The who, when, why and how of machinery and equipment appraisals

Theresa Shimansky, manager, Cendrowski Corporate Advisors LLC

Theresa Shimansky, manager, Cendrowski Corporate Advisors LLC

Executives often wonder why they need to have machinery and equipment appraised, but these appraisals are important components of business today.

“Typically, appraisals are performed because of buy/sell agreements, mergers and acquisitions, business valuations, partnership dissolutions, insurance, bankruptcy, property taxes, financing and Small Business Administration lending. Other reasons would be divorce, estate planning or other estate issues, retirement planning, cost-segregation analysis and litigation support,” says Theresa Shimansky, a manager at Cendrowski Corporate Advisors LLC.

Smart Business spoke with Shimansky about how machinery and equipment appraisals are typically handled.

What is the useful life of an appraisal?

Generally, an appraisal is good for three years, but it depends on the current market, economy and industry. An appraisal’s useful life also depends on the availability of the type of equipment being appraised. The value can drastically change with economic factors such as supply and demand.

If buying or selling a business, is a machinery and equipment appraisal beneficial?

Absolutely. Buyers want to know the breakdown between real and personal property. This is a cost segregation analysis or study. Appraisals are completed for many reasons, but most importantly for tax reasons — breaking the assets into different categories for depreciation purposes.

What information and documentation will an appraiser require?

The appraiser will need to know the manufacturer, model, serial number and age of the equipment. This information typically can be found on a plate attached to the equipment. Mostly, it will be visible; however, sometimes locating this plate can be tricky. For example, restaurant equipment will occasionally have a kick plate covering the information plate. Machines may have the plate attached inside a compartment or near the motor, while others may not have one at all. When a machine does not have a plate, it is helpful if the owner has the original manual or sales invoice that should list most of the information.

The appraiser also needs to know about the condition, special features and upgrades. Important questions to keep in mind are:

  • Does it work well?
  • Has it had any major repairs or is it in need of any?
  • Is it maintained according to manufacturer specifications? The appraiser may request to see maintenance logs or ask about special attachments or upgrades.
  • Is its software up to date?

An appraiser will evaluate and photograph each piece of equipment. When this is not possible, appraisers will note in the report which equipment could not be visually inspected and explain they are relying on the representations of similar machines’ condition and other pertinent information.

What is a ‘qualified appraisal’?

A ‘qualified appraisal’ is clearly defined in Internal Revenue Service (IRS) Publication 561, where the appraisal:

  • Is made, signed and dated by a ‘qualified appraiser’ in accordance with appraisal standards.
  • Does not involve a prohibited appraisal fee.
  • Includes, but is not limited to, a description of property, condition, date of value, terms of the engagement agreement, qualifications of the appraiser, method used to determine value and basis for value.

Generally, an appraisal is considered qualified if it follows the Uniform Standards of Professional Appraisal Practice, developed by the Appraisal Standards Board of the Appraisal Foundation.

What should you look for in an appraiser?

When searching for an appraiser, only use a ‘qualified appraiser.’ This is an individual, as defined by the IRS, who has earned an appraisal designation from a recognized professional organization for demonstrating competency in valuating property. Also, qualified appraisers regularly prepare appraisals for which they are compensated, and demonstrate verifiable education and experience in valuating the type of property being appraised.

Theresa Shimansky is a manager at Cendrowski Corporate Advisors LLC. Reach her at (866) 717-1607 or [email protected]

Website: For additional information, please visit our website at www.cca-advisors.com.

Insights Accounting is brought to you by Cendrowski Corporate Advisors LLC

How to find a VoIP provider that fits your business

Alex Desberg, Sales and Marketing Director, Ohio.net

Alex Desberg, Sales and Marketing Director, Ohio.net

There are many Voice over Internet Protocol (VoIP) providers out there, some large and some small. In the case of telecommunications, bigger is not necessarily better. Small providers tend to be more nimble and are able to customize and innovate in order to help their clients grow.

Also, independent VoIP providers can lend a personal touch, says Alex Desberg, sales and marketing director at Ohio.net.

“Most small and medium-sized businesses want to work with a local company. Companies don’t want offshore support,” he says. “They want someone who is in their backyard. Someone who is in the same time zone and easy to relate to.”

Smart Business spoke with Desberg about changes in the VoIP landscape, the differences between providers, and the importance of customer service and support.

How has the VoIP landscape changed in recent years?

In recent years, the marketplace has changed. AT&T and some of the other big players are now offering VoIP services. While the corporate giants have marketing dollars behind them to push their products, it is the smaller, more flexible companies who are pioneering new technologies.

Companies looking for an apples-to-apples replacement for traditional phone systems might be satisfied with a traditional provider.

However, business leaders that want to make a change to VoIP typically prefer working with agile companies that are trailblazers and provide service at the local level.

What are some of the differences between VoIP providers?

Companies interested in VoIP services have two options: They can either choose a big provider with pre-set packages or work with a small, innovative company that is willing to invent solutions from scratch.

For example, many organizations want to integrate their customer relationship management system with their phone system. Unless you work with a provider willing to break the mold and try new technology, it’s likely that you’ll receive a one-size-fits-all model that might or might not be a good fit.

How important is customer service and support?

The service standpoint is what truly makes VoIP providers stand out. Either they are readily available, hands-on and willing to help navigate technological challenges, or they take the stance of expecting a business to be the one that makes accommodations, fitting the company’s telecommunications needs into inflexible packages.

The majority of small and midsize businesses have a telephone system that they set up years ago and haven’t made any changes to since. Such a system might work fine and it serves their purposes — they don’t need anything special.

However, there are other organizations that want to streamline their data and communications in order to be more efficient. That’s when it’s important to have a more dynamic provider that is pushing the envelope and striving to offer new services.

How should a business go about evaluating its telecommunication needs?

Businesses tend to have an IT manager or communications director put together an annual plan for servers, software, licensing, etc., but telecommunications companies will often wait until the contract is set to expire or there are budget cuts.

Under this scenario there is not enough time to investigate what services are out there that might be beneficial. Businesses tend to shoehorn themselves into what they find at the last minute within the budget, rather than figuring out what makes the most sense from an operational perspective, which may not be the best way to approach your telecommunication needs.

Alex Desberg is sales and marketing director at Ohio.net. Reach him at [email protected]

To find out more about Ohio.net’s VoIP solutions, visit www.ohio.net.

Insights Telecommunications is brought to you by Ohio.net

How to fix a typo or grammatical error in a contract

Rebekah Parker, associate, Novack and Macey LLP

Rebekah Parker, associate, Novack and Macey LLP

Everyone makes mistakes, including lawyers and businesspeople drafting contracts. Usually, a simple typographical or grammatical mistake will not change the meaning of the agreement in a significant way — but what if it does?

“While Illinois courts protect the sanctity of the written word, they also recognize that people make mistakes, and they are willing to reform or rewrite the contract to conform to the parties’ agreement in certain circumstances,” says Rebekah Parker, an associate at Novack and Macey LLP.

Smart Business spoke with Parker about what to do when writing fails to reflect the parties’ agreement.

What is contract reformation?

Contract reformation is an equitable remedy that changes the language of a contract so that it conforms to the agreement actually reached by the parties but not accurately reduced to writing because of a mistake. Contract reformation cannot be used to change the terms of the deal; rather, it merely fixes a mistake so that the writing better expresses the bargain the parties reached.

Can any mistake be reformed?

No. Reformation is most appropriate for scrivener’s or drafting errors, such as erroneous numerical figures, incorrect dates or errant commas that change the meaning of a sentence.

If all contracting parties agree that a mistake has been made, they may — but do not have to — seek court intervention to reform their agreement. Or, they can voluntarily reform the contract themselves. This can be accomplished by, among other things, correcting the language on the original contract and having each party initial the revision; executing a rider to the agreement that identifies and corrects the mistake; or executing a new version of the contract that clearly states that it is intended to reform the parties’ prior agreement.

Courts encourage voluntary reformation and will usually enforce the reformed agreement should a dispute later arise.

What if the parties disagree about whether a mistake was made?

If a mistake advantages one party and disadvantages the other, it is not unusual for them to disagree as to whether a mistake was made. The disadvantaged party may need to bring a legal action for reformation, which can be combined with a claim for breach of contract — even if the breach of contract claim depends upon the contract being reformed. It is important that such a claim be brought as soon as possible after the mistake is discovered, because laches — unreasonable delay accompanied by prejudice — is a common defense to reformation.

The party seeking reformation bears the burden of proof, and it is a heavy one. In Illinois, there is a presumption that a written instrument reflects the true intention of the parties. Overcoming that presumption generally requires ‘clear and convincing evidence’ — a higher burden than the usual preponderance of the evidence standard.
Even if the party seeking to reform a contract fails to meet its heavy burden, it can still succeed on its breach of contract claim if the court finds the agreement to be ambiguous. In that case, the parties can introduce extrinsic evidence of their actual intent, and the court will interpret, rather than reform, the contract following ordinary canons of contract interpretation and applying ordinary standards of proof.

Do you have any advice for avoiding drafting errors in the first place?

Given the difficulty in reforming written contracts, it is vital to ensure that important contracts are mistake-free. Most drafting errors can be avoided by following these three tips: First, be cautious when creating a new contract from an old template. Sometimes stock language conflicts with a term agreed to by the parties.

Second, always have someone review the final draft, such as an outside counsel or businessperson, especially one who was involved in negotiating the deal or whose area of business is impacted by it.

Third, beware of grammar. Several headline-grabbing contract disasters involve something as simple as a misplaced comma. Most people do not know how to use commas properly, so keep sentence structure simple, and avoiding modifying clauses as much as possible.

Rebekah Parker is an associate at Novack and Macey LLP. Reach her at (312) 419-6900 or [email protected]

Video: See a video of Novack and Macey’s recent network news coverage at www.novackandmacey.com/novack-and-macey-in-the-news.

Insights Legal Affairs is brought to you by Novack and Macey LLP

How to weigh your options for cutting back or restructuring benefits

Mary Policky, assistant vice president, Momentous Insurance Brokerage, Inc

Mary Policky, assistant vice president, Momentous Insurance Brokerage, Inc

No matter what type or size of a business, health care tends to be one of the leading employer costs. Although the Affordable Care Act (ACA) was intended to reduce costs, businesses are finding themselves on the receiving end of double-digit rate increases each year.

“Because of these hefty increases, employers are searching for more creative ways to reduce costs, while ensuring their benefits package remains competitive in the employment sector,” says Mary Policky, assistant vice president at Momentous Insurance Brokerage, Inc.

Smart Business spoke with Policky about how to reduce or restructure health benefits offerings in tough times.

When should a company consider reducing or restructuring benefits?

First, they should review their policies at the beginning of each fiscal year to determine a budget dedicated to the employee benefit package.

Then, they should do a mid-year plan review, which is also a good time to re-educate employees on important benefits available to them, such as various types of preventative care, which may be covered at no cost to the employee.

Lastly, review policies near open enrollment. Typically, the carrier releases renewal rates 60 to 90 days prior to the plan expiration date. That’s the time to shop around and research opportunities with other carriers, as well as alternate plans with the current carrier.

What’s the first step to figuring out where to make cuts or restructure?

A key factor is determining how much you want to spend. The challenge is how to significantly reduce the premium without sending employees into a tailspin from extreme changes, such as increasing deductibles and copays, which inevitably raise financial concern. Additionally, it’s a good idea to conduct employee surveys to determine their areas of concern, such as office visit copays, in-network doctors, prescription drugs, etc.

It’s also beneficial to have your broker provide benchmark information to see where you are in the industry, and where your competition is. More and more, employees are seeing that medical benefits are a vital part of their total compensation package, and will often consider a reduction in salary if the company offers comprehensive plans.

Generally, what low-hanging fruit can businesses look at first?

In addition to the deductible and copays, they should review the provider network. A company with 30 employees enrolled in an HMO plan typically spends $18,000 per month. By changing to a limited network, the premium reduces to $13,000 a month — a 28 percent savings. You can use disruption reports to gauge how many current doctors are in a new limited network.

Many employers are moving toward consumer-driven plans, such as health savings accounts (HSA) or health reimbursement arrangements (HRA). These plans allow employers to give each employee a fixed dollar amount to choose how they want to spend it on medical expenses. These tax-advantaged plans result in a lower premium and less rich benefits. However, a portion of the premium cost savings can be given back to employees to use for deductibles/copays. Also, with cost decisions in the hands of employees, the onus is on them to make better health decisions.

But it’s not always about reducing benefits. Adding wellness or disease management programs help create a healthier workforce and reduce premium increases.

What’s the best way to communicate to employees?

Employers often underestimate the need for clear communication and making sure that employees truly understand their benefits. Make time for mid-year reviews, webinars, conference calls and/or payroll stuffers. If you must raise rates, inform employees as soon as possible. Also, inform employees how much of the increase the employer is absorbing. A great way to convey this is through benefits statements, which show the total cost of benefits, and how much the employer is contributing.

Health care reform is just one of the many reasons to have a broker help navigate constant changes in the marketplace and tailor a plan to fit the company’s needs.

Mary Policky is an assistant vice president at Momentous Insurance Brokerage, Inc. Reach her at (818) 574-0426 or [email protected]

Blog: Get more information on employee benefits and other important insurance topics at www.momentousins.com/blog.

Insights Business Insurance is brought to you by Momentous Insurance Brokerage, Inc.

How natural gas is changing Western Pennsylvania’s business climate

Bob Taylor, Senior Corporate Banker, Senior Vice President, First Commonwealth Bank

Bob Taylor, Senior Corporate Banker, Senior Vice President, First Commonwealth Bank

With drilling in both the Marcellus and Utica Shale formations, Western Pennsylvania is sitting on one of the largest U.S. natural gas fields.

Even if you’re not directly affected, Bob Taylor, Senior Corporate Banker and Senior Vice President at First Commonwealth Bank, says the multiplier effect ripples out into the economy.

Each well site has about 250 different jobs associated with it, and Marcellus alone has about 6,378 active wells.

“It’s an engine that is going to drive the region here for the next 20 years,” he says.

Smart Business spoke with Taylor, an energy lender, about where Western Pennsylvania’s natural gas industry is going.

What is the current situation with Marcellus and Utica?

Small companies first explored Marcellus, finding the sweet spots to de-risk the field. Then larger companies like Exxon Mobil Corp., CONSOL Energy and Chevron Corp. bought up these companies and their acreage to move into steady production drilling. Three years ago, more then 45 operators were drilling in Marcellus. By 2013 that was down to 33, according to the Pennsylvania Department of Environmental Protection.

With Utica, the large companies stepped in first to acquire acreage. This consolidation has impacted area service providers that supply the well operators in Utica.

Overall, there has been a strong impact in counties like Washington and Greene. Pittsburgh will be affected now that an agreement has been reached to drill under the airport, bringing in $50 million upfront and $450 million in royalties over the next 20 years.

How are natural gas prices impacting the rig count and service providers?

Marcellus has been ranked as one of the lowest cost fields; operators can get a 10 percent ROI with prices as low as $2.75 per 1,000 cubic feet (mcf) for dry gas and $2.25 per mcf for wet gas. With today’s price around $3.50 to $4.25 per mcf, Marcellus is profitable.

Wet gas is more valuable because it has additional liquids that can be separated out and sold, such as ethane used to make plastics. Utica is principally dry gas in Pennsylvania, but Marcellus has both wet and dry gas.

Several years ago prices were high, but supply began to exceed demand, depressing prices. Therefore, some rigs moved to the wet gas in Ohio’s Utica play. Marcellus went from 100 rigs last year to around 53. Many service companies also have crossed the border.

However, each region has a field manager — service companies that supply products in Pennsylvania have to re-qualify for Ohio. The overriding factor is safety. For example, a service provider’s truck can’t be within 100 feet of the wellhead and must have fire extinguishers.

In the future, the volatility of price should moderate to around $3 to $7 per mcf, with increased demand from export, vehicles, manufacturing and electric generation.

What gas-gathering infrastructure is developing?

Many wells have been drilled and completed, so the next push will be to lay pipe to gather the gas and bring it to production facilities. It costs about $1 million per mile to lay pipeline, and about $3 billion to $5 billion is being spent in Pennsylvania alone.

Just like drilling, laying pipe has a number of associated jobs from engineers, steel pipe manufacturers, excavators and welders to safety inspectors who monitor pipelines.

Why is wastewater treatment the wild card?

Water is injected into the ground at high pressure to frack the shale rocks and release natural gas. Flow-back water that comes up has salt brine, minerals, dirt, sand, etc. Originally, the solids were removed and the water was reused for fracking.

With the drilling slowdown, there is excess wastewater. The cheapest elimination method is deep injection wells, but there are environmental concerns. The Environmental Protection Agency (EPA) may stop or limit deep injection wells sometime in the future. The EPA could require an evaporation and crystallization technique that distills the wastewater, but cost estimates for these reclamation facilities vary from $2.5 million to $100 million.

Bob Taylor is a Senior Corporate Banker and Senior Vice President at First Commonwealth Bank. Reach him at (412) 690-2214 or [email protected]

To learn more, call (800) 711-BANK (2265), or visit fcbanking.com.

Insights Wealth Management is brought to you by First Commonwealth Bank

How to ensure your estate plan is doing things for you, not to you

Geoffrey M. Zimmerman, CFP®, senior client advisor, Mosaic Financial Partners, Inc.

Geoffrey M. Zimmerman, CFP®, senior client advisor, Mosaic Financial Partners, Inc.

Estate planning is more than just having documents. It needs to be tied to long-term intent and aligned with your goals. What works for one person may not work well for the next, and what worked 10 years ago may not work now.

Geoffrey M. Zimmerman, CFP® practitioner, senior client advisor at Mosaic Financial Partners Inc., says many treat their estate plan like a transaction, even though the moving parts may have changed.

“They may have a document that is doing things to them and to their beneficiaries, and not really working well for them,” he says. “That’s why it’s important to review the plan periodically. It might take a visit to your attorney and the cost of several hours of time to update it. But in terms of relieving the headache on a surviving spouse or beneficiaries, those can be dollars well spent.”

Smart Business spoke with Zimmerman about why your estate plan should be continually adjusted.

What recent changes make updating your estate plan important?

Although the estate tax exemption did not reset as many feared, there are new items to consider. Undistributed income from an irrevocable trust can reach the top federal income tax bracket of 39.6 percent plus the Medicare tax of 3.8 percent after only $11,950. Those trusts can also see capital gains rates increase from 15 to 20 percent. This might impact a surviving spouse with capital gains assets in a credit shelter trust (also called a bypass trust) and assets in a marital trust.

How could outdated plans create problems?

In 1996, a couple with a $3 million estate would typically use a bypass trust to allow both spouses to use their respective $600,000 exemption to non-spouse beneficiaries, effectively allowing $1.2 million to pass to heirs free of estate tax. The remaining $1.8 million — plus any additional growth — was taxed at the death of the surviving spouse at rates up to 55 percent. A common planning strategy at the death of the first spouse was to put growth assets into the trust, as there would be no estate taxes on those assets. Heirs would still pay capital gains taxes, but capital gains taxes were (and still are) lower than estate taxes.

Today, the estate tax exemption has increased to $5.25 million per person. In our example above, the surviving spouse’s estate of $2.4 million worth of property could more than double before reaching $5.25 million and triggering any estate taxes.

Also, with the new laws, there is a now a new feature called ‘portability,’ which allows the surviving spouse to use the deceased spouse’s unused exemption amount. So in theory, a surviving spouse could pass up to $10.5 million worth of assets to heirs free of estate tax without using a bypass trust.

Older trusts that call for the creation and funding of a bypass trust may incur other unintended consequences. For example, formulas that call for funding the bypass trust to the maximum amount available without triggering an estate tax could leave the surviving spouse at a disadvantage with little or no assets in the survivors trust. Subtrusts that contain highly restrictive conditions for distributions to the survivor can create further complications. Finally, estates that contain large amounts of illiquid  assets that would need to be split between multiple trusts may also be problematic.  Periodic reviews, including a flowchart to understand what assets are going where, may be particularly helpful.

Also, as mentioned earlier, undistributed income in the bypass trust can hit top tax rates at very low levels of income, whereas the surviving spouse may not reach top tax brackets until he or she reaches $400,000 in taxable income.

Does this mean subtrusts are no longer useful?

They are still useful in cases where control over the disposition of assets is important, such as preventing a surviving spouse from disinheriting children from a previous marriage. You must balance the need for control against the surviving spouse’s needs, and your goals for your non-spouse beneficiaries. The surviving spouse and beneficiaries may have different interests — income versus growth. Proper planning, which includes a good understanding of goals and motivations, can help improve the odds of a successful outcome.

Geoffrey M. Zimmerman, CFP® practitioner, is a senior client advisor at Mosaic Financial Partners Inc. Reach him at (415) 788-1952 or [email protected]

Insights Wealth Management & Finance is brought to you by Mosaic Financial Partners Inc.

How to set a tone at the top to stop fraud in its tracks

Mark Van Benschoten, Principal, Rea & Associates

Mark Van Benschoten, Principal, Rea & Associates

Fraud costs companies about 5 percent of revenue, totaling about $3.5 trillion internationally, according to a 2012 report by the Association of Certified Fraud Examiners.

“It can have impact beyond the initial financial loss,” says Mark Van Benschoten, CPA, a principal at Rea & Associates. “Fraud damages the reputation of a business, which could lead to a loss of revenue and loss of jobs; there can be a spiral effect.

Stopping fraud is about protection of the corporate entity.”

Smart Business spoke with Van Benschoten about fraud and how companies can protect themselves.

What are ways that employees commit fraud?

Some of the most common fraud happens because of inadequate segregation of duties, not communicating consequences, employee turnover, crisis conditions and poor communication. However, there are so many specific ways fraud is committed. Actually, employees who are determined to steal find new ways all the time to try and bypass a company’s systems.

What should a business tell its employees about fraud?

It’s important to set the tone about fraud from the top. Employees will react to the tone of the business owner. They may also read an owner not taking a stand on fraud as a signal that it’s OK. Business owners and management have to make it clear that they take fraud seriously and it will not be tolerated; they want to hear about what’s happening in the business. Consider putting an ethics hotline in place so your employees can anonymously report what they see.

A hotline sounds like Big Brother watching, is it?

An ethics hotline is one of the most cost-effective means of combatting fraud. In fraud cases where there is a hotline in place, the average loss is $100,000. Compare that to a company without a hotline and the amount rises to $180,000.

It’s not a matter of tattling on a co-worker. It’s about job creation. It’s about protecting the corporate image. The amount stolen from a company is one thing, but the potential losses that could happen from the negative impact on a business’ image could be devastating. This gives employees the opportunity to protect their jobs as well as those of the other honest people they work with.

There are other benefits, too. For example, if someone at a company uses a forklift in an unsafe manner, any employee that witnesses the situation can call the hotline to report it anonymously. Management can then rectify the situation and avoid a costly accident.

If a company has an audit, isn’t that enough to catch fraud?

Audits are not specifically designed to catch immaterial fraud. Audits do provide reasonable assurance about the presentation of the financial statements in coordination with Generally Accepted Accounting Principles. No auditor can, or will, guarantee that an audit will catch any case of fraud.

In most cases, someone has to speak up internally for fraud to be discovered. An outside auditor is only there once or twice a year, and his or her job is to ensure there is good financial reporting.

What other steps can companies take to prevent fraud?

It’s important that businesses have good internal controls in place. In situations where the owner is very involved with every aspect of the business, different checks and balances would be needed than in instances where the owner is hands off. With internal controls, you have to weigh costs versus benefits. It’s about how much you’re willing to pay to manage risk. You wouldn’t spend $11,000 to save $10,000.

It would be nice to say ‘do these three things and you’ll be protected,’ but there is no one-size-fits-all solution. Preventing fraud is about limiting opportunity, having good internal controls and making sure employees understand that fraud will not be tolerated by anyone — from the top down.

Mark Van Benschoten, CPA, is a principal at Rea & Associates. Reach him at (614) 889-8725 or [email protected]

Learn more about implementing an ethics hotline at www.reacpa.com/red-flags.

Insights Accounting is brought to you by Rea & Associates

How to attract and retain a multigenerational workforce

Terri Walker, SPHR, Principal Human Capital Consultant, TriNet, Inc.

Terri Walker, SPHR, Principal Human Capital Consultant, TriNet, Inc.

For the first time in modern U.S. history, companies are employing four generations of workers. Four generations in the workplace can mean more opportunity for success or more problems, depending on how an organization deals with the generational differences.

“We’ve never had four generations working side-by-side, a 20-year-old working with colleagues that may be 50 years older. In order to work together, you have to honor those differences, and you can’t expect everyone to act and think like you do,” says Terri Walker, principal human capital consultant at TriNet, Inc.

Smart Business spoke with Walker about the ways various generations view their jobs and how to manage employees to create a happier, more productive workplace.

What challenges come with having four generations of workers?

An older, more experienced worker (born before 1946) or baby boomer (1946-1964) may have different values than someone coming to the workplace for the first time. Those employees likely expect a level of respect that a Generation X (1965-1977) or Generation Y/millennial (1978 and later) employee wouldn’t automatically give just based on age. The younger workers value the knowledge and achievements you bring to the workplace more than just the fact you’ve been there a long time.

Additionally, there are differences in how generations communicate. Frequently, Gen X/Gen Y workers prefer instant messaging (IM) or email, whereas other workers might value meeting face-to-face and going to a person’s desk to have a conversation. Older workers may feel it’s rude to IM or send a text when you’re in the same building, while the younger worker thinks you’re bothering them by taking time to walk to their desk.

No one way is right or wrong; they’re just different. When you understand and respect these differences, you’ll have a more productive workplace. You don’t have to agree with each other’s values, but you have to respect them.

What are the risks of managing everyone the same?

You’re going to have employees who are not satisfied with their work environment because policies are too loose or too stringent. Employees generally know and understand work duties, but management style is what drives them toward other opportunities. High turnover brings costs in recruiting, management time and loss of productivity. The last thing you want is churn because of the work environment.

It’s up to management to bring everyone together, to find what motivates employees and tailor rewards that keep employment interesting for all. Someone who’s been with the company for years may be waiting for that gold Rolex watch at retirement, while a younger employee wants an immediate — though smaller — reward for a job well done, maybe a Starbucks gift card.

Most of us grew up with the golden rule that you treat others the way you want to be treated. However, a new rule has come into play, the ‘titanium rule’ — treat others the way they want to be treated. That involves understanding what motivates them and treating them accordingly.

How can a company bring people together?

First, look at and understand your employee base. What are the different generations? Does one generation dominate your workforce or management team? How well do they work together?

What methods does your organization use to communicate? How is technology being utilized? How are managers communicating with employees? Also, look at turnover to see if there are peaks in a particular department, which could indicate a problem with communication or work style.

Once you’ve conducted an analysis, work with executive management to find the gaps where you could be doing better. Make sure managers, supervisors and all employees feel they are valued. This approach creates a robust, productive workplace where everyone is engaged and respected, which brings real benefits in dollars and cents.

Ensure that your leaders have the knowledge and skills to communicate and work effectively with all employees. It takes flexibility and open-mindedness, a willingness to look at different ways of doing things. Successful organizations and managers incorporate these elements into their structure and practice them daily.

Terri Walker, SPHR, is a Principal Human Capital Consultant at TriNet, Inc. Reach her at (510) 352-5000 or [email protected]

See how companies grow their business and engage their employees, or follow us on Twitter: @TriNet.

Insights Human Resources Outsourcing is brought to you by TriNet, Inc.

How to avoid some common pitfalls when doing business online

Christina D. Frangiosa, attorney, Semanoff Ormsby Greenberg & Torchia, LLC

Christina D. Frangiosa, attorney, Semanoff Ormsby Greenberg & Torchia, LLC

Anything published online lasts forever, so it is important to set the right tone for your company’s online communications and to mean what you say from the outset. You might try to retract or amend these public statements, but it is relatively easy to find prior versions, thus causing embarrassing or false statements to not truly disappear, says Christina D. Frangiosa, an attorney at Semanoff Ormsby Greenberg & Torchia, LLC.

“It’s safer to wait to publish materials to the Web until you have confirmed they are accurate, not misleading and not based on someone else’s intellectual property rights,” she says. “False statements about either your company’s products or about a competitor or its products could lead to lawsuits claiming false advertising, unfair competition or commercial disparagement. Misuse of the company’s or a competitor’s intellectual property can result in a loss of rights, or even, perhaps, an injunction or damages.”

Smart Business spoke with Frangiosa about avoiding legal mistakes on the Internet.

How should you handle statements about your competitors and their products?

Avoid knowingly making false statements about a competitor or the quality of its products. Publishing statements about them without appropriate due diligence could result in negative publicity for your company, corrective advertising costs or monetary damages.

How does cutting and pasting content from other websites create copyright concerns?

Many users have a common misconception: If they can find ‘free’ content on the Internet, then they must be able to use that content for any purpose. Just because content may be freely accessible does not mean that you have a right to use it. Copyright holders have exclusive rights, including the ability to choose to publish or not to publish their works; posting something on a public website constitutes publication. Copying and pasting someone else’s images, text or video into your company’s website without permission could expose the company to copyright or trademark infringement suits, among other claims.

How might misuse in social media undermine company trademarks?

Companies today use their websites and social media to communicate about their products or services. Specific employees may be assigned to prepare and/or post content. These employees should be informed about how to use the company’s trademarks to further develop the brand and maintain existing rights. If employees misuse these trademarks on the company’s sites, they may unknowingly undermine the value of the brand, and perhaps cause problems for trademark renewals or other filings.

Some employees may also use the company’s marks on personal social media. For example, an executive might use a company logo rather than a headshot on his or her Facebook page. Any statement made on these pages about company business could be seen as a formal company representation, and perhaps cause problems for the company with the Securities and Exchange Commission or other governing bodies.

What can you do to protect against these pitfalls?

  • Create your own content, rather than relying on design elements you see on other sites. This may have a higher upfront cost but could reduce your litigation exposure in the long run.
  • Seek a license to use any content in which you are interested, and pay the appropriate royalty fee for its use. There are organizations that accept those royalty payments on behalf of content owners.
  • Obtain images, videos or other content from a valid image collection service, authorized by the copyright owner.
  • Ensure employees understand the source of the content they plan to use before they upload it to the company’s site. They should be trained to avoid the impulse to right-click, ‘save as’ and then upload.
  • Avoid using a competitor’s trademarks to advertise your own goods or services.
  • Ensure employees understand the appropriate use of trademarks.
  • Establish a social media policy that includes explanations of limits on use of the company’s trademarks.

 

Christina D. Frangiosa is an attorney at Semanoff Ormsby Greenberg & Torchia, LLC. Reach her at (215) 887-0200 or [email protected]

Find about more about privacy and intellectual property law on Christina’s blog.

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

How Ohio’s group rating is still the best option for small and midsize companies

Cliff Baseler, Vice President, Best Hoovler Insurance Services Inc., member of the SeibertKeck Group

Cliff Baseler, Vice President, Best Hoovler Insurance Services Inc., member of the SeibertKeck Group

If your company has 500 employees or less, you want to be in a group rating program to get better workers’ compensation rates. Some court rulings have decreased the amount of group credits and increased rates for group rated employers.

“It’s still the best thing going for the small to medium-size employer,” says Cliff Baseler, vice president at Best Hoovler McTeague Insurance Services Inc., a SeibertKeck company. “The group is a fantastic idea, and an employer can receive much lower workers’ compensation premiums.”

Smart Business spoke with Baseler about the advantages of a group rating program and how the landscape has changed.

How does group rating save money?

The Ohio Bureau of Workers’ Compensation (BWC) allows employers with better than average claim histories to join together through a sponsoring organization for the purpose of being rated as a large group. As a standalone business with no losses, you might only develop an experience modification of a 5 to 7 percent credit off your rates. However, when combined with thousands of other companies in a group, your company can earn up to a 53 percent credit to your base rates. The credits can vary for individual businesses, depending on your type of business, whom you are grouped with, final loss figures, total enrollment and reported payroll.

What are other benefits of enrolling?

A third-party administrator (TPA) will manage your claims cost-effectively and aggressively, as well as representing you at Industrial Commission hearings for contested claims. You also have real-time access to claims information rather than trying to obtain it directly from the BWC.

The TPA physically reviews your rates and classifications assigned to your company. Many times the company classifications are wrong because of a change in operations or they were incorrect from the beginning. All of this can result in higher premiums.
The TPA also provides training, education, bulletins, seminars, newsletters, etc. It will help you receive various other credits for safety or a drug-free environment too.

What happens if you have a large loss?

With a group rating, if you have a shock loss, a death claim or a large medical claim, you can be asked to leave at the end of the policy year. Typically that precludes you from any group for two or three years, as all groups look at your current year and the previous three years of claim history. After you’ve been relatively loss free for two or three years, many groups allow you to re-enroll.

The problem is you might have been enjoying 45 percent credit, but now have a 35 percent debit — an 80-percentage point rate swing. For a lot of small businesses, that creates a financial strain since premiums can double the next year. Extra dollars in premiums could result in a workforce reduction.

If asked to leave, you still can sign a contract with the TPA to help you limit and possibly prevent other losses with the goal of returning to a group plan.

How are recent court rulings impacting workers’ compensation?

Some recent rulings in favor of plaintiffs in Cuyahoga County have hurt the rating structure of group plans. The argument was that if Company A has a bad claims history and pays a $20 rate per hundred, but Company B is in a group rating paying $5 per hundred, that creates an unfair advantage in a public bid situation.

As a result, the BWC decreased the maximum group credit to 53 percent and raised classification rates as much as 21 percentage points versus nongroup rates. This action seeks to equalize the playing field, in the court’s opinion.

Also, the governor authorized the release of $1 billion of ‘overpaid premiums’ to private employers and public taxing groups for the 2011 rating year as a result of another court ruling. Employers are receiving rebate checks for 56 percent of premiums paid.

With the increase in rates for groups and the decrease in the credits, many companies have to decide whether to stay in the group. While it may no longer be as cost-effective, you get extra services — aggressive claims management, hearing representation, rate analysis, etc. — and service means everything to your experience and rates.

Cliff Baseler is vice president at Best Hoovler McTeague Insurance Services Inc., a SeibertKeck company. Reach him at (614) 246-7475 [email protected]

To keep up with the latest insurance news and how your company could be impacted, sign up to receive our newsletter at www.seibertkeck.com.

Insights Business Insurance is brought to you by SeibertKeck