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If you were to start over today, would you continue with the status quo?
If you were to start over today would you choose the same management structure for your organization that you currently have? If your answer is no, are you willing to make significant changes? If you truly aren’t willing to move much beyond the status quo, then this article isn’t for you. However, if you are willing to make big changes, and really take a hard look at how you are structured, then read on.
Reorganization is a common occurrence in many organizations as the goals and personnel of the organization change. They might rearrange a position here and there or shuffle a few responsibilities from one area to the other, and that generally works fine. However, occasionally, it will be useful to dig a bit further into how the organization operates and analyze if there are major changes that need to be made to keep up with our ever-changing world.
“I don’t want to use the word ‘reorganization’.
Reorganization to me is shuffling boxes, moving boxes
around. Transformation means that you’re fundamentally changing the way the organization thinks, the way it
responds, the way it leads. It’s a lot more than just
playing with boxes.”
~Lou Gerstner, former CEO of IBM
Transforming your organization requires more than just taking the time to set a few goals for the upcoming year and then allocating people and assets to accomplish those goals. Transformation necessitates that an organization find time to step outside of the current reality and look at other possibilities and be willing to implement those possibilities if that is the right thing to do.
When might you undertake a potentially transformational look at your organization? There are a few key circumstances that might trigger a transformational planning process. Turnover at the very senior positions of the organization, major changes in industry standards or requirements, dramatic changes in need for your product or service, or new product lines or services are all valid reasons for taking a hard look. Additionally, maybe it’s just been awhile since you examined why you are doing business they way you are doing it.
The first step in the process is building buy-in from those who have control over the operations or governance of the organization. If there is not support at these levels for potential change, you are not going to get very far. The second step is to assure that everyone is on the same page with what the overall goals and mission of the organization are. What is the organization ultimately trying to accomplish and what are they unwilling to compromise to get there? Once those pieces are in place, it is time to look hard at what changes to structure, thinking, and operations need to happen for you to best meet the purpose and goals of the organization. Don’t start from status quo. Really look at the best way to do it and then figure out how you can get there, or at least get close, within the confines that you have.
For instance, we recently worked with a client that had a new CEO. The current organization had operated under the same structure for many years based on the assumption that it could not be changed due to a variety of rules and restrictions that they did not have much control over. There had been constant conflict and service issues that the new CEO was ready to tackle. After some time working with the senior managers to make sure they were all on the same page with the goals of the organization, the team sat down for two full days and worked through a series of possible new structures that would meet organizational goals and could be done within the confines of the current rules and regulations. The product was a streamlined customer experience and a new way of doing business.
Recently, Align had the opportunity to assess our organization and how we want to operate. Over the years, we have continued to grow our consulting and program management services under a traditional top-down structure that was in place when we opened. When our COO retired, and in anticipation of our CEO retiring, it was time to examine more closely what the best structure was for meeting the needs of our clients and employees.
A few years ago, we reorganized into a structure where people directly reported to one person, but took direction from the full management team. As we began the process of looking at how we would operate after the retirement of long-standing leaders, we realized we had organically begun to operate more like a partnership structure. Thus, we put together a structure where the operations would be overseen by a managing director (we are a non-profit corporation) while strategy and leadership of the organization would be overseen by the full management team. This creates a need for more communication and coordination to keep us all moving in the same direction, but it allows all of us to work together better on our clients and provide the very best service possible.
Transformation is a scary thing, but if done correctly, can provide organizations with the opportunity they need to continue to build and grow their organization to meet the needs of their customers and community.
We all want to be liked and respected; however, as a manager that is sometimes easier said than done. The goal is to be to be respected, but being liked does not always come with the territory; and that is ok. As they say, “you try to please everyone, you end up pleasing no one.”
As managers we are accountable to someone else in the organization, or to external stakeholders, for being sure the mission and business objectives are fulfilled. Sometimes that accountability goes counter to the desires of our employees and we have to say “no” or give direction that employees won’t like. Be genial; try not to bark orders; be approachable. But ultimately the work needs to get done effectively and efficiently and it is your responsibility for making sure everyone is on board.
If you oversee a manager that struggles to set clear expectations and then follow-up appropriately because they are afraid of being disliked, it may be time for some coaching. Start by making sure that they understand what the performance expectations are for them and their team and what their role is as a manger. New managers, in particular, frequently struggle to understand the difference between getting the work done themselves and working through others to get the work done effectively. Help them see the impacts that being too accommodating can have. Not only can it have an impact on getting the work done, it can have substantial impacts on the team environment. Other employees know when one employee is not effective and will grow to resent the situation, and the manager, if the issue is not dealt with. Then the manager has an even bigger issue.
The next step is to help them find ways of effectively communicating clear expectations and feedback to their team. This includes both positive and negative feedback. Finally, help the manager understand that poor performance by an employee can negatively impact their own outcomes and work as well, thus causing potential negative impacts to their own job. Demonstrate for them how to effectively communicate, be respectful and still hold people accountable.
We frequently find that new managers or managers who still have significant production responsibility, struggle with the management role of setting expectations, giving proper feedback and confronting issues up to and including termination if necessary. They frequently know something is wrong, but may not be willing to or know how to have the necessary conversations. Sometimes getting them headed in the right direction is as simple as setting expectations for them. It might mean a conversation where you point out that continued negative performance within their team may mean a negative review for them and then coaching on how to fix it.
Ultimately the manager needs to be held accountable for the outcomes of their team. Helping them gain the communication and management skills they need to do so, is up to you.
Many of you are already aware that in May of 2016 the Department of Labor issued a final rule with significant changes to the Fair Labor Standards Act’s (FLSA’s) overtime rules. The new rules were set to take effect on December 1st of this year and many of you have been working diligently to make sure you are in compliance with these rules which would have approximately doubled the salary threshold for exempt employees.
In late November, a federal judge in Texas stepped in and put a halt to the implementation of the new rule by issuing a preliminary injunction. This stems from an emergency motion for preliminary injunction that was filed by 21 states which claimed that the DOL had exceeded its authority by raising the salary threshold too high and by providing automatic adjustments.
This basically means that everything will remain status quo while the court determines if the department really had the authority to make the rule and if the rule is valid.
So what changes for us?
1. While the court works to determine the validity of the rule, employers do not need to make any changes to their payroll structure by the December 1st deadline. There is still a possibility that the courts will allow the rule to move forward, but many things could evolve between now and then. We suggest that you be prepared to implement changes should the change go through, and keep in touch with Align to see how things might be amended with a new administration and the courts.
2. If you have already made changes, you may feel like you need to change back immediately. We suggest holding off for now and leaving your modifications in place. We understand that you may have raised salaries or started paying overtime and may want to revert back to your previous pay practices. However, frequent internal changes to pay policy is going to cause significant morale issues in the workplace and we do not know yet how this will end up. We suggest hanging tight and seeing how things turn out.
3. Continue to follow the changes. It looks like things are going to be interesting for a while, so you will want to stay abreast of what is happening. Here at Align, we will continue to monitor the changes closely and keep you up to date. If you have any questions, we are here to help; feel free to get in touch.
In April of 2017, Phil Van Horn, President and CEO, will be retiring from the Align Team. As Van Horn transitions out, the Align board and management team will be transitioning to a new leadership structure that will use the existing talents of its leadership team to serve its clients. Within this structure, Kathy Cathcart has been asked to serve as the first President and Managing Director, to oversee the day to day operations of the organization and to work closely with Vice Presidents Jody Shields, Bill Benskin and Brittany Ashby to move the organization into the next phase of its development.
In making the announcement, James “Murph” Murphy, President of the Align Board of Directors, said, “We are delighted to work with Ms. Cathcart and the leadership team as they continue to grow the company and bring Align’s outstanding services to more people across the state and region. The Align leadership team is a group of highly competent leaders who each bring strong talents and a wide breadth of experience to the table. The Board is incredibly grateful to Mr. Van Horn for his years of service, during which time he played a significant role in the development and successes of Align.”
Cathcart stated, “The entire leadership team, including our Board, agrees that a change to our management structure will better suit our organization. The Managing Partner vs CEO structure will allow our leadership team to focus more as a group on the services we are providing.” Ms. Cathcart went on to say, “The current plan is for me to serve in the President and Managing Director position for three years and then one of my colleagues will take on that role. I’m very humbled and honored to be named to the position. I’m invigorated knowing that the change, and then rotation, will preserve the stability, continuity and continued growth of Align.”
Align is a nonprofit organization specializing in planning, consulting, training and program management for a wide variety of businesses across all sectors and in multiple industries. Based in Cheyenne, Wyoming, the firm works with clients throughout Wyoming, in western Nebraska and down the Front Range of Colorado.
Come December 1, any employee earning less than $913/week – or $47,476/year – must not be considered exempt from receiving overtime pay if they work more than 40 hours in any given week. Said the other way around, unless an employee makes at least $47,476/year, s/he is not exempt from overtime rules. Period. Bear in mind that even if an employee earns the minimum amount to be considered for exempt status, there are other tests related to the duties of the job. Just earning at least $47,476/year does not automatically make the employee exempt from overtime rules.
The change to the salary test went into effect on May 23, 2016. Check out 29 CFR, Part 541, which you can find online. It’s 162 pages. The executive summary – the “why” of the change – is fascinating. While strong business and human resources lobbies worked hard to prevent this dramatic increase, and hopes to yet get it changed, it’s imperative that your business plans immediately begin to assume this is the new law of the land.
While there are two other “tests” for exempt status, until the employee’s pay is equal to or greater than the new minimum (thus passing the salary level test), the other tests do not matter.
There are some positions that are exempt from following the rule – certain IT personnel (but not all); outside sales employees; teachers and practicing doctors and lawyers.
It’s also possible to include some bonus and incentive pay to create a salary of at least the minimum amount; however, this exception doesn’t apply to all bonuses and incentives; nor may an employer consider benefits when calculating the minimum salary.
The unintended consequences create a longer list than we have space for here; but we can tell you what we think the choices boil down to for each and every employer in the U.S.:
1. Make your currently-exempt employees non-exempt and have them start “punching the clock” (probably a computer keystroke). Of course, that means you’ll have to watch those “little extras” that you have historically asked them to do – and probably that they enjoy doing. But if your key and largely autonomous personnel aren’t making the new minimum and you can’t afford to give them all pay increases, this is the affordable option. Get ready to manage a workplace where employees may resent time keeping; and where you may need to do more tasks yourself in order to avoid paying overtime that you can’t afford.
With this option, there are additional considerations.
If you choose this option you may want to budget for some overtime pay for these formerly-exempt employees. Thus, you aren’t paying the full increase to get them to the required exempt pay level, but they will end up earning extra income because you will be paying overtime rates for work that can’t be completed in a 40-hour work week.
You might also decide to add some staff – at least part time – if that costs less than paying overtime to non-exempt employees.
You could research and decide to use a “hybrid” pay category in which employees are non-exempt but are salaried – that is, they earn the same pay each week regardless of the number of hours worked up to 40. After 40 hours are worked in any given week, the employee must be paid overtime. When converting employees from exempt to non-exempt, this option can provide the flexibility the employees are used to, thus taking some of the sting out of the transition.
2. Give them all the increase to meet the new minimum for exemption from overtime. We suggest this means that employees already making that new minimum should also get a salary increase so that they are receiving comparatively the same difference from the exempt employees that have to be given raises to meet the minimum – but that certainly isn’t a requirement. If you choose this route, get ready to scrutinize your budget to see what you can do without so that you can afford higher pay.
In order to determine what works best for you, there are spreadsheets and long talks in your future. Don’t just jump to a conclusion without doing some calculations, including determining how many more than 40 hours each week your exempt employees work on average. Also consider the culture of your business and the impact to it if you want or need to make currently-exempt employees non-exempt. This will be an exercise in change management, no matter what choices you make.
Much has been discussed about whether nonprofits are exempt from the new rule. The possibilities for claiming exemption haven’t changed from the current rules, under which it is difficult to establish that either the nonprofit itself is exempt or that each employee of the nonprofit is exempt. The primary downfall for most nonprofits is the practice of interstate commerce, which has been broadly defined as using the US mail service, processing payments of any type that originate outside your state of business, and even using the internet for routine business, such as buying supplies. If you’re serving on the board of a nonprofit, or you are an executive director, you must take responsibility for learning more and determining the impact to your budget, your workforce and/or your workflow.
One more piece of news: as it’s published, the new rule mandates an increase in this minimum every three years. So keep an eye on this rule from now on. If you don’t, it could sneak up on you, and again cause a major business disruption.
Leaders in every organization must grapple with their eventual departure. And common to most organizations are the challenges presented when top leaders just aren’t ready to step aside, even when they know the next generation of leadership is eager to take the reins.
“I want to stay busy,” they tell us. “I still have ideas I want to try out here.” “I’m not sure the next generation is really ready yet. Let me work with them just a bit longer.”
Here’s what we ask senior leaders that have reached age 60 to think about: What age were you when you got to take on a senior role in your organization? And how old are the members of your junior leadership group? If they are as old as or older than you were when you got the big break, how long do you think they’ll stand in line waiting for you to be ready? And honestly, do you think you’ll ever really be ready to give up what you love doing? If you work until you keel over at your desk, what will the future look like for this organization you’ve poured your brains and energy into for umpteen years?
Boomer, get tough with yourself. Quietly, to yourself or with your life partner, pick a date a ways in the future – at least a year – and begin to think about what you would do if you were retired as of that date. Look around the workplace and ask yourself what you would miss; and whether you could get that from another source. The “theys” that know these things say that in retirement, people want to continue to feel life has meaning – that there’s a purpose for getting up each morning; activities that energize them; companionship; and an overall sense of identity after they are no longer an employee or an officer or a partner at the firm. So during this “pretend like you’re retiring” time, think about how you’ll fill the gaps left when you leave the workplace you’re currently in.
Just like graduating from high school or college, all possibilities are open to retirees. You can work somewhere else; work part-time or part-year; start your own business; spend more hours volunteering; travel; read books you’ve put off; build a car; or sit on the patio with your feet up if you want to.
Once you mentally try on retirement, and you realize it won’t be all bad, then set a date “for real” and say it out loud to your board, your boss, your colleagues and your family. We’ve invested so much of who we are in what we do that there will surely be a grieving process. That’s going to be true no matter when you retire or how happy you are to do so. You’ve got to go through it sometime. Maybe you should do it now, before that bright talent you’ve been grooming gets bored (or frustrated) and moves on.
If you found a copy of this article on your desk, left there anonymously, don’t be offended. It doesn’t mean they don’t respect and admire you. It just means they want their turn.
As dedicated stewards of our community, Align consultants not only work with a variety of boards of directors, we also serve on many boards ourselves. Through this experience we have encountered occasions where members of governing boards brings their own agendas with them and have a hard time really focusing on the good of the overall organization. There is one situation where this seems to be a larger issue and can really be among the most difficult boards with which to work. These are boards comprised of mostly parents of the organization’s focus customer; including nonprofit childcare centers, private schools, school boards in charter schools or small school districts (generally it is more difficult to only focus on your own kids in large districts), or nonprofit organizations such as boys and girls clubs that have not diversified their boards.
We all know that as parents the most important role we play is raising and advocating for our children. So, when our children participate in schools or programs, it seems natural for some of us to step up and serve on the governance board for the organization. We do so with the expectation that we will help improve the environment for the kids. What we tend to forget is that sometimes fulfilling our governance role can contradict what is best for our individual child and it can be very very hard for a parent to step back and say “yep, this is what we need to do even though it may not be what is in my own best interest.”
It can also be very difficult for parents to differentiate between the roles they play in the school. In Align’s training and development of other nonprofit and public boards, we often talk about board members wearing two hats: board member and volunteer. We help them look at how these are different roles and have different expectations depending on which hat they wear at the moment. Add yet a third role to the mix: the role of parent, and now the board member must think about when she is advocating for her child, serving in a governance role, or volunteering on an operational committee.
Let’s take a look at some examples:
Let’s take a look at each of these.
Ultimately, having a board primarily made up of parents of customers is a very challenging situation for everyone involved. However, it is workable with a bit of planning. If you serve on a board or manage a board made up of parents you need to make sure to have regular and ongoing board training that helps them understand what the role of the governing board is and is not. The board also needs to have ongoing conversations about how they do and do not interact with staff and other parents. You might also consider adding outside board members to the team. Having perspectives from past parents, community members or donors can help bring a much needed balance to the board that is difficult to achieve when it is all parents. Going from all parents to a mix can be a challenge, but it can be done with a little thought and effort. Ultimately, parents want what is best for both their child and the organization. It just requires a little more effort to balance the two.
As a company, we know we’ve hired well when someone on staff is ready and able to fill a supervisory role. Depending on the size and organization of your business, this may even mean being ready to be in charge of the whole thing. When folks are talented and loyal enough to deserve such promotions, it’s important they be given the chance to step up.
There’s a down side to promoting from within: it can be difficult in varying degrees for newly-promoted employees to figure out how to relate to and interact with the people that were once their peers. Each of the individuals you promote will handle it differently, but don’t forget to use the opportunity to coach them on some fundamentals. Even the best raw talent for managers and leaders need coaching before sending them on their way. You believe in careful and thorough onboarding for a new hire to ensure they have all the tools they need for success. The same principle applies to onboarding a newly-promoted manager.
Impress upon them in no uncertain terms that the relationship dynamics will change – that can’t be avoided. They’ve moved from “one of the team” to coach. There may be resentment among the team if others thought they were ready or if they don’t think the “new boss” is ready. There may be winks and nods from employees thinking the new boss will let them slide, no matter what they do. There may be open or subtle resistance to the directions of the new boss.
Ask the newly-promoted employee how they’d like to approach the newly-defined relationships and listen for any potential missteps; and ask them to talk through how their words and actions will work out. Give them a heads up on all that can go well and all that can go poorly. Tell them how you navigated your first promotion; suggest they talk with others -inside and outside your organization – about how they did it.
In short, remember that, “Congratulations! Go get ’em!” is not be enough of a pep talk to enable your new leader to succeed.
Who doesn’t like Rosabeth Moss Kanter as a management coach? She’s reasoned and realistic. A few years ago we began to use her “3 Ms of Employee Engagement” to help ourselves and our clients understand what to give to employees to help them feel they are valued and to let them value the work they do.
Here’s Ms. Kanter’s recap of the topic:
“I summarize these keys to strong work motivation in three Ms — mastery, membership, and meaning. Money is a distant fourth. Money can even be an irritant if compensation is not adequate or fair, and compensation runs out of steam quickly as a source of sustained performance. Instead, people happy in their work are often found in mission-driven organizations where people feel they have positive impact on social needs. As my HBS colleague Michael Norton shows in his book Happy Money, giving to others boosts happiness.” [Emphasis ours.]
She briefly defines the Three Ms this way:
Mastery: Help people develop deep skills.
Membership: Create community by honoring individuality.
Meaning: Repeat and reinforce a larger purpose.
Maybe the simple way to describe what we mean by showing employees they are valued is to tell you the best way to make sure they don’t think they are. If you want to make sure employees feel undervalued, never listen to their ideas; tell them exactly how to do every step of the job; keep them isolated from their coworkers by telling them everything has to go through a manager; and don’t talk to them about the overarching mission of the company and how their specific work fits into it.
To engage them year-round (and not just on Employee Appreciation Day), help them believe they are a master at what they do – and that the company is a master in your field. Get excited about their ideas for how to do the work and help them iron out the details. Have them train new employees on how to do the tasks.
To reinforce membership, host team activities that the employees – not management – design. Brand your business to service – service to clients and customers; and service to the community. Let the employees use some time each month to support charitable purposes. Create opportunities for the team as a whole to participate in a community service project. But do remember there actually is an “I” in team: it stands for individual. Don’t subsume all your employees into a giant collective that leaves each person feeling swallowed up and unimportant.
To create a sense of meaning for your employees, talk often and candidly about the mission of your organization and how it is being accomplished. And ask them to talk about what they’ve done to advance the mission. If you sell carpet, talk about how flooring improves the world one business or one household at a time. If you are a nonprofit that raises money specifically to give to others in need, let them talk about how awesome – and sometimes frustrating – that is. If you run a financial institution, remind them the overarching goal is the safety of each customer’s funds and, indeed, the overall economic fitness of your community.
That’s a long-winded way of saying we love Employee Appreciation Day. Of course, at Align it means food and games. But it can’t just be one day each year. You have to create a culture of showing employees they are valued.