14 minute read
LEGAL Q&A
simple.
“When we needed financing for a major addition and renovation at our
Harborcreek location, we quickly learned how difficult that whole process can be.
“But then we talked with Marquette and everything changed. They are a
community-minded, mission-driven organization just like us. Because the process with the financing was so collaborative and seamless, we now do all our banking at Marquette. They made everything so easy — it was incredible!
– AARON LUNDBERG, Executive Director Grace Church
“When you have an opportunity to sit across the table from a business owner — and drive by their business every day — you have a perspective that out-of-town decision makers can never have. If we can find a way to help a local business grow and prosper, we all prosper. And our hometown becomes stronger.” – JOHN DILL, Executive Vice President, Business Banking
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Might It Take Money to Save Money?
Most of us know the saying, “It takes money to make money.” But what about, “It takes money to save money”? Lean Six Sigma is famously credited for driving increased productivity and improved efficiency or, in other words, “doing more work” for the same cost or “doing the same work” for less cost. Quantifying these cost improvements may seem an easy task, but sometimes companies fail to make the benefits real to their bottom line by not making the up-front investments necessary to realize the true benefit. This not only hurts the financial statement, but it can also undermine the confidence in Lean Six Sigma programs for both management and employees. “Hard dollar” savings, such as reduced scrap or lower raw material costs, are usually straightforward benefits, but labor savings is often a “soft dollar” savings with some potential issues associated. For example, if a Lean Six Sigma project makes Process A run more efficiently such that 10 employees can accomplish the production demands that used to require 12 employees, the project might claim a 16.6-percent increase in labor efficiency and a cost savings related to a reduction of two full-time equivalent employees. However, if all 12 employees are still on the payroll, did the company really save anything? To have a real bottom-line cost savings, two employees either need to come off the payroll or they need to be redeployed to a position the company was prepared to hire. This is a very sensitive issue for Lean Six Sigma to be welcomed and become part of the company culture. If employees see Lean Six Sigma as mostly a job-cutting strategy, employees will feel threatened and won’t likely participate. If management only sees “soft” or theoretical cost savings, they too may fail to embrace the effort. Typically, the Financial Department can help by establishing a continuous improvement/cost savings framework that promotes continuous improvement projects that can be married to employee attrition, transfers, redeployment and/or hiring plans. This requires the company to invest in education and training, to incorporate the framework to ensure that the right projects get worked on, and to create a culture that makes employees feel valued and safe — a core part of the continuous improvement process. Lean Six Sigma projects that improve efficiency in areas or departments within the business can drive real cost savings for the company’s bottom line, but it may take some more investment up front before you truly feel it in the bottom line. Join us for the MBA’s next three-day Six Sigma Green Belt workshop on March 11, April 15 and May 13. Visit www.mbausa.org to register!
Ray Davis is a training instructor at the Manufacturer & Business Association and managing partner of Supply Velocity, a leader in highly effective execution, Lean Process Improvement and Supply Chain Management.
SURVEY: MORE THAN HALF OF U.S. CFOS EXPECT RECESSION IN 2020 More than half of U.S. businesses expect a recession to occur in 2020, coinciding with the timing of the presidential election, according to fourth-quarter results from the Duke University/CFO Global Business Outlook. Seventy-six percent predict a recession by mid-2021. The CFO Survey has been conducted for 95 consecutive quarters and spans the globe, making it the world’s longest-running and most comprehensive research on senior finance executives. “Business leaders continue to expect an economic slowdown in the United States before or concurrent with the presidential election,” said John Graham, a finance professor at Duke University’s Fuqua School of Business and director of the survey. “I’d expect uncertainty about the election itself to cause firms to slow expansion in the summer and fall of 2020.” Fifty-six percent of U.S. companies indicate they are taking steps to prepare for a recession. Among these firms, 59 percent are strengthening their balance sheets, 58 percent are reducing costs, 49 percent are increasing liquidity, and 31 percent are scaling back or delaying investment.
SURVEY: NEARLY 8 IN 10 EMPLOYERS EXPRESS CONCERN ABOUT FINANCIAL STABILITY OF WORKERS In MassMutual’s 2019 Workplace Financial Wellness Study, survey data gathered by Greenwald & Associates, reported that a large majority of employers believe their employees are struggling financially in saving for retirement, settling debt and dealing with medical costs. In the survey findings, nearly eight in 10 (79 percent) plan sponsors believe their employees are struggling financially, with larger employers showing to be 13 percent more likely to express concern about employee financial issues compared to employers with the smallest asset level. Among employers, 51 percent of those reporting concern estimate that at least 25 percent or more of their workers struggle financially, with 15 percent of employers estimating that upwards of 50 percent of employees are experiencing financial difficulties. Currently, most employers (53 percent) believe that employees are struggling financially from hearing them talk about it, with 46 percent delineating risk from retirement plan participation and from those who have second jobs. The most prevalent issues cited by employers according to total concern were financial readiness for retirement (67 percent), ability to pay future medical expenses (64 percent), and participation in an employee’s retirement plan (62 percent). Lesser concerns included consumer (43 percent) and student loan debt (35 percent).
WE HAVE EMPLOYEES WHO COME TO WORK SICK. CAN WE SEND THEM HOME? When sick employees show up for work, known as “presenteeism,” there is a significant and costly impact on an organization. There is a risk of spreading the disease but also diminished productivity, quality and attention to safety. Employers generally have the ability to keep their workplaces safe and healthy by sending apparently sick and/or contagious employees home or asking them not to report to work in the first place. If the employees are nonexempt, then they would not need to be compensated for time not worked. Alternatively, you may require the use of banked PTO to cover the missed time. If the employees are exempt, then you also are permitted to require the use of PTO for the missed time. WHAT ARE SOME UNIQUE PTO FEATURES A BUSINESS COULD CONSIDER WHEN DEVELOPING THEIR PTO POLICY? Employees’ engagement and sense of value are directly related. If you want employees — or prospects — to be engaged with your business, they must also feel valued by it. This is essentially the thought behind offering an attractive PTO policy: showing workers you care by offering them more. This doesn’t mean you need to offer employees unlimited PTO or pool time into a PTO bank, necessarily — only that you need to be more creative with your policy offerings if you want to attract and retain talent. Combined with competitive total compensation, a well-designed PTO policy can keep your top employees on board. Below are some imaginative benefits you may consider tacking onto your PTO policy: • Volunteer days — Employees can take time off to volunteer. Depending on the set up, these could be additional days set aside and not included in a primary PTO bank or they could simply be another PTO category. • Extended holidays — Many businesses slow down during the holidays, so some employers give employees extra days off during that time. If your business thrives during the holiday season, consider offering free days off when you’re less busy to reward employees after the rush.
Is PTO Right for Your Organization?
Taking a sick day or requesting vacation is a thing of the past for many companies. In recent years, many companies are experimenting with paid time off (PTO) as opposed to the traditional vacation, sick and holiday benefits packages. Understanding PTO Unlike traditional benefits, PTO is a bank of hours that employees can draw from for a number of reasons, including taking a vacation, taking care of a sick child, going to a doctor’s appointment or needing a personal day off from work. Employers either credit the employee’s bank every pay period with a specified amount of time that they can use, or credit the year’s worth of days at the start of the year. For instance, if the employer would offer paid holidays, vacation, personal days and sick leave days, then the employee would bank PTO days off in their place. Instead of these days being itemized by the employer for a specific purpose, the employee uses the days at his/her discretion. (Some PTO plans keep paid holidays separate from the rest of the PTO.) There are two ways to distribute PTO days. Some employers credit the full annual number of days to the employee’s account on January 1. Others prefer the days to accrue throughout the year and deposit days each pay period. PTO plans promote a work-life balance by allowing employees to determine when they should take time off and what they should use it for. Benefits of PTO There are several benefits for both the employee and the employer of using a PTO plan versus the traditional vacation and sick benefits allotment. • The company appears more attractive to potential employees and current employees because they are allotted more days to take off. Since most employees do not use all of their sick days, they view the lump sum days as more vacation time. • Employees are treated as adults and are able to make their own decisions regarding vacation and personal time without having to provide an explanation to their employers. • Employees do not have to lie about being sick to take care of personal issues that they would rather not discuss with their employer. • Healthy employees don’t feel “penalized.” • Employers have more control over unscheduled absences that can become very costly. Regardless of whether you have traditional time off categories in place, or you decide to move to a PTO bank model, offering employees time off from work can be an easy way to round out your benefits package. If you have any questions, or need assistance with your PTO policy, the MBA Legal and HR Services are here to help.
Tammy Lamary-Toman, JD, PHR, SHRM-CP, is vice president and employment counsel at the Manufacturer & Business Association. Contact her at 814/833-3200, 800/815-2660 or ttoman@mbausa.org.
IT’S TRUE. {YOUR} TIME IS MONEY.
HR/LEGAL HELP IS HERE
Human resources is a critical component of every business. Yet if you’re like most small-to-mid size companies with limited staff and resources – you spend more time putting out internal fires than solving your customers’ problems, expanding value and improving performance to bolster your bottom line.
Whether you need assistance on a complex short-term project or a little help week-to-week, our certified-HR consultants and labor and employment law attorney are ready to help put time back on your side!
Part-time Human Resource Services Include: • Recruitment/New Hire Process • Termination & Employee Separation • Recordkeeping Compliance • Developing Policies & Procedures • Employee Performance Measurement • Workplace Harassment Training • Employee Relations • Benefit Administration • Employment Law Compliance • Unemployment Compensation • Workers’ Compensation
MBA HR & Legal Team
Tammy Lamary-Toman, JD, PHR, SHRM-CP Vice President/Employment Counsel ttoman@mbausa.org
Stacey Bruce, SPHR, SHRM-SCP Director of Human Resources sbruce@mbausa.org
Rachel Tserkovniak Human Resource Consultant and Trainer rtserkovniak@mbausa.org
Rose Bruno, PHR, SHRM-CP Human Resource Consultant rbruno@mbausa.org
Today, more and more women are taking risks, embracing new opportunities and effecting change in key leadership roles. But, when it comes to the workplace, there is still a long way to go.
Join us as we hear from a local difference maker and Fortune 500 company representative on the importance of fostering motivation, team building and talent within your organization that can have a powerful impact on your business and community as a whole. Ann Scott is the community outreach manager for Erie Insurance where she oversees the company’s charitable giving and community outreach, including philanthropy, volunteerism and employee giving. Before assuming her current role with the Erie Insurance Giving Network, she had a long career in human resources, with a focus on diversity and inclusion. In 2012, the Mercy Center for Women named her a “Woman Making History” for her contributions to supporting women and youth in the community.
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The Manufacturer & Business Association (MBA) strives to keep its members informed on the most current business issues affecting employers in the region. For more information about upcoming events or to view the MBA’s photo gallery, visit www.mbausa.org. EVENTS & EXTRAS | NETWORKING & MORE
Association members and guests gathered in the Founders Room to learn more about the Erie Forward initiative, during a recent Eggs ‘n’ Issues briefing at the MBA Conference Center in Erie. Erie Forward is a five-year, regional economic and community development initiative that aims to enhance economic growth, collaboration and talent development building opportunities for all of Erie County’s citizens.
James Grunke, president and chief executive officer of the Erie Regional Chamber & Growth Partnership, discussed the Chamber’s Erie Forward Initiative at the MBA’s January breakfast briefing.
Tom Micelotta, senior project director of National Community Development Services, also addressed the Erie Forward initiative at the Manufacturer & Business Association’s January 23 Eggs ’n’ Issues briefing.
Representatives from the MBA were given a tour of the Donjon Shipbuilding & Repair facility in January. The Erie company marked its 10th anniversary in 2019 and is the most recent addition to Donjon Marine’s family of services.
It’s nice to know that sometimes you don’t have to change a thing.
96% of businesses that choose UPMC Health Plan stay with UPMC Health Plan.
You’ve given a lot of thought to your employees’ health coverage. And you’ve come to a familiar conclusion – nothing’s better than UPMC Health Plan. Choose us for affordable plan options. Full in-network access to UPMC along with other doctors and hospitals in the community. Care when you travel. Service from a designated Health Care Concierge. And health tools that keep up with busy lives and schedules. All this is worth sticking with, don’t you agree? To learn more, visit UPMCHealthPlan.com/employer.
