Angie Angus is the executive director of the American Council for a Strong Economy (ACSE), a nonprofit, nonpartisan, grassroots organization that aims to educate people on the issues that negatively impact businesses, causing them to shut down or move to more business-friendly states or countries. ACSE provides easy ways to help initiate meaningful reform that will help keep companies located in America. Angus recently spoke with the Business Magazine about the progress of ACSE’s Keep Pennsylvania Producing initiative, which is focused on uniting individuals and businesses to voice support for reforms that will keep and attract business to Pennsylvania and save, strengthen and grow the state economy.
What is currently going on with ACSE and the Keep Pennsylvania Producing campaign? With today’s difficult economic times, it is even more important that people get involved with a grassroots campaign like this. We are currently signing on new coalition members and partnering with local Chambers to do regional presentations so people can learn how to get involved and to become more aware of the issues. You can join as a company – manufacturing and nonmanufacturing - or as an individual; so far, we have 39 companies and six individuals signed on. Tell me about the new educational program that you are presenting in area school districts. In January we launched the school presentation, “What’s Up with American Manufacturing?” that explains why American manufacturing is such a vital part of our state and national economies. It is an interactive presentation that looks at the reasons why American manufacturers struggle to make a profit. These students have to understand that it is not by choice that an employer lays someone off or closes a facility; they are being forced to make this decision because they can’t stay competitive in the global marketplace due to high nonmanufacturing costs that are not in their control such as health care, taxes and regulatory costs. These companies are being forced out of the state due to the unfriendly business laws that we have. What is the affiliation between ACSE and the Manufacturer & Business Association? Many of the Association member companies and businesspeople were frustrated with all the issues that businesses face that make it difficult to be profitable, so they wanted to ban together to have more of a voice in Harrisburg and nationally. So with the help of the Manufacturer & Business Association, they banded together to found ACSE, with the initial thought that their first campaign would focus on Pennsylvania. What is the top issue of your campaign? Taxes. Pennsylvania has the highest flat business tax rate in the country and that it makes it very difficult to stay competitive within the United States let alone globally. What else is a high priority? Nonproduction costs — those costs that are not in the control of the manufacturer/employer, such as health-care costs, regulatory costs, liability costs and energy costs, which are a big concern for the future. Other items that we will be addressing include the skilled worker shortage and unfair trade practices. How have you mobilized these efforts? We track legislation at the state level and give people the opportunity to speak out on various pieces of legislation. We have talking points on our Web site where you can very quickly create a letter and e-mail it directly to your state legislator. The more letters that get sent, the more likely they are to vote in favor of what the people are asking for. Also, through our Web site, you can request posters to display in your workplace and print out payroll stuffers to insert in all of your employees’ paychecks, asking them to go to the Web site and join the coalition. We also have forums where people can voice their opinion and through the click of the button, e-mail the Web site to a friend. How do you join ACSE? All you have to do is go onto the Web site, www.KeepProducing.org, click on a button that says, “Join the Coalition,” fill out a form that takes about 30 seconds, and you will be added to a list of companies that support the campaign. It’s free. It’s fast and it’s very easy. For more information, please call 866/293-4194.
BUSINESS M A G A Z I N E Manufacturer & Business Association
Class of 1998 Where Are They Now? pg.12
ACES
VOLUME XXII, NUMBER 2
FEBRUARY 2009
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FEBRUARY 2009
EDITORIAL >
FEATURES >
7 / Health Matters
2 / Spotlight
How the patient-centered medical home (PCMH) concept has the potential to change the basis of how health care is administered. MICHAEL CULYBA, MD
GE Transportation President and CEO Lorenzo Simonelli discusses his new leadership role and the direction of the Transportation unit.
11 / Legal Brief
12 / PA Business Week
Directors and officers of corporations frequently come across business opportunities outside of their employment. When is it possible to take advantage of them?
Americans for the Competitive Enterprise System marks its 10th year of operating Business Week and its 50th anniversary of the Outstanding Citizen Award.
W. PATRICK DELANEY
25 / Events
23 / Financial Adviser Tackling the new language of business acronyms. KAREN L. BENSON, CPA, PFS
27 / In the Bank The importance of paying attention to your retirement savings during times of change.
See what’s been going on at the Association and who’s been in attendance.
INSERT / Training Catalog The right employee training, development and education, at the right time, provides big payoffs for employers. Find out about the Association’s latest course offerings.
19
25
JERRY T. KEMICK
Special Section >
6 / Corporate Health & Wellness Guide Discover some of the best health-care resources in the region with this guide to area events, programs and providers.
DEPARTMENTS > 4 / Business Buzz 16 / HR Connection
ONLINE EXCLUSIVE: Read
19 / On The Hill 20 / Legal Q&A 28 / People Buzz
how you can join the Keep Pennsylvania Producing initiative currently under way by The American Council for a Strong Economy, in the new digital edition of the Business Magazine at www.mbausa.org.
22
February 2009 > www.mbausa.org > 1
SPOTLIGHT > by Karen Torres
VOL. X XII, NO. 2 FEBRUARY 2009
Manufacturer & Business Association Board of Governors
Dale Deist Gerald B. Eighmy Scott M. Hanaway Dan Ignasiak Mark C. Kulyk William F. Muck John B. Pellegrino Sr. Dennis Prischak Timothy G. Shuttleworth Sue Sutto Philip Tredway
Editor in Chief Ralph Pontillo rpontillo@mbausa.org Executive Editor John Krahe jkrahe@mbausa.org Managing Editor & Karen Torres Senior Writer ktorres@mbausa.org Contributing Karen L. Benson, CPA, PFS Writers Michael Culyba, MD W. Patrick Delaney Jerry T. Kemick Advertising Sales Lori Maus Joint 814/833-3200 or 800/815-2660 ljoint@mbausa.org Design, Production Printing Concepts Inc. & Printing printcon@erie.net
In July 2008, Lorenzo Simonelli was named president and CEO of GE’s Transportation business, headquartered in Erie, Pennsylvania. The company employs approximately 10,000 employees worldwide and is a global technology leader and supplier to the railroad, marine, drilling, mining and wind industries generating revenues in excess of $4.5 billion. Simonelli recently sat down with the Business Magazine to discuss his new leadership role and the direction of the Transportation unit.
In the span of 14 years, you worked your way up the corporate ranks to become chief executive of one of GE’s fastest-growing and most profitable divisions. How would you describe your transition to the headquarters here in Erie? Fast and furious. In light of the global recession, it seemed like we shortened the 100-day grace period for the new guy in office to a 10-day grace period. My new team has done a great job bringing me up to speed and welcoming me to Transportation and to Erie. The community also has been warm and welcoming. How would you describe your leadership style? We have incredible talent in our organization, very bright and dedicated people from all over the world. It’s my job to bring out the best in everyone. My job is to provide the overall direction to the enterprise. Many who have worked with me would likely describe me as decisive. However, I am not in the business of telling people how to do their jobs; I rather facilitate dialogue and team work for the best possible results. What new business approach do you bring to the Transportation division? I like to think of myself as a global leader accelerating GE Transportation’s journey to becoming a truly global and diversified enterprise. Business cultures vary greatly around the world. We encounter differing management and communication styles depending on the markets in which we operate. Even our teams here in Erie often consist of individuals from many different countries. It’s vital to be cognizant of our differences and similarities and to use these insights to take our business to the next level. Who are some business leaders you admire? Why? I greatly admire Warren Buffett for his forward-thinking business leadership, keen investment instinct and philanthropic vision. He has prevailed in up and down cycles. Warren Buffett has seen tremendous success, yet remained a well-grounded individual. That’s a remarkable achievement.
Mission Statement The Manufacturer & Business Association is dedicated to providing information and services to its members that will assist them in the pursuit of their business and community interests. – Board of Governors Manufacturer & Business Association 2171 West 38th Street Erie, Pa. 16508 814/833-3200 or 800/815-2660 www.mbausa.org © Copyright 2009 by the Manufacturer & Business Association. All rights reserved. Reproduction or use of editorial, pictorial or advertisements created for use in the Business Magazine, in any manner, without written permission from the publisher, is prohibited. Unsolicited manuscripts cannot be returned unless accompanied by a properly addressed envelope bearing sufficient postage. The magazine accepts no responsibility for unsolicited manuscripts or artwork. The Business Magazine and Manufacturer & Business Association do not specifically endorse any of the products or practices described in the magazine. The Business Magazine is published monthly by the Manufacturer & Business Association, 2171 West 38th Street, Erie, Pa. 16508. Phone: 814/833-3200 or 800/815-2660.
2 < www.mbausa.org < February 2009
What is your advice for young professionals who are looking to climb the corporate business ladder? I’d encourage young professionals to match up what they are truly passionate about with a career that allows them to realize that passion. In the current job market, young colleagues need to differentiate themselves by going above and beyond the call of duty every day. My advice would be: Work hard and learn from everybody you have the privilege of coming in contact with. Build positive and lasting relationships with your peers and team members. You’ve been named president and CEO at a time when the U.S. economy is struggling. What measures have you taken, or are planning to take, to weather this downturn here in the United States? It’s the toughest economic environment in decades, in both the U.S. and worldwide. There’s little we can do about macro-economic issues like the collapse of the housing market or the financial crisis. However, we have been and are taking active steps to effectively respond to the crisis. We focus on maintaining our technology leadership and to offer premium products. In addition, we continue to aggressively pursue global infrastructure growth opportunities to offset a slowing
U.S. market. Rail represents our core business, but we continue to branch out to related industries like marine, mining, stationary power, drilling and wind industries. We accelerate the diversification of our product portfolio. In these challenging economic times, it’s key to be aggressive about cost control. We are looking at all opportunities to contain cost to keep the business competitive. Just some examples: We cut travel and opted for videoconferencing instead. We look at phone service, office supplies, holiday parties. We made tough choices on contracted and purchased services. Most importantly, we stay focused on delivering the best products on time and on budget to our customers. Delivering on our customer commitments is the most critical element to weather the storm. How are global sales being impacted? What are the projections for 2009? We are monitoring the global marketplace very closely. Our customers face the same challenges we do and might choose a conservative approach to investing in new products. The financial crisis has led to frozen credit markets, which could spell liquidity challenges for our customers. Therefore, we cannot take our backlog for granted. We must deliver on our customer commitments today to give them good reasons to make investments tomorrow. 2009 is going to be a tough year for many businesses and industries, although we count on infrastructure growth opportunities in emerging markets. GE Transportation recently announced that it intends to form a joint venture with Bharat Heavy Electricals and Indian Railways to supply diesel locomotives in India. What progress is being made on this rail deal? We teamed up with BHEL to compete for a 1,000 diesel locomotive tender issued by Indian Railways (IR). We were recently shortlisted by Indian Railways. Markets like India, Kazakhstan or China are critical to our success. What other projects are on the horizon? We continue to pursue hybrid technologies across the transportation industries we serve — rail, mining and marine. We introduced the Evolution® Series Hybrid locomotive in May 2007 and have already tested a hybrid propulsion system in a 240-ton mining truck. We are also excited about hybrid tugboats. Tugboats idle in harbors close to densely populated areas approximately 80 percent of the time. The environmental benefits from switching the tug from diesel power to battery power with virtually no emissions and generating zero noise is pretty dramatic. Greener infrastructure technology solutions will definitely gain in prominence in the time to come. ´
A Touchstone Energy® Cooperative
February 2009 > www.mbausa.org > 3
Business Buzz Meadville Medical Center Opens Wellness Extension The Meadville Medical Center (MMC) has opened a new Wellness Extension, “WE,” at the site of the former Fitness Garage in Vernon Township. The center will serve as an extension of the Mind-Body Wellness Center, and reflects MMC’s ongoing commitment to promote healthy lifestyles through coordinated whole person health care. “As a medical center, we cannot ignore recent news documenting doubling of the incidence of diabetes within the last 10 years. When one realizes that obesity and inactivity are the primary causes of this devastating trend, it becomes absolutely clear that a comprehensive health-care system must develop and offer safe, sustainable lifestyle strategies for improving quality of life and reducing the incidence of life-threatening diseases,” commented MMC Chief Innovations Officer Barry Bittman, MD. With a focus on prevention, recovery and the preservation of health, the new center integrates innovative state-of-the-art fitness strategies with comprehensive nutrition and
MACHINING FABRICATING ASSEMBLING 3-D LAsER GRINDING BROACHING MILLING PUNCHING CUTTING
stress reduction initiatives that are designed to meet the needs of each person. For more information, visit www.mmchs.org.
ECS&R Staying Tuned For Digital TV Conversion Environmental Coordination Services & Recycling, Inc. (ECS&R), in Cochranton, is expecting a large volume of television sets to be recycled with the onset of the digital TV transition, as 2009 brings the end of analog programming to the United States. One solution available is to install a converter box that will allow the analog receiver to then be able to receive the digital signal. Another alternative is to subscribe to cable or satellite television services. The final alternative is to purchase a new TV set. ECS&R demanufactures electronic equipment and handles all materials properly, a process regulated by the PA Department of Environmental Protection. Pickup can be scheduled for television sets ready to be discarded by calling 814/425-7773, or sets may be dropped off between 8:30 a.m. and 5 p.m. Monday through Friday. There is a per
BENDING FORMING ROBOTIC WELDING HIGH-SPEED SAWING SPLINING & GEARING HIGH-DEFINITION PLASMA BURNING BEARING CAP & HOUSINGS LINE
< www.mbausa.org < February 2009
DEPARTMENTS > Contact: Karen Torres
Two flexible machining cells High speed drilling and tapping Cell New Mazak Nexus 450 CNC Lathe 22” dia x 80” Powder Coating
pound charge for recycling. ´
Want to Get Your MBA at the MBA? Gannon University and the Manufacturer & Business Association have partnered on a Master in Business Administration program offering available at a discounted rate to Association members. The program offers Saturday classes at the Association’s Conference Center taught by Gannon’s dynamic, recognized faculty, and is internationally accredited by the Association of Collegiate Business Schools and Programs (ACBSP). To learn more, visit www.gannon. edu/mba or 1-800-Gannon-U. Editor’s note: Gannon’s program is not the only MBA program in the area to hold an international accreditation recognized by the Council on Higher Education Accreditation.
ou can see it in the bayfront skyline—new facilities like the Hamot Women’s Hospital that ensure even better access to the most advanced care. You can see it in our outcomes—success rates that continually earn national recognition, including recent designation by Thomson Reuters as a Top 100 Hospital for Cardiovascular Care. You can see it in the opportunities we create that stimulate growth and invigorate our community. You can see it in the lives that we impact every day. New facilities. New services. New opportunities. Our commitment to excellence has never been stronger. And, as always … we’re leading the way to better living, by leading the way to better health.
CORPORATE HEALTH & WELLNESS GUIDE
HEART GALA 2009 â&#x20AC;&#x153;The Beat on the Bayâ&#x20AC;? American Heart Associations 13th Annual Heart Ball
Saturday, February 21st , 2009 â&#x20AC;&#x201C; 6 p.m. Celebrate Mardi Gras at the Bayfront Convention Center
Hospice of Metropolitan Erie
Entertainment by Black Diamond
(H.O.M.E.)
A very special â&#x20AC;&#x153;thank youâ&#x20AC;? to our generous sponsors: Saint â&#x20AC;˘ Saint Vincent Vincent Health Health System System â&#x20AC;˘Saint SaintVincent VincentCardiovascular CardiovascularSurgery Surgery â&#x20AC;˘Vantage Vantage Holding HoldingCo Co â&#x20AC;˘Mr. Mr.&&Mrs. Mrs.Louis LouisJ.J.Porreco Porreco â&#x20AC;˘Mr. Mr.&&Mrs. Mrs.Gregory Gregory Rubino Rubino â&#x20AC;˘Lake LakeErie ErieCollege Collegeof ofOsteopathic OsteopathicMedicine Medicine â&#x20AC;˘Millcreek MillcreekCommunity CommunityHospital Hospital â&#x20AC;˘Medical MedicalAssociates Associatesof ofErie Erie â&#x20AC;˘Dr. Dr.&&Mrs. Mrs.Robert RobertJ.J.Ferraro Ferraro
For referrals or information call: 814 456 6689 We are here when you need us
For more information: Gina R. Klofft (814) 836-0013 Gina.Klofft@heart.org
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Health Matters
EDITORIAL > by Michael Culyba, MD
A Healthy Partnership: Patient-Centered Medical Home One of the most enduring images of health care is that of the family doctor. Many people view the family doctor concept as simply a reminder of the way things used to be. Also, it is a perfect model for the way things can be again. It is also a way of approaching health care that differs greatly from the current system. When we talk about the “patient-centered medical home,” we are talking about physicianguided, patient-centered care. The partnership between the provider, the patient and their families is what makes it work. From that partnership comes a holistic, coordinated plan of care that uses evidence-based medicine to produce better outcomes and lower costs. The patient-centered medical home (PCMH) concept has the potential to change the basis of how care is administered in this country. At present, most care is episodic, illnessoriented and complaint-triggered. With PCMH, care will transform into a patient-centered, physician-guided, cost-efficient model that encompasses both the art and the science of medicine. Physicians will become partners with both patients and insurers in coordinating and facilitating care to help patients navigate the health-care system. Patients will have a personal physician who works with a team of health-care professionals in a practice that is organized according to the principles of the medical home. Who fills the role of a member’s “personal” physician?
That person could be either a primary care physician or a medical specialist. In most cases, a primary care physician would be best suited to fill the role, which would be to provide principal care and to be the patient’s care coordinator. But a medical specialist could also perform those functions. Is the patient-centered medical home similar to the traditional managed care model? Not really. The personal physician is not acting as a “gatekeeper” who restricts patient access to services, but rather as someone who facilitates care and is directly responsible to each patient. The personal physician can serve as an advocate for patients as well as a guide to patients and their families as they navigate through the complex health-care system. Why is this the right time for PCMH? The current system is not prepared to meet the needs of an aging population, either now or in the future. In this environment, physicians are under constant pressure to see more and more patients in less and less time. Health-care costs continue to rise faster than the economy. Employers, government, and individuals feel increased financial burdens. And, you can add to that the fact that health-care outcomes in the United States compare unfavorably with much of the rest of the industrialized world. The reason for all the unnecessary and inappropriate health-care services that people receive is that there is little or no coordination of patient care
among providers. We also need to recognize that primary care in this country is a failing entity. Each year, the number of primary care physicians drops by six percent. We need to redefine and redesign primary care. That’s a basic concept of the patient-centered medical home. How will this system work? Ideally, it will work through partnerships. The health plan acts in partnership with its members, with its employer groups, and with its physician community. In essence, the concept of service excellence will be redefined and the physician/ patient relationship enhanced. Care is facilitated to assure that patients get care when and where they need it and want it. ´ For additional information, contact UPMC Health Plan at 1-888-383-UPMC or visit www.upmchealthplan.com.
Michael Culyba, MD, is vice president of Medical Affairs at UPMC Health Plan, which is part of the integrated partner companies of the UPMC Insurance Services, one of the integrated partner companies of the UPMC Insurance Services Division. The UPMC Insurance Services Division offers a full range of insurance programs, including UPMC Health Plan, UPMC Work Partners, LifeSolutions, and UPMC for You (Medical Assistance).
February 2009 > www.mbausa.org > 7
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Legal Brief
EDITORIAL > by W. Patrick Delaney
The Duty of Loyalty Individuals who take on the role of officer or director of a corporation assume a duty of loyalty to that enterprise that is often overlooked or misunderstood. One aspect of that duty of loyalty is that an officer or director may not take for themselves business opportunities that could be useful to the corporation. Groundbreaking Case Consider the fascinating case of Charles Guth (1876-1948) and his relationship with Loft, Inc. Mr. Guth became the president of Loft, Inc. in March 1930. Loft, Inc. was a corporation engaged in manufacturing and selling candies, syrups and beverages. Its main offices were in New York, but it operated over 115 stores in urban areas along the middle Atlantic seaboard. During the height of the Depression, it had assets exceeding $9 million in value and was operating a flourishing business. In 1931, the Loft stores were dispensing Coca-Cola soft drinks. So large were Loft’s operations that it was purchasing 30,000 gallons of CocaCola syrup annually. At about this time, Mr. Guth learned that a secret formula for an alternative cola product could be acquired out of bankruptcy court. Shrewdly sensing that this alternative beverage could compete with Coca-Cola, Guth joined with others to purchase the secret formula and the trade name for the beverage. The problem was, instead of acquiring these assets for his corporate employer, Loft, Inc., Guth bought them for himself (through a separate corporate entity he named “Pepsi-Cola Company”). From 1931 to 1935, Mr. Guth continued to act as president of Loft, Inc. At the same time, he was
in complete control of Pepsi-Cola Company. He reformulated the drink and introduced the wildly successful 12-ounce bottle for five cents. Of course, he introduced Pepsi to Loft, Inc. stores, and Loft became one of the chief customers of the Pepsi-Cola Company. In 1936, the shareholders of Loft, Inc. removed Guth from its management, and a long legal battle ensued in the Delaware courts. The claim was that Guth should have offered Loft the opportunity to purchase Pepsi and not taken it for himself. In a frequently cited decision, Guth v. Loft, Inc., 5 A.2d 503 (Del. 1939), the Delaware Supreme Court upheld a lower court decision that Guth had violated the duty of loyalty that arose from his position as a corporate officer. The Court stated: [I]f there is presented to a corporate officer or director a business opportunity which the corporation is financially able to undertake, [and such opportunity] is, from its nature, in the line of the corporation’s business and is of practical advantage to it, is one in which the corporation has an interest or a reasonable expectancy, ... the law will not permit him to seize the opportunity for himself. — Guth, 5 A.2d at 511. Ultimately, the Court required Guth to turn over a controlling interest in the Pepsi-Cola Company to Loft, Inc. In 1941, the Pepsi-Cola Company was merged into Loft, Inc., and the name Loft, Inc. was changed to Pepsi-Cola Company. The principle set forth by the Delaware Supreme Court is commonly referred to as the “Rule of Corporate Opportunity” and reflects the law throughout the
United States. If a court finds that a corporate officer or director has taken for himself a business opportunity that is in the same line of business as the corporation, without first having offered that opportunity to the corporation, it is likely that a court will find that the officer or director has breached the duty of loyalty and wrongfully usurped the corporate opportunity. The lesson, of course, is to act fairly, with common sense, and with the duty of loyalty in mind. When a business opportunity arises, the corporate officer or director must ask whether this opportunity fits into the line of business of the corporation. If so, the opportunity should be offered to the corporation, and the offer should be documented. If the corporation expressly rejects the business opportunity, the individual then can safely pursue it. ´ For more information, contact Patrick Delaney at MacDonald, Illig, Jones and Britton LLP at 814/870-7658 or pdelaney@mijb.com W. Patrick Delaney is a partner in the law firm of MacDonald, Illig, Jones and Britton LLP, where he is chairman of the firm’s Commercial Litigation Group. He is a 1976 graduate of Capital University Law School. His practice focuses on issues of business litigation in the state and federal courts throughout western Pennsylvania.
February 2009 > www.mbausa.org > 11
Where Are They Now? ACES marks 10th year of operating Pennsylvania Business Week, 50th Outstanding Citizen Award The afternoon bell signals the end the school day, but there is no break for Val Laufenberg. Full of energy, the executive director of the nonprofit organization, Americans for the Competitive Enterprise System (ACES) headquartered in Erie, is already busily planning for the next few weeks, preparing herself and her team for an intense week of working with high school students throughout Northwest Pennsylvania. For Laufenberg, working with these youngsters isn’t a “job,” but a calling. In fact, 10 years after ACES took the reins of Pennsylvania Business Week (PBW) from the Manufacturer & Business Association, she is just as enthusiastic about the prospects of introducing this one-of-a-kind in-school program to a new group of students, as she was when she first started out. Like any business venture, Pennsylvania Business Week was inspired by an idea – to expose high school juniors to economics education and promote the free enterprise system in an intense, weeklong in-school program. The test site for the first program began at Fort LeBoeuf High School in 1997-1998 under the leadership of the late principal, Art Bergamasco, and was profiled in the February 1998 Business Report article, “Tomorrow’s CEOs.” More than a decade later, the program has reached more than 10,000 students at 14 high schools in five counties throughout Western Pennsylvania.
How it Works
Shown here are CEOs from the inaugural 1997-1998 Pennsylvania Business Week program at Fort LeBoeuf High School, including top row, from left: Ryan Carroll, Jill Bendig and Grady Powell; second row, from left: Katie Kimble, Lyndsey Cash, Seth Hunt and Meghan Coughlin; third row, from left; Mandy Huston, Mike Steigerwald, Natalie Matta and Jennifer Huston; and bottom row, from left: Amanda Lachowski, Ricky Peck, Sarah Falkowski and Stephanie Brown.
Divided into teams, or companies, the goal of PBW is to teach students the fundamentals of business and running a company in a competitive environment, the building blocks of the free enterprise system. To make the experience more realistic, each company has a student CEO and executive management team to run the operation, while a businessperson from the community and teacher serve as business advisers for the companies throughout 12 business quarters, or three years, that are condensed into one week. Students make all managerial decisions including pricing, marketing, production, research and development and human resources, and at week’s end compete in five competitions: advertising, stockholders, trade show, return on net assets and top company. All members of the winning team are awarded $100 cash.
Oftentimes students are shocked to learn that the program is primarily computer-free, but rather a “brain game” that tests competence, competitiveness and strategy. It is a combination of fundamental business concepts and economics that incorporates logical thinking, math, reading and writing. “I want to see what’s in here first – to get the ideas, the brain working,” Laufenberg says. “When you come into a stockholders’ meeting and you have all these lovely charts and graphs that you’ve made from an Excel spreadsheet, do you know what they really mean?”
Laufenberg
History: Developed by the Manufacturer & Business Association in conjunction with Fort LeBoeuf High School in late 1997, Pennsylvania Business Week (PBW) is the first in-school program of its kind in the United States. In 1999, the Americans for the Competitive Enterprise System (ACES) added PBW to its list of economic education programs. Funding and donations: PBW receives no government support and is funded entirely through sponsorships and donations. Businesses are encouraged to help with tax-deductible contributions, or to participate in the Educational Improvement Tax Credit (EITC) program when donating to the program. According to ACES, 90 percent of a company’s donation to PBW could be eligible for a state tax credit through EITC. Operation: PBW is currently run by ACES and its Board members: Charles “Boo” Hagerty, Hamot Health Foundation; John Krahe, Manufacturer & Business Association; James Ohrn, Custom Engineering Co.; Jeremy Lincoln, Lincoln Metal Processing Co.; and Carl Wolfrom, Northwest Savings Bank. Volunteers and sponsorships: The program relies on volunteers from the business community to serve as advisers, judges and sponsors, and regularly features a presentation by Chuck Jenkins of the American Manufacturing Tribute Bike – Careers in Manufacturing Tour. Current and past participants: Corry Area High School, Fort LeBoeuf, Neshannock, Lincoln, New Castle Area, Maplewood, Cambridge Springs, Saegertown, Sharpsville, Strong Vincent, Girard, Union City, Youngsville and Shenango high schools. For more information: Visit www.aceserie.org, pabusinessweek.org or call 814/456-7007. 12 < www.mbausa.org < February 2009
According to Laufenberg, the program is designed to expose students to economic education – which is still not a required course in Pennsylvania high schools, but also to give students a better picture of “business” and what’s involved. “You say businessperson to a student and they have an image of a guy in a suit behind a desk, and they have no idea what he is doing,” explains Laufenberg. “After Business Week, they come to understand that there are a lot of different career opportunities for them to explore. It’s not just sitting behind a desk; it’s being creative; it’s working with your hands. It’s talking, sales and production. It’s marketing. It’s all of that.” And the best way to do this is through a program like PBW, which partners the business community with the educational community. “ACES’s whole mission is to promote free enterprise and economic education by providing partnerships between the business and educational communities,” says Laufenberg. “Because if you are going to teach something then teach what it is, and no one knows this better than the business community.” Dave Sterrett, an engineer at the consulting/engineering firm Herbert, Rowland & Grubic and Summit Township engineer, has served as an adviser since the program’s inception and has watched its progression year after year. Nothing, he says, compares to seeing the students gain a solid grasp of key business concepts throughout the week. “When you work with these kids that have never done anything with accounting and you watch them put together a balance sheet and income statement, Sterrett and they understand the general concept or general content of what that report is including and telling the shareholder of the company, that to me is really neat,” he says. According to Laufenberg, ACES measures the success of the program on the evaluations at the end of the week. Overwhelming throughout the program’s history, more than 90 percent of students say that, yes, they have a “better understanding of how business operates in the American economy after participating in Business Week.” But the real measure, she says, often comes years down the road. “It’s what I call the ‘aha moment,’ ” Laufenberg says. “They hear it in some other form – on the job, or in a college class, and they’ll go – oh yeah. I remember. They taught me that in Business Week and they see the connection to reality.” In marking the 10th anniversary of ACES operating PBW, the Business Magazine caught up with a few of the program’s former participants to see where they are now. Many of those students agreed that, in one week, Business Week had a significant impact on them — and their careers.
Tomorrow’s CEOs Today
It’s been eight years since George Valletti participated in Business Week at Corry Area High School, but the experience has stayed with him ever since. Valletti, whose parents own a car wash and detail shop in Corry, had grown up with a family-owned business, but it was Business Week, he says, that “enhanced” his understanding of the economic progress and management. “What I’ve taken away from Business Week, when I was a junior in high school has guided me through many leadership roles through college, through where I’m currently at as a teacher,” he says. “What I’ve taken out of it is how to communicate efficiently with people and how to work with people, and how to figure out and analyze problems.” Valletti
In fact, on February 27, Valletti’s fifth-grade students at Manassas Park Elementary School in Manassas Park, Virginia, will be hosting their first trade show. Valletti’s students are working on a business project using a variation of the Business Week program he designed for his elementary school students, whose project it is to come up with a company name and logo, and develop a product that benefits society. So far, one group, Valletti says, developed a collapsible shelter for the homeless that is sturdier than a tent, while another company has come up with a communication bear, or teddy bear, that is a visual aid for the blind.
nts’ marketing and advertising skills and The trade show competition tests stude the business world. of nt them to the competitive environme
exposes
Every few weeks, Valletti says he also adds a new problem, or crisis management, for companies to tackle, to keep the project relevant to the current economic climate. One week, for example, it was a budget crunch. Many “students don’t understand the value of the American dollar,” Valletti notes. “They don’t understand how our economy works and how it’s based on supply and demand, how checks and balances work, and how gas prices fluctuate. All of that stuff I was introduced to in Business Week.”
Where It All Started Talk to Grady Powell and many of his fellow CEOs from that first Business Week program at Fort LeBoeuf High School, and you’ll find similar stories of inspiration. After his experience as CEO of Redwood Cellular during Business Week and subsequent internship at the Manufacturer & Business Association, Powell decided to major in economics education at Furman University. He worked at an advertising agency out of college and then caught what he calls the “social entrepreneurship” bug.
Powell
Today he is business director at an educational nonprofit, Trinity Forum Academy, in Maryland. He is currently leading a team of developers on a curriculum project known as Common Vocabulary, with The Earth Institute at Columbia University, which is designed to help educate high school students and the wider public about the global issues of extreme poverty, environmental degradation and public health crises. While brainstorming about the best way to present the curriculum, Powell says, it was Business Week that came to mind. “Business Week keeps popping up as one of the most influential educational experiences I’ve ever had, so we’ve considered developing a similar model,” he noted. Seth Hunt, who had been CEO of Next Wave Sound during the 1997 program at Fort LeBoeuf, is now in his fourth year of a dual doctorate program in Zoology and Ecology, Evolutionary Biology, and Behavior (EEBB) at Michigan State University. Business Week, he notes, helped him develop the ability to organize other people toward the completion of a common goal. “Part of my undergraduate education was made possible by a volunteer service scholarship,” he explains. “I spent the better part of two years as the student leader of that organization. The organizational skills that I worked on during Business Week were directly helpful to being a successful leader within that organization.” Brian Blank was one of the members of team Mo’Shin with CEO Ryan Carroll during Business Week, and describes the program as “hands-down the best educational experience we had in high school.” “If felt like we could finally put our education to work,” he says. “For a week, we were supposed to be able to forget about homework and tests. But you know what? We took the ‘tests’ and ‘homework’ of running a business maybe more seriously than schoolwork. >
Blank
February 2009 > www.mbausa.org > 13
We really wanted our business to succeed. And it did.” The program, Blank says, had a major impact on his career path. “I felt so alive while presenting our team’s television commercial and our booth at the trade show. I loved the selling, the presenting. For me, Business Week brought to life a developing desire to go into TV.” After high school, Blank attended the University of Missouri-Columbia to study broadcast journalism. From there, he pursued a career in cable news and went on to report for CNN Radio, write for CNN.com and produce FOX News anchor Neil Cavuto’s business network show. For the time being, Blank has left the world of journalism to study in a postbaccalaureate pre-med program at Harvard University, so that he’ll be able to apply for medical school someday. “A complete 180,” he says, “but something I’m very excited about.” Former Business Week CEOs Jill Bendig Runciman of Jabalojit Entertainment Division and Amanda Lachowski of SCS Fonz also have fond memories of the program and what it taught them. Runciman, a trained photographer and stay-at-home mom who resides down under in Australia, is currently putting her entrepreneurial skills to the test and starting her own company, Shutterbubs. She describes it as a “rewarding challenge” to be managing her own business while raising a child. “In high school (and now),” she notes, “I would have considered myself much more of a creative-type than a business-type, and the Business Week experience certainly taught me that business doesn’t have to be boring and there is a very real and important place for creative and artistic types within any business.” “It would be amazing if this (Business Week) was compulsory for all high school students,” she adds. Lachowski, now the education program coordinator for Friends of Deckers Creek, a small watershed nonprofit based out of Morgantown, West Virginia, says the program helped her to build her public speaking and leadership skills, which helped her excel as a freshman at Allegheny College. She also discovered that she had “a lot more to learn about the business world.” “Looking back,” she recalls, “I think the greatest lesson I learned was coming to understand how all types of people with different skills must come together to run a successful business.” Lachowski
She also adds a note of thanks to the late Art Bergamasco. “I saw him as the individual who was instrumental in this partnership and many other unique educational experiences offered during my time at Fort LeBoeuf… Sometimes all it takes is one person to inspire a whole generation.”
Get Involved Laufenberg sees such inspiration year after year. The real reason for the success of Business Week, she insists, are the volunteers – the advisers, At the end of the week, students compete in five competitions, including advertising, stockholders, trade show, return on net assets and top company. All winners of the winning team are awarded $100 cash.
14 < www.mbausa.org < February 2009
speakers, judges and sponsors who support the program, a great staff, – and the students who benefit. “Business Week doesn’t take place in a vacuum,” she says. “It takes that whole community of volunteers, whether you can give us an hour to speak, a couple hours to judge, or an entire week as an adviser – they all have an important part in making it happen, because we at ACES can’t do it on our own. It takes the business community to support it.” — This feature sponsored by National City. For more information, visit www.aceserie.org.
ACES to Honor Hamot’s Malone as Outstanding Citizen For 50 years, the Americans for the Competitive Enterprise System (ACES) has recognized an area businessperson with its Bob & Betty Merwin Outstanding Citizen Award, in honor of their practice and promotion of free enterprise in both their professional and personal life.
Malone
During a private reception co-sponsored by the Business Magazine on February 4, 2009, at the Manufacturer & Business Association Conference Center, ACES will present Hamot Health Foundation President and CEO John Malone with its highest honor. Malone was chosen based on his vision and initiative in leading others by example, and by his ongoing advocacy of the free enterprise system. “This award does not just recognize business success but also giving back to the community,” says ACES Executive Director Val Laufenberg. “Hamot does a lot for the community in regards to assistance of those in need of help and sponsorship of different types of community activities that raise our standard of living, and the enjoyment of living in a community where things like that happen.” Since coming to Hamot in 1975, Malone has served in many capacities, including administrative assistant, vice president, vice president of Regional Health Services and senior vice president of Hamot Medical Center. He then served as president and chief operating officer of Hamot Medical Center from 1989 until his appointment as CEO of Hamot Health Foundation in 1992. As ACES’s 2008 Outstanding Citizen Award recipient, Malone is the latest in a long line of influential business leaders to receive the award. Other past honorees include: 1958 Bertram Miller 1959 Norman W. Wilson 1960 G. Richard Fryling 1961 Sumner E. Nichols 1962 Arthur F. Schultz 1963 Guy W. Wilson 1964 Donald S. Leslie Sr. 1965 Robert A. Haller 1966 Robert F. Merwin 1967 Douglas M. Moorhead 1968 James M. Vicary 1969 Harold Reslink 1970 Robert Young 1971 Everett Zurn 1972 Herbert S. Sweny 1973 Thomas Lord 1974 A. Bruce Smith 1975 Henry Orth Hirt 1976 J. Robert Baldwin 1977 Ray L. McGarvey 1978 William B. Conner 1979 Charles H. Bracken 1980 John Cochran 1981 Mace Levin 1982 Joseph & Lois Dahlkemper 1983 Henry Fish
1984 Albert F. Duval 1985 Thomas L. Venable 1986 Charles R. Beckman 1987 Edmund J. Mehl 1988 F. William Hirt 1989 Carl J. Schlemmer 1990 James C. Levinson 1991 Edward M. Mead 1992 Edward P. Junker III 1993 Nicholas C. Scott 1994 None 1995 Louis P. Musante 1996 Ralph T. Wright 1997 William M. Hilbert Sr. 1998 Calvin D. Neithamer Sr. 1999 P.C. “Hoop” Roche 2000 Gary P. Schneider 2001 Joseph Prischak 2002 Kathleen Scheppner 2003 Philip M. Tredway 2004 Richard A. Merwin 2005 Harry E. Brown 2006 Manufacturer & Business Association Board of Governors 2007 Chuck Jenkins 2008 John Malone
Training Update
Front row, from left: Brian Nguyen, Carlos Menjivar and Salvador Menjivar Back row, from left: Josh Chesly, Dan Kaufmann, Sean Simon, Pat Baily and Mark Walters
“The Supervisory Skills Series has given our supervisors the tools to further develop a management style of their own. It has given them the confidence to more effectively communicate with their co-workers and create stronger teams throughout the plant.” — Sean Simon, Production Manager Rehrig Pacific Company
For more information on upcoming training classes, please visit www.mbausa.org or call us at 814/833-3200 or 800/815-2660.
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February 2009 • www.mbausa.org
Manufacturer & Business Association Training Schedule
March
April
Professional Development
Professional Development
Certified Supervisory Skills Course I Course I (St. Marys) Course I Course I (Meadville) Course I (Corry) Course II (DuBois) Course III (Franklin) Course III Course V Course V
3/17 and 3/24 3/18 and 3/19 3/25 and 4/1 3/25 and 3/26 3/31 and 4/1 3/11 and 3/12 3/25 and 3/26 3/31 and 4/7 3/4 and 3/11 3/12 and 3/19 3/16 3/21
Food Safety Certification
Price: Member $125, Nonmember $225
PHR-SPHR Study Group (Six Weeks) Price: Member $795, Nonmember $995
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4/20
Computer
NEW! Introducing Microsoft Vista (Half Day)
3/12
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3/11 3/19 3/31 3/18 3/17
Access Advanced Excel Level I 2007 Excel Level I (Sharon) Word Level I Word Level II
4/30 4/16 4/21 4/7 4/29
Price: Member $155, Nonmember $275
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Access Basics (Two Days)
4/2 4/2 4/30 4/30
Price: Member $125, Nonmember $225
Computer Excel Level I Excel Level II Excel Level III Mastering PowerPoint Outlook
4/21 and 4/22 4/7 and 4/14 4/8 and 4/9 4/15 and 4/16 4/1 and 4/2 4/16 and 4/17 4/30 and 5/1
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Leadership Course I Leadership Course I (Warren) Leadership Course II Leadership Course II (Warren)
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Food Safety Certification
Certified Supervisory Skills Course I (Sharon) Course II Course II (Meadville) Course II (St. Marys) Course III (DuBois) Course IV (Franklin) Course V (Franklin)
3/26 and 4/2
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EXCEL LEVEL I: “All the little details I thought I knew were old news and I learned a more efficient way to use Excel.” — Kristen Respecki, STERIS Corporation EXCEL LEVEL II: “The small class size and cheerful instructor made learning a pleasant experience.” — Trisha Pursell, Erie Veterans Affairs Medical Center
QuickBooks 2007
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EXCEL LEVEL I: “The instructor simplified the presentation and for the first time I was not intimidated by the computer.” — Robert Chandler, Stairways Behavioral Health Opportunities Unlimited QUICKBOOKS: “Very organized and the instructor was able to answer all of our specific questions that applied to our line of business.” — Natalie Kreidinger, Advanced Cleaning Systems, LLC
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HR Connection STAGGERING ECONOMY TOPPLES 2009 SALARY INCREASES Recent survey data from BLR.com shows a significant change in the plans of U.S. employers for salary increases in 2009. According to the 2009 Pay Budgets Revisited Survey, the average merit pay increase is now 2.80 percent. That’s down almost 25 percent from the 3.71percent increase employers reported in June 2008, when BLR conducted its annual Pay Budget survey. “The current economic turmoil appears to have claimed yet another victim — pay increases planned for 2009,” said BLR CEO Bob Brady. “To see a 25-percent drop in salary increases, the lowest seen since 9/11, in the space of just a month is unheard of. Let’s hope that the markets calm down and confidence improves, but even if they do, BLR expects that most organizations are likely to follow through on these reduced percentages.”
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Group coverage through the Man ufacturer & Business Association (MBA) must start with an employee base of at least two full-time employees. The re is a difference between carriers as to how the gro up is viewed if through attrition the group drops to one full-time employee. Both HealthAmerica and UPMC review the group circumstances at renewal and Patty Smith is may cancel the the group of one. Highmark allows true director of Emplo groups of one to yee Benefit Services remain on the group coverage thro at ugh the MBA so the Manufactur er & long as all other underwriting rule Business Associa s are in place. tion.
TECHNICAL, SCIENCE-RELATED CAREERS TOP JOBS LIST Computer specialists top the list of the 25 highest-paying occupations requiring post-secondary training or an associate’s degree, while technicians of various kinds dominate the list, according to a report by the Office of Occupational Statistics and Employment Projections at the Bureau of Labor Statistics.
Eleven of the 25 highest-paying occupations have “technicians” or “technologists,” in their titles, with nuclear technicians (third on the list) the highest paid among these. Most of the occupations on the list require technical skills related to engineering, electronics, mechanics or science.
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DEPARTMENTS > Contact: John Onorato
Updates Mandatory for Labor Law Posters Ben Franklin once noted that there are two things that are certain; death and taxes. If Franklin were an HR professional, he might have added frequent changes to employment law posters. NEW FEDERAL POSTERS ARE NEEDED In January 2008, the federal government amended the Family Medical Leave Act (FMLA) to provide eligible employees working for covered employers two important new leave rights related to military leave: 1. Eligible employees are entitled to up to 12 weeks of leave because of any “qualifying exigency” arising out of the fact that the spouse, son, daughter or parent of the employee is on active duty or has been notified of an impending call to active duty status. 2. Eligible employees who are the spouse, son, daughter, parent or next of
kin of a covered service member who is recovering from a serious illness or injury sustained in the line of duty is entitled to up to 26 weeks of leave in a single 12month period.
are two or three times the price that your Association charges. Worse yet, these firms will often solicit sales from you where there really isn’t a need for a new poster.
In late October, the Department of Labor published the regulations related to the amendments. As a result of these new regulations, every employer’s federal labor law poster needs to be replaced.
You can trust that when we tell you there is a need for a poster, it is a true need and that the price we charge is a fair one. ´
NEW STATE LAW POSTERS NEEDED TOO In November 2008, the General Assembly made minor amendments to the state’s unemployment compensation law. Although the changes are minor, employers in the Commonwealth are required display the new poster. MBA IS LOOKING OUT FOR YOU Many of our members inform us that they often receive solicitations from firms seeking to sell them posters. Oftentimes the prices these firms charge
If you would like to order new federal or Pennsylvania law posters, visit us at www.mbausa.org or call us at 814/833-3200 or 800/815-2660. Attorney John Onorato is the vice president/general counsel at the Manufacturer & Business Association. He assists member companies with their legal needs and HR questions.
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OntheHill The Employee Free Choice Act Myth vs. Fact The Manufacturer & Business Association believes that all workers deserve the fundamental right to a federally supervised private-ballot election when deciding to accept or reject a union. Secret ballot elections allow employees to vote anonymously, without fear of intimidation or retaliation. However, under the Employee Free Choice Act (EFCA) or “card check,” a worker’s vote would be made public to not only their employer, but also union organizers and co-workers. There would be no private election or free choice.
MYTH #1 The private ballot process for unionization hurts unions by intimidating and coercing workers not to vote for the union and delaying an election.
FACT
National Labor Relation Board (NLRB) private-ballot elections are the cornerstone of the democratic process. NLRB statistics show that the median time for holding an initial private ballot election is just 39 days, with most elections held within 56 days. Secret ballots allow workers to make judgments for themselves without organizers or company officials looking over their shoulder. In a “card check” system, employees are exposed to coercion and intimidation as they are forced to choose sides in front of union organizers and co-workers who support unionization.
MYTH #2 Secret ballot-organizing elections are unfair and do not protect the rights of workers to unionize.
FACT
According to The Heritage Foundation, unions win more than 60 percent of organizing elections. While card
DEPARTMENTS > Contact: Sheila Sterrett
check was used for union organizing in the 1930s and 1940s, widespread intimidation of workers led Congress to amend the National Labor Relations Act in 1947, providing that workers be given the right to a private ballot election. Today’s elections are balanced with regard to the rights of employers and unions, ensuring that unions have access to workers when they are not on company time.
MYTH #3 Binding arbitration enacted through EFCA is necessary to enhance wages and employment conditions.
FACT
EFCA would force employers and newly organized unions into binding arbitration if they were not able to settle on an agreement within 90 days from the start of bargaining. Binding arbitration would deny workers the ability to bargain and vote on their contracts, leaving the decision to an arbitrator who has little knowledge of the competitive realities that companies face or in crafting
Association Celebrates Grand Opening of Harrisburg Office Kicking off its 104th year as an advocate for businesses throughout the Commonwealth, the Manufacturer & Business Association (MBA) celebrated the grand opening of its Harrisburg office. The new office, located directly across the street from the Capitol, will enable the Association’s lobbyists to play a larger role in policy development and the legislative process as we continue to fight for the rights of our members and the protection of the free enterprise system. Joining in the celebration were the MBA Board of Governors and
business contracts.
MYTH #4 Only employers should be held accountable for unfair labor practices during organizing drives.
FACT
While labor activists argue that unions almost never abuse workers during organizing drives, unions have actually been charged thousands of times since 2000 for threats, violence and coercion. By increasing penalties against employers only and not unions, EFCA would send the message that union coercion is not as harmful to workers. Both employers and unions should be held accountable for unfair labor practices. While earlier attempts to pass EFCA in Congress were narrowly blocked, unions have made it clear that EFCA is their highest legislative priority in the 111th Congress. Visit www.mbausa. org to learn more about this issue and how to contact your legislators urging them to oppose this legislation. ´
staff, and representatives from fellow trade organizations eager to welcome the MBA to the state capital. Following the ribboncutting ceremony, legislators and administration officials met for an informal reception. See photos of the new office at www.mbausa.org.
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Legal Q&A WHEN WE CLOSE OUR PLANT, OR GO ON LAYOFF STATUS, WE SOMETIMES END UP WORKING ONE DAY A WEEK. FOR SALARIED EMPLOYEES, CAN WE ONLY PAY THEM FOR THE ONE DAY THAT THEY WORK? No. Under the federal Fair Labor Standards Act, a salaried employee is entitled to their full salary for a workweek in which they perform any work – with very limited exceptions. Therefore, if a salaried employee works one day for your company, they are entitled to receive their full salary for that week. Treating a salaried employee differently risks them being seen by federal or state wage-and-hour investigators as an hourly employee – and may expose your company to
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civil and criminal claims for unpaid overtime. I HAVE AN EMPLOYEE WHO PLAYS BY THEIR OWN RULES — SHE COMES IN LATE, LEAVES EARLY AND IS OFTEN A “NO SHOW’ FOR WEEKLY STAFF MEETINGS. THE PROBLEM IS SHE IS, BY FAR AND AWAY, MY BEST PERFORMER. WHAT IS YOUR ADVICE ON MANAGING THIS EMPLOYEE? There are several ways you could address this issue. One school of thought holds that you should go by the book on this one and use whatever discipline you would use with any other employee. Usually, that means going through some sort of progressive discipline and counseling, but if none of that works, you have to consider terminating the employee. The thought
behind this is that if your firm is going to have rules, then you have to insist that everyone follows them, no matter what their performance level is. To do otherwise is just asking for a lot of trouble when dealing with employees in general. Another school of thought is that you may be able to curb this behavior by making punctuality a performance issue. In other words, it would be one of the performance measures you would use to measure this employee. Another alternative is to counsel and coach the employee, and if infractions continue, ask the employee to sign a ‘last chance’ agreement whereby they promise to refrain from rule infractions or suffer significant discipline, like termination.
DEPARTMENTS > Contact: John Onorato
Employee Assistance Programs Offer Aid in Time of Financial Distress As the economy continues to recede, businesses should be equipped to respond to employee performance problems created by financial difficulty. Human resource professionals may want to consider supplementary resources that may be available to address employee issues created by financial distress such as debt/credit counseling or an employee assistance program (EAP). In addition, it is important that employers are aware of legal limitations on their actions with regard to an employee’s financial problems. Both state and federal laws limit actions employers may take against employees that are subject to wage attachments or file for bankruptcy. Some of those legal limitations on employers’ actions are as follows: • Garnishment/Attachment of Wages. Under Pennsylvania
law, wages and earnings of employees may not be garnished or attached except for child and spousal support, delinquent taxes, higher education assistance loans, damages awarded to a creditor-landlord arising out of a residential lease, or board or lodging for four weeks or less. Furthermore, employees may not be disciplined, discriminated against or discharged because of wage garnishments. • Employee Bankruptcy. Section 525 of the Bankruptcy Act protects employees and applicants from discrimination who are or have been a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt: 1) is or has been a debtor under this title or a debtor
or bankrupt under the Act; 2) has been insolvent before the commencement of a case under the Act or during the case but before the grant or denial of a discharge; or 3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Act. ´ For more information, call the HR & Legal Services Division at 814/833-3200 or 800/815-2660. Tammy Lamary is Labor & Employment Counsel for the Manufacturer & Business Association’s Legal Services Division.
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EDITORIAL > by Karen L. Benson, CPA, PFS
Financial Adviser
ACRONYM Overload – What Do They Mean and Will They Affect You and Your Business? As the business world and global economy are caught off-balance and faced with unprecedented challenges, a new language is surfacing — business ACRONYMS. Briefly, we’ll journey into this new genre by tackling a few acronyms and, hopefully, add some clarity to the recent news flashes. International Financial Reporting Standards (IFRS) IFRS are the international accounting reporting standards that have been in the making for decades. What’s new and what has the U.S. public companies spinning is the realization that U.S. GAAP (Generally Accepted Accounting Principles) is no longer recognized as the “gold standard.” During 2008, the Securities and Exchange Commission (SEC) proposed a “roadmap” toward global accounting standards that could lead to the use of IFRS by U.S. issuers beginning in 2014. This shift has driven financial oversight and regulatory bodies to establish a single set of robust, high quality, and internationally accepted standards. To date, more than 100 countries, including all of Europe, permit IFRS reporting, with approximately 85 of these countries actually requiring IFRS reporting for their listed companies. Although this proposed SEC roadmap involves only publicly traded companies, there is a tremendous “trickle down” effect for smaller privately owned entities. As the U.S. Financial Accounting Standards Board (FASB) feverishly works with the International Accounting Standards Board (IASB) toward convergence of standards, GAAP will be changing to fall more in line with its international counterparts. These changes will affect all entities, not just
the public companies. It’s not all bad news; there is a silver lining. There will be tremendous opportunities for smaller progressive companies that are able to address and implement these standards into their financial reporting processes. These opportunities include expanding business in overseas markets, accessing international credit markets and being poised for potential international mergers and acquisitions. Volatility Index (VIX) In 1993, the Chicago Board Options Exchange (CBOE) introduced the CBOE Volatility Index and it rapidly became the benchmark for stock market volatility. VIX measures market expectations of near term volatility utilizing S&P 500 index option prices and has been dubbed the “investor fear gauge.” Historically, analysts have associated values exceeding 30 with a large degree of volatility and less than 20 with less stressful and complacent market conditions. Recently, we have seen consistently high VIX values greatly exceeding those of normal market conditions. This is certainly not a stand-alone tool for attempting to time or hedge the market, but the VIX is an interesting index to watch and understand. Discriminant Function (DIF) Used by the IRS Although not in the news, this is a very interesting acronym for taxpayers, since it is a mathematical technique used by the Internal Revenue Service (IRS) in scoring income tax returns as to examination potential. The DIF score is based on formulas using audit data collected by the National Research Projects (NRP) initiatives.
Computer-generated DIF scores are generated for returns filed based on taxpayer data compared to expected ranges. The higher the DIF score, the greater the potential is for audit. Currently, individual taxpayers, corporations with less than $10 million in assets, partnerships and trust returns are DIF scored. With resources limited at the IRS, this methodology will likely continue as one of the most cost effective means of targeting returns with a potential for additional tax revenues. Although these business acronyms are unrelated, they directly relate to you and your business and hopefully this quick look behind the letters has been helpful. ´ For more information, contact Karen Benson at McGill, Power, Bell & Associates LLP at kbenson@mpbcpa. com or 814/453-6594.
Karen L. Benson, CPA, PFS, is a partner at the accounting and consulting firm, McGill, Power, Bell & Associates, LLP. Her specializations include tax accounting and planning, pension and welfare benefit plan auditing and consulting, estate and succession planning, and personal financial planning. She is a member of the Pennsylvania Institute of Certified Public Accountants (PICPA) Council, Executive Committee and Federal Tax Committee. Benson is also on the United Way of Erie Advisory Committee and a board member with Community Resources for Independence.
February 2009 > www.mbausa.org > 23
“NWIRC
helped make our Web site a reality.” Anthony and Tom Pellegrino Pellegrino Foods Warren, Pa. www.pellegrinofoods.com
Pellegrino Foods produces and distributes Italian specialty products to retailers all over the country— using the standard distribution channels that you would expect. According to Anthony Pellegrino, “Business was great all along, but we had yet to utilize the Web to expand our distribution even further.” That’s where the NWIRC came in. “The NWIRC conducted a full Web site needs
For more information about how the NWIRC can help you make the most of your Web presence, call us at one of our regional offices: Erie: Jack Watts or BJ Lechner (814) 456-6299 Meadville: Susan Hileman (814) 572-2077 Dubois: Gene Samanka (814) 590-1219 Mercer: Amy Weller (724) 699-5787
assessment and provided us with recommendations for building our online presence. Then they led us through the launch of our new Web site, which has proved to be a very successful distribution channel for us. We couldn’t be happier with the process. Or the results.”
www.nwirc.org
EVENTS > Contact: Karen Torres
Events James Kurre, Ph.D., associate professor of economics at Penn State Erie, the Behrend College, and director of the Economic Research Institute of Erie shares his research, during his annual economic forecast briefing at the Association.
GE Transportation President and CEO Lorenzo Simonelli speaks before a record crowd at the popular Eggs ‘n’ Issues forum in the Founders Room of the Association’s Conference Center.
The Cactus Cuties, who sang at the Association’s 103rd Annual Event in June 2008, recently performed for President Bush and First Lady Laura Bush at the White House during the holiday season.
Dennis, Joseph and Dan Prischak of the Plastek Group in Erie attend a legislative luncheon in the Association’s Founders Room.
Erie Insurance congratulates ACES on 10 years of Pennsylvania Business Week. We’re pleased to be part of helping area students explore how they can learn, earn, grow and succeed.
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February 2009 > www.mbausa.org > 25
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In The Bank
EDITORIAL > by Jerry Kemick
In The Bank: During Times of Change, Pay Attention to Your Retirement Savings In uncertain economic times, many of us find that job change is inevitable. A recent survey by the Employee Benefit Research Institute (EBRI) found that the median job tenure for Americans ages 25 to 34 was fewer than three years. With half of these workers changing jobs even more frequently than every three years, it seems certain that most professionals will change jobs three, five or even 10 or more times throughout their career. Retirement investments often become casualties of a job change, and it’s vital to protect your workplace retirement plan when you move to a new organization or retire. As employees change jobs, their savings in employer-sponsored retirement plans are often withdrawn and spent; statistics say that 45 percent of employees cash out their employer-sponsored plan when they leave a job. This is understandable, especially in trying economic times, yet unfortunate as these individuals are essentially robbing from their retirement savings. It’s important to stay informed, and to inform your employees, about the trap of cashing in retirement savings when moving to another company. Know Your Options When changing jobs, an employee typically has three options regarding their workplace retirement plan, such as a 401(k) or 403(b). They can cash out, roll the money over to an individual retirement account (IRA), or keep the money in an employer’s plan either by leaving it with their former organization’s plan or rolling it over to their new workplace plan.
Most investment advisers would agree that cashing out a retirement plan when making a job change is by far the least advantageous option. Not only will you owe income taxes on the cash out amount, you will also incur a 10-percent penalty for taking the money out early if you are younger than 59. In addition to these penalties, the lost opportunity for growth through compounding can never be recaptured — this is of the utmost concern for older workers with little time to replenish their nest egg. Younger workers also will be adversely affected by opting to cash out their plan. By cashing out on only $5,000 today, a worker expecting to spend another 40 years in the work force could be passing up $80,000 in retirement savings (assuming the spent money would have doubled every eight years). A job change usually makes you eligible to roll over your qualified plan to a traditional IRA or another employer-sponsored plan. A “rollover IRA” will continue to shelter retirement savings from taxes and is likely to offer more investment options than a workplace plan. A direct rollover, where your employer writes a check directly to the institution that will administer the rollover, can prevent your company from withholding 20 percent of your account balance for tax purposes. If you have the amount paid to you instead, that 20 percent will be withheld for federal taxes.
new employer’s plan. Keeping the money in a 401(k) or 403(b) plan can be convenient, yet you may face restrictions on leaving your savings in your old employer’s plan. With either of these options, you will have fewer investment choices than with a rollover IRA. As careers progress, job change often results in opportunities for professional advancement and salary increase, meaning that you can ideally allocate even more of your income toward retirement savings. Always take the responsibility to safeguard what you’ve already contributed at a previous employer by carefully weighing your options and protecting your nest egg whenever you experience a job change. ´ For more information on protecting your retirement savings, contact Jerry Kemick at the Erie General Electric Federal Credit Union at 814/4566231 or jkemick@egefcu.org.
Jerry T. Kemick is Manager of Investment Services at the Erie General Electric Federal Credit Union, having joined the Credit Union in 2003. He is Series 7 licensed and an NASD Registered Representative with CUNA Brokerage Services with a focus on employersponsored retirement plans.
You also can opt to keep the money in an employer’s plan — either by leaving it in your old employer’s plan or by rolling it over to your February 2009 > www.mbausa.org > 27
People Buzz
EDITORIAL > Contact: Karen Torres
LECOM FACULTY MEMBERS PROMOTED
GREAT LAKES AUTOMATION EARNS IMPACT AWARD The owners of Great Lakes Automation in McKean were presented with the Harris Corporation’s prestigious “Impact Award” for 2008, at a recent ceremony in Rochester, New York. The award recognizes Great Lakes’ efforts to achieve 100 percent on-time delivery and 100 percent quality, along with more than $1 million in cost savings, to Harris, a global communications equipment company, over the past year.
Several Lake Erie College of Osteopathic Medicine faculty members received promotions leading into the 2008-09 academic year:
From left: Harris Corporation Commodity Manager Paul Nealon, Great Lakes Automation’s President/Owner Mark Fatica and Vice President of Manufacturing/Owner Bryan Brooks; Harris Lead Buyer Connie Wilson; and Great Lakes Automation CEO/Owner Ken Fisher, in Rochester, New York.
ATG’S DeSIMONE NAMED TO CHEMICAL PROCESSING GROUP American Tinning & Galvanizing in Erie has announced that Rachel DeSimone has been elected as a voting member of the Chemical Processing Task Group of the NADCAP Management Council, during its quarterly global meeting in Japan.
NADCAP (National Aerospace Defense Contractors’ Accreditation Program) is the group responsible for setting the standards for all aspects of aerospace fabrication and manufacturing. DeSimone is a former paralegal who has been certified in Quality Systems Internal Auditing and Root Cause Analysis. Under her leadership, American Tinning & Galvanizing’s Electroplating and Anodizing departments were NADCAP Certified in 2004 and have held the “Supplier Merit” status since 2007.
Promotions in the LECOM College of Medicine include: Michael Bradbury, Ph.D., to Associate Professor of Biochemistry; Randy Kulesza, Ph.D., to associate professor of Anatomy; and Beth Ann Callihan Ricci, D.O., M.S. (Med Ed), to clinical associate professor of Family Medicine/OMM. Promotions in the LECOM School of Pharmacy include: Kim Burns, R.Ph., J.D., to associate professor of Pharmaceutical Science; and Janene Rigelsky, Pharm. D., B.C.P.S., to associate professor of Pharmacy Practice. ´
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