Fred Steiner

Monday, 22 July 2002 10:09



Move over, specialists.

By Fred Steiner

If it seems that recruiting people with high-profile executive talent or technical skills is hard now, wait a few years. A wide range of factors are squeezing the supply of top talent and there is no end to it in sight.

Yet there are still opportunities. The near-wholesale jettisoning of older workers in many industries presents a boon for small businesses willing to think creatively. Older workers and executives offer an affordable alternative to trying to outbid larger competitors for younger workers.

"Small businesses in particular need to revisit the older worker, the retired worker, and people over 50 have to rethink the level on which they wish to work," suggests William A. Hite, president of Hite Executive Search in Cleveland.

At the same time, companies will need to innovate to hang on to their own executive and technical talent in the face of the restricted stock options, long-term incentive plans and other costly goodies that the Fortune 500 now offer.

"And they're reaching down further-it's not just for the senior-most execs," notes Timothy Smith, vice president at Christian & Timbers, executive search consultants in Beachwood. "They are reaching down to a lower level so that people can feel that they are in the game and they have upside. It's the equity participation now that's a real pull."

The recruiting process also becomes more complex as the two-career family continues to develop. Many top talents have spouses with equally prestigious careers, and family considerations are playing bigger roles in job-change decisions. Recruiters now have to sell entire families to get their fee.

The future does seem to belong to generalists. Executives with specific industry backgrounds will continue to take a backseat to those with wide-ranging business skills and a savvy track record.

"They used to refer to a person that could wear a lot of hats," notes Smith. "[Now] I would describe these people as people who think more like owners."

In the Midwest, the large number of conservative companies has meant a continued reliance on recruitment within an industry or skill set, Hite says. But like so many trends that move from west to east, that will probably give way over the next few years.

Executives, under pressure to compete and innovate, will keep spending more time and money to increase their companies' "mindshare" vis-À-vis the competition. This will make for many happy returns for retained search firms.

Worker shortages, particularly in high-tech fields, will continue to drive industries to the politically explosive decision of importing skilled workers or exporting jobs. Ever-growing "Silicon Valleys" in India, China and Israel are proof of the trend.

Monday, 22 July 2002 10:09



There's always more paperwork.

By Fred Steiner

The Internet and other communications technologies will have the same effect on the rock-steady practice of payroll as they're having on such areas as banking and retail sales. Your employees-think of them as customers-will do more of the detail work regarding their own paychecks. And if you play your cards right, they'll thank you for it.

A disproportionate amount of time in the human-resources department is spent on routine and repetitive paperwork such as changing addresses and revising W-4 forms.

Onsite automation-intranets and telephone touchpad menus-are being used by the largest companies to let workers make their own information changes. These innovations will trickle down to smaller businesses.

As direct-deposit payroll software drops in price, electronic commerce is becoming an option for the HR unit of businesses of any size. The main cost issues now are the processing fees

charged by some banks to smaller account holders. As bank mergers produce larger and fewer players, the range of fees will likely narrow.

As for innovations in the discipline of payroll, think incremental at best.

"We are sort of a reactionary type of department in payroll," observes John Nasea, C.P.P., president of Paytime in Solon.

On the government front, the usual dichotomy of increased intervention and promises of reform should offer all kinds of change and very little relief in the blizzard of paperwork required when you have employees.

One change that actually is coming, after more than one delay, is automated filing with the Electronic Federal Tax Payment System. Future notions in D.C. circles involve mandatory electronic filing of everything from quarterly reconciliations (Form 941) to W-2s.

The main obstacle to many of these initiatives is the handwritten signature. So the day may be approaching when at least one computer in every office is equipped with the type of electronic signature technology used by UPS.

Tax reform continues to be a Congressional football and even minor successes like the Taxpayer Relief Act of 1997 end up with hidden minutiae that adds more filing work for business. In the end, there may be revision, but simplification isn't likely.

Notes Nasea: "They give and they take."

Monday, 22 July 2002 10:07

On Capitol Hill

Running a growing business is never a simple proposition, and the ever-changing world of laws, regulations and requirements handed down from the federal government doesn’t always help.

Talk on the Hill has again begun to gravitate toward tax cuts. Specific issues expected to become future legislation include a repeal of the estate tax and a bill sponsored by House Speaker Newt Gingrich (R-GA) to reduce the capital gains tax from 20 percent to 15 percent. The latter should be on the floor by mid-July. Still, the mood in Washington remains contradictory.

“Favorable but uneducated,” is the way the general climate is described by Karen Kerrigan, president of the Small Business Survival Committee. “You do have a lot of good rhetoric coming from the Hill about removing the obstacles to competitiveness and survival—and there has been incremental movement on legislation that has been helpful. But then there are these big sweeping pieces of legislation where the fallout eradicates whatever gains were there from that earlier legislation. It’s like one big step forward and then a couple of steps backward.”

With that in mind, here is a brief overview of recent legislation that should be of interest to employers and employees alike.

Product Liability Reform Act of 1998 (S.648 - Sen. Gorton, R-WA) - An ambitious bill establishing the following potential reforms: a uniform standard of “clear and convincing evidence” in regard to punitive damages creates an 18-year limit from the date of purchase for workplace durable goods after which the manufacturer can not be sued; a provision for reduction of claimant awards for misuse or alteration; and a complete defense for manufacturers if the claimant is shown to have been under the influence of alcohol or drugs and more than 50 percent responsible for the harm. The bill is scheduled to come to the floor for debate in July and looks favorable for passage.

Paycheck Protection Act (S.1663 - Sen. Lott, R-MS, H.2608 - Rep. Schaffer, R-CO) - Essentially an amendment to the Federal Election Campaign Act, both bills target the notion of dues, fees or payments from employees or stockholders being used for political activities without prior written consent of the individual. Both bills mention banks and corporations, but primarily are aimed at unions, based on the well-known perception that dues are often used for political purposes not in line with the wishes of the rank and file. The bills would forbid that practice. The bills came to a vote on the floor of both houses and failed in each one. Expect the issue to be brought up again, though not before the November elections.

Truth In Employment Act of 1997 (HR.758 - Rep. Fawell, R-IL, S.328 - Sen. Hutchinson, R-AR) - Both bills intend to amend the National Labor Relations Act to prevent requiring employers to employ persons with ulterior motives other than primary employment, or so-called “salting.” The bills are part of a four-pronged reform (see next). The House version passed in a nasty labor battle, 202 to 200, however the Senate version is still being lobbied and has not yet come to a vote.

Fairness for Small Business and Employees Act of 1998 (HR.3246 - Rep. Goodling R-PA, S.2085 - Sen. Hutchinson, R-AR) - The key provision here for small business regards litigation with the NLRB. This bill requires that the NLRB must reimburse attorney and administrative costs if the prevailing parties are employers or labor organizations with fewer than 100 employees and a net worth of no more than $1.4 million. It is thought that this will lead to more judicious NLRB filings. The House version passed in the aforementioned four-part action. The Senate version has been held at the desk but will likely be added as an amendment to another bill sometime this session.

OSHA Reform Act of 1997 (HR.1162 - Rep. Hefley, R-CO) - Designed to overhaul much of the current OSHA mission by requiring OSHA to, among other things: conduct continuing economic analysis of costs of each standard; establish small business assistance and training programs to create cooperative workplace safety and to use 25 percent of its appropriations for such; and to repeal provisions for current methods of inspection, recordkeeping, review, enforcement and penalties. Both houses have passed a minor version of the bill that specifically states that if a small business fixes its OSHA violation it will not be subject to punitive actions. The White House has expressed no interest in opposing this adjustment to OSHA policy.

In addition to this legislation, small business lobbies are watching a wide range of possible amendments that could be attached to other bills and piggyback their way into law. Among those most often cited as a threat to small business are two potential changes to the Family and Medical Leave Act of 1993. One bill seeks to lower the threshold of the current act so it applies to private sector employers with more than 25 employees as opposed to the current 50 employees (S.183 IS - Sen. Dodd, D-CT), while a second bill (S.280 - Sen. Murray, D-WA) seeks to include up to 24 hours of education or family literacy training to the areas of leave covered by the act.

Also of concern is the repeated interest in raising the minimum wage championed by Sen. Kennedy (D-MA) and the so-called “Blacklisting Regulations” supported by Vice President Gore, which seek to make companies without a pristine labor law record ineligible to receive federal contracts. The regulations have been delayed for nearly 18 months due to political lobbying both for and against them.