Tuesday, May 12, 2015

Non Competes: The Good, The Bad and The Ugly

By guest author: pmphrblog for Portnoy, Messinger, Pearl & Associates, Inc. Tri-State area human resources and labor relations consulting firm.

In today’s information economy, the protection of proprietary information is becoming even more essential. Employers, in increasing numbers, are requiring employees to sign so called “covenants not to compete,” or non-compete agreements. A covenant not to compete is an agreement that the employee will not work for a competitor for a specified period of time. In addition to confidentiality agreements, this is a powerful tool to prevent employees from misappropriating proprietary information such as trade secrets, or client information and supplying it to competitors. Such agreements also prevent employees from poaching clients and starting their own firms.

Who should sign non-compete agreements?
Employees who pose the greatest risk to theft of proprietary information should be required to sign these agreements. Thus, courts are far more likely to enforce a non-compete against an engineer or an accountant, than a janitor.

There are numerous pros and cons of requiring employees to sign non-compete agreements. In some cases where the risk to proprietary information is high, they are a necessity. In other situations these factors should be weighed to determine if one is necessary.

Some advantages of non-competes are that they:

  • Protect trade secrets and other confidential information,
  • Can help prevent high performing employees from leaving and working for competitors,
  • Prevent the loss of clients or key customers when an employee leaves, and
  • Have the effect of improving retention.
On the other hand requiring employees to sign a non-compete can create tension between employees and employers, and may induce some employees to quit immediately. It may also be more difficult to attract talent, as incoming employees may be reluctant to sign a non-compete. Moreover, such agreements may be found unenforceable in court. Even if the agreement is enforceable, the costs of enforcement can be prohibitive. Enforcing such agreements often requires the retention of an attorney and the initiation of a lawsuit which can cost an organization thousands of dollars in legal fees.
Covenants not to compete must be reasonable in terms of the following three areas:

1. Duration: Courts will generally not enforce a non-compete that has a duration longer than two years. The shorter the duration, the more likely courts will find the agreement reasonable.

2. Geographic Scope: It becomes more complicated when deciding the geographic scope. The scope must be limited to the area where the business primarily operates. For example, an organization that does most of its business in New York, New Jersey, and Connecticut must limit its non-compete to those states. Most nationwide non-compete agreements are unenforceable except for high level employees at large corporations.

3. Industry: Non-competes must be limited to the particular industry of the employer. For example, a company that produces semi-conductors cannot prevent an employee from working in a restaurant or other unrelated industry.

Overall these agreements must be drafted in a way that satisfies their purpose of protecting proprietary information, while not being excessively burdensome on the employee. These agreements are not always looked favorably upon by the courts.  The courts have placed limits on the scope and reach of non-compete agreements. Thus, employers must weigh these advantages and disadvantages when deciding whether to require employees to sign a non-compete. All agreements should be reviewed by counsel before asking an employee to sign it.

This article is intended for general information only and should not be construed as legal advice.

For more information on labor relations please visit us at:

About Portnoy, Messinger, Pearl and Associates:

Portnoy, Messinger, Pearl and Associates, Inc. (PMP),  the oldest labor relations consulting firm representing management on Long Island, was founded in 1964 by former union organizer and worker’s rights advocate, Murray W. Portnoy.  Initially, Murray offered human resource consulting and union contract negotiating services to a handful of clients. Today PMP has a full staff of experienced and talented human resources and labor relations consultants, labor and employment attorneys, and administrative personnel. Murray Portnoy's values and vision remain at the core of PMP's mission and principles.

Monday, May 11, 2015

Be Frugal and Generous

There are a few people who I love reading everything they write and every interview they give. One of those people is Google's head of HR (officially, "head of people operations"), Laszlo Bock. That definitely rang true as he gave a recent interview to The Guardian with ten tips to get ahead at work. There are a ton of great parts in there (pay unfairly, spoil your best workers, choose a job that makes you happier, etc) but my favorite one was this: Be Frugal and Generous.
Most things Google does for its people costs nothing. Have vendors bring services in-house or negotiate lunch delivery. Guest speakers require only a room and a microphone. Save your big cheques for the times when your people are most in need. Your generosity will have the most impact when someone needs emergency medical attention or when families are welcoming new members. 
This is true even for the smallest company. My father founded an engineering firm that he led for over three decades. He cared deeply for each of his people. When any of his team reached five years in tenure, he took them aside and told them that the company had a pension plan, and at five years they were fully vested in it. 
In addition to whatever they’d been saving, he had also been putting money aside for each of them. Some cheered, some cried, some simply thanked him. He didn’t tell people earlier than that because he didn’t want them to stay for the money. He wanted them to stay because they loved building things and loved the team.
I've been at companies that spent wildly on their employees...and then had to cut them later to save money. I've been at companies that held tight to every dollar...and then had employees leave because they were way too frugal. This seems like great advice on how to fit in between.

You don't have to give everyone a pension plan that you personally pay into or bring in lunch every day--sometimes, you just need to find a way to show you care and do the things for your employees that show you appreciate they stuck around. Bock has some great ways to do that in this piece.

Tuesday, May 05, 2015

Advice for Working Remotely--or from Anyplace

After spending almost a year working remotely, I've written about quite a few do's and don'ts for doing so yourself. There was an article recently in Medium with some advice for working remotely. While I actually don't think this article is a great one for working remotely, I do think there are a few key takeaways for any employees.

The best of them references one of my favorite apps, Pocket, and described a real-life work situation:
Here’s an example: It’s Tuesday, 11am — I’m working away on a project, when Twitter prompts something of interest… Oh, man, I’m interested! Let me just click and see what it’s all about… …No, wait a minute, I’ve been in this situation hundreds of time: I’m about to click away and lose my focus… Yes, I want to read this article! And if I read it now, I’ll lose my focus for sure! Instead, I add content to Pocket, it bookmarks things on all devices — I then review it in my own time.
You will never be able to keep your employees away from other websites during work hours (I don't think you even want to, in all honestly). But the key is to keep them from sitting and reading and not paying attention to their work.

Bring in Pocket which will not only save that article to read later, but also download the article to your smartphone. So if you, like me, take a subway to work or travel for work (and so have some time without cell coverage), you can read this article on your phone. Fully downloaded.

And if you find a good article like this that you want to make sure you put in a blog post, well, you can save it and then send it to yourself and it ends up here. Whether you work from home or from your office, using productivity apps like Pocket can help you be a better employee. 

Tuesday, April 28, 2015

Dealing with Organizational Changes

According to a 2013 Towers Watson survey, 25% of employers sustain advantages from organizational changes over the long term. The notion of change can be quite alarming for many.  However, change is inevitable for organizations, given the environment we’ve experienced over the last decade. In this issue of Astronology, we discuss organizational change…and ways to do it successfully.

Change is inevitable, considering in the last 10 years we’ve had to deal with

  • The economic downturn and slow recovery
  • An increasing demand for employees with technical skills
  • Overall process changes with advancing technology and globalization

Some organizations, in order to stay afloat, have had to deal with mergers, technical skills upgrades for employees dedicated to outdated methodologies & technologies, and changes in lead staff due to early retirements & layoffs.  With only 25% of employees seeing an advantage in these sometimes necessary and generally large adjustments, it’s important to understand what the major factors are in making organization-wide changes and having participant buy in for successful results.  To facilitate success, managing change can be broken into two factors: planning and following up with execution.

Planning

Although it sounds easy, planning is anything but. Planning involves more than just identifying areas that need change. It also involves recognizing the areas of concern, and addressing & managing worker enthusiasm, or “buy in” to change.

In order to have workers buy in to change, they must be motivated to want to change. This is mainly done by alleviating the natural anxiety that comes with facing an unknown future. This is where education and training become important. When workers are aware of what to expect and how to handle it, anxiety is lessened. When workers feel involved in making changes, whether by input in the design of change or having a dignified role in its execution, control is given which can lessen anxiety. Anxiety can also be lowered by making clear to workers what the organization’s mission is in conjunction with the new changes. Including team building moments leading up to the change can give a sense of security and comradery. Giving evidence that workers will have the opportunity to build their own careers from these changes is also a great incentive. Clear communication on these points is of high value.

Execution

During the execution of change activities, availability of support is crucial. Employees must know that they have the resources available to carry on their responsibilities during and after the change. It is also imperative that leaders are available to give support, clear communication, and even commendation during the adjustment. Human Resources expert Susan Healthfield expresses, in an article for the human resources page on about.com, “Spend extra time and energy working with your front line supervisory staff and line managers to ensure that they understand, can communicate about, and support the changes. Their action and communication are critical in molding the opinion of your workforce.” She makes mention of a previous client that had to deal with changes in work teams. The client had expressed that they wished they had handled differently mid-level managers who resisted change. The client had given these particular managers 18 months to buy in to the change.  It was observed that this kindness undermined the change for some time.
                  
Inc.com’s online article, “Managing Organizational Change” lists these key steps when making organizational changes:


  • Understand the current state of the organization.
  • Identify problems the organization faces.
  • Assign a level of importance to each one.
  • Assess the kinds of changes needed to solve the problems.
  • Competently envision and lay out the desired future state of the organization.
  • Carve the ideal situation for the organization after the change is implemented.
  • Convey this vision clearly to everyone involved in the change effort.
  • Design a means of transition to the new state. An important part of the transition should be maintaining some sort of stability.  Some things—such as the organization’s overall mission or key staff—should remain constant in the midst of turmoil to help reduce people's anxiety.
  • Implement the change in an orderly manner.
  • Manage the transition effectively. It might be helpful to draw up a plan, allocate resources, and appoint a key person to take charge of the change process.
  • The organization’s leaders should try to generate enthusiasm for the change, by sharing their goals & vision, and acting as role models. In some cases, it may be useful to try for small victories first in order to pave the way for later successes

Tuesday, April 14, 2015

The Difference Between a Great Manager and an “Okay” Manager

According to a report from gallup.com, “managers account for at least 70% of variance in employee engagement…”.  With a March 2015 survey discovering that only 32.9% of employees are engaged at work, clearly management has a dramatic impact on employee engagement and work productivity. In this issue of Astronology, we look into the characteristics needed to define great management versus mediocre management.

As discussed in our first Astronology article of 2015, there are various areas that managers can target to improve employee engagement. Those highlighted areas were the following:
·       Goal Setting
·       Communication
·       Promotion of Work / Life Balance

       Targeting these areas can be the start of attacking a bigger issue for managers…manager engagement. An April 2015 Gallup report stated that although 54% of managers with high talent are engaged at work, just 35% of all U.S. managers are engaged in their work and workplaces. 51% of U.S. managers are not engaged…and 14% are actively disengaged.

Ultimately, the difference between a great manager and an “okay” manager is leadership quality. The April Gallup report discovers that the talent of being a great manager is found in one out of 10 people, while another two in 10 possess a basic talent for management. With training and coaching, these abilities can be heightened. The talents Gallup observed in great managers are the following:
·       Ability to motivate every employee to take action via engagement
·       Assertiveness in driving outcomes and overcoming adversity & resistance
·       Create a culture of accountability
·       Build working relationships that create trust, open communication, and full transparency
·       Make decisions based on productivity…not office politics

Many other articles support these observations. John Kotter, Konosuke Matsushita professor of Leadership at Harvard University expressed, “Management is a set of processes that keep an organization functioning. They make it work today – they make it hit this quarter’s numbers. The processes are about planning, budgeting, staffing, clarifying jobs, measuring performance, and problem-solving when results did not go to plan.” All of these are processes are necessary in order to get an organization functioning.  However, the qualities to lead, to be a great manager, involve “aligning people to the vision, that means buy-in and communication, motivation and inspiration.” An inc.com article listed the following similar nine qualities that define great leadership:

·       Awareness
·       Decisiveness
·       Empathy
·       Accountability
·       Confidence
·       Optimism
·       Honesty
·       Focus
·       Inspiration

Similar qualities were mentioned in a Houston Chronicle online article. If one in 10 people possess these qualities, there is a strong possibility right now in work groups and in various sections in organizations that great managers, great leaders, are literally waiting to be cultivated. Have you recently identified these qualities in your managers? Do you see potential in certain workers? How does your organization cultivate leaders? Write to Astronology with your thoughts!

Tuesday, March 31, 2015

Neglecting Retirement Plan Fiduciary Obligations: Plan Sponsors have “Nowhere to Run”

Summary

Employers who sponsor defined contribution (DC) retirement plans for their employees select the plan’s broker, record keeper, and third party administrator (TPA) as well as determine the plan design, pick investment options, and educate employees about the program. These plans can be rewarding and beneficial for both employer and employee. Most such plans are, however, subject to the Employee Retirement Income Security Act of 1974 (ERISA) which imposes significant fiduciary obligations on the individuals serving as plan sponsors. In some cases the individuals can be held personally liable for losses.

The good news is that the government provides guidance for best practices which, if followed, significantly reduce plan sponsor liability. These practices address vendor selection (broker, record keeper and TPA), investment guidelines, and educational policy among other matters.

The article outlines the key points of a strong retirement program that will significantly reduce fiduciary liability.

Real World Risks

Three examples where plan sponsors failed to meet their ERISA fiduciary obligations:

  • Flagstar Bank agreed to make a $3 million payment to its 401(k) plan for allowing investments in its own stock during the Great Recession, “when they allegedly knew, or should have know, that such investment was imprudent.”
  • Coin Builders LLC of Wisconsin Rapids and its president was sued by the Department of Labor for improperly transferring $1.3 million in plan assets to a Coin Builders bank account. The president also allegedly handled plan assets without being bonded as required by ERISA.
  • Engineering giant Bechtel has agreed to an $18.5 million settlement of an excessive 401(k) fee suit.
  • The following retirement plan strategies may reduce the likelihood that these types of lawsuits will happen to your organization.

Core Elements of a Retirement Plan

All ERISA retirement plans must include:
  • A written plan that describes benefit structure and guides day-to-day operations.
  • A trust account that holds the plan’s assets.
  • A recordkeeping system to track the flow of monies to and from the plan.
  • Reports that furnish mandatory disclosures (e.g., fees)  to plan participants, beneficiaries, and government.

Who Will Manage Your Retirement Benefits Plan?
Selection of reputable and competent vendors and assignment of the right staff or board members are integral to implementing a compliant plan:
  • Hiring outside professionals (e.g., investment advisor)
  • Forming an internal administrative committee
  •  Assigning management to Human Resources if applicable
  •  A combination of the above

Six Important Rules for Fiduciaries of Retirement Plans

Following these six rules can help reduce fiduciary risk:

  1. Act solely in the interests of the plan participants and exclusively for the purpose of providing benefits.
  2. Act "prudently" and document decision making
  3. Follow the terms of your plan (except where it conflicts with ERISA) and keep it current.
  4. Diversify investments to minimize risk of loss
  5. Pay only "reasonable" expenses and fees
  6. Avoid "prohibited" transactions
The “prudent man rule” in ERISA requires fiduciaries to carry out their duties with the same "care, skill, prudence and diligence" as would a person who is familiar with the subject and has the capacity to understand the issues.

Document Your Process and Build an Inspection Ready ERISA File

Your assigned staff with the help of your broker/consultant should ensure that appropriate documentation has been kept on your process: An inspection ready ERISA file should include:

  • Basic plan document w/amendments, adoption agreement, SPD
  • IRS opinion, advisory, or determination letter
  • Investment policy statement and ongoing IPC minutes
  • Investment contracts, prospectuses, semi-annual reports
  • Form 5500, summary annual report.
  • ADP/ACP and other required tests
  • Fidelity bond
  • 404(c) documentation (regarding diversification of plan investments)
  • 408(b)(2) disclosures & reasonableness determination of service providers (service provider disclosures of services, fiduciary status, and compensation)
  • 404(a)(5) participant disclosures (plan sponsor explanation of fees and expenses deducted from participant accounts)
  • Performance, monitoring, benchmarking, & fee analysis reports
  • Education and enrollment information
  • Qualified Default Investment Alternative (QDIA) determination (the account into which contributions are placed when no investment election has been make by the participant)

This article was written by: Bob Trobe, Managing Director at Crystal & Company. For more information please contact Bob at 212.504.5960 or robert.trobe@crystalco.com

Sunday, March 22, 2015

Do Your Teams Have the Qualities Necessary for Success?

Whether it’s every day or for a special project, at some point of time we all have to do some form of collaborative teamwork. Some people dread this, others look forward to it. What are some qualities to instill in your team in order to ensure success? Astronology covers five critical qualities of a successful team.

Communication:
                
Clear consistent communication is extremely important. There is nothing worse than when team members don’t feel comfortable voicing their opinions and ideas.  Open and clear communication has to be promoted within the group. Having a facilitator for brainstorming sessions will be helpful in enforcing this. Facilitators have to be mindful to encourage all participants to contribute and, more importantly, acknowledge each contribution given. A facilitator also has to guide the selection of the best solution / process for the team. Recording meeting sessions via notes and sending these notes afterwards will also promote clear communication.

Active Listening:

Hand in hand with clear communication, team members must practice active listening. This form of listening is important because it can create meaningful dialogue when it comes to deliberating on a decision. Active listening requires team members to listen with the intent to understand, not with the intent to respond. This will allow the speaker to freely voice his / her thoughts and, most importantly, allow the other team members the chance to thoroughly think about what is suggested. This also means dismissive attitudes cannot be tolerated. An effective technique to use in order to encourage active listening is, after a suggestion is made, or a thought is shared, a team member – preferably the facilitator – repeats what has been said in order to verify that everyone has the same understanding.

Commitment:

Although ideally we would like to think that everyone on a team is committed to the assignment, unfortunately this is not always the case. A starting point for success is the commitment level of the team leader or facilitator. A Forbes online article on the top qualities of a great leader stated that “There is no greater motivation than seeing the boss down in the trenches working alongside everyone else, showing that hard work is being done on every level.” As a team leader / facilitator, are you also assigning yourself tasks when it comes to delegation? Does the rest of the team see that you are also hard at work? Your demonstration of your sense of responsibility will echo to your team and can encourage everyone to take their roles more seriously.

Respect and Support:

Two other key qualities are respect and support. If a team leader can’t demonstrate respect and support to a teammate, nothing will be accomplished. Team members won’t feel free to express themselves, and team morale will lower significantly as a result. One articled suggested that team members, “…don’t place conditions on when they’ll provide assistance, when they’ll choose to listen, and when they’ll share information. Good team players also have a sense of humor and know how to have fun (and all teams can use a bit of both), but they don’t have fun at someone else’s expense.”

All of these qualities contribute to positive team morale and effectiveness in handling team assignments. There may be additional qualities, however, that other teams may value more than ones mentioned above. What qualities do you value in a team? Write to Astron and share your team’s keys to success!

Wednesday, March 04, 2015

No Vacation Nation?

In our last Astronology, we discussed work / life balance in America, with a primary focus on the negative outcomes from improper balance and what some employers are doing to combat them. In this issue of Astronology, we’ll explore a key component of work / life balance – the vacation policy.

No Vacation Nation’

Did you know that America is considered the “No Vacation Nation”? CNN reported in a 2011 online article that roughly 57% of U.S. workers use up all the vacation days they’re allotted. As mentioned in our previous article, employees can be overworked from not taking adequate breaks or rest from work. The results from workplace stress can impact an organization so much that absenteeism increases, employees have lower job satisfaction, and eventually, employees have a lower commitment to the organization overall.

Under federal law United States employers are not obligated to offer any paid vacation. Although many organizations aren’t required to give vacation time, however, it doesn’t mean they don’t offer it. A Center for Economic and Policy Research report states “Almost one in four Americans (23%) have no paid vacation and no paid holidays.” This means that a significant number do enjoy time off benefits.

Although the number of Americans that are offered paid vacation is quite large, when comparing the amount of days given for vacation time, we see surprisingly that the typical U.S. worker at a private company gets 10 days of paid vacation and six paid holidays per year. In contrast, our European counterparts are required by law to set a minimum of 20 days paid vacation per year for employees. In recent years, however, the US approach is changing, as organizations are creating unique vacation policies. Take a look at what the following organizations offer, for example:

  • Paid, Paid Vacation: A cloud base contact management for individuals and business organization, FullContact offers its employees once a year, $7,500 to go on vacation…and completely disconnect from work (no emailing!). 
  • Two Weeks Paid Vacation and Use of Services: An online social network designed to help travelers find free local accommodations, CouchSurfing not only offer employees two weeks of paid time off, but also encourages usage of its own services in order for employees to have a vacation. 
  • One Week Off and Additional Spending Money: The CEO of Evernote offers employees unlimited vacation time and $1,000 spending money to take off at least a week at a time. 
  • Unlimited Vacation: An online book retailer, Chegg, lets its employees take as much vacation as they choose.

The reality for many organizations is that offering unlimited vacations and additional money is not feasible. But all organizations can find unique ways to promote a healthy work / life balance. Have you looked into ways you could possibly do so? For instance, here at Astron, during the summer months, employees are offered ½ days on Fridays. This allows employees to take advantage of fun events that occur here in New York during the summer, as well as give employees a satisfactory pause from their usual routine. As always, if your organization offers anything unique in regards to vacation policy and work / life balance, Let us know and we’ll gladly share your thoughts here at Astronology.