Manufacturers Alliance E-Newsletter

April, 2008

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Article Index

Book Review: First, Break All The Rules*
Article by: John Hehre
How effective are the managers in your organization? How effective are you as a manager? The Gallup organization set out to answer these questions based on twenty five years of research and interviews with over a million employees and eighty thousand managers.

Legal Corner: Protecting Company Employee Confidential Information
Article by: Gregory Peters
Many employers are concerned about disclosure and misuse of their own and their employees' confidential information. Many third parties ask employers for data, and sometimes employees or others disclose, take or use employer data inappropriately.

Beyond the Paycheck: Evaluating Pre-Tax Benefits
Article by: John Lawson
These days, manufacturers aren't just competing for business. They're also competing for employees. The high cost of turnover coupled with a small pool of qualified workers is forcing some companies to get creative and offer incentives that go beyond the paycheck.

MN Economic Outlook
Article by: Dr. Ernest Goss
For the month of April 2008, reported May 1, 2008. For the first time since October of last year, Minnesota's Business Conditions Index moved higher.

Book Review: First, Break All The Rules*

How effective are the managers in your organization? How effective are you as a manager? The Gallup organization set out to answer these questions based on twenty five years of research and interviews with over a million employees and eighty thousand managers.

Combining that information with typical measures of success like sales, profitability, customer satisfaction and employee turnover, they were able to identify specific characteristics of great managers. The project went on to develop and explore the details on how this information can be used and applied in any organization.

The book begins with a discussion of twelve questions that have a very strong correlation with business success. These questions are focused on the factors that affect an organization's ability to attract and retain the most talented employees. Next, the book connects the performance of great managers with those twelve questions. Several important points, including some that contradict conventional wisdom, emerged. For example, many organizations expect their managers to treat all of their employees the same way. Given the varied nature of people, this is rarely likely to produce outstanding results. People are different, with different motivations and should be managed as individuals. Another example is the traditional focus on building up those areas that are lacking, instead of focusing on a person's strengths. The authors contend that is at best a waste of time and at worst, destructive.

The main portion of the book is spent defining four concepts or "keys" that are common to great management. They are "select for talent," "define the right outcomes," "focus on strengths," and "find the right fit." Each of these keys is developed in detail with examples and suggestions on how to apply them. The book concludes with additional practical suggestions on using the four keys.

The best business books almost all have some basis in actual research and this one is no exception. Based on extensive empirical evidence, this book truly defines management excellence in a way that is instructive and practical. Ideas are frequently illustrated with interesting stories. People need great managers - in fact they will leave otherwise great jobs and companies because of bad managers, and will stay in difficult situations because of great managers. The book is well organized and well written; anyone in management or aspiring to management should read it.

John Hehre is a business advisor and member of Platinum Group in Eden Prairie: 952.829.5700; john@pllc.com; www.theplatinumgroup.com.

Legal Corner: Protecting Company Employee Confidential Information

Many employers are concerned about disclosure and misuse of their own and their employees' confidential information. Many third parties ask employers for data, and sometimes employees or others disclose, take or use employer data inappropriately.

This data can be misused to the detriment of the employer's business through unfair competition, and employees can be subject to identity theft and other abuse of their data. Employers can also be liable to employees for inappropriate access to or disclosure of personal employee information.

The following are some recommendations to minimize the risk to your business of avoidable and expensive information disclosures:

Treat confidential information as confidential. Stamp it "confidential," limit access, use and distribution internally, lock the files, and follow the "need to know" principle in determining who gets the information.

Have a good confidentiality policy in your employee handbook and get employees, independent contractors, consultants and others with data access to sign off on it.

External disclosures of confidential information should be restricted to your own attorneys, insurers and others who genuinely need access.

Use confidentiality agreements, expectation statements or court orders when disclosure is necessary with court and agency proceedings and in business negotiations.

Don't give confidential information to government agencies (which are required to disclose most some data to third parties) unless you are obligated (or have a good business reason) to do so, and in those cases, follow #1 and #4 above.

When you must submit business and employee information to government regulators, public contracting officers, clients or vendors, submit only what you must and follow #1 and #4 above.

Don't give unions who don't represent your employees any information, since you have no obligation to do so.

Remind terminating employees in writing of your confidentiality policy, and of your confidentiality, non-solicitation or non-competition agreement (if any), and recover any information and documents, including computer data, at that time.

Promptly investigate any situation in which confidential information of the business or your employees is accessed, disclosed or used inappropriately (whether internally or externally), and respond appropriately. Failure to do so may waive any ability you have to protect that information in the future, as well as risk liability.

Careful preparation to protect your business's confidential information, and that of your employees, can help you protect your business from unfair competition and liability, and your employees from identity theft and unwanted solicitations. You can and should take steps to protect your business and your employees.

Gregory L. Peters, attorney with Seaton, Beck & Peters, P.A., works with employment counseling, employment litigation, labor arbitration, union organizing and labor negotiations. Reach him at (952) 921-4607.

Beyond the Paycheck: Evaluating Pre-Tax Benefits

These days, manufacturers aren't just competing for business. They're also competing for employees. The high cost of turnover coupled with a small pool of qualified workers is forcing some companies to get creative and offer incentives that go beyond the paycheck.

Pre-tax benefits are attractive to employees because they can save money immediately on rising costs, such as healthcare, childcare, tuition payments or insurance premiums. With pre-tax benefits, a portion of an employee's earnings is withheld before taxes, and in some cases, the employee can be reimbursed for certain expenses tax-free.

In addition to saving employees money, pre-tax benefits also save the company money. In most cases, companies do not pay employment taxes, such as FICA, on that compensation. Few manufacturers offer pre-tax benefits, which means they can be a competitive advantage when hiring.

Options:

Health Saving Account (HSA)
To curb rising healthcare costs, many companies are turning to a high-deductible medical plan coupled with a health savings account (HSA). It works like this: Employees switch to a high-deductible medical plan. Then they withhold the money they save in premiums and put it into an HSA account, which can be used to pay for a wide variety of medical and dental expenses tax free.

The benefit? Employees avoid paying taxes on their contributions, and employers can avoid paying FICA taxes on any contributions or matches they make. Unlike a traditional medical care reimbursement account, any unused dollars at the end of the year roll over to the next year.
Tuition and Dependent Care
Aside from healthcare, an employee's next largest expenses might be tuition or childcare. Some employers choose to help offset these costs by reimbursing a percentage or a certain dollar amount.

The benefit? Up to a certain amount, neither the company nor the employee will pay any taxes on the money used for these expenses. Tuition reimbursement increases the number of highly-skilled workers employed at the company. Dependent care reimbursement is a plus that employees won't find at most other companies.

Life, Disability and Long-Term Care Insurance
Insurance can bring peace of mind to employees. It also takes the hassle away from employees finding insurance on their own.

The benefit? Insurance is relatively inexpensive for a company to offer because, in most cases, it is deductible for the business. In addition, it can be relatively inexpensive for employees to purchase because they receive a group rate through their employer and can avoid paying taxes on the premiums that are paid by their employer.

Deciding which pre-tax benefits to offer largely depends on the overall makeup of your workforce. Younger workers in their 20s and 30s are more likely to appreciate a company that covers a portion of their childcare or tuition expenses. However, workers in their 40s and 50s may be more interested in life, disability, or long-term health care insurance options.

John Lawson is a shareholder with Schechter Dokken Kanter. He can be reached at (612) 332-9350 or jlawson@sdkcpa.com.

MN Economic Outlook

For the month of April 2008, reported May 1, 2008. For the first time since October of last year, Minnesota's Business Conditions Index moved higher.

The index, a leading economic indicator from a survey of supply managers in the state, rocketed to 55.1, its highest level since September 2007 and up from 44.8 in March.

Components of the overall index for April were new orders at 57.3, production at 57.2, delivery lead time at 61.2, inventories at 43.6, and employment at 50.0. "Minnesota's economy has more closely mirrored the national economy than other states in the region. Even with the significant downturn in residential construction in the state, Minnesota's unemployment rate has risen by only 0.2 percent over the past year. I expect the state's unemployment rate to stabilize at its current level until the end of the summer, when it will begin to move lower. For April, growth in Minnesota's durable goods sector, except for transportation equipment and parts manufacturers, more than offset weakness among nondurable goods producers such as food processors," said Goss.

Dr. Ernest Goss of Creighton University, used the same methodology as The National Association of Purchasing Management to compile this information. The overall index ranges between 0 percent and 100 percent. An index number greater than 50 percent indicates an expansionary economy, and an index under 50 percent forecast a sluggish economy, for the next three to six months.

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