Articles & Report Summaries
|2003 - 360 Feedback: Comparing Installed Software, ASPs and Service Bureaus: What's the best Choice for You?||Describes the difference between the three methods of deploying 360 degree feedback processes and the pros and cons of each.|
|Stay (Retention) Bonus: Compensation Programs to Hold Key People||2 Articles: Case studies of Mergers, Acquisitions, Divestitures, Special Projects (Y-2K, SAP)|
|2000/01 Survey of Exempt and Nonexempt On-Call Pay Policies||A Review of Issues|
To Insure That Secretarial Pay Fairly
Reflects Broadened Skills and Responsibilities(1)
|Comprehensive, objective task-based job analysis and job evaluation software|
|1998 360 Degree Performance Feedback||HRMagazine Article comparing features with needs|
|What Do You Do When the Police Come Knocking?||Dealing with arrest warrants in the workplace|
|It's Scary Out There||Weapons in the workplace|
|Fending Off Unreasonable Compensation Attacks||Dealing with IRS Tax Audits or Dissident Shareholders|
|Bibliography of HR related articles, reports, and books by N. E. Fried|
To Insure That Secretarial Pay Fairly
With a market pricing
approach, a company first decides the degree it wants to compete for talent
in the job market. For example, do they want to pay average or above average
salaries? Then the company conducts on analysis of salary data derived
from salary surveys. For secretarial and administrative support jobs,
most companies attempt to set their salary range midpoints to match the
average pay in the marketplace.
To assess these differences,
analysts must examine job content to compare how these new secretarial
jobs stack up when contrasted with other staff support or administrative
positions. Job content reviews can be limited or quite comprehensive.
How the company approaches job content evaluation depends on its values,
culture, budget, and available staff to perform the analysis.
Real Impact of Technology
on Skill and Responsibility
About the author: N.
Elizabeth Fried, Ph.D., CCP, is President of N. E. Fried and Associates,
Inc., a Carlsbad, CA based compensation consulting firm, with a sub-specialty
in secretarial pay. For information on her Dimensional Job Grading system,
an objective approach to evaluating secretaries and administrative support
assistant jobs, go to www.nefried.com/djg.
1. This is a working draft of an article published in the May, 1998 issue of Office Pro, the official magazine of Professional Secretaries International.
©1998, N. Elizabeth Fried, Ph.D., CCP
2000/01 Survey of Exempt and Nonexempt On-call Pay Policies: Job Site vs. Home Based©
N. Elizabeth Fried, Ph.D., CCP
This is our fifth study of on-call pay policies. It contains data from 84 U.S. organizations nationwide. In several instances, companies submitted multiple plans because their plans differed significantly between divisions. Therefore, the report includes a total of 89 cases, each displaying information for both nonexempt and exempt plans. This year the number of participants held relatively steady with our prior study and represents 6 broad standard industrial categories.
We primarily examined whether an organization paid an on-call premium for time not worked (sleeper or standby pay). Secondarily, we determined the call-in rate of pay for employees who were either called back to the job site or called upon to solve problems from home via phone or computer. Additionally, we addressed such issues as mileage reimbursement, geographic or time restrictions, and methods of computing the hours worked.
Of the 80 nonexempt cases, 52 paid an on-call premium for time not worked. Of the 86 exempt cases, 41 plans also paid a premium. Upon further review of the 86 exempt plans, we also found that in 20 cases, organizations offered some type of remuneration to those who were called back to work or responded via phone or computer.
We collected data between November 1999 and January 2000 by faxing new participants a survey instrument, which they completed and returned by fax. Our analysts reviewed the data and followed up with a telephone call to verify and clarify the information. For past participants, we faxed them the policy they had submitted in 1998 to review for any changes. If there were no changes, then they simply faxed us back a cover sheet indicating there were no changes. If there were changes, they revised the areas in which these changes occurred, and we updated the data, which was indicated in bold italics.
During our first literature review in 1992, we found that there was little written on the topic of on-call pay. Furthermore, there was even less data on actual policy information. In July 1994, the follow-up literature review for our second study produced modest results. We found some additional information addressing the legal issues; however, there were no other significant survey data describing company on-call policies in use today. In January 1996, the literature scan for developments again revealed that no major articles had been written about the topic and no new survey data were available. We did not find any other significant studies about on-call pay in our January 1998 literature review. In our January 2000 search, we found additional information on legal issues in Thompson Publishings FLSA Employee Exemption Handbook and Employers Guide to the Fair Labor Standards Act. We also monitored HR and Compensation Internet list servs and sites.
Additionally, we queried users of our 1998 study for their opinions about the study's data quality as well as its format and design. They told us that the format was clear and easy to interpret and offered some suggestions. Their primary suggestion was to provide further breakdowns in summary tables, which we have included in the front section of the report.
Definition of Terms
Call-in rate: The rate of pay provided to employees called upon to work outside the regular shift after they have left the job site
Clock start/end: The point at which an employee's chargeable work time begins and ends
Guaranteed minimum: A minimum number of hours at the call-in rate or flat dollar amount guaranteed to employees when called to work outside the regular shift after they have left the job site
Geographic or response-time restrictions: The mileage radius an employee must remain within or the time an employee must be able to respond while scheduled to be on call
On-call premium pay: A predetermined, flat rate or percentage of pay guaranteed for employees scheduled to be available to work beyond the regular shift after they have left the job site (e.g., $100 per week or 10% of the regular hourly rate during the scheduled on-call period). This premium may be paid in addition to any amount earned when actually called to work or may be offset by the call-in rate or a guaranteed minimum, whichever is greatest. (Employees are free to sleep or engage in personal activities during this time, but they must be able to respond within a prescribed period.)
We examined the issue of whether companies can pay exempt employees hour-for-hour compensation for on-call pay without compromising their exemption . A review of the literature reveals conflicting and confusing opinions among the various circuit courts, but recent 1998 and 1999 cases seem to bring more clarity to the subject. The Department of Labor (DOL) has continued to hold its opinion as stated literally by the law and supported further in its Field Operations Handbook. The material we have provided below will demonstrate how this issue has evolved and help you reach a conclusion. You must decide how you want to construct your plan based on your business needs and determine the level of potential risk.
Thompson Publishing Groups FLSA Employee Exemption Handbook (December 1998, Tab 200, pp. 28-29) discusses the issue of overtime pay and its effect on exemption status in the following excerpt:
Legal experts Miller and Winterbauer (1993, pp. 503-524) agree with this position and suggest that providing hour-for-hour overtime pay or compensatory time off may violate the salary basis requirement of the Fair Labor Standards Act. Thus, such payments may disqualify an employee's exemption status.
Miller and Winterbauer cite several cases with conflicting rulings on the issue, where some circuit courts allow these payments, while others do not. They state that ". . . several courts have held that payment of overtime to exempt employees on an hour-for-hour basis is not inconsistent with the salary basis requirement. These courts appear to rely on the spirit rather than the express language of the regulations. These regulations expressly permit payment of certain 'additional compensation' to exempt employees and specify three types of acceptable payments: a commission based upon sales, a bonus based on profits, and payment on a daily or shift basis. None of these types of additional compensation, however, involves payments that vary in direct relation to the number of hours worked. Nor do the regulations even remotely suggest that hour-for-hour overtime payments qualify as acceptable additional compensation."
To counter this position, the FLSA Employee Exemption Handbook (December, 1998 Tab 200, pp. 29-30) refers back to the basic law and goes on to say:
There have been several Wage and Hour Opinion Letters confirming this opinion. As listed in Appendix IV of FLSA Employee Exemption Handbook (August 1996, p. 66), the most recent letter, dated April 6, 1995, written by Daniel F. Sweeney, Deputy Assistant Administrator, states:
This DOLs position is supported by the cases found in the Fourth, Fifth and Sixth Circuit Courts of Appeals, as stated in the FLSA Employee Exemption Handbook (December 1998, Tab 200, p. 29):
In Boykin v. Boeing Co., No. 96-35482, October 23, 1997, the Ninth Circuit Court of Appeals determined that exempt employees who received overtime pay for all hours worked in excess of 40 in a single workweek in addition to the normal salaries still met the FLSAs "salary basis" test and qualified as exempt. The court upheld the Department of Labors regulations interpreting the FLSA to allow employers to pay additional compensation to exempt employees without affecting the salary basis and the exempt status.
Most recently the The Employers Guide to the Fair Labor Standards Act Current Development (December, 1999 pp 9-10) addressed this issue with updated information. They indicated that the U. S. District Court for Eastern Michigan ruled that:
In the above case, registered nurses (considered exempt professionals) argued that they were not paid on a salary basis because the employees compensation policies allowed for additional compensation for hours worked beyond 40 in the specified workweek. Disagreeing, the court found that the overtime pay was consistent with the workers salaried status.
The year prior, another federal district court in Michigan ruled similarly. In Tutlin v. Prime Succession Inc., 29 F. Supp. 2d 794 (W.D. Mich. 1998), the court held that a funeral directors salaried status was not affected by the fact that he received extra pay for working more hours than scheduled. The court confirmed stating, "Additional compensation over and above the predetermined amount is specifically permitted by the regulations and does not affect the employees salaried status."
Since the inception of this study, we have cautioned readers to avoid paying hour-for-hour compensation in their plans. To alert you, we had footnoted plans containing such polices to remind you that they may be risky. The most recent court rulings has caused us to change our position, and we will no longer be footnoting these plans and issuing these warnings. While we are not attorneys and do not intend to give legal advice, based on the these court findings and the Labor Departments guidance, it doesnt appear that paying exempt employees extra for working overtime violates the FLSAs salary basis test. However, we are nevertheless compelled to leave you with one critical warning. If you engage in the practice of hourly overtime pay for exempt workers, be very careful that you dont cross the line and begin to deduct pay from an exempt employees salary. Specifically, if you engage in such practices as by-the-hour deductions from employee leave banks and carefully document an exempt employees hours, a court may consider these factors along with any overtime pay to determine that an otherwise exempt employee would be nonexempt.
As you develop your on-call pay policy, balance your business needs with employee relations and legal considerations. A The New York Times (April 1994) article focused on potential employee relations and productivity problems related to "beeper bondage." The Wall Street Journal (April 1992) raised legal issues, reporting a series of cases in which workers sued employers for neglecting to pay them overtime while on call. Although the results of these suits were mixed, one thing was clearcompanies may need to review their existing policies from a variety of perspectives.
If you currently have or are planning to develop an on-call policy, be sure you adequately define what constitutes on-call pay for your company. The Fair Labor Standards Act defines on-call time in Section 785.15 of its interpretative bulletin as follows:
When forming your definition, indicate what constitutes on-call pay and under what considerations or circumstances you offer it. Provide examples of an emergency or crisis that would require an employee to be called in after the normal shift, on weekends, or in the middle of the night.
Consider the legality of your payouts as they reflect your definition. Are you going to provide an on-call premium whenever an employee is scheduled for availability? Are you going to provide a guaranteed minimum when you call an employee to work and at what rate?
Be aware that you must incorporate certain extraneous payments, such as nondiscretionary bonuses paid to nonexempt employees, into the total salary to assess the "actual" regular rate of pay for purposes of calculating overtime. A nondiscretionary bonus is one that is promised to employees in advance of its receipt.
This concept also applies to on-call premiums as confirmed by Richard J. Malloy, District Director, Wage and Hour Division, in Columbus, Ohio. He stated in his letter to us dated November 2, 1994:
There is detailed discussion of the law as well as several opinion letters confirming Mr. Malloys statement in Thompsons Employers Guide to the Fair Labor Standards Act (Tab 500, pp. 16-19). Here, the Thompson authors point out that while the law states that non-working time need not be included in the regular rate of pay, on-call pay is an exception.
Consider when the clock will start and stop to determine chargeable work. Will it be upon arrival and departure or portal to portal?
Will you reimburse employees for travel or mileage and at what rate?
Employers guide to the Fair Labor Standards Act. Washington, DC.: Thompson Publishing Group, Inc., 1999 (1-800-677-3789).
FLSA employment handbook Washington, DC.: Thompson Publishing Group, Inc., 1999 (1-800-677-3789).
Moses, Jonathan M. A $58 million judgment for on-call workers is overturned. The Wall Street Journal, August 3, 1992, p. B2.
Reed, Christopher. Be wary of beeper bondage. The New York Times, April 17, 1994, p. F-13, col. 3.
Salam, Debra. Wage-hour laws. Compensation Guide, New York: Warren Gorham Lamont, 1997, pp. 4:1-4:42.
Staffing and scheduling strategies. PPF Survey No. 152 Washington, D.C.: Bureau of National Affairs, Inc.,, June 1994, pp. 16-20.
Smith, Matthew M. Overtime pay liability: The unexpected peril of disciplinary suspension policies. Employee Relations Law Journal, Spring 1995, 20 (4) p. 503-524.
Smith, Matthew M., & Winterbauer, Steven H. Overtime compensation under the FLSA: Pay them now or pay them later. Employee Relations Law Journal, Summer 1993, 19 (1) p. 23-51.
Turk, Harry N. Employee compensation for on-call or waiting time (Questions and Answers). Employment Relations Today, Summer 1993(5) pp. 243-245.
©2000 N. E. Fried and Associates, Inc.
Click here for pricing information to obtain a copy of 2000/01 Survey of Exempt and Nonexempt On-call Pay Policies: Job-site vs. Home-Based (89 cases 228 pages, $398 plus $7 shipping and handling)
Retention Strategies That Survive a Sale
N. Elizabeth Fried, Ph.D., CCP
The president and the executive staff have informed you the company wants to sell off one of its divisions. They need you to help them assure the division maintains a business-as-usual environment during the negotiations and up to the event of the sale. They have no idea whether the buyer will keep the existing management or clean house. You have to come up with some arrangements that will not only keep key management in place, but encourage them to help with the sale. Are you up to the challenge?
In the today's environment of mergers, acquisitions, and divestitures, it's not uncommon for human resources executives to become involved in the process of successful deal-making. Designing and staging compensation programs to hold key staff can be exciting as well as tension filled. Plan designers must walk a narrow line. Well-crafted plans can avoid undue stresses on negotiations and can sometimes be a key factor in consummating the deal. Poorly designed plans can backfire, delaying negotiations or killing the deal. If the situation is poorly handled from the start, it tends to set off a domino effect of negative consequences that can severely disrupt the affected business unit. For example, key management may jump ship, morale may decrease, and productivity may decline.
The compensation arrangements structured for the management of a divested or acquired company are commonly referred to as "stay bonuses" or "retention bonuses." They have become
popular vehicles used by buyer or seller to retain critical employees during the transition period. These compensation arrangements are highly varied, with monetary rewards ranging from a few extra weeks of severance pay to hefty multiples of six-figure salaries. The employees covered by these plans can be limited to top executives or extended throughout the ranks. Eligibility and level of reward are driven by the individual circumstances and requirements surrounding each transaction.
N. E. Fried and Associates surveyed more than 50 companies. The firm collected data, in a case study format, on actual programs which were implemented or proposed in companies that have undergone or attempted acquisitions, mergers, or divestitures. These organizations designed plans to retain key employees in the company during and/or after the event. They structured plans to accomplish one or more of the following objectives:
Each company assessed its own situation and designed its plan accordingly. The three examples which follow focus on two of these objectives and demonstrate what worked and why. These examples are extracted from the complete report, Compensation Arrangements Designed To Hold Key People During Acquisitions, Mergers, Divestitures, Relocations, and Bankruptcies.
NATURAL RESOURCES COMPANY
The company was up for sale and currently in negotiations with a foreign buyer. The owners were concerned about keeping the key employees during the period of negotiations as well as for a reasonable period after the sale, should the deal go through. They structured the compensation arrangements as follows:
This plan's design takes into consideration the employee's need for job security and includes a sweetener for remaining with the company throughout the duration of the contract. Additionally, the beneficial tax treatment is icing on the cake. This creative arrangement should enable the company to maintain its objective of management continuity during and after the sale.
LARGE NEW YORK BASED FINANCIAL SERVICES COMPANY
The following deals were structured for a Local/Regional Mortgage Bank and a Relocation Company. Both organizations were wholly owned subsidiaries of privately held companies. In both cases the objective was to motivate each management team to take a proactive part in helping with the sale of their respective subsidiary.
This arrangement worked very well. In this case management continuity was not the only issue. The sellers were not interested in paying management to stick around and coast while they attempted to sell off the subsidiaries. They designed the plan to send a clear message that sloughing off would offer no rewards. It was important that management push toward achieving their objective. Management needed to show that the company was not just financially sound, but financially strong. These conditions would not only make the company attractive to a buyer but also offer financial rewards for the key officers.
DIVERSIFIED NATURAL RESOURCES COMPANY
The parent organization decided to divest a major part of its business, which had been losing money for several years because the parent had been under attack as a takeover candidate. The actual divestiture was a combination of stock dividend in the divested company to existing shareholders, plus sale of shares for cash. They developed the following strategy:
Part of this strategy backfired. Some problems occurred with the benefits arrangement. A number of executives were hired since the divestiture. These executives were not given the same superior level of benefits as those in the original group. This has had a negative effect on internal equity. The company is currently investigating some type of non-qualified arrangements for the new executives to correct the situation.
The concept of the trust fund, however, was quite effective. This strategy created "free" money for the company. The shares did not add to the dilution, nor was there any expense connected with their use since the shares came from the trust. The company used the shares almost entirely as restricted stock, and the program has been very successful.
The development of stay bonuses and other forms of compensation arrangements will have their place as long as companies continue to be bought and sold. Savvy human resources managers have learned how to be true strategic partners with management during these situations. They ask essential business questions and assure the arrangements they structure are in keeping with the organization's ultimate objectives. Those who are truly successful have developed the ability to mix creativity and vision, with common-sense practicality.
Click here for pricing information and how to obtain a copy of Compensation Arrangements Designed To Hold Key People During Acquisitions, Mergers, Divestitures, Relocations, and Bankruptcies and Special IT Projects .
Note: Below is a follow-up article that provides an example related to an Information Technology project.
How to Keep Key Employees from Fleeing During Times of Transition
N. Elizabeth Fried, Ph.D., CCP
Whats a good way to hold on to Y2K workers when they are offered such sweet enticements to leave?
In our latest survey of stay bonuses used to retain key employees during mergers, acquisitions, and divestitures, we discovered three new trends. First, stay bonuses are being offered to lower-tier management, professional, and administrative employees more frequently. Information technology (IT) employees are the most recent recipients of these awards, particularly those working on special "sunset" projects, such as Y2K or SAP.
Second, attractive stock options or sizeable restricted stock grants are included with a cash award as part of the package. Third, the size of the award is being tied to the employees performance.
The value of the reward depends on the nature of the deal, the criticality of the employee, and organizational level of the position. Companies typically identify key players and put a price tag on what it's worth to keep them around until the business is sold or the project is completed.
Retaining critical administrative or technical employees creates an additional challenge. These employees are typically short-service and have highly marketable skill sets. Thus, classic length-of-service severance arrangements are insufficient incentive to keep these employees from fleeing.
The survey showed varied, creative responses to this dilemma. Companies will either develop a cash stay bonus to complement severance, enhance the existing severance package, restructure the criteria for determining severance, offer stock options, or apply a combined approach whatever it takes to insure that the employee sticks around until the transaction is closed or the project is complete.
However, that there are special considerations when paying a predetermined bonus to any nonexempt employees included in the plan because of the probable impact on overtime. The Fair Labor Standards Act requires that additional compensation beyond the regular hourly rate be added to the annual base pay. This amount is then divided by the number of hours worked to calculate a new regular hourly rate for purposes of determining overtime. Companies that overlook this provision of the FLSA will be required to make back payments and are potentially subject to fines.
To maximize the proceeds of the sale and assure that management and other critical employees will assist in the process, companies attempt to maintain business-as-usual during negotiations. Our report shows how companies make it attractive for these employees to cooperate. Companies design bonus programs that ward off breaks in management continuity, avoid potential loss of customer base, and maintain profit levels.
This is tricky. The company must create an effective sweetener for employees to stay while also keeping an eye on their performance. To manage this, smart plan designers tie in performance as a factor and use it to increase or decrease the value of the reward. This creates a significant upside potential and moderate downside risk.
Our research also showed that companies not involved in merger, acquisition, or divestiture activities are using stay bonuses to keep IT workers. The following case illustrates how one company retained its Y2K workers.
A large industrial products manufacturer had general concerns about recruiting and retaining IT professionals. It also had immediate concerns with the Y2K project. To deal with both issues, it developed a three-pronged retention program. Some individuals could be eligible for all three components as described below:
Results: The company has lost only two key IT people since the inception of this program. One individual left to begin a family; the other obtained a career advancement opportunity from another organization. They have lost no one from the Y2K project. The company admits it has somewhat stacked the deck in this case by carefully choosing individuals for this project who would be less likely to leave.
Click here for pricing information and how to obtain a copy of Compensation Arrangements Designed To Hold Key People During Acquisitions, Mergers, Divestitures, Relocations, and Bankruptcies and Special IT Projects .
What Do You Do When the Police Come Knocking?
N. Elizabeth Fried, Ph.D., CCP
The police show up at your door, flash a badge, some paperwork, and ask to see your employee. This type of uninvited visit from law enforcement authorities can be both unnerving and potentially disruptive. What are your rights and responsibilities regarding subpoenas, arrests, search warrants, or investigations? What are your risks? Do you call your corporate counsel? What is the role of internal security? How do you deal with this issue and maintain the least amount of disruption?
My interest in this topic began during research for my recent book, Sex, Laws & Stereotypes. I was particularly disturbed by a tragically mishandled arrest case for non-payment of child support. An inexperienced and overzealous human resources manager gave police direct access to an employee in view of his co-workers. When police attempted to arrest and handcuff the normally mild-mannered graphics artist, all hell broke loose. He became violent and fled the scene, creating injury and chaos along the way. His coworkers froze in horror as they observed the police eventually drag out their fellow worker, bloodied and shackled before their eyes.
All of this was preventable. Unfortunately many companies are ill-prepared to deal with this issue because they have no policies or protocols to address the handling of arrest or police investigation incidents. The problem is exacerbated in cases where companies maintain satellite offices with no security or human resources representative on site. A hasty decision could lead to costly and emotionally shattering mistakes.
Have some procedures in place.
"The last thing you want is the company receptionist making the decision to hand over an employee to the police," says Jonathan Segal, partner at the Philadelphia based law firm of Block, Schorr & Solis. "It's not fair to the receptionist and it's not responsible to the other employees."
Most experts agree that companies should maintain guidelines or procedures for handling police matters. For example, the point person for outside visitors should know where to direct police who are on official business. Each company must individually decide whether human resources, general management, or security should act as the liaison on law enforcement issues. Regardless of whom the company appoints as liaison, when approached by law enforcement officials, it is important to ensure employee safety and protection from liability. Thus it is prudent to verify that the police are indeed who they say they are. Although it would be rare that someone would impersonate the police to kidnap an employee, this simple precaution only takes a few moments and demonstrates that company officials acted prudently.
"It is perfectly appropriate to ask to see the officer's identification. This would be true whether they are uniformed officers or plain clothes detectives. A legitimate uniformed officer should not be offended if you ask for official identification," advises Dean Denlinger, partner in the law firm of Denlinger, Rosenthal & Greenberg based in Cincinnati, Ohio. "Also, make sure you check the language of the warrant before you go forward," warns Denlinger, who also co-edits The Ohio Employment Newsletter.
It is important to know the distinction between an arrest warrant and a search warrant. An arrest warrant gives police the right to seize the employee but not to search your premises in the process. So, if the police only have an arrest warrant, you are within your rights to limit their access to company property. "If they do have a search warrant," advises Mr. Segal, "it's important to make sure that they generally limit their search to the area covered by the warrant or to an area that is in plain view."
"When confronted with police officers presenting a valid arrest warrant, we advise clients to cooperate with the police, in part to avoid potential obstruction of justice charges. On the other hand, employers should not actively participate in the arrest in order to reduce potential liability for false arrest. For example, if the police arrest the wrong person or if the employee is tried and found 'not guilty,' the company may have some liability if it has acted as an agent of the police," cautions Tom Greble, a partner in the New York employment law firm of Roberts & Finger.
An employer's primary responsibility in police arrests and investigations is to maintain an employee's dignity in the most humane way possible, while ensuring the safety of the work force. Some human resources professionals ask police to arrest the employee after work hours to avoid disruption. Depending on their relationship with the police and the nature of the crime, the police may agree to return at closing.
For most employers, however, a reasonable course of action would be to arrange for the police to wait in a private conference room. Next, the employer would contact the employee's supervisor, stating that a human resources representative or security officer requests the employee's presence on a personal matter.
"Our approach is to tell the supervisor that the employee needs to 'view some legal documents.' This statement is truthful, yet purposely vague. On the rare occasions that this happens, our goal is to maintain the employee's privacy and keep things as low-key as possible," says Terry Bean, executive vice president of human resources at Office Depot.
Sandy Dulaney, a human resources consultant at ARCO Exploration and Production Technology follows a similar practice. "First we verify the officer's identification and paperwork. Once we're satisfied that everything is in order, we arrange for the employee to meet in a private room with the police. No one from human resources remains in the room. The company considers the matter private and one for the employee and police to resolve."
Legal adviser, Ellen Garling, of the Columbus, Ohio office of Baker and Hostetler, feels stricter measures are appropriate. She indicates that in non-violent arrest cases two representatives should accompany the employee from his or her work station to the conference area where the police are waiting. Her rationale is that all employment actions should be witnessed.
Other legal advisers like Jack Raisner, professor of law at St. John's University in New York feel this approach is overkill and could come back to haunt you. He disagrees with Garling's view that arrest actions fall under the same umbrella as internal employment actions. He supports Mr. Greble's view that employers should take the most unobtrusive route in arrest cases to minimize their exposure for liability.
Once the police notify the employee of the arrest, it is standard police procedure to handcuff the individual when taking him or her into custody. This is a very demeaning experience for the employee and upsetting for co-workers to view. Employers should take steps to reduce embarrassment and quietly remove the employee from the premises. If a side door is available, it is advisable to ask police to park their vehicle at the side entrance and quietly usher the employee out the side exit.
"Because we don't have a side entrance and an employee must leave the building in full view of other employees, we have asked police to hold off hand cuffing procedures until the employee is out of the building," says Kerry Sims, director of human resources at Victoria's Secret retail stores. "We've been fortunate that on the few occasions that this occurred, they have cooperated with us."
One way to improve cooperation with the police is to develop a relationship with your local law enforcement agency as a matter of positive community relations. Tom Seals, director of protective services at the Cleveland Clinic Foundation, recommends that companies appoint a liaison from their organization to cultivate these relationships. When companies establish these relationships, police may offer the courtesy of a prior phone call to alert you to the problem, so that you can handle the matter quietly, safely, and efficiently.
Dealing with police investigations
Companies vary widely in their approach of allowing employees to participate in police investigations. Some companies fully cooperate and permit officers on premises to question employees who may have witnessed a crime. However, Kerry Sims believes such cooperation could be harmful. Their company policy refuses police access to associates for investigation purposes for crimes that do not affect the company directly. He will notify an associate that authorities wish to question him or her. He will also provide a phone number of the investigating officer, but Mr. Sims will not take employees away from their work area.
"We feel that unless we can get solid verification that our associate has knowledge of the crime, we could be putting him or her at a personal risk. How do we know that someone just hasn't thrown our associate's name out based on hearsay? We'd rather leave that decision to talk to the authorities up to the associate; it's none of our business."
Companies also have varying policies on handling process servers (subpoenas). Some companies accept state and federal subpoenas, but refuse municipal subpoenas. Others do not permit process servers on premises. The Cleveland Clinic maintains a centrally appointed person to accept all subpoenas on behalf of employees, with the right to refuse.
"This gives the organization a chance to screen the process. For example, it alerts us to a potential civil process that might involve the organization and its employees through some sort of vicarious liability. With a designated point person to accept subpoenas, you get a little bit of knowledge and opportunity to see what's coming through the door," says Mr. Seals who is also an attorney.
Whether it's an arrest, a subpoena, or an investigation, companies must be knowledgeable of the particular state laws under which they operate. The next step is to draft some general guidelines with the advice of your legal counsel. The bottom line is to maintain the employee's dignity, co-worker safety, and minimize disruption. We recommend you consider this activity part of your crisis planning program
Click here for Sex, Laws & Stereotypes
It's Scary Out There
N. Elizabeth Fried, Ph.D., CCP
A family member stopped by on his way home from work. He was holding a box and said, "Hey, take a look at this." He grinned proudly as he showed me his new hand gun.
I'm frightened by guns and have never owned one, so I backed away.
"Where did you get that?" I asked.
"From work," he smiled as he fondled his new piece.
"From work? You're a service person, why would they issue you a gun?" I asked somewhat startled. I knew the company sometimes called him out on emergency to work at night, but he was not assigned to a high-crime neighborhood.
"Oh, no, not for work," he explained, "I bought it from a guy at work--he's a gun dealer, and he got me a heckava price."
"A gun dealer where you work? Does your supervisor know about this?"
"The dealer is my supervisor--he does this on the side," he clarified.
Somehow, this explanation did not provide me much comfort.
"And his boss? Does he know that your supervisor sells guns to other employees?"
"You mean the Regional Manager? Sure, he knows. He bought one too. We all wanted to get ours before the laws change and make it impossible to buy one."
I was outraged. During my research for Sex, Laws & Stereotypes, one of my sources (from a Fortune 500 company) revealed a case involving guns. While investigating a wrongful termination case, he discovered that workers at a rural plant were having hunting rifles shipped to the workplace for convenience purposes. This practice went unnoticed until one day co-workers terrorized another employee whom they considered a sissy. First it was taunts, then they brandished an unloaded firearm in his face. Management's poor judgment in this case led to a substantial out-of-court settlement. Initially I assumed that this was an isolated case. However, my recent personal experience suggests availability of firearms in the workplace may be more common than I thought. Despite my background in human resources, I was flabbergasted to learn that a major local service company whose workers have access to the public's homes would turn a blind eye to gun trafficking during coffee breaks. If it can happen in the Heartland's All American City, it can happen anywhere.
It is irrelevant that these private gun sales may have been legitimate. The real issues are that upper management had no knowledge of this practice and that middle management condoned it. This suggests serious flaws in the company's policies, security, and communication program.
A National Institute for Occupational Safety and Health alert, (Preventing Homicide in the Workplace, September 1993) revealed that between 1980-89, nearly 7,600 U. S. workers were victims of homicide in the workplace. "Homicide was the leading cause of occupational death from injury for women and the third leading cause for all workers" (p. 2.) During this period, guns were used in 75 percent of all occupational homicides.
Companies cannot afford to ignore these statistics and should prepare for potential gun-related and other acts of violence through a variety of prevention strategies. A first step is an assessment of the work climate. A key to avoiding violence is to insure an atmosphere of mutual respect and empowerment among employees.
Additionally, companies should implement policies and procedures for dealing with reporting, investigation, and consequences of harassment, making it clear that they will not tolerate threats or physical violence. Reporting procedures should be convenient and accessible. Some companies maintain a 24-hour hot line. Investigation should be swift, thorough, and completely documented.
Managers and supervisors need to be sensitive to employees' concerns and recognize that at times some employees may experience financial, marital, or other personal problems. In these cases a company can aid those in distress with proper intervention strategies such as counseling offered by an employee assistance program. This free counseling may be able to help the employee alleviate his or her problems and prevent a potentially volatile workplace situation. However, managers must be careful not to cross the line of an employee's privacy and should be trained accordingly.
All employees should receive training in such areas as conflict resolution, negotiation, and other interpersonal skills to maintain harmonious working conditions. They should also be trained to spot and report unusual behavior or symptoms that could spark a condition of violence. Such symptoms may be depression; social withdrawal; frequent absences; nervousness, irritability, or impatience; complaints of insomnia; or excessive fault finding with others. An audit of a company's security systems is critical. At the very least, limit access to the facility, implement visitor sign-in policies, and provide employee safety awareness training. Companies may also choose to include use of medical detectors, locks and alarm systems, employee ID badges, improved lighting, workplace surveillance (within federal, state and local legal limitations), panic buttons, and locked drop safes.
Moreover, companies should conduct new employee background screening to keep violent criminals from infiltrating its work force. Rigorous background checks will also help to avoid negligent hiring claims if an employee is harmed by a co-worker.
If you decide to engage an outside security firm, make sure that the firm conducts effective employee background checks on its security staff. Police discovered that the 1994 Tiffany heist was inside job. In response to this event, The Wall Street Journal labor column reported that the top 25 security firms admitted lax reference checking procedures. Within a twelve-month period, employees from these firms had committed over 250 serious crimes including murder and rape. Insist that security firm officials provide evidence of clean records for all guards on your premises.
Finally, develop a comprehensive crisis management plan that includes an emergency response team. Prepare team members to take over within ten minutes of the event and to handle multiple events. Each member should be assigned specific responsibilities before the any incident occurs. This eliminates irrational decision-making while under duress when faced with a real incident. Develop individual protocols for every type of workplace incident that involves violence. For example, include separate procedures for an employee who uses physical force, an employee who uses a gun, an employee who has a bomb, an employee who takes a hostage, or an employee who threatens suicide.
Each set of procedures should indicate who should be contacted for each type of incident. Each procedure should also state the steps to take until the appropriate help arrives, such as its internal security, law enforcement, or psychiatric assistance. Debriefing and counseling should also be an integral part of the protocol. Workplace violence can be a mentally shattering experience for observers and survivors. Have professional help available.
Whether one is a manager or nonexempt employee, fearfulness is debilitating. Employees have the right to feel safe at work. Human resources professionals must work with management to insure the workplace is free of harassment and harm by developing plans and programs that foster mutual respect and protection. Strong policies, effective security procedures, and continuous training will go a long way toward achieving this goal.
Fending Off Unreasonable Compensation Attacks
(Co-authored with Charles F. Schultz, CFS Consultants, Inc.)
In today's business climate, executive compensation frequently acts as a lightning rod, attracting scrutiny from a range of interested, often hostile parties. The IRS or dissident shareholders are the major groups that commonly attack closely-held or private companies.
The IRS often targets these businesses because the executives tend to be significant shareholders, thereby making them easy prey. The agency contends that these executives are less likely to maintain credible, arm's length negotiations on compensation arrangements than their counterparts in publicly held companies. Thus, if executive pay levels appear suspiciously excessive, the IRS will eagerly launch an assault. They will argue that a portion of the executive's compensation should be disallowed as a tax deduction because it represents a disguised dividend payment.
The agency's argument arises from the one-two double taxation punch delivered through tax law. The first blow comes when a company pays out dividends. Dividends aren't deductible from corporate income as an expense. The second punch is quick and sure. The IRS socks the executive/shareholder with a taxation hit on any dividends received. However, there are clear tax advantages for the executive/shareholder to receive income in the form of compensation because payment of reasonable compensation is a fully deductible expense for the corporation.
Taxation is not the concern of dissident shareholders. They will usually allege that excessive executive pay constitutes a waste of corporate assets. This, in turn, restricts the company's level of profitability and erodes the shareholder return. Regardless of who raises the question, the burden of proof to demonstrate that the executive's compensation is, indeed, reasonable rests with the company.
As an adviser to management, one of your roles is to monitor the compensation programs and identify atypical or irregular practices. If business conditions cause unusual compensation arrangements, it is critical and prudent to prepare and document a rationale that effectively defends management's compensation actions in the event of a challenge. Forewarned is forearmed.
We will review the strategies and factors used by privately or closely-held businesses to assist in their defense against unreasonable compensation complaints, audits, or litigation. Our focus will be on reasonable executive pay design from the compensation practitioner's viewpoint.
Defense preparations for reasonable compensation require a full assessment of the specific facts and circumstances surrounding the individual case. Various precedents set by audits and case law provide guidance in structuring a defense. These precedents involve thorough examination of three broad categories cited in unreasonable compensation cases: salary comparisons, performance of employees, and company conditions. To effectively build a case, carefully consider the following questions in the context of your situation.
We suggest that you expand your focus to total compensation when making pay comparisions.
You should also view the performance of employees relative to other companies.
Very importantly, you must look at the environment in which the company operates.
There is no single category, group of factors, bright line tests, or safe harbors that will universally insure a victory in a defense against a charge of excessive compensation. However, the dominant line of successful analysis involves the development of a viable external marketplace model. This market model establishes prevailing wages, benefits, and total compensation comparisons.
IRS regulation 1.162-7 (b) (3) specifically recognizes compensation as reasonable when it mirrors levels paid for services by like enterprises, under like circumstances. In our experience, an analysis of the following elements will determine the outcome of your defense against unreasonable compensation claims by the either the IRS or dissident shareholders. A well developed market model based on thoughtful analysis will strengthen the credibility of your data. In short, it is the bedrock for your case.
Be realistic in characterizing the universe of companies and industry segments against which you'll make pay comparisons. Guard against building a model that is too limited and be sure to reflect the full range of companies with whom you compete for executive talent. When considering the breadth and complexity of the executive's role, we often find the source of this talent pool comes from companies whose revenues range from half to three times greater than the revenues of the company under study.
Compile salary, annual, long-term, and market total compensation going rates as well as prevalence features for benchmark jobs that represent executive roles in your company. Use public (i.e., proxy statements), as well as respected published or proprietary survey materials as the basis for your data. Along with establishing prevailing base salary norms, identify the prevalence and cash equivalent value of other pay or benefit elements. These components are critical to developing a total compensation profile for the executive position. Specifically, define such elements as the:
In many instances, when you establish a comprehensive evaluation of total compensation, you will be able to identify gaps between your executive pay levels and the market. These gaps, which reflect shortcomings in your pay levels, are critical pieces in defending the reasonableness of your compensation.
Typically, during the early years of private or closely-held organizations, executives who are owners or founders will forgo market-level direct compensation until the business matures or stabilizes. Once the company achieves sufficient revenues and earnings, these executives may be awarded higher-than-market pay. The company's intent is to recognize the executive's prior sacrifice and efforts to offset foregone compensation. However, to sustain the tax deduction for the executive's current compensation, the company must justify its actions by establishing that the executive had been underpaid during the earlier years. This requires documentation of the amount of underpayments and that current compensation awards represent payment for past services.
Generally, the IRS only considers compensation awards from the present corporate employer. Typically, the agency's analysis disallows any undercompensation data paid by a predecessor entity. For example, if a sole proprietorship preceded the corporate business form, any executive earnings paid by that entity would be excluded.
Additionally, emerging, closely-held businesses are often remiss in maintaining the same strict corporate reporting standards as public companies. Such lax documentation will weaken an argument for claiming that executives were underpaid in previous years. You can prevent this situation by appropriately documenting the corporate minute book. This action is your best evidence of the company's intent that current pay levels are designed to counterbalance past awards. Thus, the company should formally note the specific periods of undercompensation in its resolutions. Equally important, companies need to file these resolutions early in the company's plan year. This precaution will avoid an IRS contention that the company based its compensation decision on the availability of profits from the current period, inferring disguised dividends.
There are generally two accepted methods for determining past year market going rates for executive jobs. You either can obtain compensation data from the specific period under scrutiny or discount contemporary salary and total cash information by the rate at which external market wages increased during prior periods. By summing total compensation levels available in the market for a series of years, it's possible to demonstrate that current pay levels exceed market norms because of earlier shortfalls.
The role performed by an executive may be substantially broader and of greater complexity than typical positions in comparable firms. An area for potential analysis is the organizational structure. If the structure is lean, the executive probably carries greater responsibility than comparable positions in other companies.
You can often support an argument for higher pay by detailing that the executive is directly responsible for multiple activities, such as customer sales, new account acquisition, and financial analysis. The costs for absorbing these responsibilities normally performed by others would legitimately reflect a 10 to 30 percent pay premium for the executive. This action recognizes the scope and diversity of the executive's role and is common compensation practice.
The services and presence of a key executive may be indispensable to a closely-held firm's survival and continued prosperity. In a highly competitive business, a rainmaker may be necessary and paid accordingly. Customers, vendors, lenders, and investors may regard the quality and nature of an executive's efforts as essential elements in their willingness to do business with the company. Companies that consistently document an executive's critical business activities (key customer relationships, financial transactions, or client deals) tend to successfully support atypical compensation levels.
An executive compensation survey conducted by the wholesale industry identifies pay premiums for owner versus non-owner executives. When controlling for scope and demographic variables, results indicate that an executive who is also an owner/founder in a firm may realize from 15 percent to 50 percent more compensation than a non-owner in an equivalent position. During our years in practice, we've also observed this phenomenon throughout a wide range of industries. This pay premium is a valid consideration and may help you effect a favorable market comparison in situations where owner/founders exist.
Business advisers are keenly aware of the importance of a formal compensation philosophy. This philosophy expresses how the company positions total pay against the appropriate marketplace. It also provides the rationale for its market positioning. This rationale may ultimately serve as the essence of your defense.
Personnel handbooks, board minutes, or company-to-market salary and total pay comparisons, may be persuasive devices for explaining why an executive's pay leads market rates. Indeed, we've observed many cases where a company has expressed a pay philosophy to match the market's compensation at a premium level (that is, third quartile level) over going-rate total compensation.
The application of your internal pay policies may create additional support for why executive pay leads the market. Here, the objective is to demonstrate that the executive's rate of pay increase is in step with the company's middle management personnel. For example, the market may suggest average increases for middle management are 6%. However, the company chose to award their middle managers 8%. If the company awards top management the same percentage, then executives receive the same treatment as their internal management staff. This illustrates that salary or incentive/bonus awards are consistent with the company's internal pay policies and thereby reflect a business justification to pay at the designated levels.
The IRS relaxed its position that a corporation's failure to pay a dividend will automatically result in the finding of disguised dividends. In these cases, the IRS and courts will allow the tax deduction for personal service income when the company offers legitimate evidence for retaining cash in the business. As part of your strategy for defending reasonable compensation, you should consider the company's past business practice and documents to support why cash was not paid out as dividends. For example, there may have been a need to replace plant and equipment, to acquire buildings, or to provide funds for product development.
One of the litmus tests used by the IRS to determine reasonable compensation arrangements is the independent shareholder standard. This standard, which evolved from judicial rulings, asserts that compensation is reasonable if an independent shareholder would realize an acceptable level of total return after payment of executive compensation.
Stock appreciation, dividend yield, or a combination of the two contribute to acceptable returns on stockholder's investment. Thus, the withholding of dividends while paying out substantial compensation awards would not necessarily trigger a claim for unreasonable compensation. According to the independent shareholder standard, the concern over failure to pay dividends may be offset by the fact that the value of the company's stock may have achieved significant gains.
Superior company performance typically justifies awarding above-market pay. High performance, coupled with an existing formal, systematic incentive arrangement, may persuasively deflect IRS claims that the mere availability of year-end profits was the basis of excessive bonus/incentive awards. Courts favorably view above-market total compensation levels when companies maintained prescribed, systematic incentive formulas or programs. We strongly recommend the implementation of structured incentive plans, particularly when the executive is a significant shareholder. These arm's length agreements can be among your strongest assets in supporting the reasonableness of above-market cash awards during periods of high performance.
The following case demonstrates the interplay of the three broad groups of defensive compensation factors: salary comparison, performance of employees, and company conditions. This is an actual case. However, we created a fictitious name and changed other potentially revealing information to protect client confidentiality.
As a business adviser, top management relies on you to help prevent bloody battles with dissident shareholders and the IRS. A formal compensation philosophy, performance driven compensation programs, solid documentation of business activities, and a full understanding of your company's market all contribute to successfully sustaining a defense against IRS or shareholder attacks. Work shoulder to shoulder with your tax adviser and corporate counsel when designing or modifying compensation arrangements. Precautionary measures will help preserve tax deductions, avoid costly courtroom confrontations, and provide a viable tool to reward executive performance.
360 Feedback: Comparing Installed Software, ASPs, and Service Bureaus
What's the Best Choice for You?
In the December 1998 issue of HR Magazine, we assessed four major 360 degree software tools based on a variety of technical criteria and organizational needs. Prior to this article, we had no vendor relationship. However, as a result of extensive testing, we first chose 20/20® Insight GOLD as the best option for our clients. At the time, we felt it was the most flexible, comprehensive, user friendly 360 degree software system available on the market.
During the past several years, we continued to monitor the market for improvements and technological advancements and assess new products. With the explosion of the Internet, we found other equally appealing products to serve our clients. As the year 2000 approached, a new wave of 360 degree feedback products hit the market known asApplication Service Providers (ASPs). The ASP created new opportunities for customers to go directly to the Internet to deploy their 360 projects and get them up and running with as little as four hours training. Several software based products jumped on the bandwagon and added an ASP option to their suite of offerings, or they added the Internet as media option to their software. We were particularly impressed with Panoramic Feedback's™ ease of use, colorful reports, quick loading and responsiveness and added them to our toolbox.
Additionally, there is a third form of 360 feedback service that has always been there, but also serves a need for clients: The 360 feedbackService Bureau. In the past service bureaus having been highly labor intensive and relatively costly. However, when combined with new Internet-based products, this service has become a less costly and quite a viable option for clients. Our firm offers this service to clients who have very small one-time projects, larger projects with no staff to manage them, or who want to pilot the 360 feedback process before investing in a an organizational wide rollout. We can offer this service through through a variety of products that we represent. It is always the client's choice as to which product they want to use.
Brief Overview of the Difference Between Software, ASPs, and Service Bureaus
As you investigate which type of product or service is right for you, we encourage you to do two key things. First, get a handle on the differences among all three forms of 360-degree feedback offerings and then determine which will best fit your needs. Next compare products within the type of configuration you choose. To help you, let's define the three configurations very simply, examine how they work, and consider some pros and cons. Before we begin, let's make the following assumptions about all three configurations:
1. They will allow you to customize your questions.
2. They will allow you to add comments.
3. They provide a library of questions from which to draw or modify.
4. They will automatically generate reports and do not require any data entry of feedback items unless you need to use some paper-based feedbacks for certain individuals.
5. They will allow you to customize your rating scales and define them as you wish.
6. They will allow you have your respondents provide feedback directly on the Internet
360-Degree Feedback Software Systems
Software systems typically offer you software in which you pay a one-time license fee to the developer for the software to run the 360 applications. You will maintain the system on your PC or local area network (LAN). Good systems will offer you multi-media options. If you want to include the Internet as a media option, these systems will provide a web hosting service to you and charge you a bandwidth fee for usages, or they will provide you additional software for your InTRAnet server. However, not everyone in your company may have access to the Internet. In those cases, you may want to deploy the 360 feedbacks via your LAN (local area network), diskette, or paper in addition to the Internet. These systems will accept the data and combine it effortlessly into one report. They will allow you to mix and match media for the same subject. Thus, one person who is a respondent for John Jones may use the Internet, two others may use diskettes, and one may use the LAN. No problem.
Typically, you pay a base price for the administration software. Sometimes you pay an additional one-time fee for web hosting setup or for internal server software. Those are your fixed costs. You then have some potentially variable costs for usages. Usages are typically priced based on the subject being evaluated and can be single usage or unlimited usages. Sometimes you are also charged for respondents. Each vendor prices things a little differently, and some offer a one-time enterprisewide usage license that that covers all employees with no on-going additional charges. You'll have to compare to determine which is best for you. (See my vendor comparison chart to get the details on this.) Most, but not all, vendors charge you 15% to 20% annual maintenance fee to cover their costs of product improvements, technical support, and upgrades.
Pros: These systems can be cost effective if you have relatively low turnover, want to survey your employees on an ongoing basis or multiple times a year, desire complete control of your data, and expansive reporting options, such as time-one, time-two reports, aggregate reports for departments, etc.
Cons: These systems, because they are often highly flexible and feature rich, require a couple of days training and someone to manage the system and make sure all updates are downloaded and installed. While the training is not particularly difficult, it does require a fair amount of computer literacy with MS Windows and involves a longer initial set up time than with other options.
360-Degree Feedback Application Service Providers (ASPs)
ASPs are a wonderful way to get your 360 feedback projects off to a fast start and keep your administrative time to a minimum. These systems typically will allow you to import your employee data to the web and provide you with all the tools to set up your project on line with easy, step-by-step instructions. Good systems will be designed to load quickly, save response data quickly, and allow respondents to leave the system and return later to complete it without losing data if they are interrupted. They provide opportunities for direct email notifications and automatic email reminders and will generate individual and aggregate reports directly from the web and send them to recipients or the administrator in PDF format. A review of the updated grid that follows shows that ASPs have dramatically increased their menu of features in the past year, enabling greater reporting capabilities and flexibility.
Fees for an ASP are typically designed in a "pay-as-you-go format." There is generally an initial setup charge to give clients entry to the site and perhaps create a customized page with the client’s logo. Once that has been established, clients purchase usages, as they need them. Typically there are volume discounts.
Pros: You can begin a 360-feedback project for relatively low time and investment costs. There is no software to maintain and upgrade. The ASP continually upgrades its product, which is transparent to the administrator or respondent. The ASP will notify the administrator of new available features, but typically there is some type of on-line wizard to guide you through new features. Some ASPs will allow on-line rater selection, relieving the administrator of many of the initial setup chores.
Cons: Your employee data is housed on another's site, which may make some companies uncomfortable. However, good ASPs have secure sites that basically eliminate this concern. From a pricing perspective, ASP’s "pay-as-you-go" fee structure over the long run may generate significantly higher costs than a software-based product that provides for a one-time enterprise usage license. You will have to conduct a cost comparison over a three-year period to get a true picture. Conversely, these projected costs may be offset by the lower initial investment of an ASP, allowing you to plan for this through general operating budgets rather than capital budgets.
360-Degree Feedback Service Bureaus
Service Bureaus essentially do all the work for you. You just need to provide them basic employee information in electronic format (easy to do as an export file from your HRIS system), and they do all the setup and administration for you. Some will charge for purchasing their data bank of questions, others will not. Some service bureaus only operate on the Internet. Others will accept other forms of media, such as paper, scan forms, diskettes, or email attachments. They will often work with you in the design of your questionnaire and any process consulting you need (e.g., communication, policy issues, etc.) or they will simply act as a processor for you. Many firms use this mode of 360 feedback for their senior managers when they want to do a one-time project. Our firm has frequently supplied this service to organizations that want to run a pilot prior to purchasing a product we represent or for organizations that simply don’t have the time or resources to do it themselves.
Pros: Zero training and your administrative involvement is at a bare minimum. The service bureau handles all the administrative details. They'll set up the survey questions, invite the participants, collect the data, and generate and distribute the reports for you. You are often not restricted to standard reports. They often will customize reports and give you data exactly as you want it. The fact that the data is being collected and crunched by a third party may be appealing if you have confidentiality concerns about who sees the final reports. Or, if you are a highly technical company where there are concerns that individual respondent data may be compromised, third-party service bureaus remove the confidentiality concerns. (In reality, however, ASPs or software programs are typically very secure and encrypt individual respondent data.)
Cons: Costs are typically higher because someone else is doing the labor to set up on the project and you are using their system for data collection and web access. If you want special customization, be prepared to pay more. Depending on the service bureau, they may have a menu of charges and will charge you for every change. Others will have a package price to allow for these changes. Check your agreements carefully.
We are not focused on selling you one specific product. We listen to your needs and narrow down your choices to the one or two products that fit your budget and meet your requirements. We can also act as a service bureau, since we are also licensed on several of the products we represent. Furthermore, we offer process consulting, communication, training, and coaching as part of our suite of services. Our objective is to provide you with a solution to your 360-degree feedback needs so that you can sort through this process with ease. To view our vendor comparison grid click on the HRMagazine cover below. Once there, you can request a PDF format of the detailed comparison which will be sent to you free of charge.
List of Professional Publications
Fried, N. Elizabeth. 2000/01 Survey of exempt and nonexempt on-call pay policies: Job-site vs. home-based, Dublin, OH: N. E. Fried and Associates, Inc., 2000.
Fried, N. Elizabeth. 360 degree feedback software roundup: Selecting the right tool. (Part I) IPMA News, July, 1999, pp 26-27.
Fried, N. Elizabeth. Sleeper pay causes employee nightmare. IPMA News, July, 1999, p.8, Doc.#4005.
Fried, N. Elizabeth. Retention Bonuses: Compensation arrangements designed to hold key people during mergers, acquisitions, divestitures, relocations, closings, liquidations, bankruptcies, and special IT projects. Dublin, OH: N. E. Fried and Associates, Inc., 1999.
Fried, N. Elizabeth. 360 degree software shootout: Comparing features with needs. HRMagazine Focus on Technology Supplement, 1998, 43(13), 8-13.
Fried, N. Elizabeth. Get paid what you're worth: How to ensure that your pay reflects your broadened skills and responsibilities. OfficePro, 1998, 58(5), 6-9.
Fried, N. Elizabeth. 1998/99 Survey of exempt and nonexempt on-call pay policies: Job-site vs. home-based, Dublin, OH: N. E. Fried and Associates, Inc., 1998.
Fried, N. Elizabeth. Retention Bonuses: Compensation arrangements designed to hold key people during mergers, acquisitions, divestitures, relocations, closings, liquidations, and bankruptcies. Dublin, OH: N. E. Fried and Associates, Inc., 1996.
Fried, N. Elizabeth. 1996/97 Survey of exempt and nonexempt on-call pay policies: Job-site vs. home-based, Dublin, OH: N. E. Fried and Associates, Inc., 1996.
Fried, N. Elizabeth. When the police come knocking. HRMagazine, 1995 40(6), 76-81.
Fried, N. Elizabeth. Chief executives own high level of company stock. Compensation Guide: Benefits & Compensation Update, New York: Warren Gorham Lamont, 1995 2(4), 4.
Fried, N. Elizabeth. Sex, laws & stereotypes: Authentic workplace anecdotes and practical tips for dealing with ADA, sexual harassment, workplace violence, and beyond . . . Shawnee Mission, KS: National Press Publications, 1995. (Business Users Manual)
Fried, N. Elizabeth. It's scary out there. B & C Solutions, 1995 17(2), 36-37.
Fried, N. Elizabeth. 1994/95 Survey of exempt and nonexempt on-call pay policies: Job-site vs. home-based, Dublin, OH: N. E. Fried and Associates, Inc., 1994.
Fried, N. Elizabeth. Holding the bag. HRMagazine, 1994 39(5), 76-78;81.
Fried, N. Elizabeth. Sex, laws & stereotypes: Authentic workplace anecdotes and practical tips for dealing with ADA, sexual harassment, workplace violence, and beyond . . . Dublin, OH: Intermediaries Press, 1994.
Fried, N. Elizabeth. Job evaluation. Compensation Guide, New York: Warren Gorham Lamont, 1994.
Fried, N. Elizabeth. Pay structures. Compensation and Benefits, WGL's Human Resource Series, Alexandria, VA: Warren Gorham Lamont, 1994.
Fried, N. Elizabeth. Job evaluation. Compensation and Benefits, WGL's Human Resource Series, p. 215:3101 Alexandria, VA: Warren Gorham Lamont, 1994.
Fried, N. Elizabeth, & Davis, John H. Developing Statistical Job Evaluation Models: An Approach to Building a Job-Worth Hierarchy, Scottsdale, Arizona, American Compensation Association, 1993.
Fried, N. Elizabeth. Retention bonuses: How to run smartnot scaredwhen buying or selling a business. B & C Solutions, 1993 15(11), 48-49.
Fried, N. Elizabeth. Job evaluation methods. BNA's Compensation and Benefits Guide, p. 101:3025, Washington, DC: The Bureau of National Affairs, Inc., 1993.
Fried, N. Elizabeth. The right software partner will make your programs dance. B&C Solutions, 1993 15(9), 44-45.
Schultz, Charles F. & Fried, N. Elizabeth. Everything with reason. Small Business Reports, May, 1993, pp. 45-49.
Fried, N. Elizabeth. Secretarial grading practices: 1993 update. Dublin, OH: N. E. Fried and Associates, Inc., 1993.
Schultz, Charles F., & Fried, N. Elizabeth. Fending off unreasonable compensation attacks. HR Magazine, 1992 37(6), 49-54.
Fried, N. Elizabeth. Bizarre behavior at work. HRMagazine, 1991 36(6), 86-91.
Fried, N. Elizabeth. Outrageous conduct: Bizarre behavior at work. Dublin, OH: Intermediaries Press, 1991.
Fried, N. Elizabeth. Compensation arrangements designed to hold key people during acquisitions, mergers, divestitures, closings, liquidations, and bankruptcies. Dublin, OH: N. E. Fried and Associates, Inc., 1991.
Fried, N. Elizabeth. Retention strategies that survive a sale. HRMagazine, 1990 35(10),40-42.
Fried, N. Elizabeth. Compensation arrangements designed to hold key people during acquisitions, mergers, and divestitures. Dublin, OH: N. E. Fried and Associates, Inc., 1990.
Fried, N. Elizabeth. Improving secretarial pay practices. Perspectives in Total Compensation, 1(5), Scottsdale, AZ: American Compensation Association, 1990.
Fried, N. Elizabeth, & Ding, Mae Lon. Microcomputers in Compensation Administration. Personnel Management: Compensation Service, pp. 10,661-10,667, Englewood Cliffs, NJ: Macmillan, Inc., 1990.
Fried, N. Elizabeth, & Ding, Mae Lon. Microcomputers make compensation administration more effective. Journal of Compensation and Benefits, 1990, 5(6), 334-339.
Fried, N. Elizabeth. Improving secretarial pay practices. The Journal of Staffing & Recruitment, 1990 1(4), 16-20.
Fried, N. Elizabeth. Secretarial grading practices: 1990 update. Dublin, OH: N. E. Fried and Associates, Inc., 1990.
Fried, N. Elizabeth. Secretarial pay practices: 1988 update. American Compensation Association News, 31(5), 6, Scottsdale, AZ: American Compensation Association, 1988.
Fried, N. Elizabeth. Diffusing the secretarial time bomb. Human Resource Executive, 1988, 2(8), 50-51.
Fried, N. Elizabeth. Employers need to rethink the way they pay secretaries. Journal of Compensation and Benefits, 1988, 4(2), 95-98.
Fried, N. Elizabeth. Determining secretarial pay. The Secretary, 1988, 48(7), 12-13.
Fried, N. Elizabeth. Business needs to change its view of secretarial value. Business First, June 13, 1988, 4, 5.
Fried, N. Elizabeth. Secretarial grading practices: 1988 update. Dublin, OH: N. E. Fried and Associates, 1988.
Fried, N. Elizabeth. Selecting a secretarial job evaluation system. Personnel Management: Compensation Service, pp. 207-211, Paramus, NJ: Prentice Hall, 1986.
Fried, N. Elizabeth. Job description manual: A tool for improved distributor productivity and planning. Oakbrook, IL: Associated Equipment Distributors, 1986.
Fried, N. Elizabeth. Why write job descriptions? The Effective Executive, February 11, 1985. Dartnell Corporation. Chicago, IL.
Fried, N. Elizabeth. An analysis of interrelated trends and conditions affecting the selection of a secretarial job evaluation system. Dublin, OH: N. E. Fried and Associates, 1985.
Fried, N. Elizabeth, & Johnson, Mildred. Tuition reimbursement handbook. Columbus, OH: Franklin University, June, 1984.
Fried, N. Elizabeth. Microcomputers bring new flexibility to compensation administration. Personnel Management: Compensation Service, pp. 577-580, Englewood Cliffs, NJ: Prentice Hall, April, 1984.
Van de Voort, David M., McHenry, Jeffrey J., & Fried, N. Elizabeth. A policy-capturing approach to the valuing of managerial jobs: Developing a standardized, computerized job grading system. Dallas, TX: Paper presented to the Academy of Management annual meeting, August, 1983.
Fried, N. Elizabeth, Kohlbacher, Mary K., & Spangler, Wanda F. Proofreading communications, Rehoboth, MA: Twin Oaks Publishing, 1983.
Fried, N. Elizabeth, & Kohlbacher, Mary K. Nationwide's proof is the package. Words, 1979, 8(3), 32-34.
Fried, N. Elizabeth. Clerical employment tests: Are they valid? Dartnell Office Administration Service, February, 1979 (File 9: Recruiting & Hiring).
Fried, N. Elizabeth, & Kohlbacher, Mary K. Word processing aids blind programmer. The Office, 1978, 88(5), 52; 56; 58.
Fried, N. Elizabeth. The contribution of typewriting speed, spelling, and proofreading skills to transcription abilities of IBM magnetic keyboard operators (Doctoral dissertation, The Ohio State University, 1978). Dissertation Abstracts International, 1978, 39, 2704. (University Microfilms No. 7819595)
Fried, N. Elizabeth. Company training programs: Are the dollars justified? Dartnell Office Administration Service, April 1978 (File 11: Training).
Fried, N. Elizabeth, & Kohlbacher, Mary K. Word processing and administrative support must be a team effort. The Office, 1978, 87(6), 84; 86; 88-89.
Fried, N. Elizabeth, & Kohlbacher, Mary K. Nationwide's wp policy pays off. Words, 1978, 7(1), 42-43; 45.
Fried, N. Elizabeth, & Johnson, Carole M. Business education: Our role in educating the handicapped. Journal of Business Education, 1977, 53(1), 4-5.
Fried, N. Elizabeth, Johnson, Carole M., & Ferran, Guadalupe. Good-Bye Smith-Hughes. The Ohio Reporter, 1977, 25(3), 2.
Fried, N. Elizabeth. Facing future mailing standards. Journal of Business Education, 1977, 52(4), 169-171.
Fried, N. Elizabeth. New dimensions in general business. Unpublished minigrant report. Columbus, OH: Columbus public School System, 1972.