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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.
The history of the workplace and how it’s managed is fascinating. Since the beginning of free enterprise, in particular, management theories have increasingly favored participation by employees at all levels of the organization.
Think of employees – all employees – as decision makers. Outside of the workplace, they make decisions on an ongoing basis. Where to live, what type of car to buy, what to eat, with whom to form relationships and how to raise our children are just a few of the high-level decisions we make. So then if an employee inside a workplace is told to “Just do what I tell you and how I tell you to do it,” they’re not going to feel management thinks they are smart and capable.
Many first-time managers make this rookie error. Excited about the opportunity to be in charge, they tend to over-manage (or micromanage) and it works against them. The best ideas, in fact, generally come from the folks actually performing the tasks associated with the job. While the first-time manager may have been mulling better ways to do things for a long time and therefore looks forward to the new opportunity to “bark orders,” it won’t be effective in the long run.
Chances are if a new manager – or any manager – feels inclined to demand “my way or the highway,” it’s because s/he didn’t feel listened to as a member of the staff. The best way for that new manager to make sure he is well-respected and looked up to, then, is for him to break the cycle of telling instead of listening to and supporting others’ ideas.
Don’t get us wrong: listening and supporting doesn’t always mean accepting others’ ideas and running forward with them. The manager is accountable for the overall business plan and therefore has to make sure every idea is vetted from all angles. If it’s accepted, then implementation has to be thoughtful and detailed, bringing along all the folks that weren’t involved in the decision at the beginning.
The point is that if you’re still running your organization with that strictly top-down management theory, you’re about 70 years out of date. Try to loosen the reins and find ways to dialog with employees so that all great ideas – management and non-management – are on the table and open to discussion.
Whether it’s an all-company gathering, a department meeting or even a one-to-one conversation with the boss, most of us head in to employee meetings with a combined sense of obligation, skepticism, trepidation and boredom; and an overall belief this will be yet another waste of good work time. The problem is not the attendees’ attitudes. The problem is that meeting organizers and presenters – and that’s typically company leadership – don’t take time to plan meaningful gatherings.
Leaders have to shake it up. They’ve got to match their presentations with what we’ve come to expect in the world – a fast pace, multi-media and a chance to interact. If you’re a leader that has no idea how to do that – and in fact, even if you do know how to do that – one of the ways to refresh and invigorate meetings is to include non-management staff members in planning and presenting. Ask them what they’d like to know more about and ask them how they would present it so that it’s interesting, meaningful and understandable. It’s even a good idea to let those folks make some of the presentations. We don’t always have to hear the CFO give the financial highlights. Lots of your team members can read financial statements. Have one of them talk with the CFO to glean what’s going on and then let the employee present it in the manner she wants to and highlighting what she thinks her peers will find important. If she wants to create a rap and “spit the word,” we challenge you to let her. In fact, Leaders, we challenge you to join her!
And let’s go ahead and slay another sacred cow. Maybe there is no financial report or state of the organization report. Those things can be written and read; or discussed by a direct supervisor with his staff members (which would like be a more interactive exchange anyway). At a large gathering, instead of droning on about the company’s quarterly results, or the latest capital campaign, use the time for building a collaborative team. Do team activities – fun and silly; or meaningful learning experiences – it doesn’t matter. Show them – let them experience – working together as a group to complete a task that isn’t related to the work they do at their desks. Shake up the teams, by the way – don’t make it “department wars,” but get folks from different departments working together on a team. (“Department wars” are okay for endeavors like fundraising when they’re competing to see who can raise the most money. For the most part, however, we strive to break down any walls between departments.)
If you don’t want to be silly or conduct non-work related activities (and we don’t know why you wouldn’t), then have the entire office work on rearticulating your vision, mission, values and corporate culture… but let them have a creative, innovative, fun time doing it. Have them make a three-dimensional poster that represents a value; or have them write a short story or scene to act out about the mission.
Bottom line: we all engage better if we feel that the meeting organizers wants us to be part of the meeting. Nobody wants to be lectured, regardless of age, rank, gender or any other criterion of distinction. All team members have brains; and, when encouraged, most are willing to participate.
The era of complete vertical integration is rapidly dissolving. In the last decade of the prior century, growing companies acquired, built and otherwise owned each aspect from production to sales. Today, from manufacturing to marketing, leadership teams have discovered that costs of space, human resources, capital and opportunity can be reduced and consumer prices kept more competitive by outsourcing functions and skills that heretofore may have all been in-house.
Determining what and when to outsource requires an objective analysis of the all-in costs of performing a function totally in-house compared to the price of the same deliverables from an external source. A simple example is an organization’s large printing functions—quarterly reports, annual reports, newsletters and the like. Compare the costs of owning or leasing the printing equipment, maintenance, space, paper stock, as well as the human costs in time, salary, benefits, and—what is most often overlooked—what critical functions are not being done while someone is standing by the printer collating and binding. Add in the time cost of equipment breakdowns and the answer of whether to outsource or not begins to gel.
The same process can be applied to virtually any function within an organization including elements of human resources management such as payroll and benefits; website updates; employee training and development; and bookkeeping. There is one exception, however: accountability. The buck still stops with the leadership of the organization. We don’t want missed deadlines or inaccurate journal entries. It is incumbent upon the decision makers to clearly define work-quality standards and hold the vendor’s feet to the fire.
This is not to say that outsourcing is always the most cost beneficial answer. In the printing example above, if an organization has, as one of its key mission-based functions, the production of written reports on a daily basis, the cost benefit may favor an internal print shop.
A final word about outsourcing. In general, the decision to outsource should be an “all-or-not-at-all, we’ll-always-stick-to-the-policy” decision. “Sometimes” negates any cost benefit whether you retain the function in-house or outsource it. In fact, the “sometimes” approach unquestionably adds significant and needless costs.