose service has been less than what we'd like. They misrepresented their claims payment platform and capabilities, botched the eligibility file leading to problems when employees go to their providers, and now owe us money under the performance guarantees in their contract with us. In negotiating the payout back to us their offer was to reduce our premiums by 5% for the rest of this year. My offer back to them was this: we're not satisfied so you're fired effective March 31, or you can extend the reduced premium through the following plan year and give yourself essentially 18 months to win us back. After two months of negotiations, they declined. Its a new benefit, so we'll notify our enrollees this next week that its going away March 31 so that they can use it before its gone. The discounted premium we sought will be eclipsed by the losses the carrier will incur by having strong utilization for the next 7 months and then losing the premium revenue before they can recoup.

I have no war stories on this, yet. The one staff reduction we've done was executed in such a way that we've stood by everyone terminated through severance, outplacement, putting them on a preferred rehire list, etc... and almost all of them have now found jobs. That's been noticed by those not cut and its helped to reduce some of the nervousness in the workforce. Not every company does it this way.

Every day I read where companies are cutting staff. With January 1 approaching, the period when most companies renew their employee benefits, I'm starting to hear of other companies making drastic cuts in benefits and cost-shifts to their workforce. There's a problem with that strategy, and I know of what I speak. Hard economies suppress turnover due to lack of options, but bad economies always turn around and people have long memories. Standing by your people now, when money is tight at home and the prospect of unemployment is scary, builds loyalty and retains talent once things turn around. Leadership teams and HR departments all over are undertaking efforts to squeeze costs at the expense of their workforce; efforts that will lead to fruit basket turnover later. Like my three vendor examples above, employers can throw people overboard to keep profits high and lose them forever, or stand by them and build loyalty.

This is a time of opportunity.

Thursday, September 04, 2008

You'll be Proud of the Lynne Spears Book

I'm an HR guy so this isn't a book review; that's not what I do. This is about our culture as a Christian company and why you shouldn't be concerned about this book at all. I'll be the first to admit it, I was one of those in our workforce who originally raised concerns about the book when word first leaked out internally that we were publishing it. Before there was an internal announcement of the book and its intended subject matter, many of us in the workforce jumped to the same conclusions as the general public that this was either a tabloid tell-all or apologetics for Britney's antics. Some of the internal subtitles were: "It's not my fault", or "See, I have two other normal kids", or "Scratch that, I have at least one normal kid". As with any instance where gossip occurs, it wasn't (behaviorally) our finest hour.

I wanted to be able to assure our workforce that this book was consistent with our values and culture, so I asked for an advance copy and got it. I'm glad I did. I've passed this same copy to two people close to me, both women, and asked them to read it. Both came away with the same impression; that Lynne comes across as sincere, engaging, and genuine. While there are some new details about the family's life and struggle, this isn't a tabloid tell-all. It's more about what happens to a normal small-town Southern family when thrust into the center of the tabloid universe.

Internally, everyone to whom I've spoken on our staff who's met Lynne is taken with her. She's reported to me to be genuine and authentic.

Since we're still a couple of weeks away from the street date that's all I'm going to say. Besides, we want people the buy the book! Just please be assured that nobody is more concerned with keeping us true to our culture and core values than am I, and I think we'll be proud to have The House logo on the spine of this book.

Sunday, August 17, 2008

Why Obama's Candidacy Matters No Matter Who Gets Your Vote

I am 48, and my earliest memories are in front of the television (I think a fudge-pop may have been involved) during the turbulent middle and late 1960s. I have thus grown up during the era of civil rights; that period that transformed this country from a Protestant, white-male dominated culture to a multi-ethnic, multi-cultural, and religiously diverse nation. My time in business, first in line management then in HR, has been entirely during the era of group rights and redress of societal grievances, some legitimate and some not. Now more than halfway through a career focused on business management and HR, I'm well versed in all the things you can't say, can't do, and sometimes don't dare think in regards to race, gender, national origin, etc...

Along with the political correctness of our culture, which can't help but be reflected in our business culture, come a few assumptions; women are more sensitive to women's issues, non-whites are more sensitive to race issues, immigrants are more focused on national origin issues, etc... In the civil rights era, that time between about 1962 and 2008, the focus is on defining people as to which group they belong, not as individuals, and everyone takes up for their group. Around these groups, a civil rights industry developed which took advantage of both private and public money to keep civil rights issues on people's minds. Organizations from NOW to the NAACP to the Rainbow/Push Coalition existed to advocate and support women and people of color, to raise money for those efforts, and to keep civil rights alive. If you've received a mailing from any of these groups, you'll also know that they served to sound the alarm on offenses real and simply perceived, and to keep righteous anger alive as part of fund raising.

The fact that we may be able to book-end the civil rights era with an end date is the transcendent, sea-change impact of the Obama candidacy. His popularity has highlighted a generational reality that many people missed; that the civil rights movement succeeded, and the generation my daughter's age not only doesn't see race, gender, and national origin, but also doesn't see the need for the infrastructure of the civil rights industry itself.

Running against the first legitimate woman candidate for President, Obama swept the overwhelming majority of young women's votes in the democratic primary. Middle-aged and older women voted for Hillary with a passion born of righteous indignation; young women voted for Obama because they don't have that indignation and liked his policies. White men voted overwhelmingly for Obama in all but the rust-belt states. In the rust belt this was an indication of class politics; blue-collar vs. Obama as the perceived elitist. In the rest of the country, they just liked him better regardless of his race. This was particularly true, again, with young white male voters.

As I said above, societal trends show up as workplace trends because no workplace exists in a vacuum from the society in which it operates. At work I'm starting to see signs of this post-feminist, post-racial generation. We recently held compensation communications meetings in one division, and I invited anyone with questions about their compensation to ask me directly. This group contains a disproportionate percentage of our young women, and those who approached me were all from this demographic. It has been my experience with women's compensation questions, particularly among middle-aged and older workers, that I commonly get the question, "Am I paid fairly compared to the boys"? Its a fair question, to be sure. What struck me about the questions from the young women were that it was entirely, "Am I being paid fairly compared to the market"? Unlike their mother's generation, this generation of young women has so far not exhibited the expectation of gender bias in pay; they are post-feminist.

As for race, the last two EEOC claims we've received were from whites who quit and claimed either age or racial associative discrimination ("I was friends with an African American and that's why they fired me"). Both were lame and, in my opinion, a mis-use of the EEOC as a weapon of retaliation against a company that didn't provide for them the outcomes they desired. Again, this is a sign of post-civil rights non-whites whose thought process, like our young women, does not run first to discrimination.

Whether or not Obama is elected isn't the point, and I'm not advocating anyone's candidacy. The important aspects of it in the workplace, however, are that as managers and co-workers we have a new and fundamentally different demographic with which to deal in the workplace. Our younger workers are post-feminist, post-civil rights, and more focused on business. Now there's one place where we can follow their example.

Thursday, August 07, 2008

Work From Home Update

As of last week we have 136 people signed up to work partial weeks from home. These individuals work in three of our five divisions. In HR, we are building an email distribution list so we can send email blasts with tips and best practices, communicate directly to those in the test to see how its going, and start to build community around those involved in this innovation. One group we're watching closely is the Design group working in Production under Debbie Eicholtz, since they are Mac power-users and a key test of how the remoting software works with Macs.

In trying to stay ahead of the corporate test, HR is pushing ahead with two more phases of the project. About three weeks ago, with the wise counsel and support of our IT group, we installed video conferencing software and web cams for most of our staff. Since then, we've expanded our work-from-home schedule. At first we had three salaried staff members working three half-days each from home, making sure to have everyone in the office two days a week for staff meetings or other face-to-face events. Now all salaried staff are working from home two full days each week, and the majority of the hourly staff are working four 10-hour shifts. Staff meetings are now being done with at least two members joining via web cam from home, as the whole staff is never in the office on the same day anymore.

This week, again with the wisdom and support of our IT colleagues, we are planning the next and near-final phase of the test which is space sharing. By the end of this month we intend to have two staff members merge into one cubicle on alternating days. Neither has a laptop so the technical challenge will be how to share desktop computing resources with one person in the office and the other remoting in from home.

Most of this is going smoothly, but not all. The Mac users have had more technical difficulty than PC users, and one HR staff member can't get their home PC to work with the videoconferencing software and hardware. These are the types of bugs that we must work out of the system, as well as developing the policies and procedures and reflecting those in the Handbook, in order to roll this out to more people. This is taking time, but its such a profound change in work style that we need to get it right.

That's the latest. I welcome comments and questions as always.

Sunday, July 20, 2008

Love Your Integrity? Love Your Auditor!

If you're in the business world more than five minutes you've probably been audited or even investigated. This experience ranges from when you started running a cash register in an entry-level position and having someone spot-balance your till, all the way up to having an auditor or investigator dispatched to investigate some perceived or suspected irregularity. My first response to this as a junior staff member was to be offended; after all, I know my integrity and intentions so what makes someone think otherwise? As you grow your career and have staff, especially if you have a hand-picked and trusted staff like I have, its easy to take up their cause and be offended on their behalf. The plain truth is that this is one area where you have to grow thick skin and love your auditors as yourself.

Not only should you not mind audits or investigations (this is assuming you're conducting your business as you should be) but you should welcome them. Here's why:
  1. Audits Protect You From Rumors - No matter where you work or what you do, people are going to gossip and its not always going to be charitable. At times that gossip is going to turn to suspicions about your honesty or integrity. Being periodically audited, and welcoming those audits each and every time, blunts the gossip and never allows it to gain traction.
  2. Audits Help You Get Better - I've never had an audit or investigation of any kind that showed an irregularity or dishonesty, but every audit I've ever had showed me some area of needed improvement. If you can effectively shake off the righteous indignation from being audited, and focus instead on what needs to be improved, you get better at what you do.
  3. Audits Build Your Brand - If they're done right, and unfortunately they aren't always, completed and clean audits build your personal brand and reputation among the auditors. This also leads to less frequent audits.
  4. You Really Have No Other Choice - Being audited or investigated is a win/lose proposition with no viable middle option. If you welcome the scrutiny and come away with nothing worse than a list of things you could do better, you win. If you come away with this same list but resist and object, the auditors walk away mumbling to themselves and others that they still have suspicions because of how you objected. In that case, the brand damage is done without just cause and, really, you did that to yourself through your reaction.

That said, here's a word to auditors.

  1. Your purpose is to make sure the business is operating smoothly and efficiently. Its not to catch someone doing something wrong, although clearly that should be reported should you find it.
  2. You have a responsibility to be respectful of the chain of command and inform HR and the department head of the area being audited of your activities in advance. You don't have "super jurisdiction" that allows you to unilaterally snoop on suspicion.
  3. You have a responsibility to be accurate and to conduct your audit thoroughly. You have no less than people's reputations and livelihoods on the line and sloppy work should be intolerable.
  4. You have a responsibility to accept the results of your own audit and not continue to mouth unproven suspicions about the people who you investigate.

Properly authorized and executed scrutiny should be a blessing to the organization in which its done. It should be conducted in a way that brings honor to the organization, and it should be welcomed by those being scrutinized as a chance to build your brand and that of the company. If everyone is doing what they should, facts are truly friendly.

Thursday, July 17, 2008

Slow Economy Facts and How to Help Your Staff

If someone were to ask me what I really believe in and know to be true, along with the Father, Son, Holy Spirit, Communion of the Saints, and the power of prayer I would list The Business Cycle. Anybody whose been in business for long has seen it for themselves and heard the age-old phrase, "What comes up must go down". The fact that "everybody knows that" however, is an assumption we can't make because a lot of your young staffers have never seen a down cycle. They hear the hystrionics of the mass media and believe we're all going to die broke, and very soon. Here are some facts to help you and your staff through the trough and back up to the inevitable peak.

Take a good macroeconomics course and you'll hear that full employment in this country is an unemployment rate of 4 - 4.5%. That's because, historically, about that percentage of the U.S. population is in transition at any given time. By transition I mean just coming out of college, just quit their job to go back to college, quit one job but hasn't yet started an already-secured successor job, left the workforce to have children, just became and empty nester and now trying to get back into the workforce, etc... This time last year the unemployment rate for metro Nashville was 3.7%, which explains all those "Help Wanted" signs you saw around town. This year we're up to (Gasp!) about 5%. On a population base of 625,000 (nearest estimate I can find on-line) the difference between 4.5% and 5% unemployment is 3,125 people out of work who want to work. In other words, the sky is not exactly falling no matter what you see on the 6:00 news. And, oh yeah, you still see help wanted signs around town.

A recession has a technical definition; two consecutive quarters of negative economic growth. To date, in 2007 and so far in 2008, we have yet to have even one quarter of negative growth. What you see and what you're feeling in the local economy, with light traffic and half-empty restaurants (and book stores), is a slow-down but not negative momentum. The slow down is more the product of anxiety and higher energy prices, but its not an economy going backwards. Think of it this way; the same amount of money is flowing through the local economy; its just that a much larger percentage is being spent at the pump at the expense of restaurants, book stores, etc... The jobs, and aggregate income, are still here and the depths of the slow-down, or whether it becomes a real recession, will depend upon how quickly people find ways to use less gasoline and reclaim those dollars for their other spending. There's hopeful signs of this today, as the price of oil is down $14 in three days over increased U.S. petroleum inventory. Its a sign that people are finding ways to use less due to the high cost.

It Depends on Your Age
The last mild recession we had in this country was the post-9/11 recession of 2002. Assuming that you were 23 when you entered the workforce (a Freshman at 18 and 5 years to graduate and find your first job), that means that anybody on your staff who is 28 or under was not in the workforce when we last had a slow economy. That recession was mild compared to the Jimmy Carter recession of 1981/82. Using the same age assumptions, that means that nobody on your staff under 47 has been in the workforce during a prolonged recession. The Reagan/Clinton/G.H.W. Bush economies were so good over such a long period of time, that you have people in your work groups right now that are seeing recessionary signs for the first time in their working lives.

This makes it incumbent on those of us who've lived through this all before to help educate, reassure, and encourage those who haven't. This doesn't mean being Mary Sunshine and telling them that everything is going to be alright; things could get worse before they get better and job loss in such times is always a possibility. The encouragement, though, is that things do get better and history proves this to be the case. The best remedy for job anxiety at times like these is to look for ways to save money, both personally and professionally, and for new ways to add value. Stepping into the challenges with courage distinguishes those who do and helps make careers; sitting around a dark office talking about how bad things are neither shows courage nor adds value.

Oh yeah, and one more thing; turn off the TV until after the election. You're not going to die broke anytime soon.

Tuesday, July 01, 2008

The Thomas Nelson Work From Home Test

I generally am loathe to talk about something new before its tested and fully functional. However, at last week's Publishing Compensation meetings I heard several comments about why we're not talking about our telecommuting pilot program. I haven't been because its a test, meaning we don't know what we don't know and are trying to learn. Still, the enthusiasm for the test is such that a lot of people apparently want to know about it.

We began a pilot program in HR about 9 or 10 months ago, without telling anybody (including the ELT and my boss the CEO) what we were doing. The idea was this: if a face-to-face service department like HR could leverage the technology available to us with zero additional investment and no drop-off in service, then almost any business unit in the company could do the same. None of us own laptops, none of us carry a blackberry, and we committed no funds to the program. Instead, we worked with our IT department (and what great partners they are!) to install VPN software on our home PCs, an internal IM client (Pandion) on our work PCs, and otherwise we simply changed the methods by which we did our job. I offered the opportunity to work from home up to three half-days to my staff, and the three hourly team members declined citing that their work couldn't be done from home, and the three salaried staffers took me up on my offer.

We had some rough spots and a lot of kinks to iron out (this was a test, after all...) but at the eight month mark we felt good enough about the results to write it all up and make a recommendation to the ELT. Now, every EVP has been assigned by the CEO to identify a test group or groups in their division and we should be underway with those tests in 1 - 2 weeks.

Meanwhile, in the HR department, we're trying to stay ahead of the divisional tests and continue to experiment with new technologies and methods. I have offered 4 10-hour shifts to my hourly staff who can't work from home, in order to give them relief from high gas prices. I have expanded the salaried staff to two full days off-site, and installed web cams for my assistant, the salaried staff, and me. This cost us about $500 and is the first money we've spent on the test. IT installed these in such a way that they can be used at work then easily removed and taken home for off-site work. IT then installed Skype and Oovoo for video conferencing, and I've installed AIM Pro (the business version of AOL Instant Messenger) and Yahoo Messenger, both with one-click video conferencing. Starting next week, we will have all our departmental meetings with one or more members joining in via video conference. Also starting next week, we will have face-to-face video interviews with candidates before paying to have them travel to Nashville.

Where's this going? Well, its too early to tell just yet...its a test! What I hope to see out of this is in the short-term is relief for our staff from high commuting costs. What I'd like to see in the intermediate term is a 30% reduction in occupancy costs (see my earlier blog on that topic) in Nashville, which would give us savings literally in the hundreds of thousands of dollars annually. Long-term, I'd like to see the critical learning of how to work together, virtually, across-town translate into learning how to work with each other cross-country (hello, virtual office in New York!) and then internationally. These skills will hasten the realization of our having operations all over the world (which we do to some extent now) that are fully integrated and aligned with each other and corporate headquarters. But for now, this is only a test....

Thursday, June 26, 2008

The Gun Debate at Work

On my way home last night I listened to a long-form news report on NPR about the Supreme Court's ruling in District of Columbia v. Heller, where the court ruled that law-abiding citizens have the right to own guns for their own protection. The case has been years in the making and involved overreaching gun control laws in the District of Columbia which prohibited lawful handgun ownership. NPR, of course, was predicting the end of civilization as we know it. Curiously enough, it blamed D.C.'s unacceptable violent crime and murder rate not on defenseless citizens, but on gun shows in Maryland. In other words, their answer to the dismal failure of gun control in D.C. was to export it to Maryland.

The high court's ruling came on the heels of yet another workplace shooting, this time at Atlantis Plastics in Henderson, KY fairly near my home town. There Wesley Higdon shot his boss and five coworkers before killing himself. He used a handgun that he kept legally in his vehicle (as even non-permit holders are allowed to do). Looking at shootings like this one and hearing about the loosening of gun ownership restrictions, it would be easy to draw the conclusion that more guns make a society less safe, and banning guns at work or elsewhere will reduce shootings. Well, not so fast.

D.C. has been notorius for gun violence for years. Their solution was to disarm their people and rely completely on police for protection. Kentucky's solution was to develop a system to qualify law abiding people to defend themselves. Part of this difference is geographic, as in a larger rural land area police can't be everywhere. Growing up in rural Western Kentucky, I remember the only time we ever called the county sheriff (because of a break-in one of our barns) they called us three days later to see if we still needed them to come out. D.C. is a more compact and urban land area and more conducive to police response.

But another more important difference is cultural. D.C. has a larger percentage of its population in public housing, on public assistance of one type or another, and is a more urban/community-oriented culture. Kentucky is more rural, and more than slightly ornery. One of the foundations of Kentucky jurisprudence in the area of self defense comes from a 1931 case Gibson v. Commonwealth where the state supreme court established the right to self defense, emphatically, by ruling:

"It is the tradition that a Kentuckian never runs. He does not have to...he is not obligated to retreat, nor to consider whether he can safely retreat, but is entitled to stand his ground and meet any attack made upon him with a deadly weapon"

Based in large part upon this foundational ruling, Kentucky passed one of the best Concealed Deadly Weapons laws in the country in October, 1996 and I obtained my permit within a few months of its passing. To date, literally thousands of permit holders have successfully defended their lives, the lives of others, and their property with deadly force. To date, not a single permit holder has been charged or convicted of misuse of deadly force.

The results of the D.C. and Kentucky approaches are clear. In Kentucky the murder rate was increasing steadily from 1960 when such records started being kept on a statewide basis, until 1996 when the law was passed. In 2006 (last year for which I can find data), the murder rate is at its lowest since 1963. In 2006, Kentucky had 169 murders with a population of 4.2 million while D.C. had 168 murders with a population of 581,000. In 2006 Kentuckians experienced 2.6 violent crimes committed for every 1,000 people; in D.C. that number was 15.1.

D.C's high crime rate is because it is the ultimate soft target, like workplaces and schools. Any place where people are defenseless and can't shoot back is an easy target for someone with bad intentions and a gun. When's the last time you heard of a crazed gunman walking into a police station and opening fire?

The Supreme Court got this one right, and the answer to the horrible phenomenon of workplace shootings is to qualify and register honest people to carry and use deadly weapons, and then allow those in the workplace. The Kentucky law, unlike Tennessee, specifically prohibits businesses from terminating permit holders for carrying a firearm on company property regardless of company policy. However, Kentucky allows employers to restrict that firearm to the personal automobile of the permit holder making the workplace, as in Tennessee, a soft target unless you have armed security. It should be up to each employer to quietly change their policies to allow permit holders to carry in the workplace and save the lives of themselves and their coworkers the next time some crazy with a gun walks into the lobby.

Should we care about this at Christian companies? Absolutely! As my former boss once said, "There are nuts, and there are religious nuts, and those are the ones to fear".

Sunday, June 22, 2008

Realtor's Fees Driving Relocation Costs

The slowing real estate market is bringing to the forefront a long-simmering problem for small-to-medium-sized companies. The majority of corporate relocation expense is now reimbursement for realtor's fees. That just feels wrong in so many ways.

For decades the best practice in relocation management, if your company is too small to buy the houses of the relocating candidates or employees, has been to reimburse realtor's' fees for the selling of their current house and closing costs on the purchase of a replacement in the new city. This is 6% on the selling side and 2% on the buying side, and assuming that the transferee purchases about the same priced home as the one they sold, that's a flat 8%. When this practice became industry-standard, a modest 1500 sq. ft. in a major city was priced around $95 - $125,000 and the expense to the company was usually no more than $10,000. Today, that same house is $325,000 - $400,000 unless you're in a premium neighborhood, in which case it could be as much as $700,000. Now the reimbursable real estate portion of the move is $30 - $40,000. Our relocations usually involve about 15,000 lbs of personal goods, and with all other benefits (house hunting trips, storage, misc. allowances for deposits, etc...) the real estate piece is typically no less than equal to all the other expenses put together, and in some cases its double all other expense.

We got around this for awhile during the recent real estate boom. We gave incentives for people to sell their own home, and sometimes increased the cash allowances as a reward for FSBO. Now that the market has slowed, people need professional help marketing their home and a realtor is a given. However, the slower market hasn't led to significantly lower home prices, as people have 80 - 120% mortgages and not only can't afford to lose equity, but in many cases can't pay off the bank without getting close to full price. The end result is that a 2000/2001 move that would cost us $32,000 now costs $52,000.

So what's the solution? I'm not sure because the issue is bigger than just corporate relocation. Remember, those same Realtors selling those same houses are now getting double the commission they once were due to the rising home values. However, their commissions have not dropped and my friends who are Realtors and see this as profiteering tell me that a realtor who drops their commissions can expect to not have their house shown by other Realtors. Its a closed market; you have to be licensed by state agencies controlled by Realtors, and the 6% commission is regulated informally by other Realtors.

The immediate action required is that managers need to start thinking about what positions are worth relocations. We need about $250,000 in incremental revenue to cover every relocation, so maybe the standard is that the person or position must generate that in order for us to not restrict hiring to the local area or letting the person home-office from their current location. Once a relocation need is established, the managers need to budget $50k for each anticipated full-service relocation (we have a Uhaul-level for some positions).

Finally, if there's a relocation expert out there whose found a solution, let's hear from you!

Thursday, June 19, 2008

Father's Day

There's a line in a song I heard several years ago that says, "All Things Work for Good has become my favorite verse". I thought about this during Father's Day week. After years of being distant my Dad and I have become close again. It started about three years ago as our daughters started attending the same college and our nests emptied simultaneously. It continued on with his urging me to take up guitar again. It solidified this past winter with the passing of his dad.
Suddenly each of us has graduated to a new role. I no longer have kids at home, and he's now the patriarch of the family. He has things he'd like to do but no longer feels up to it alone, and I find myself coming up to Kentucky more often to pick, fish, drop things off or help around his cabin. This past Father's Day week I arranged a guide on Percy Priest so he could fish for rock fish and stripes like he did during the two times he's lived in the Nashville during the 60's and 80's. He drove us all down to the Loveless Cafe for dinner the night before, then we visited until way later than we needed to. We pushed off from Elm Hill Marina at 3:45 a.m. and fished hard until 8:00, grabbed breakfast at the Stewart's Ferry Waffle House, and thoroughly enjoyed each other's company (despite having only two hours sleep!). He caught the most (10 to my 7) and I got the biggest one (15 lbs.). I would not have done this in a million years if he hadn't wanted to, and it was truly one of the best days of my life.
I'm sorry Dad didn't have his dad this year for Father's Day. I'm also sorry that his daughter was away at school for all but a few hours. But selfishly, all things truly have worked for good in that we had this time together. Its summer; if you're lucky enough to still have your dad, take him fishing (or whatever it is he likes to do). What you do isn't really the point anyway.

Saturday, June 14, 2008

A Truly Decent, World-Class Leader

Friday I had lunch with Stephen Harrison, founding partner and current Chairman of Lee Hecht Harrison. LHH was one of the handful of companies who helped invent the professional outplacement industry and Steve, along with Bob Lee and Bob Hecht, were its founders. Steve is the author of "The Manager's Book of Decencies: How Small Gestures Build Great Companies" (McGraw Hill, 2007) which I began reading last night (even though I typically detest business books).

Our company used the Nashville office of LHH for the majority of our professional outplacement during our April staff reductions; their service was spectacular. After meeting their Chairman, I have a better understanding of why their company performs at this level.

Steve was in town to visit the local office, and Mark Marshall, who heads that office, told me in a private moment how Steve spent Thursday and Friday. Thursday was spent in the LHH Nashville office with Steve speaking to people who were in outplacement; hearing their stories, asking their opinions, and finding out what was going on in their lives and the companies that had just separated them. He spent Friday talking to clients; our lunch was at his invitation. During our time together he was interested in how I came to Nelson, what our business issues were, and he had some really good questions about a current area of interest for him; how compliance regulations are or are not driving corporate culure, and an HR leader's role in defining culture for our organizations.

Two things I found most refreshing and impressive about Steve; even though he's a senior executive for a global conglomerate, he is soft spoken, thoughtful, and decent. Mark confirmed with me that he's "easy company" when they travel. The second thing is that, in a difficult economy, Steve was out where leaders should be; on the front lines and out of the office. How many times in my career have I seen, at the first sign of trouble, the senior executives of a company huddle together in multi-day meetings to try and figure out what's going wrong. It makes as much sense as a captain of a battleship, at the first sound of cannon fire, going down below to confer with his officers. A leader's place in time of trouble is on the front lines listening to employees, customers, and end users. They know more about your business than any focus group, survey company, or consultant.

On that note, for those of you are who scheduled to be in the Publishing division's compensation meetings next week, I'm looking forward to spending the day with you, sharing what we've done and are doing, and hearing back from you in what promises to be a day of dialogue and collaboration.

Monday, June 02, 2008

The Hidden Cost of Traditional Offices

The tried and true method of performing communal office work is for people to commute into an office, work for a set number of hours, and commute home. While there's nothing new that I can write about telecommuting that hasn't already been written, I've not seen much written about the cost to the local economy of continuing what is increasingly an arcane work style. Here's food for thought...

I was surprised to learn from our Facilities department that the gold standard calculation for space needed per employee is about 200 ft. Now you may look at your 8 x 8 cube or 10 x 15 office and think, "where's my 200 ft.?" The difference is that Facilities professionals like ours know to allocate hallway, restroom, break room, and lobby space into their needs. So for the sake of calculation, let's go with 200 sq. ft. per person.

With that established, we now have to rent that amount of space. For a typical office outside of the downtown Nashville area, you can expect to pay about $20 per square foot. We negotiate for large spaces and don't pay that much always, but most smaller renters would certainly experience at least this amount. This puts, conservatively, the average annual rent for one employee, before any utilities, maintenance, security, or equipment at $4,000. This means that, for every 100 employees, an employer will spend $400,000 per year just on providing space before any additional costs are incurred. For a company with 500 Nashville employees, like Nelson, that's $2m per year in overhead before a single product is produced. The theory, of course, is that the sum total of the work accomplished more than covers expenses; but what if that work could be done without this expense?

That's on the company side. How about employees? In this era of the super commuter, the typical commuting length is 45 minutes with some lucky souls commuting only 10 or 15 (like I do now) while others commute up to 90 minutes (like I used to do). Assuming an average commuting speed of 30 mph, that's 22 1/2 miles each way, or 45 miles per day, or 225 miles per week. If you're lucky enough to average 20 mpg and have two weeks vacation, you're paying $43.30 per week at $3.85/gallon like I paid today in Nashville, or $2,165 per year just for fuel. Add tires, maintenance, oil changes, and insurance and you're easily around $4,000 per year to drive to work. Consider your time on the road as lost work time, and that number at least doubles. So add $8,000 per employee in commuting expense and lost work time to the $4,000 employers pay for the space in which to perform the work, and the local economy is spending $12,000 per person, or $6,000,000 for every 500 employee workplace such as ours.

As we search for flex schedule solutions and a new way to define the workplace and workday, there will be false starts and bumps and some will say its not worth it. While $6m isn't what shows up on the balance sheets, it does show up in expended energy and the toll on working people as they struggle to balance work, family, and personal time. I will say here and repeatedly as we go forward that the rewards are worth the problems if we can find a way to return value to our authors, vendors, customers, and shareholders from home offices.

Tuesday, May 27, 2008

Universal Healthcare Key to Virtual Workforce

In every era capitalist economies form systems to maximize efficiency. In past decades work had to be performed at a work site where processes took place that added value to physical materials. Retaining a healthy workforce over several years was necessary both to keep labor peace and also to maintain efficiency and quality through retention of company-trained employees in a generally uneducated workforce . Employees themselves sought the security of a job that lasted a lifetime.

Insurers could underwrite policies accurately and profitably, because it had the worker throughout his or her lifetime, collecting excess premiums in their youth and investing that money sufficiently enough to cover the expenses of current employees and fund the period of deficit premiums when that same worker became older. The typical retirement age was 65 and typical mortality was at age 69, so companies and insurers could profitably provide retiree medical benefits for a period of only 4 or 5 years in most cases. The country was young, riding the early phase of the two post-war baby booms, so the ratio of young workers with little healthcare spending overshadowed the premium deficits of older workers.

In the modern era almost all of this has changed. Increasingly, jobs in developed economies involve the processing of information, almost universally in electronic formats. The work can be done anywhere and almost everyone is educated enough to do it (your 14 year old is probably better at it than you are!). Career-long loyalty to an employer is a thing of the past, and employer loyalty to its workforce is similarly rare. The workforce is aging, making older high-healthcare-cost workers an increasingly large percentage of the total workforce, and insurers are becoming increasingly selective in whom they will insure, and increasingly creative in how they can carve-out higher-cost medical procedures. There simply are not enough young, healthy workers paying in excess premiums to cover the cost of older workers. In individual plans where there is no opportunity for an underwriter to spread risk, sick workers cannot get coverage from anywhere.

The only component of the turn-of-the-century economic model still in existence is the employer as health plan sponsor. Since group health plans are the only "guaranteed issue" vehicle left, i.e. the insurance carrier can't exclude an otherwise covered employee due to health issues, employees with health issues cling to corporate jobs as their only hope for health coverage. Employers can't legally terminate older workers in order to lower their healthcare costs, and insurance carriers won't extend individual coverage to workers with any significant health issues. The combination of these culpabilities results in an inertia that builds-in fixed costs for employers and robs employees of the ability to move rapidly through the economy to work assignments that they find favorable. Thus, lack of universal health coverage is the last, greatest inhibitor to the New Economy where all workforces are virtual and every knowledge worker works for themselves as an independent contractor free of corporate power and influence.

Think of what a powerful future this evokes for working people of all professions. It no longer would matter if you lost your job; you just take on additional work from your other customers (since you most likely work for multiple employers part-time rather than one all the time) and your health care would continue without regard to COBRA, health questionnaires, or eligibility for coverage. Imagine similarly a company that could assign work as-needed, where needed, with no long-term obligations to maintain a certain roster of people. Taxes would be higher to fund universal coverage, but carve-outs could be prohibited by law so benefits would be greater.

In this election year, for the first time in my adult life, I'm listening seriously to any candidate proposing universal healthcare. It is both a basic human right, and the one societal development with the potential to radically democratize corporate workplaces. It would free corporations of a huge and growing benefits predicament in the form of spiraling benefits costs, and the only losers would be insurance carriers. Having worked with these companies for several years as corporate health plan sponsors, I can tell you that alongside Big Oil and Big Tobacco, if there is an industry that deserves regulation its Big Insurance. Since the most expensive 2% of real estate worldwide is owned by the same companies that cap your kids braces at $1,500 per set or force your wife out of the hospital 24 hours after labor and delivery, if "The People in the Pyramid" become "The People in the Nice Office Park on the Outskirts of Town" so that everyone has access to healthcare, that'll do in my book.

Wednesday, May 21, 2008

What Managers Can Learn from the Clintons

Let me first say that I am no fan of either Bill or Hillary Clinton. My idea of Hillary as Commander in Chief is this; imagine your wife in a terrible "I told you so" or "I know best" mood... for eight years... with Army Rangers to back her up. But again I could be wrong...

But this post isn't about politics other than using two amazing politicians as an example. The seldom-told secret of how either of these two made it to power really rests in a rare dynamic within their campaigns. It is something managers could do well to learn and replicate.

  1. They empower someone in their inner circle to tell them the brutal truth, no matter what the topic.
  2. They act immediately to counter or capitalize on that truth.
Here are some examples. During the first Bill Clinton campaign his staff planned contingencies around what his inner circle labeled "bimbo eruptions"; revelations from young women who might claim to have known him well. Each time a Jennifer Flowers or Paula Jones dropped out of the closet, the campaign immediately responded with supportive quotes from Hillary about the strength of their marriage followed by less than flattering information, pre-researched and pre-written, about the accuser. The end result was that the young women came across as looking for money and attention, and Bill became President.

After Barack Obama's upset win in Iowa, Hillary's staff told her she came across to voters and cold and aloof. A week later in New Hampshire...tears for the camera and a landslide win from higher voter turnout, especially from women. Several weeks later, beaten badly on Super Tuesday, the campaign again delivered the bad news that young women were voting overwhelmingly for Obama, who himself was running a weak campaign with white, working class, rust-belt voters. From that came the rebirth of Hillary as "Rosie the Riveter: Champion of the Working Class" and big wins in Ohio, Pennsylvania, West Virginia, and Kentucky that have kept her campaign on life support.

These amazing feats, and "Clinton spin" cannot be described accurately as anything less than amazing, all started with brutal candor from supportive insiders. Imagine this was your job; you get to go to your boss and say, "Sir, we've heard that you've had several extramarital affairs. We need to know the details about these women so we can research them and respond to future rumors". Or, in the Hillary example, "Ma'am, the workforce feels that you're a cold, uncaring elitist. We need a strategy to warm your image up a bit".

How many of you in staff positions would have the backbone for that job? Conversely, how many of you who manage people have someone on staff to perform this same service for you? Make no mistake, this is a service and an important one.

If you want to manage your personal corporate image, or the rumor mill on any topic, you must have someone who can speak the brutal truth to you while still having your back. If you don't have someone like this already, find someone loyal and give them permission to be truthful; brutally truthful if necessary. If you're a staff member, work your way into this type of position with your boss, or find someone for whom you can work who will value this service.

I have two people like this on staff and I include them in those times when I count my blessings.

Tuesday, May 13, 2008

I Kept My Promise; What's Next?

I can point to the spot in the street, 17 years ago, where I was walking with our then six-year-old daughter Rachel one night when she asked a question that literally changed my life. The family was young, money was tight, and she had just started 1st grade. The teachers were encouraging these new young students to do well in school so they could one day go to college. After dinner we were out for a walk when she looked up and asked me, "Will I get to go to college"? Without the slightest hesitation or idea how, I promised her she would. This past Saturday she changed her tassel from left to right, walked across the stage, shook President Gary Ransdell's hand, and my promise was kept.

After I made that promise, my work life became serious. Very serious. Serious to the point of often being unbalanced, unhealthy, and focused to the point of obsession. We lived in a small Kentucky town where jobs were scarce, and as my career progressed a good job like mine was rare. Because I had obligations that must be met no matter what, I developed and constantly maintained Plans B, C, D, E, and F to make sure that no matter what happened at work we had an income. I also learned to keep my ear to the ground and know how the political wind at my employer-at-the-time was blowing. This was my sole purpose, my only goal, and as of 3:45 last Saturday afternoon it was done.

Monday morning I woke up and realized that, from this point forward, I was working for something else. What that is, however, is less clear. Certainly I have a mild student loan hangover that will need to be eased; I had to pay off my own loans along with paying for a new baby, and I don't intend for Rachel to start off her adult life in debt. We also have some deferred bills from an expensive move to Nashville that we now can address. Still, this is all stuff and hardly the types of things from which purpose is found.

Turning points are part of any career; those times when you recalibrate who you are and what you're all about. I've seen people, particularly men, hit these mid-career turning points for years and now its my turn. The question of, "What's next?" won't be easily or quickly resolved but at least initially the prospect of major change feels exhilarating.

Tuesday, May 06, 2008

The Importance of Getting Past It

Forget for the sake of this post that I have any managerial or leadership position with any company. I'm not serving as an apologist for anyone when I say to those of you seeking long-term corporate careers that getting past difficult decisions and people is an absolutely essential skill.

Now two-weeks past our staff reductions, I see and hear of a person here or there who is struggling to keep their chin up. Their best friend was let go, the person who hired them is retiring, someone they loved was laid off while someone they despise was kept. It is not at all unusual, and is actually fairly common, for personal loss to cause someone to change jobs. The idea that, "its just not the same around here anymore" can cause you to look for another job, or at least suffer a loss of commitment to the job you have. Its a form of grief not unlike the death of someone close to you.

I know this first hand. A few years back I knew I needed to leave Sumitomo Electric because I saw the handwriting on the wall. I was opening new plants in Mexico and performing compensation analysis on U.S. vs. Mexican operations, and saw that we were paying the same wages for a week in Juarez that we were paying for a day in Kentucky. I knew that one of these days my job would be in Mexico if I had one at all. I was sort of looking, sort of not... The day after New Years 2001 my best friend at work Mark Black collapsed outside the back door of our offices in Bowling Green and, despite being a healthy young man in his 30's, died in the hospital of meningitis a few weeks later. My wife and two of my co-workers later told me that they knew at his funeral mass that I was gone; three months later I was here at Thomas Nelson.

This was a good move for me, because there were other reasons to go and losing my closest personal connection at work just gave me the shove I needed. But sometimes people make bad, hasty moves out of emotion, and a poor job change can alter the trajectory of an entire career. As I've said before, emotion and business don't mix. Here are some tips for working through grief at work, whether caused by anything from a lost colleague to a bad decision.

1. Realize that you're grieving and treat it as such. If someone close to you died you wouldn't expect to be back to normal by the next Monday morning. Nothing is wrong with you, or your job, because you feel really down at the moment. Grief has stages that must run their course.

2. Reach out to your friend outside of work (and don't talk about work when you see them). Making your friendship transcend your work relationship will go a long way toward easing your grief. Or, if that relationship turns out to be only superficial and work-oriented (see my previous post), your grief will ease with this new perspective.

3. Remember that its only a job, not your whole life. You didn't expect to like everything and everybody when you applied, so get back to that perspective now. If you find that you've wrapped up too much of your personal and social life into your work, now is a good time to resolve to make friends outside of work.

When you remember that a job, even a good job with a good company, is just the career/financial component of your overall life then you begin to adjust the expectations you have for that job and that workplace. I've said this before and will repeat it as long as I have readers: if you rely on a job, any job, even a great job with a great company to provide happiness then the corporate life will be a miserable existence for you. If you treat it as an important component to a balanced life that includes family, church family, friends, recreation, personal interests, etc... then you give a good employer the chance to exceed your expectations. You'll also be in a better mood when you go home each night.