NOVEMBER 2015 November 9th
November 20th Jeff Kortes “Give Your Employees C.R.A.P.” Utilize Your Human Capital to Build Organizational Value
IBAW SALES ROUNDTABLE
Inside This Issue:
HIRSCHFELD: 10 THINGS YOU SHOULD KNOW ABOUT WINDOWS 10
KEATING: TRENDS IN BUSINESS STARTUPS AND THE ECONOMY
OLLENBURG: THE ANNUAL PERFORMANCE REVIEW; POST MORTEM?
Networking matters
At AT&T, we know that making connections is critical to success. In Wisconsin and across the nation, we link businesses with their customers and the world through our wireless network with access to the nation’s largest Wi-fi network. It’s just another way we help our customers stay connected. AT&T is proud to support the Independent Business Association of Wisconsin.
© 2014 AT&T Intellectual Property. All rights reserved.
IBAW thanks AT&T for it’s continued sponsorship.
IBAW MEDIA LINK Executive Director Steve Kohlmann
Who is Justice Rebecca Bradley? _________________________________________________________
WIS EYE sits down with Wisconsin newest State Supreme Court Justice for a one-on-one interview.
President Jim Leef ITU AbsorbTech Secretary Charles Fry Robert W. Baird & Co., Inc President Elect 2015-16 Craig Coursin MSI General VP. State & National Programs Jeff Hoffman Boerke Treasurer Casey Malek Sikich Directors
To watch, click here.
Bart Adams Sikich Ann Barry Hanneman Simandl Law Group S.C John Weber Hypneumat Dan Hansen Park Bank Richard Blomquist Blomquist Benefits Lisa Mauer Rickert Industries Tom Boelkow BSI Design, Build, Furnish Robert Gross Gross Automation
IBAW Mission: To advance business prosperity through insightful programming, executive networking and member-driven public policy and advocacy.
2015 INDUSTRIAL Q3 MARKET UPDATE Report Produced by C&W | The Boerke Company’s Research Department and the Industrial Team’s Jeff Hoffman & Chad Vande Zande
OCTOBER 2015
2015 Q3: Manufacturing Slowing – Development Accelerating MARKET OVERVIEW
The temporary lack of supply (4.6% market vacancy) has led to a slow down in absorption. Excluding the already announced delivery of a 520,692 SF building to Uline in Pleasant Prairie, the Southeast Wisconsin market place only absorbed 67,823 SF of space in Q3. Despite the slow down, there are deals circulating. The worst kept secret in the market is that GE finally signed a deal to take the 280,000 SF Staples building in Oak Creek. Liberty Property Trust also appears to have their 171,000 SF spec building in Oak Creek spoken for with a 50,000 SF lease to logistics provider SEKOK and it is rumored that a lease is out for the balance of the building. Without question, manufacturing in Wisconsin has SLOWED! The most recent ISM Manufacturing index for the area registered 39.44 (above 50 is expansionary) with broad based weakness in new orders, production, and inventories.
LOCAL MARKET TRENDS There is real rent growth occurring for the first time in the Milwaukee market since the mid 90’s, this is both in new deals and renewals. The compression of the supply in the market has lead to limited options for users. User sale activity picked up in the 3rd quarter. There were 15 sales in the 15,000-50,000 SF size range in the quarter….this segment of the market had been underperforming for the first half of the year.
Pricing for Core and Core Plus industrial real estate investments are at record highs for Milwaukee. Becknell just purchased a 2 building portfolio in Brookfield and Franklin totaling 223,000 SF for a high 6.8% cap rate (approximate). Discipline is holding firm on the pricing of B&C assets. This will be tested with an Airport flex portfolio that was recently stabilized and just hit the market at an 8.25% cap rate.
WHAT TO EXPECT IN Q4? Don’t expect a quick bounce back for manufacturing. There were 2,214 layoff announcements in Q3 for manufacturing businesses in the State contrasted to the announcement of 1,158 new jobs. The commodity markets (think CAT & Joy Global and all of the suppliers to them) will remain depressed in the near term. This news comes on the heels of a robust pipeline of new industrial space being delivered in the near future. By the end of spring 2016 developers will be delivering nearly 1.75 million square feet of speculative space in the Region. Some good news though….developments such as Wangard’s 60,000 SF spec building in West Allis are oversubscribed, with tenant demand and developers reporting solid activity on their projects with numerous proposals being sent out to prospects.
ROBUST PIPELINE OF SPACE
By the end of Spring 2016 developers will be delivering nearly 1.75 million square feet of speculative space in the region. 4TH QUARTER PREDICTION: Don’t expect a quick bounce back for
manufacturing, the commodity markets will remain depressed in the near term. FOR MORE INFORMATION, CONTACT: Cushman & Wakefield | The Boerke Company 731 N Jackson Street, Suite 700 (414) 347-1000 www.boerke.com
Jeff Hoffman, SIOR, CCIM Principal, Industrial Team (414) 203-3038 jhoffman@boerke.com
Chad Vande Zande, SIOR Principal, Industrial Team (414) 203-3049 cvandezande@boerke.com
© 2015 Cushman & Wakefield, Inc. | The Boerke Company. All rights reserved.
Friday, November 20th, 2015 “Give Your Employees C.R.A.P.” Utilize Your Human Capital to Build Organizational Value Jeff Kortes didn’t become an employee retention speaker, author and expert by accident. He worked 25 years as a human resources professional, trainer, and consultant. He has held leadership roles in companies such as ConAgra, Midas International, SPX, and Regal Ware, Inc. During that quarter-century, Jeff saw countless employees come and go. The reasons rarely varied. The employers suffered, though, as good people left. Over time, Jeff devised a plan of inventive, common-sense employee retention strategies to help businesses keep their best talent. After three facility closures, a strike and a corporate buyout, Jeff started Human Asset Management, LLC. He has worked with hundreds of first-line supervisors, managers, and executives in employee engagement and retention training. His no-nonsense approach is reflected in his Execution Focused Leadership® series, which is designed to build positive supervisory and managerial behavior while driving results in the organization. Jeff speaks and conducts workshops regularly in Iowa, Wisconsin, Illinois, Michigan, Minnesota and Indiana. He draws on his experiences as a human resources professional, father, coach, martial artist and U.S. Army veteran to provide thought-provoking programs that yield results.
LOCATION
THE WISCONSIN CLUB 900 W. WISCONSIN AVE. MILWAUKEE
7:00 AM
REGISTRATION & NETWORKING
7:30 AM
BREAKFAST & PROGRAM
9:00 AM
PROGRAM ENDS
Cost: $32.00 IBAW Members
$42.00 Guests
Registration now open! Click here.
YOU'RE CORDIALLY INVITED: Pre-Debate Luncheon Forum on Tax Reform Before the big presidential debate, we'll buy your lunch…You come ready to talk about the need for tax reform.
Please join the MacIver Institute for Public Policy, Main Street Growth & Opportunity Coalition, Wisconsin Manufacturers and Commerce, Metropolitan Milwaukee Association of Commerce and the Independent Business Association of Wisconsin for a pre-presidential debate luncheon forum on the need for tax reform to grow the economy. Republican presidential candidates who are in town for the Republican debate will be invited to attend and speak. Members of the press, campaign staff, state and local elected officials and the business community will be invited to participate. WHAT Pre-presidential debate luncheon forum on the need for tax reform to grow the economy. WHEN Tuesday, November 10th 11:30 am - Registration and lunch served 12 noon-1:00 pm - Program WHERE Hilton Milwaukee Regency Ballroom 509 West Wisconsin Avenue Milwaukee, WI 53203 **There is no charge for the event** Please RSVP by November 6th to info@maciverinstitute.com or (608) 237-7290.
IBAW at 2 Years: Hard Work, Cool Stuff Steve Kohlmann, IBAW Executive Director It was two years ago today that I left a career of 35 years in the printing and communications field to devote full attention to growing the IBAW. I had been in that field since I was 15 and I didn’t really know anything else. Was it a huge leap of faith to do this? To some extent, but no more risk our members take as they run their business. Only small business owners understand the weirdness of the work/life balance schedule. For example, when you own a small business, you lose sleep over things both important and trivial. You get up early, stay up late, go to events during a cold, dark, winter evening while others are home having a nice dinner (cocktail!) or sitting on the couch watching a movie or Monday Night Football with loved ones. You also work on weekends and your work/life schedule blurs into a weird stew. You don’t know what day it is, and it doesn’t matter anyway because you just have to get the work done and out. Such is the life of the entrepreneur. And it can be difficult for people who aren’t entrepreneurs to comprehend this - especially people who have worked a 9 to 5 job. My sister and her husband flee Wisconsin and hit the Florida Keys during the winter. I’m often treated to photos of warm sandy beaches, tan people in shorts wearing flip flops and holding a fish - or cocktail. There are photos of kayaks on the water. She has invited Sue & I down for a few weeks to escape the cold & snow but, as I am sure you are aware, when you work for yourself, you just can’t put responsibilities on hold and sacrifices are made. And more often than not - they are. As I’m writing this, it’s a gorgeous fall Sunday afternoon with temps in the upper 60’s. A day normally reserved for a motorcycle ride is preempted by the need to get a monthly magazine put to bed. And so here we are...typing. But it’s just typing and isn’t incredibly difficult or physically taxing. It’s not like I’m on a construction site hauling rebar. However, there are cool things - really cool things - I get to do which far outweigh any negatives. For one, I get to meet a lot of people who run interesting businesses and I learn from them, which ultimately makes me a much smarter person than I was the day before. I get to develop monthly programs business people flock to learn, network and grow their business. I also connect people who never knew each other before so they can get together and (hopefully) do business with each other. I also have a really great office, desk and computer and I can play music on Pandora as loud as I want whether it’s AC/DC, Rickie Lee Jones or Merle Haggard. And then there’s the really cool stuff; Just the other week I received a call from Senator Johnson’s office who read our story about LakeView Technical Academy and wanted to know if I could arrange a tour for him. A Senator's office...calling me. How cool is that? I also have a variety of duties that utilize my creative, marketing and organizational skills. Everything from web work to fundraising to outreach with elected officials. All this keeps me active, engaged, and makes me smarter - something I’m always in need of. It’s all good stuff. Blessed and thankful I am. I’m looking forward to another year of learning and continued growth for the IBAW. Have a great Thanksgiving!
Commentary: Trades a Viable Option to College Cheryle Rebholz Entrepreneur, Business Owner
Think about how the technical college and the skilled trades education impact your daily routine? To start the day, you wake up in your home that just completed a remodel or addition. Or, you moved into new home construction (built by a trades-person) and got into your choice of transportation, probably a car (serviced by an auto technician) and went to a breakfast at a cafe, and later went for a beauty appointment for a family wedding, the prom or black tie auction/ fund raiser event, done by a barber or a cosmetology professional. How about dropping off your computer or a house call from an IT specialist, then on to a local walk-in health clinic where a nurse takes care of you. In the last 3-6 months have you personally had to call in a plumber, refrigerator, heating and air conditioner service technician expert, mason, or electrician? I know when I get the bill from one of these trades people's it isn't peanuts. All of these careers are available at our local technical colleges. Technical colleges offer associate degrees that are completed in two years along with diplomas and credentialed certificates, the latter of which are completed in 4 to 12 months. Not to mention, you can always advance your education. The data is out, by choosing these pathways students are placed in their degreed area within an average of 6 months. That school investment is a fraction of a four- year college or university. And, the student does not start their career with a mountain of debt. Public schools emphasize too much four- year college at the expense of career and technical education (CTE.) A balance needs to be struck. There is a student population that needs career and technical education. Unfortunately, this pathway is currently and gravely under served and neglected. The student that is left behind is usually identified as disengaged. Articles have been published that more boys than girls are affected by the lack of vocational education. Presently, there is a huge need for students who want to follow a vocational career path but current school programming in this area has been dramatically cut back resulting in a new symptom - less children being exposed to the skilled trades thus creating an American work shortage crisis. The public and parents fell victim to a public relations campaign suggesting that by not going to a four university can result in a life of hardship and overall failure. The careers I highlighted are just a few to name in the CTE pathways relevant in both todays and future job markets. They all have the potential to be lucrative alternatives to traditional four- year university degrees. You can earn an excellent living with the possibility of owning your own business and having a half dozen employees working for you within a few years. Camille Paglia, a professor of humanities and media studies at the University of the Arts in Philadelphia since 1984, was interviewed by The Wall Street Journal and within this interview she stated, “the push for universal college is ‘social snobbery on the part of a lot upper-middle-class families who want the sticker in the window.’” She goes on to say, “’I have woodworking students who, even while they're in class, are already earning money making furniture and so on.’" She is right, and the thinking that parents pressure their children to go to college is shared by public school systems whose sole measure of success has become the percentage of students who are accepted to traditional four-year universities.
Public schools need to do a better job in exposing and supporting students in CTE. On a personal note, my special education son found that he was more successful pursuing the CTE track. My other son chose community college and then pivoted to a certificate while working in the field and learning and earning on the job and my last child, a daughter, chose a four- year private university. I am a living testimonial of the trifecta of individual pathways. Students who are not looking for a career in the technical field in high school should at least leave with the basic skills that they can use for a lifetime. College is not for everyone. There are other options. We are not a "one size fits all” work world. It takes all pathways to fill our needs. We all have different talents and abilities. Isn't it the job of public education to maximize the academic achievement and personal growth of all students including arts, sciences,military, and the trades? By using this approach, wouldn't we also address the social and emotional well being of our future high school graduates? It is unacceptable that business owners and employers must look elsewhere and outside of our region or borders to fill these positions because of the lack of technical and vocationally skilled workers. The problem is not a lack of schooling. We have the assets, we just need to align them. Cheryle Rebholz Entrepreneur Member of the Business Education Advisory Committee (BEAC) Former Board of Education Member of Mequon-Thiensville School District Owner: Faces II Esthetic Salon Est.1979 State of Wisconsin Licensed Credentialed Esthetician Barber/Cosmetology in the Professional Technical Trades Resident of Mequon since 1991
The Annual Performance Review: Post Mortem? Jessica Ollenburg, HRS CEO Each day, more employers abolish their annual review system. Why? Because feedback delayed an entire year is arguably worthless, accomplishes negative value, creates fear of feedback and decimates corporate resources. For the annual review to succeed, feedback must be ongoing throughout the year, and the annual review cannot produce surprises. Any employer who overattends annual feedback and under-attends daily feedback is in critical need of realignment. As showcase employers such as Adobe, GE, Microsoft, Accenture and Deloitte have recently rejected the annual review in favor or regular conversation, they understand that performance appraisal done right is the catapult to success! Jack Welch’s 1980’s described “rank and yank” methodology at GE has merit, if and only if, the 10% being guillotined after one year of poor performance are 1) provided the tools to succeed along the way, and 2) damage controlled short of a full year’s underperformance. Frequent feedback by education-empowered leaders is most certainly inherent to the success blueprint. Leaders must effectively lead daily, not just annually. Does Your Company’s Annual Review Deserve a Kick to the Curb? Are leaders often late in preparing and/or delivering the annual review? Are employees shocked by ratings and feedback? Has your company encountered legal argument or unemployment defense because of instrument content or omission? Is the benchmark employee flat-lining between or after reviews? Is compensation becoming more tied to timing than merit, serving more as a COLA than a performance accolade? Annualized reviews have become default policy due to conformity with once widespread practice and a desire to delay cumbersome, often cookie cutter, legalese documentation. HR information systems, while offering efficiency to the tech savvy, are often exacerbating the practice through irrelevant templates, impossible to align. There’s a much, much better way. Consistent with young employees’ reliance upon push-button and command control feedback through technology, a revamp of the system absolutely improves engagement and productivity for today’s and tomorrow’s workforce. Let’s keep up with the changes! What Should the Annual Review Look Like? A “no surprise” recap of the year’s challenges, improvements, progress against prior goals and goals/resources for the future, A meaningful, customized instrument to facilitate progress rather than to impede progress, Benchmark plan of forward-moving feedback, rich with self-evaluation tools made quick, accurate and easy through metrics, Deployment of criteria which in no way provokes and in fact reduces legal argument, Consistent, applicable, weighted metrics which align job description, goals and compensation, Where collective bargaining is applicable, alignment with said agreements. Not an exhaustive list, these are the critical starting points. Opportunities exist to deploy several evaluation formats within a single employer, as long as lawful and fair consistency exists at a department and/or job function level.
Is a Great Performance Appraisal System Enough? Yes, as long as we clarify that a great appraisal “system” cannot exist without the following: Getting the right people in the right company seats, Selecting, developing and continuing lifelong learning for the right leaders, Properly deploying magnets and motivators, Adapting to unique employee learning styles, Understanding and appropriately addressing the unique talent intensity and interrelatedness of each company role, Dedicating laser focus to legal, fiscal and brand risk management. Legislation in Employment Law Necessitates Valuable Rewrite of the Review The earlier weight on personal attributes now produces a 6+ figure risk for employers who miss the cues for rewrite. Given the many attributes stemming from culture, religion, genetic and medical protection, we can no longer consider personality, attitude, mood, and/or any characteristic which may attach to a protected class. While many employers are still missing the point, the more savvy, such as HRS clients, are finding not only risk management but also improved productivity outcome by swapping workplace behavior ratings for personal characteristic ratings. Actionable ratings without insult and risk better pave the way to success. When crafting the review, consider ratings which align with job description and meaningful criteria to the unique job. You’re one of the rare few if a universal template actually fits the purpose. Most templates can be the culprit to your leaders dreading and delaying the evaluation process. If a leader is already evaluating the criteria on a daily basis, dropping the rating into the appraisal is simple. If a leader doesn’t find the criteria naturally relevant or described in applicable terms, the blank stare and frustration will replace and likely reverse progress. Deploy “Appreciative Inquiry” by driving what’s going well to such an extent that it overpowers that which is going wrong. A recent HRS survey of 3000+ validates positive feedback 4 times as powerful as negative feedback. That being said, over-attending the positive without documenting need for corrective action can provoke a legal challenge for a wellintending employer. Failure to prove an employee was cognizant of substandard behavior and chose not to succeed will posture wrongful discharge claim, even beyond the obvious blemish to fairness. Balance is critical. The Resolution Originating in military protocol, the annual review emerged into mainstream workplaces circa 1950’s as a metric to rank, recognize and review compensation. Due to changes in leadership case study and employment law, the annual review is now under review itself. Employers continue to prototype 360 reviews and peer-to-peer bonuses. Both have their niche, but both can backfire dramatically if wielded haphazardly without precise control. It remains absolutely the strongest ROI to invest up front into a custom, ongoing performance management system. Relevant tailored tools and lifelong leader development safeguard time, energy and risk at every evaluation rollout. Managers should not dread or find cumbersome the evaluation process. Evaluation should be at the very core of leadership. Of more than 60 performance appraisal formats available through HRS, we still find ourselves further customizing the instruments for improved client outcomes. Without exception, the appropriate fit minimizes waste and improves outcomes for all. It is far too often the inappropriate use of templates which has threatened the reputation and results of the review system. Furthermore, because leaders are entirely disposable if they don’t create better performance in those who depend upon them, it is the performance evaluation system upon which company success relies. We at HRS advocate, design and facilitate leadership development and performance management systems that position an employer for success. We deliver and we see the results! As experts in Organizational Development, Employment Law and HR, HRS empowers business owners and C-suite leaders with fiscally savvy performance management solutions, custom to each unique employer. Headquartered in Brookfield WI, HRS offers locations in Washington DC and Scottsdale AZ plus national satellites. For more information visit AskHRS.com, call 866.HRS.9030 or email IBAW@AskHRS.com Article produced for IBAW release. Copyright ©2015 by Human Resource Services, Inc.
10 Things You Should Know About Microsoft Windows 10 Scott Hirschfeld, CTaccess
Windows 10 was released at the end of July. Those of us who like to jump in early, have had a chance to kick the tires and run it around the track. The interesting thing at this point in its release cycle is actually the silence. And in this case, I think the silence is good. There is no backlash going on and no hype in the media about how much people are hating it. At this point in the Windows 8 release, there was quite an uproar. The lack of negativity makes it feel like there is less information in general. That is unfortunate, because the news about Windows 10 is good.
Here are The 10 Things You Should Know About Windows 10. 1. The START button is back in full color. I know, some of you are doing a jig in your seats! The START button does all it did before, but now adds in the Windows 8 tiles in a way that respects both desktop and tablet users. Right next to the START button sits the search bar so you can quickly find whatever you are looking for. In addition, Windows 10 is device aware and can automatically slip into tiled mode on your touch tablet or phone if this is what you desire. 2. It is faster in every way. Microsoft often says their new version is faster, and in this case, it really lives up to its billing. On hardware we have tested, after upgrading, boot time is faster, shutdown is faster, and it seems to multi-task and switch between applications faster. 3. You will adjust quickly to this new platform. Whether you are a Windows 7 or Windows 8 user, the change is not that dramatic. If you are switching from Windows 8, you will quickly get used to using the START button again. Some controls are in different places, but mostly setting and config controls. New features are intuitive. Most people like Windows 10 after upgrading, and don’t really have to adjust their daily computer habits. 4. There are privacy concerns but not that much different than you might have with Google and Apple. When you use your Windows 10 machine, it tracks a Marketing ID and shares your searches and habits with advertisers who customize their advertising to your habits. This sounds familiar. Google makes its money this way by tracking cookies and other searches you make when logged into your account. You can turn this functionality and other functionality off, but you do lose some features. There are some experts who believe this might create an issue with HIPAA or SOX compliance, but I am not convinced, at least not yet.
5. Cortana really is smarter than Siri. You may have seen the ads where Cortana, Microsoft’s digital assistant consistently outwits Siri. Right now, these ads really are true. You can ask Cortana for the weather, a restaurant recommendation, a song, a joke, how long it will take you to get home, and more. She has good answers, unlike Siri who at least at my last try didn’t understand what I was asking for. I suspect this will change quickly. 6. Your battery will last longer. If you are using a laptop, tablet, or phone, the battery consistently lasts longer. It is that simple, Windows 10 manages power usage better. 7. Microsoft has added a new Internet browser called Edge. This is the default browser with Windows 10. It works well, and Microsoft is calling it their last browser. It reportedly will auto-update forever and never have a new “version release” as Internet Explorer did. If you need it, Explorer 11 is still there lurking in the background and you can install Chrome and other browsers too. 8. Yes, the upgrade is free. It is free for a year from release date, and it is relatively easy to install. There were early talks of Microsoft charging a subscription fee for updates, but they are saying that is not the case now and that updates will always be free. In a corporate environment, it is always recommended that you test out the upgrade on a test unit before moving forward. Free and easy does not always mean flawless. 9. Compatibility is VERY good. Ninety percent of the time the applications and hardware work without a problem. We have experienced a few driver problems that have been mostly correctable, and heard of one or two older pieces of software that had some issues on the new platform. 10. This is a stable new version of Windows. The software upgrade is free, the compatibility is good, and the user experience is good. In most cases, it makes sense to upgrade. Keep in mind, on your company network, there are lots of other things to consider. Even though the upgrade installs well, it is a project to upgrade a large number of computers. Testing is a must to insure you don’t leave a critical application, printer, scanner, or other hardware behind. Windows 10 is a solid choice for home and business users who want to stay current. The fact that it is free makes it even more attractive. Microsoft has made it cross-platform friendly so that it operates well on phones, tablets, and desktops. However, until the Microsoft store catches up to Apple and Google, Windows 10 will remain mostly a desktop and laptop operating system. Scott Hirschfeld is president of CTaccess located in Elm Grove, WI. He can be reached at ScottH@ctaccess.com
Learn more about us during our
25th Anniversary / Open House Thursday, November 12th!
IBAW Around Wisconsin... IBAW attended Arrowhead School's new Design, Engineering and Manufacturing Center Open House. While the center is still is in the gearing up stage and still needs equipment such as CNC machines, it’s nice to see schools offering this to get young people interested in these fields.
ABOVE: The Engineering classroom is first rate and contains a well lit working environment complete with computerized white boards, LED TVs and 3D printers. BELOW: The Manufacturing area is still a bit bare but new equipment is scheduled to arrive within the next few months. Towards the left of the photo, by the blue curtains, are welding stations that are already in operation.
Left: Students get to test a robotic manufacturing arm supplied ABB. Right: IBAW Executive Director Steve Kohlmann conveys to Arrowhead Principal Gregg Wieczorek the message from manufacturers to Guidance Counselors that manufacturing and trades can be a viable alternative to college and the debt associated with it.
“Small Group” Re-Defined Under the Affordable Care Act Mark Brault, Compliance Advisor / Benefits Attorney at HNI
On October 7, 2015, President Obama signed legislation called the Protecting Affordable Coverage for Employees (PACE) Act that amends the Affordable Care Act (ACA) definition of a “small employer” for the purpose of purchasing health insurance coverage. more The PACE Act repeals the mandatory expansion of the small group market to employers with up to 100 employees and reverts to the prior definition of up to 50 employees, although the states maintain flexibility to define the small market as up to 100 employees. Under the ACA, health insurance offered in the small group market must meet strict underwriting requirements and cover all essential health benefits - conditions that do not apply in the large group market. The PACE Act’s enactment means that employers in that 51-100 size bracket that buy health coverage will not be subject to the small-group market rules.
So What Does The Change to the ACA Small Group Definition Mean? HNI will continue to update you on this matter as the effects of this new law change become better known. At this time, there are 4 things to be aware of relative to the PACE Act:
1) Self-insured employers are not affected by this new legislation. If you're self insured, ignore the new guidance - it does not apply to you.
2) Things are still uncertain for those with under 100 employees. Insurance carriers have already filed their small group 2016 plan rates assuming the expansion of this market space. In addition, many employers impacted by their re-classification have already secured coverage or are finalizing plans for 2016 coverage. Will insurance carriers be able to modify small group rates with the now smaller market space? Will employers between 51-100 employees be able to shop for other coverage in the large group market and have enough time to do so? We don't have answers to all of these questions at this time.
3) States may extended the definition of small employer. The PACE Act repeals the mandatory expansion of the small group market to employers with up to 100 employees and reverts to the prior definition of up to 50 employees. The new law gives states the option to extend the definition of small employer to those who employ an average of at least 1 but not more than 100 employees on business days during the preceding calendar year.
4) Applicable large employers are still defined in the same way. The definition of applicable large employer under the ACA's "pay or play" and information reporting provisions has not been changed. As we learn more about how the new law will be applied, we will post updates at our blog. Visit us at www.HNI.com.
IBAW, LTA & Senator Johnson In Pleasant Prairie IBAW received a call from Senator Johnson’s office regarding a story about LakeView Technical Academy (LTA) in Pleasant Prairie. The Senator wanted to tour and learn more about LTA and its success in programming. IBAW arranged the tour.
Left: Senator Johnson meets with school officials along with IBAW members and other manufacturers from the area discussing the challenges of encouraging young people - and their parents - to look at manufacturing as a career.
Upper Left: Senator Johnson gets a look at motor mounts designed by students on CAD programs and then manufactured via the school’s 3- D printers. These mounts are then affixed to the underwater robots they build. Students use computer simulations to test different mounts for efficiencies before production takes place. Upper Right: Teacher Matt Schultz discusses the complexities of the microprocessors the kids at LTA create when making their underwater robots.
Right: A student gives an overview of LTA’s Super Mileage Vehicle which competes at Road America with other schools. Students design, test and then build the car with help of teacher Matt Schultz. The vehicle has won many awards as can be seen in the smaller inset photo.
Welcome new IBAW Members! BRAAS Co. Automation components, systems & solutions The Braas Company’s mission is to be a customer’s first choice for automation solutions. How do they define an automation solution? That depends on the task to be accomplished, or the problem to be solved, but if it has to do with Automation, you can rely on BRAAS. We believe being employee-owned makes a difference, one that you'll notice. An owner cares more about the business, and tends to have an understanding of the bigger picture, not just his or her job. We value customers who partner with us over the long haul, and believe that a deep understanding of your needs provides value to your design efforts, your supply chain, and ultimately your customers. We operate as an extension of our suppliers, and have been in business long enough to ensure that we have top-tier suppliers. Our employees bring that knowledge to you, not just what's in a catalog or on a spec sheet, but the know-how and instinct that comes only from experience and from volume of business. Yes, volume. You do something over and over again, and pretty soon you'll get good at it. We are the largest distributor in the US for many of our top lines. If not #1, we are close. Of course, this didn't happen overnight. We've been focused on automation since 1961, and have had a significant presence in Wisconsin for over 30 years.
Dan Toynton, WI Branch Manager 262 780 1600 New Berlin, WI Sales Office 630 640 6151 Cell • Dan.Toynton@braasco.com
Gregg Robers, Schooley Mitchell Schooley Mitchell is the largest independent consulting firm of their type in North America, working on a contingency basis to find savings with a focus on a communications audit (voice, mobile, merchant services, and data), typically finding 25%-35% savings for clients. Schooley Mitchell’s unique approach often finds savings without having to change vendors or suppliers. Other highlights: - Works as an independent - no financial ties with suppliers or vendors. - No cost or obligation on the client’s part. - Clients are shown where they can be saving money before they ever decide to do business. For more information visit them at www.schooleymitchell.com/grobers.
Companies Value Curiosity but Stifle it Anyway Todd B. Kashdan, via Harvard Business Review website
As children, anything sparks our curiosity. The box intrigues as much as the gift, and the scenery outside a car window can enchant for hours. We seek to know, and we engage in the essential activity for finding out. We question. And yet, as we grow older, curiosity tends to be wrung out of us. Parents, schools, and workplaces impose rules and discourage risk. Rather than provoking with inquiry, they insist on correct answers. A child asks 300 questions a day. By middle school, the number is down to practically none. By adulthood, our disposition toward questioning can range from the timid to the hostile. A recent study I did with the German-based Merck KGaA, to commemorate its 125 years in the United States, underscores the problem. Surveying workers in 16 industries, we found that while 65% said that curiosity was essential to discover new ideas, virtually the same percentage felt unable to ask questions on the job. The contradictions continued: while 84% reported that their employers encouraged curiosity, 60% said they had also encountered barriers to it at work. What’s happening here? It seems that organizations are claiming to value curiosity, but still discouraging its expression. They promote innovation, yet punish failure. They cling to legacy structures and systems that emphasize authority over inquiry and routine over resourcefulness. Consider the automobile industry. According to our survey, its workers don’t feel their leaders and companies embrace or effectively capitalize on curiosity; it ranked 14th on our list. Common stumbling blocks cited (across industries) were a top-down approach to decisionmaking, limited time for creative thinking, a preference for safe ideas over new ones, and fear of standing out from the pack. How can these and other organizations do better? As a first step, questioning — from why something has always been done a certain way to why a leader holds a certain view — should be positively rewarded. Do traditional car ads (vehicle on an open road, powerful sound track) really work? Should dealerships consider deviating from the standard (boring) layout? Second, leaders must emphasize observation. Instead of asking customers to take satisfaction surveys, consider actually watching what they do when trying to buy a car. For example, parents often leave the dealership without making a purchase
because their kids get bored and cranky. Why not install an indoor playground or wall of video game consoles to divert the little ones’ attention? A third step is to seek different perspectives — to both capture minority voices and ensure everyone listens to them so that no good idea is lost because of shyness, intimidation, or institutional sexism and racism. Perhaps an automaker could launch an in-house competition to name and create a marketing slogan for a new model of car? On a more personal level, managers might consider asking anyone attending a brainstorming meeting to submit ideas ahead of time; only after the ideas had been discussed would the participants know who had suggested each. When you stop paying lip service to the power of curiosity and empower your employees to express it every day, you not only boost innovation and productivity, you enhance well-being. The best research in this area indicates that the most curious people are also the most fulfilled. That’s because curiosity demands that we engage with the world around us right now in a meaningful and complex way. It doesn’t require gambling on what will trigger pleasure in the future or recalling what did in the past. It sustains interest in a moment we can actually grasp. Curiosity is hard-wired into the brain, but we’ve been taught to suppress it. It’s time for that to change. The workplace — where we spend most of our waking hours and often seek fulfillment — would be an excellent place to start.
Trends in Business Start-Ups and The Economy Ray Keating, Chief Economist, SBE Council, Washington D.C.
The importance of entrepreneurship and small business to the US economy should not be underestimated. At the same time, the US economy has been struggling for nearly nine years – or arguably for almost 15 years now. Consider that real annual GDP growth averaged 3.8 percent from 1950 to 2000. Since 2000, it has averaged 1.8 percent, and since the recession started in late 2007, real GDP growth has averaged -1.2 percent. So, what’s been going on in terms of entrepreneurship? The US Census Bureau’s Business Employment Dynamics website provides data going back two decades that offer some insights. Consider the following trends in terms of business start-ups (that is, establishments less than one year old): So, we see growth in the late 1990s to 2000, and then a decline with the 2001 recession. Growth resumed in 2002-03 until 2006. Subsequently, there was a small, immediate drop, which accelerated with the Great Recession. Growth resumed over the past four years for which we have data, but the March 2014 number of start-ups actually stood just about where we were in 1999, and markedly less than the 2000 level. That’s, at best, a decade-and-ahalf pause in the growth of entrepreneurship. In fact, if we consider start-ups as a share of total establishments, it’s more than a mere pause. As of March 2014, business start-ups (again, establishments less than one year in age) made up 8.8 percent of total establishments. That compared to a rate of 8.0 percent in March 2010 (again, the recent low in the number of start ups), 10.3 percent in March 2006, 10.7 percent in March 2000, and 10.5 percent in March 1999. Twenty years before, in March 1994, the rate was 10.3 percent. So, if we measure start-ups as a share of total establishments, the rate of entrepreneurship is down notably compared to what has been generally experienced over the past two decades. The other critical trend to note is the rate of start-ups to business closures. As explained by Jim Clifton, Chairman and CEO of Gallup in “American Entrepreneurship: Dead or Alive?”, employer firms are vanishing in America but they are not being adequately replenished.
Clifton writes: “We are behind in starting new firms per capita, and this is our single most serious economic problem. Yet it seems like a secret. You never see it mentioned in the media, nor hear from a politician that, for the first time in 35 years, American business deaths now outnumber business births.” Since Clifton wrote the piece in January 2015, several presidential candidates as well as some in the media have focused on this troubling trend, which finds that in 2008 the birth rate of new businesses dropped below the death rate for the first time in 35 years. A struggling economy for the past 15 years, and declining levels of entrepreneurship – that’s no coincidence, to say the least. And, as Clifton warns in his piece: “Let’s get one thing clear: This economy is never truly coming back unless we reverse the birth and death trends of American businesses.” Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.
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WHAT HAPPENS IN YOUR BRAIN DURING THE TWO CRITICAL STAGES OF SLEEP. WE SHOULDN'T WEAR LACK OF SLEEP LIKE A BADGE OF HONOR. OUR BRAINS ARE ACTUALLY DOING IMPORTANT WORK TO MAKE US MORE SUCCESSFUL AS WE SNOOZE. By Vivian Giang, reprint from the Fast Company website.
The average person spends one-third, or 36%, of their lives sleeping. That means if you live to be 90, you spend about 32 years asleep. "What that 32 years is telling us is sleep, at some level, is important, and yet for most of us, we don’t give sleep a second thought," says Russell Foster, a circadian neuroscientist, in his massively popular TED talk titled, "Why Do We Sleep?" "We throw it away. We just don’t think about sleep." Since sleep and its role in our lives is still mostly a mystery, those hours we rest are, unfortunately, thought of as a waste of time in our always-on, connected world. As the famous saying goes, "money never sleeps," so those who can find a way to "cheat" sleep are accoladed for their "secret to success"—as if getting by on less sleep is accomplished through sheer determination. But based on recent research, we know that a lot of things happen in our brain while we sleep. Below are further explanations of critical sleep cycles and how they affect our brain's cell formations and ability to cleanse toxic proteins. THE TWO STAGES OF SLEEP According to Vincent Walsh, a professor of human brain research and Royal Society industry research fellow at the Institute of Cognitive Neuroscience in London, people think the first half of sleep—the deep sleep stage—is most important because of how groggy they feel if woken up during this time. However, it’s actually the later part of REM sleep that’s more vital, because it’s necessary for the encoding of procedural memories, like knowing how to do things—walking, talking, or riding a bike. Basically, the slow-wave deep sleep you have earlier in the night is necessary for explicit information, facts, new words, and encoding of declarative memories, like daily events or things you would learn in class, explains Walsh, whereas "REM sleep is for creative problem solving and motor skills." Additionally, REM sleep is also called paradoxical sleep because the body is paralyzed. "This is why you dream about flying and not being able to run and all of the bizarre stuff," says Walsh, because your body is inhibited. WHY THE ENTIRE NIGHT IS CRITICAL The information above shouldn’t encourage you to deem specific hours of sleep more important than others. In fact, we know that varying brain-wave states occur in 90-minute cycles where your brain is constantly establishing new memories and learning.
“SLEEP ALSO ENABLES CONNECTIONS TO HAPPEN BETWEEN BRAIN CELLS THAT IMPROVE CREATIVITY.” "One of the things that happens overnight is that brain cells that weren’t previously connected connect up with each other, and that allows more creative thinking," says Tara Swart, a lecturer at MIT Sloan Executive Education and author of the book Neuroscience for Leadership. "There’s a lot of famous stories of people, just as they were falling asleep or just as they were waking up, having this moment of insight . . . something that you’ve been thinking about anyways. But it’s only when you’re only in a close sleep stage that you get a really good idea about it." As a result, Swart advises having a notebook next to your bed so you can jot down ideas or notes as you’re asleep or as soon as you wake up. Additionally, humans need an uninterrupted six to eight hours of sleep to cleanse our brains overnight of neurotoxins, specifically harmful remnants like beta-amyloid, which are found in clumps in the brains of sufferers of Alzheimer’s disease. Without sleeping through this entire six- to eight-hour process, the brain’s cleansing system can’t filter bad proteins through your spinal cord. Even worse, the more beta-amyloid you have sitting in your brain, the less deep sleep you’re able to get, causing a vicious cycle and affecting the connections to take place in your slow-wave and REM sleep cycles. YOUR ACTIVE SLEEPING BRAIN While our digital world seems to make it fashionable to be so busy and successful that you don’t have time to sleep, thinking this way assumes that your brain shuts down when you sleep. This is the opposite of what happens. In fact, our brains need the rest of our body to shut down so that it can work in overdrive. The process is crucial for processing thoughts, memories, and forming new brain cells. Research even shows that some genes are turned on only when you sleep. Instead of thinking of sleep as a waste of time, we should be thinking of sleep as a time to open the door for greater cognitive abilities. And that’s the real secret to success.
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SALES ROUNDTABLE "The ninety minutes we spend together is very valuable. It is a confidential environment where fellow business professionals discuss ideas and insights into effective sales and business-building techniques. I would encourage anyone who is in sales to participate in this program."
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Even if you're seasoned in sales, learn what other professionals are doing and some new techniques and skills you might be missing. This is open to anyone at an IBAW member company who would like to share their real world challenges and most successful strategies for growing business. This Roundtable is meant to serve as a confidential means to learn from your peers in other industries and to help others learn from your experience – good and bad.
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Get involved with IBAW. Consider joining a committee! Contact Steve Kohlmann for more information.
Legislative Fix Moving Ahead for Wisconsin’s New Manufacturing & Agricultural Credit Jim Brandenburg, CPA, MST - Sikich LLP
In IBAW meetings and publications in recent years we have introduced you to Wisconsin’s new tax incentive - the Wisconsin Manufacturing and Agriculture Credit (referred to as the “MAC”). The MAC came about in 2011 to provide an incentive for Wisconsin manufacturers and agricultural companies to remain and grow here, and also perhaps to have out-of-state companies move here. It was scheduled to begin in 2013, and when fully phased-in by 2016 it would essentially exempt any Wisconsin manufacturing and agricultural income from Wisconsin income tax. The MAC was championed by Representative Dale Kooyenga and Senator Glenn Grothman in the legislature.
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The MAC, however, had some problems for individual taxpayers when it was drafted and this glitch was recently identified. Here is the issue in a nutshell: the MAC would reduce a taxpayer’s Wisconsin individual income tax, but then would trigger a Wisconsin minimum tax for nearly the same amount. Thus, there may be little, if any, net savings for the MAC in 2013 (a “MAC Attack?”). The legislature is trying to remedy this situation now so that taxpayers can realize the proper tax savings with the MAC on their 2013 Wisconsin individual tax returns.
The IBAW magazine is in need of content, we rely on our members and sponsors to supply us informative articles. The digital magazine is sent out to over 650 contacts statewide and the magazine is parked on the web where, on average, it gets over 1100 views.
Legislative Update: It seems that all key legislative leaders are now on board to correct this issue. It was approved by the legislature’s Joint Finance Committee last week. The Senate and Assembly will be in session in March and voting on final passage for several bills, one of which is this tax bill with the MAC correction. It looks like the legislative timetable will have the bill passed near the middle of the March, before going to the Governor. Thus, a best guess now is that the bill would be enacted into law somewhere in the latter half of March, 2014. MAC Attack Options: For any of our individual taxpayers taking advantage of the MAC, this may present some filings logistics. Here are the possibilities:
1. Best case scenario - in some cases the taxpayer’s share of the MAC for 2013 will be used and not result in a Wisconsin Minimum Tax. A taxpayer in this situation could go ahead and claim the MAC and file their 2013 Wisconsin individual return. There would be no need to wait for the legislation to pass.
Consider writing an article on a timely business related topic to your particular field of business. This is an outstanding opportunity for you and your company to gain exposure and increase your brand awareness to a statewide audience. There is no cost to submitting an article.
2. Next, a taxpayer has generated a MAC for 2013, but it will trigger a Wisconsin Minimum Tax. The taxpayer in this case could wait until the law is changed (and then wait a little for the WDR to update its computer processing systems) and then file their Wisconsin tax return and claim the MAC, and not incur the Wisconsin Minimum Tax. This could present a tight timeline for the April 15 deadline, and you may need to file for an extension.
3. Similar case as #2, but this taxpayer could file their Wisconsin individual return with the MAC, but also incur and pay a Wisconsin Minimum Tax for 2013. Then, once the corrective law is enacted go back and file an amended 2013 Wisconsin tax return to obtain the proper tax benefit of the MAC. You would not need extend, but you would need to amend. We’ll keep you posted as this legislation moves forward. If you have any questions, please contact Jim Brandenburg or Brian Kelley at Sikich, LLP in Brookfield (262)754-9400.
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Meeting Recaps 2014 Wisconsin Manufacturing Knowledge Summit
Power Test
On June 20, 2014 the IBAW partnered with the Tool, Die & Machining Association of Wisconsin (TDMAW) to offer Wisconsin manufacturers and their suppliers a unique look at trends within the industry and to also report on some of the challenges the industry faces in the next 5 years.
Power Test, Inc. is an industry leader in the design, manufacture and implementation of dynamometers and control systems.
Special thanks to the event sponsor, First Business Bank for their efforts in helping organize this event.
For more than 37 years, Power Test has provided specialized test equipment to manufacturers, rebuilding facilities and distributors globally. Our products can be found in use at these facilities in nearly 100 countries on six continents.
Chris Halaska
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Our headquarters and manufacturing operations are located in Sussex, WI with sales representatives worldwide. Our unparalleled customer service is well known throughout the industry. Power Test employs a dedicated staff of talented machinists, fabricators, electronic technicians, assemblers, designers, engineers, software developers, and administrative and customer service personnel. Our exceptional product life and excellent customer service is well known throughout the industry and has made us one of the industryleading dynamometer manufacturers. Our dedication to the customer and to the advances in powertrain component testing keep us there.
Power Test N60 W22700 Silver Spring Drive Sussex, WI 53089 Phone: 262-252-4301
4 Advanced Waste Services Advanced Waste Services is an environmental services company that provides wastewater recycling and other waste and risk elimination services to manufacturers in all industries. Each day, AWS helps hundreds of businesses, both large and small, meet their community and environmental obligations. Annually, we collect, treat and recycle more than 50 million gallons of contaminated wastewater into clean, reusable water and other valuable resources like fuel, steam and electricity. AWS is constantly helping our clients manage, reinvent and improve their sustainability successes. For example, we recently partnered with Forest County Advanced Waste Services Potawatomi Community to help Wisconsin food and beverage manufacturers convert 1126 South 76th Street food waste into clean, green renewable energy. Suite N408B West Allis, WI 53214 Founded in 1993, AWS employs 55 people in the Milwaukee area and a total of 150 people companywide in 5 states. 414-847-7100
Photo Key 1: A full house in the main ballroom of the Wisconsin Club as IBAW & TDMAW members prepare to hear about the state of manufacturing and the challenges the industry faces in the workforce.
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2: David Vetta of First Business Bank delivers opening remarks and highlights the importance of a strong relationship between banking and manufacturing working together for success. 3: New IBAW President, John Weber of Hypneumat addresses the change in IBAW Bylaws and calls for voting in new board officers. 4: Kent Lorenz of Acieta gives the main presentation on “Manufacturing Matters” pointing out the trends on manufacturing now and what to expect in the future. 5: Outgoing IBAW President, Steve Van Lieshout receives his award for his efforts as 2013 - 2014.
6 Photos courtesy of Tim Townsend.
6: IBAW Executive Director, Steve Kohlmann (Left) presents David Drumel with an award for his service on the IBAW board.
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2015 IBAW Legislative Priorities Now Online! State Legislative Priorities - Tax Reform - WI DOT Funding and Strategic Visioning - Establishing RIGHT TO WORK in Wisconsin - Joining the Lawsuit against the EPA - Advancing WI Education & Workforce Development Reform
National Legislative Priorities - Pro Growth - A National Energy Policy Capitalizing on our Strengths - Limitations on Executive Action and Administrative Regulations - Sustainable Healthcare Reform - Supporting a Free Market Internet
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