Companies like Capital One, Cisco Systems and Best Buy are finding success in allowing employees to work from home – or anywhere other than the office.  Call Centers used by the Home Shopping Network and Infomercials are also taking advantage of the benefits.  Can you as well?

Keeping your employees during these difficult economic times may be as simple as allowing them some flexibility.  Nearly a third of U.S. workers consider work/life balance to be the most important factor when considering a change, according to a 2008 national survey of workers who’ve been with their company less than five years.

Allowing employees to work remotely may be carried out as a regular, consistent provision, an occasional provision or to meet a temporary situation such as in disaster recovery or pandemic conditions.

There are many factors that are influencing companies to review the alternative of a telecommuting relationship with its employees:  increased globalization, the cost savings on overhead, mergers and acquisitions, and the increased desire of employees to have a work/life balance.

There are several Insights written by others that address how to build a strong telecommuting relationship and how to select eligible employees.  But, how will you manage them?  What type of management is needed to be successful?  What traits are important in a manager of a remote employee?  The answer:  the same as any other manager!

This Insight addresses five tips on managing telecommuters/remote employees.

Tip 1:  Set Guidelines.  These guidelines should identify how telecommuters are selected and what the requirements are to continue in this type of relationship.  As mentioned in previous Insights, a contract between the employee and the company is an important document so that everyone has a clear understanding of the guidelines.

Tip 2:  Set Expectations.  Managers who still manage by standing over the employee’s shoulders or having to physically see the employee each day will not do well in a telecommuting relationship.  Expectations should be identified through the performance results reached by the remote employee; not on the number of hours worked.  It’s important that a manager can quantify the results and help the employee to establish goals that can be measured.

Tip 3:  Communicate!  It’s important that a manager effectively manage performance by reinforcing positive behavior and addressing poor performance immediately.  While effective communication is vital, whether the employee is working in the office or telecommuting, the tools used to do this can vary.  It’s important for a manager of remote employees to take advantage of all the communications tools that are available.  Learn to identify the communication styles and needs of each employee so that you can meet the needs of everyone in this type of a relationship.

Tip 4:  Create Opportunities for Involvement.  Remote employees often perceive themselves to be “out of the loop.”  Successful managers will find a way to create opportunities for a remote employee to be as involved as possible with company celebrations, assignments and promotional opportunities.

Tip 5:  Be Aware of Employment Laws.  Employment laws apply to all of your workforce – including remote employees.  Some of the laws that a manager should put particular emphasis on reviewing are:  Fair Labor Standards Act (Wage and Hour Compliance), OSHA (Workplace Safety), Workers’ Compensation, Americans with Disabilities Act, Family Medical Leave Act.

Remember, even with adherence to these tips, not every telecommuting relationship will be successful.  Some employees will find it too difficult to work from home, or will miss the face-to-face interaction.  The manager may find the situation does not prove productive, the tools needed are not in place, or service is suffering.

When you begin to see these outcomes appear, it is important to address the concerns as quickly as possible.  If poor performance continues, the telecommuting relationship may need to be terminated and the employee returned to a traditional relationship.  It will be important to refer back to the telecommuting contract.  There should be a clear framework for handling concerns and, if necessary, ultimately changing the relationship.

If you’re interested in more resources, check out the following HRTools.com Insights:

• There Are Many Benefits of  Telecommuting 
• Making the Benefits of Telecommuting Work for Your Company 
• Reasons for Telecommuting: Employer and Employee Benefits 

Hands down: Corporate online training is definitely cost-effective, when compared to other workplace learning environments.

Online training also provides for other significant and appealing business advantages, especially given today’s economic environment, as described in my previous HRTools.com Insight.

As a follow-up to that Insight, the tips below are intended to aid even the most technically savvy within an organization that might be considering a corporate online training program:

1. Clearly define expectations. In other words, identify what you are trying to accomplish. As they say, if you don’t map out where you’re going, you may never reach your destination.
2. Evaluate how you’re going to meet the needs of your adult learners. It’s important to remember that your workforce is made up of adults. As such, adult learning in a business environment requires an entirely different style of instruction, than say your university or college online training courses. For instance, again, you should first define your goals and how you expect those adult learners to apply what they’re learning. These workplace adult learners must also know in advance what the online program will require of them. Are they going to be interacting within the program? Or, are they simply going to sit there and listen to someone talking to them?
3. Realize that the optimal learning experience is usually based on an engaging online program. The most effective online courses offer stimulating activities. For example, if it’s a webinar, the students should be asked to participate. The program should solicit learner ideas; they should be allowed to ask questions and be encouraged to learn.
4. Review and analyze the technology first. For example, you may want to consider online training programs that offer discussion boards or blogging opportunities so that employees can interact independently, yet as part of a larger community. Ask questions. Is the technology intuitive? Is it easy to understand? When employers sidestep this point, and they do not first review the technology, they can end up sabotaging the experience. If the online learning experience ends up as a frustrating one for the employees, then it will be unsuccessful. If the program is too slow, for example, then it will not be well received, and the results will reflect it.
5. Make sure the online training program supports the culture you’re trying to foster. You will want the training content to support your mission, values and vision. You will also want to make sure that the content is relevant. Will your employees be empowered through the training? Are they going to be held accountable for implementing an outcome from the training?
6. Pledge and commit to implementing a successful online training program.  If you’re leading the decision, no one but you can make that commitment. You have to be the first one to make that leap. Once you do that, then:
   
   • Get buy-in from the C-level executives because you will need their support.
   • Do your due diligence, as it relates to vendor selection. Do they have a proven track record? Are they reputable? Do the materials and online content meet workforce needs?
   • Ensure that webinar instructors know how to train online. And, don’t jump to the conclusion that an effective classroom trainer will automatically transition to become an effective online trainer, because the two environments are completely different.
   • Measure the results and monitor employees’ progress. Ask questions. What are the employees’ contributions to the learning experience? What are the training outcomes?
   • Collect employee feedback. Ask them about their interactions and how they felt about those interactions. How much time did they spend on their learning activities? What did they receive from the training?
   • Stay flexible. Based on feedback and your direct observations, you want to be prepared to make program and/or platform adjustments. You also may need to adjust your training goals.

All in all, corporate online training can be tailored to meet most business and workforce training needs. Because of a delivery potential to a majority, or even all, of any business’s workforce on a 24/7 basis, this training method can also provide a good return on the investment.

Due to the recession and budget-tightening measures, many companies are cutting back on training programs. Regardless of the economic times, employees still need to be trained. And, as a recent study points out, many of today’s new hires lack "crucial basic and applied skills."

So in preparing to write this Insight, I thought about this recently reported study, "The Ill-Prepared U.S. Workforce: Exploring the Challenges of Employer-Provided Workforce Readiness Training," as reported by The Conference Board on July 14, 2009.

Granted, it’s a major challenge that businesses today face. While many U.S. employers are struggling with an ill-prepared workforce, they are also faced with re-evaluating business expenditures, budgets and other priorities, including their people.

To the rescue! Corporate online training: This alternative training environment solution works very well, during good and bad times. I find that this type of e-learning instruction is a flexible and cost-effective answer to meeting organizational training needs.

And, no doubt, as ‘C Suite’ decision-makers today look at the bottom line and note that a company’s training program isn’t flexible and cost effective; then they are not going to think there is a return on their investment.

In addition to realizing cost-effectiveness benefits, there are other strategic reasons for re-evaluating training methods during tumultuous economic times. For one, and especially in these times, a business must find ways to retain its best and brightest talent. Because talented achievers are normally highly motivated to continue learning and growing—training and development also serves as a strategic retention tool for business.

And not only does training help a business retain its most talented employees; it further supports the growth of that organization so it can keep pace with or stay above the competition.

Some studies indicate that nearly one-third of corporate training used in the U.S. occurs online (via the World Wide Web or Internet). One research firm reported that U.S. companies spend $16 billion annually on corporate training and an estimated $3.5 to $5 million of that amount is spent on online training.

Here are a few examples of technology-based, e-learning approaches that most organizations can use and benefit from:

• Online courses
• Webinars
• Podcasts

For obvious reasons, then, e-learning methods are more cost-effective than formal in-person training, especially for those organizations with a scattered workforce. So corporate online training can be used both domestically and internationally.

When compared to using other training environments, organizations that use corporate online training programs will significantly reduce expenses in affected areas such as the following:

• Travel and transportation
• Lodging
• Meals
• Training facilities
• Materials (printing costs, etc.)
• Loss of productivity (while employees are traveling, etc.)

Corporate online training has other built-in, time-saving considerations. For example, employees can access online training 24/7. Or a business can offer online training over lunch times or at the end of the business day, which allows a business to minimize losses from that ever-so-important business need, which is employee productivity.

When employees leave (‘exit’) and terminate their employment with a company, it’s important that employers view these times as opportunities to get feedback. In fact, I believe that employee exit interviews should be used as a tool to improve a business’s human capital strategy.

And many companies do not take advantage of these exit interviewing opportunities. Unfortunately, they are cheating themselves out of gaining valuable information.

When companies conduct exit interviews, they can acquire significant information that can affect their business and they can do so inexpensively. For instance, after gaining exit interview feedback, a business can identify factors that influenced employees to voluntarily leave.

If your company holds an inferior position to your competitors in terms of salary and benefits, you may need to know that. If employees are leaving because of supervisory or company cultural reasons, you will want to learn more about that. And, likewise, you will want to know what employees found to be of value while working for your organization.

The following sample questions are ones that most businesses can use in their exit interview with a soon-to-be former employee:

1. Did you feel prepared for this position?  
2. Was on the on-boarding a smooth process?
3. Was the training adequate?
4. Did you find the ramp-up time as acceptable?
5. Did the company communicate effectively?
6. Do you have any complaints or suggestions for improvements? 

In fact, answers to question number six above may be the single most important piece of information that you can gather. 

This next point is very important. Does the employee seem angry or frustrated? 

A business can gain a distinct advantage should it learn of any potential legal problems looming over the horizon. For instance, could an employee be planning a discrimination charge or a lawsuit? 

So exit interviews are a way not only for you to probe further regarding some of these issues. But also if the employee is leaving in an unhappy state-of-mind, then an exit interview allows them an opportunity to vent frustrations, and perhaps even to diffuse the anger. 

Exit interviews also allow you an opportunity to document the employee’s reason for leaving your company. This way, too, you can review these statements in the future, if there are any discrepancies regarding the separation. 

When companies implement exit interview programs, there are a variety of formats that companies use such as: 

1. Conduct a formal face-to-face interview, which a designated company representative uses a structured interview type of questionnaire.
2. Sit down and have a casual conversation.
3. Send a post-employment written questionnaire. 

There are pros and cons for each type of format, but there are also some general mistakes that can be made regardless of how the process is handled. Among them: 

• Relying too heavily on the data gathered from exit interviews; remember it’s only one source of information. Instead, companies should also look to employee focus groups, annual surveys and other similar analytical tools in order to evaluate a variety of employee concerns.
• Addressing the task with a closed approach. Instead, keep an open mind and use an open approach. The interviewer needs to be able to drill down on any comments that are unclear.
• Designating an inappropriate person to conduct the interview. The interviewer should be one who has developed a level of trust with the employee. It does not have to be the employee’s manager; it could be a neutral manager, or even an outside or outsourced vendor. Regardless of who is doing the interview, you want the employee to feel comfortable in providing both positive and negative comments. You do not want them or current employees to think that their feedback could create future repercussions or some form of retaliation.
• Violating a confidence. Companies must maintain confidentiality with this kind of information. Employees need to be secure in knowing that information they pass along will not be compromised.

All in all, you want to create an environment of openness, and employees should know that what they say will not be used against them in some way. And you should avoid placing too much weight on any one individual response. Employee responses should be put into perspective and evaluated with other information gained through other tools, as specified in the first bullet above.

Finally, remember to store exit interview information in a separate file; this information should not be filed with the employee’s personnel file. 

Many employers have this employee concern come up from time to time.

In my previous HRTools Insight, I discussed how moonlighting jobs and related issues seem to increase during recessionary periods. This issue also comes up in other types of situations, as well.

Is this legal?

What happens if an employee is on an FMLA leave-of-absence, and an employer learns that this employee is working a secondary job? Or, perhaps an employee is injured on-the-job and unable to return to their normal job duties. He or she may be collecting workers’ compensation benefits, and an employer learns that this injured employee has taken a secondary job.

Most employers want to know if this is legal. Do employees have a legal right to do this?

Simply put: It depends on the situation and how it is addressed in your company policies.

Cautionary point: Employers should be very careful how they address these types of policies and how they are going to enforce them. So I strongly recommend that employers seek legal counsel to help draft, review and implement any such policies.

Here is an example to help illustrate why employers must be very careful in these situations.

Let’s say, you have an employee who is a warehouse worker. He or she may have gotten injured while sweeping and cleaning, or while changing light bulbs or moving boxes. The resulting injury may make it impossible for this employee to lift or perform any type of manual labor tasks. This individual might be able to sit at a desk instead, but your company currently has no desk jobs available for this injured employee.

In such a case, if this employee can find employment elsewhere that allows him or her to sit at a desk and answer the phone, then the workers’ compensation status remains unaffected. Now, if this injured employee goes to another company and takes on a position in which he or she is lifting boxes, sweeping floors and changing light bulbs, then that might be an issue.

In other words, if the primary business employer cannot offer the injured employee (keeping in mind those stated restrictions) a way to return to work at this primary business, then generally, the employee is within his or her rights to take another position with a secondary employer.

So when you’re looking at secondary employment issues that result from leave-of-absence or workers’ compensation situations, you have to look at them on a case-by-case basis. And this is why you will want to avoid making related blanket policies and statements. 

Employers may find it is not uncommon that their employees start taking on moonlighting jobs during recessionary periods. Of course, that is, for those people fortunate enough to even find additional work! 

In fact, the U.S. Department of Labor reported in late 2008 that the number of employees working two jobs had already increased by five percent since the previous year. And I suspect that those numbers are continuing to increase. Not only that, the Bureau of Labor Statistics showed that in 2008, there were 7.5 million workers holding down one full-time job and one part-time job. So this is a major workplace trend we are experiencing. 

I think you will find a number of reasons for this growing employment trend, which are also probably a direct result of the country’s economic conditions: 

1. Some workers may have had their hourly or weekly hours reduced.
2. Some workers might have to moonlight out of financial necessity or as a way to meet their family’s financial needs.
3. Some workers might be exploring new career opportunities.
4. Some workers might want to gain new skills and experiences.

The question then becomes: What should employers do when confronted with this issue of employees who are compelled to seek moonlighting jobs? 

Depending on your business and circumstances, I summarized a few considerations below that you may wish to think about: 

1. Reconsider establishing policies against moonlighting—understandably, an employer’s first reaction might be to ban the practice and put a policy in place that forbids employees from accepting outside employment. Policies of this nature are usually intended to protect the company’s interest. For instance, employers may want to keep confidential and proprietary information from being disclosed to competitors. Or employers may want to control risks associated with loss of employee productivity and/or absenteeism. Irrespective of moonlighting concerns, however, these are legitimate concerns that employers will always have about their workforce. The reality is that moonlighting policies can be difficult to enforce, and they can be even more difficult to defend. Another reality is that the political climate is changing and the sphere of employee rights is gaining momentum.
2. Consider executing confidentiality or a non-compete agreement with key employees or with those employees who have access to proprietary information. This type of document should be prepared by the organization’s legal counsel, so that it addresses specifics and meets all federal and state laws and regulations. 
3. Consider alternatives to including a specific policy against moonlighting in an employee handbook (as such policies can be difficult to enforce, as mentioned in number one). Alternatively you might consider:

• Addressing common employer concerns such as absenteeism, loss of productivity, appropriate work guidelines, etc. For instance, you can remind employees that outside employment commitments will not be considered a valid excuse for tardiness, for refusing to work required overtime, or meeting work-related traveling obligations.
• Including information about ethical concerns and respective appropriate behaviors.
• Creating job descriptions. This information identifies the essential duties that must be performed in order to be successful in the employees’ respective positions.
• Creating performance standards. These metrics provide employers with a way to measure and evaluate employees. As a result, if an employee fails to meet these standards, then this process affords the employer with disciplinary options. 

In closing, I want point out that this area of moonlighting jobs represents complicated issues. Employers are encouraged to seek legal counsel, as these employment law professionals are best equipped to help employers determine their options. The United States has numerous federal, state and local laws governing individual privacy rights, so employers must be very careful when delving into the private lives of its employees. 

Remember, too, as an employer, your ultimate goal is to build and maintain that employer-to-employee trusting relationship.

In my previous HRTools.com Insight, I defined the term ‘blended learning’ and covered a few basics. If you’re unfamiliar with this employee training technique, you might want to review that first. 

Now, I have a few recommendations, or tips, to share for maximizing the blended learning experience. 

1. You may have heard that saying, “New and Improved!” While there are a lot of new and improved training technology options, I think it’s important to keep in mind that not every learning opportunity needs to be altered to include technology. 

• Instead, the key to blended learning is to effectively evaluate your options. You want to select the right combination of the media or tools by evaluating how you are going to achieve the strongest business impact; and at the lowest possible investment.
• So an instructional designer should evaluate the materials and the delivery styles of what has been previously used and ask themselves: How can we improve these training elements with technology? 

2. You will want to know how to effectively track the progress of the participants who are engaged in the self-paced portions of blended learning programs. 

• Ensure that a tracking method is in place so that you can detect problems such as a lack of progress or participation.
• Design your program to ensure that the asynchronous segment and any other pre-class assignments that might be given are completed. 

3. You will want to consistently hold employees accountable for the material that they are learning. 

• Ensure that the different segments are fully integrated. Employees may try to select the parts of the program that they prefer. As a result, they may not really concentrate on the segments that are required. That's a natural tendency.
• Help them understand that all the segments add value to the objective of the program. So it’s important to hold them accountable for that information and to make sure that each segment is interrelating. 

Blended learning also has other positive implications for American business today. Obviously these dire economic times are posing threats to budgetary concerns, which can affect employee learning and development resources. Studies point to survey findings that some U.S. companies are cutting their training budgets this year, and they will probably do so in 2010. So transitioning to blended learning programs can be vital to the success of a business’s training and development plans. 

And as companies evaluate their training and development needs, they should consider the following:

1. What are the business needs? A business should take into consideration its mission, its vision and its values for the company culture.
2. What are the strategic goals? A business should align its training with the current strategic directions of the company. 

So as you consider or determine whether to transition to a blended learning approach, you will want to analyze: What is the specific problem that needs to be solved? You will want to determine: What is the goal of this training? 

As you can probably tell, blended learning has great potential for almost any organization. With all the technology and media available today, organizations can often be freed from the expenses of purchasing three-ring binders and printing volumes of materials. Again, your primary objective is to get the most return on your investment.

Blended learning: what do we mean by that term? 

Blended learning combines different training delivery methods. And this type of learning approach is most often used when you want to reach a united learning goal. For example, you might incorporate the use of instructor-led training with some type of online training program. 

Actually, most learning methods can be blended. To give you an idea, here are three of many such combinations:   

1. Instruction-led and e-learning
2. Self-paced and virtual classroom
3. Discussion boards and instructor-led 

Or you can combine almost type of training objective and mix it in with a blended learning program. For instance, you can have an asynchronous segment, which might cover material that will be used as a prerequisite to a follow-up synchronous segment. Doing training this way allows participants to apply content acquired in one setting and blend it with another—such as instructor-led combined with virtual classroom technology. 

And, ideally, blending learning takes the best from each method of training in order to: 

• Improve the learning experience
• Provide the company with the most efficient use of employee time and company resources. 

Given that blended learning allows for portioning out the pieces, so to speak, the approach affords a company the best return for its investment. 

Here’s an example of what I mean: If an organization uses a traditional learning experience and some of the employees have already mastered the class’s foundational information, then those employees may be forced to sit through the time it takes to get everyone else up to speed. 

On the other hand, with a blended learning arrangement, you might be able to address the foundational material and allow employees the ability to ‘test-out’ by evaluating their knowledge through an e-learning tool or a Web-based module. With blended learning, participants can then focus on developmental areas such as confidence-building or improving team functionality in the instructor-led training. 

I am a strong advocate for blending learning arrangements. But to be successful at this, employees must have good organizational and time management skills.  

I find these elements relevant to any type of delivery method, but it should really be underscored when considering a non-instructor-led portion of a blending learning experience. You will find that any self-paced or e-learning format really requires that employees have initiative; and they cannot procrastinate to complete that required training segment. 

Now, that I have covered some basics of the blending learning experience, my next Insight will review the more in-depth and technical aspects; and how this type of employee learning experience can maximize returns for a company’s investment in training.

Some employers might relate to this experience, which I want to share as an accompaniment to a previous HRTools.com Insight, “10 Points to Consider for Developing Instructor-Led Training Programs.”  

I once had an opportunity to help an employer develop an instructor-led training program. This employer had two significant strengths going for it, in addition to its reputation and standing as an industry leader: 

1. a low employee turnover rate; and
2. a great employee benefits package. 

In spite of the above, this business faced some organizational concerns. The organization employed workers reporting to two physical locations in two different cities. As can happen in these situations, the company culture reflected a division among the two employee groups. It was an ‘us versus them’ kind of mentality. 

So, to meet the related challenges and to help bridge the distance between the two locations, we developed a training plan with those factors in mind. The first class happened to be a liability management training class. Our training goals included building interaction between the two employee groups, and showing them how they were equally valued. 

We also faced other challenges: Due to the nature of the business, as well as factoring in the employees’ time and expenses, it was not feasible to bring in employees from one location to another. Given these factors, it was not possible to conduct in-person, onsite training for all employees. 

So, instead, we offered live, online virtual training, which provided all the employees the opportunity to hear and receive the same training message at the same time. Not only that, we found that these employees were able to socially interact with one another while they were logging on and participating in the preliminary introductory activities. Of course, too, the employees were able to interact with one another throughout the learning experience. 

Sometimes, especially with instructor-led training, you end up with successful outcomes not necessarily related to the learning experience. This training experience not only provided for a learning experience, but it also provided for an unintended consequence—which was helping to unify the employees. 

I like to recall this experience, because we took deliberate care to develop this training in such a way that it would help bridge the distance-gap that these employees were experiencing. This approach afforded a successful outcome and one that definitely pleased the employer. It’s also a case in point for explaining some of the long-lasting advantages to instructor-led training. 

Although previously referenced, it bears repeating—as the American National Standards Institute (ANSI) states, “Live, instructor-led training is considered by all to be the most effective, as it best facilitates real-time interaction, in-depth information sharing and direct response to questions.”

According to an online statement posted by the American National Standards Institute (ANSI), “Live, instructor-led training is considered by all to be the most effective, as it best facilitates real-time interaction, in-depth information sharing and direct response to questions.” This nonprofit organization, founded in 1918, exists to serve U.S. businesses by enhancing global competitiveness and promoting voluntary consensus standards. 

After giving the above statement some thought, I concluded that today’s educational world really expands far beyond the walls of a classroom; and yet even a ‘virtual’ world can still maintain that instructor led style. For example, instructor-led training is achieved through alternative venues, such as Web based learning environments (Webinars, virtual workshops, etc.), which also provide live training options. 

Regardless of the learning environment, when you’re preparing to develop and implement instructor-led training programs, you will be well served by considering these 10 points:   

1. Define expectations. In other words, what do you want the participants to learn? Be specific and make sure that objectives are realistic. For example, do you want to improve employees’ performances? Are you striving to reduce work-related accidents and increase worker safety practices? Do you need to prepare employees for newly developed or modified tasks? Perhaps you’re introducing new product information. Or you might be conducting routine or annual training, such as ethics or sexual harassment prevention, security, etc.
2. Define success. How are you going to measure the success of the training? Can you compare the results of the training with the stated objectives? Can you test participants on the knowledge and skills that they obtained? Will you keep records on their progress? Is it the trainer’s responsibility to rate the employees during the course of the training plan? Will you follow up on the training with supervisors and managers and make those determinations regarding long-range effects? 
3. Determine the audience. Who should participate in the training? Is it company-wide or is it contained to a specific department? Is it a certain type of position for which training is needed? Or is it specific to an employee? 
4. Remember, most people are visual learners. Many surveys confirm that about 80 percent of adult learners are visual learners. So to effectively engage and teach adults, it is important to provide opportunities for learners to communicate in real time.
5. Determine the time frame. How long will it take to reach that goal? Are timelines embedded within the objectives?
6. Calculate the budgetary requirements. How much money do you need to spend if employees are brought in to a physical location? Do you have the capability to deliver the training using another method? Will alternative methods take additional funds? 
7. Decide upon the training method(s). What are the best delivery method(s) for what you want to accomplish and within the budgeted time frame?
8. Figure out presenters’ availabilities. Do you need more than one presenter? Will you need additional subject matter experts? 
9. Analyze those factors that can hinder your outcome. It can happen; after considering all the above elements, you may realize certain factors that could pose challenges. For instance, you may decide that ‘in-person’ training is the best solution. Perhaps you will need to fly in a handful of people for this training, but your budget doesn’t allow for that. Now, what is going to hinder the outcome of your training? By giving this full consideration, you are then in a better position to come up with some solutions.
10. Obtain buy-in from both management and employees. Who will be the champions of the training you need to deliver? You want to make sure that you have commitments from those who will be involved in the process. 

It may be worthwhile to also note—since nearly everyone today is concerned about costs—there are some obvious cost benefits associated with Web based, instructor-led training. Many expenses can be cut or reduced: for instance, companies can realize significant savings on costs associated with traveling, lodging, training room rental fees, etc. Also, Web based training alternatives help companies decrease the time and shorten the distance for its employees’ learning experiences.

If you have employees who need training and information sooner rather than later, and most organizations do, you might be interested in virtual learning possibilities.   

With almost limitless choices and options, virtual learning can serve to meet the educational needs of almost any enterprise. To get more of an idea of what virtual learning is, you might be interested in reading “Get Real with Virtual Learning: It’s the Digital Age in the Workplace.” Employers can use virtual learning tools for a variety of business objectives, ranging from coaching employees to rolling out new benefit plans.  

Why are so many businesses exploring or offering virtual learning opportunities in the workplace? Here is one very practical and overriding reason: a trainer’s time and energy is a finite resource. Alternatively, you will find that virtual learning can often serve as a 24/7 kind of infinite resource. 

In some cases, a business may need to break up the type of training. For instance, if you’re working toward a teambuilding focus, some results-oriented techniques can be conveyed during a virtual learning session. Then again, you will want to do some things in person, such as when you’re developing those teambuilding relationships that are built on trust. 

So virtual learning can help a company save significantly when it comes to those expenses relating to human capital, time and energy costs. Here are just a few scenarios to give you an idea:

1. When employees are geographically scattered throughout the organization.
2. When workplace topics demand a great deal of attention and you need to ensure that employees have participated and completed the training. For example, (1) ethics training or (2) workplace discrimination prevention and sexual harassment prevention trainings. These types of employee training needs can be handled in a virtual learning situation. Simply sending out information in an e-mail is usually not enough. You will want to ensure that the employees participated and that they were engaged during the session. A virtual learning program can be developed to ensure these objectives are met, and it can also provide for documentation.
3. When you are introducing, updating or making alterations to a product. Perhaps you need to inform your sales force of product or service changes. Especially if they’re scattered geographically, you will need to get them this information as soon as possible. This need represents a “just-in-time” virtual learning training opportunity. Obviously, the quicker your sales force has this information, the quicker they can get out there and sell this product or service.
4. When you want to branch out and reach your customers. You may want to deliver some important details or information to your customers about services or products.
5. When your work groups need to collaborate and they need to use e-tools. Virtual learning provides them with opportunities for sharing applications and virtual tools, and you eliminate the expenses and inconveniences related to traveling, etc. 

While virtual learning will not change your organization overnight, I think that most businesses will find that the limitless opportunities and significant cost savings it provides will give them an ongoing competitive edge.

If you consider the approaching first decade of this century, and the number of catastrophic events, I think you will agree: Crisis management planning is critical and essential for any American business. 

For Houston and the Gulf Coast area, many of us are still recovering from Hurricane Ike and, already, we are gearing up for the next hurricane season. In the northeast, of course, we had 9/11 and the Northeast Blackout of 2003, and California continues to have its share of earthquakes and wildfires. The list goes on. 

While we cannot live in a state of constant fear and anxiety, at the same time, employers are responsible for the safety and welfare of their employees. 

Just the word “crisis” can evoke an emotional response, which is why businesses must plan ahead. It’s far better to plan for how you’re going to handle inevitable disastrous events, such as hurricanes, fires, tornados, workplace violence, etc., when the world isn’t spinning out of control around you. You need to be able to ‘roll’ at a moment’s notice. 

OK, so once you have your plan and your crisis management team in place, you will want to consider how you will respond in a crisis. First of all, I hope you don’t put your crisis management plan at the bottom of some filing stack. Make sure it is visible and easily accessible. In addition, although hopefully you never need them, I offer the following tips, which can help you gain some extra peace of mind: 

1. Do not panic. It’s important that the crisis management response team takes charge.
2. Convey a sense of calm and confidence throughout the organization. 
3. Make sure that the company’s leadership team is visible during and after a crisis.
4. Anticipate that employee productivity and performance may drop off in the aftermath of a crisis.
5. Be prepared to handle more employee administrative details, such as increased absenteeism and family and medical leave requests.
6. Treat employees with empathy, and treat them fairly and compassionately. After all, without employee support, business continuity would be impossible.
7. Consult with a labor and employment law attorney soon after a crisis. These professionals are trained to help you with legal concerns, such as wage and hour issues, and federal, state and local regulations, laws, etc. 

Preparedness is also a practical matter: If a business portrays itself as disorganized and chaotic during a crisis, an employer can, in turn, lose a lot in terms of its reputation—and its valuable employees. A company can see its reputation tarnished if it performs poorly during and after a crisis. 

Therefore, to properly manage and control business risks, you will want to take all the precautionary steps you can. As many of us learned in school, while participating in various disaster type drills, organizations should even have catch phrases for their company’s crisis management plan. Do you remember, for instance, the catch phrase we learned in school, “Stop, drop and roll?” What will yours be? 

So as we experienced in school, our educational leaders didn’t begrudge crisis planning as something detracting from the educational experience; it was part of the educational experience. This same philosophy can apply to your business strategy. Your crisis management planning should be a part of your overall business strategy. 

It doesn’t have to be all gloom and doom either. Some businesses get creative and turn their crisis management planning into employee morale building events. For example: 

• A business could plan a fire drill on a hot summer day and, while everyone is together outside, you could serve ice cream to your employees.
• Or, alternatively, on a cold fall day, you could have an evacuation drill; again, while everyone is outside together huddling, you could serve some hot chocolate.
• You could follow the example of some businesses that plan ‘lunch and learn’ seminars. During these occasions, employers can pass out information, for example, about natural disaster readiness or literature about workplace violence. 

Unfortunately, natural and man-made disasters happen. You want to avoid going through a crisis event and turning it into an even worse situation. As a final note: Remember, if you keep your employees’ safety and health a high priority during both your planning and execution phases; they, in turn, can better help you when you really need it.

“…I’m a digital immigrant. I wasn’t weaned on the Web, nor coddled on a computer. Instead I grew up in a highly centralized world where news and information were highly controlled by a few editors, who deemed to tell us what we could and should know. My two young daughters, on the other hand, will be digital natives. They’ll never know a world without ubiquitous broadband Internet access.”
                     ----Rupert Murdoch, Chairman and Chief Executive of News Corporation

Virtual learning takes place in different settings than traditional classrooms. Although some people think that virtual learning is new to the employee development area, it actually started a couple of decades ago with employees training on the computer. However, virtual learning today doesn’t mean that someone is learning alone in a room and simply interacting with a computer screen. In fact, virtual learning gives people almost endless choices and options for learning and sharing knowledge. 

When the Internet exploded onto the world scene, and not long thereafter, there was also a large-scale growth of communication network systems. These two events have significantly impacted all areas of the workplace, including how employees learn new tasks and skills; and even how employees can come together to accomplish a goal. 

Here follows a quick glance at just a few basics and attributes of virtual learning: 

• Virtual learning, typically, consists of voice options such as the Voice over Internet Protocol (VoIP) or voice over Internet phone systems and teleconferencing.
• Visual options include the Microsoft Office products including PowerPoint, Word and Excel. Participants can also enjoy viewing options such as shared whiteboards, Webinars or Webcam.
• Visual options can range from slideshows to multimedia types of presentations.
• Virtual learning can provide for the sharing of applications, creating polls and conducting short surveys.
• There can be opportunities for online “chats” with others, or even for breakout sessions in which there can be side discussions or activities to be completed by a small group.
• The medium of virtual learning can be used to meet the needs of training employees on both hard and soft skills.
• Leaders and managers can conduct more effective meetings and provide educational opportunities for employees such as:
  • rolling out new employee benefits information;
  • streamlining the on-boarding process so that employees get their information quicker and more consistently and
  • coaching and mentoring employees.
• Vendors can introduce new products or marketing materials more quickly. 

Virtual learning also meets the needs of the next generations of business learners.

The above lists just a few ways that businesses can benefit from and apply virtual learning techniques. In fact, a lot of companies are altering their business practices and processes to address the needs and interests of the younger ‘digital age’ generations in the workforce. The people represented by this demographic do just about everything technically today, including the use of Blackberries, social networking, etc., and they seem to utilize these technologies all the time. 

What advantages does virtual learning bring to businesses? Two major advantages that come to mind are: (1) Virtual learning helps deliver consistent messages and (2) it significantly reduces costs, such as expenses for travel, the employees’ traveling time and conference meeting space, shipping materials, etc. 

So businesses are getting prepared, as the digital generations will expect these tools and devices in their places of business, both as employees and consumers. And virtual learning provides the type of learning environment that can meet their levels of interest.

Know how you will communicate in a time of crisis to gain confidence and peace of mind. 

After 9/11, a commission was formed and a report was published. According to the Executive Summary portion of “THE 9/11 COMMISSION REPORT,” the roles of communication were reviewed. Ironically, the terrorists’ communications were described as “…sufficient to enable planning and directives of operatives and those who would be helping them…” 

While New York City and its people did their best to cope with the unthinkable, its communications among responding agencies were found to be inadequate. 

We do tend to learn from disasters and catastrophes. And certainly employers can benefit from others’ “lessons-learned,” and many do when developing their own crisis management plans. A vital piece to any plan will be your communications strategy. 

As they say, “Information is power.”  During a crisis, it’s especially important to keep open those lines of communication. When catastrophe strikes, communication trumps almost everything else. 

What should you consider? Here are some elements to an effective communication strategy that you will want to think about: 

1. Identify how you will keep open your lines of communication.
2. Know what information needs to be immediately communicated.
3. Evaluate system options. Perhaps you will want to develop a telephone calling tree or an e-mail alert program. You might want to consider establishing a toll-free telephone number, with a call-in voice recording, through which employees can call you and leave messages.
4. Create a contact list of those you will need to contact in an emergency. Included in this list should be information about employees, vendors, suppliers, contractors, etc.
5. Include information about how to report an emergency; for instance, a fire.
6. Develop written procedures that set in motion an accounting for all employees. If an evacuation is ordered, for instance, you want to make sure all managers have that information at hand.
7. Outline how you plan to help those employees who need special assistance. Depending on the nature of the crisis, some employees may need outside support. One resource to tap into is your benefits plan. Many benefit plans have employee assistance programs (EAPs).
8. Detail how you will handle the critical functions of your business. For example, consider how data will be retrieved. Do you have payroll procedures for running an emergency payroll? 

Finally, you want to make sure your supervisors, along with any other key individuals, are properly trained. These people are the backbone of any organization, as they typically are the ones who deal directly with your employees. So you will want to equip them with the resources and information they will need to stay in touch with employees and maintain business continuity. Here are a few ways to do that: 

• Train supervisors to immediately recognize the warning signs of a potential crisis.
• Make sure supervisors are cognizant of the emotional-support signals that employees may exhibit during a crisis.
• Include related training during new employees’ on-boarding activities. This training serves to identify procedures; and it also sends an important message to new employees that you care about and value their health and safety. 

Finally, any crisis management plan, including the communication pieces, should be reviewed at least annually to make sure the information is current. Out-of-date crisis management plans will not serve you, your business or your employees well. 

You can learn more about crisis management plans by reading my two other Insights found at www.HRTools.com: 

Make Sure Your Business Has a Crisis Management Plan 

Take Actions: Preparations for a Crisis Management Plan

Take a close look at your job descriptions, goals and talent needs.

When the economy rebounds, some forecasters believe that businesses will again be faced with talent shortages. And when this economy rebounds, many talented workers may be on the look-out for employers who can catch them up on their salary expectations. 

Employers can expect fierce competition, especially in those fields requiring highly skilled workers. Without talent, companies will be unable to compete. For these reasons, information gathered through salary surveys can be very useful. 

As explained in a previous HRTools.com Insight, salary surveys can help employers accomplish a number of objectives: from evaluating a current position’s pay competitiveness (for instance, if someone believes they’re being underpaid), to the development of an entire compensation structure for the company. 

As companies position themselves for a rebound, employers will want to consider the following steps in order to maximize the benefits of using salary survey data: 

• Develop job descriptions for all positions. Well-written and accurate job descriptions serve employers in very important ways. Most importantly, they provide employees with a clear definition of what is required of them to succeed in their positions. A well-written job description identifies the essential duties of the position, as well as the knowledge, skills and abilities required to successfully perform the job. Using job descriptions in your process helps identify and match those essential factors to survey benchmarks. 
• Determine how the salary survey information will be used. You will want to ask yourself questions such as: 
  1. What is my goal for having this information?
  2. What are we going to do with the information when we get it?
  3. What are our resources?
  4. What is our timeline?
  5. What is our budget? 

It is important to think about these questions because the answers will impact future decisions. 

• Decide how you are going to find this salary data. There are several sources to choose from, ranging from your traditional published salary surveys to those found on the Internet. Published surveys are useful for most organizations. These surveys are conducted by large compensation service groups such as Watson Wyatt Worldwide. Many of these companies have been gathering salary data for a number of years, so they have comprehensive reference points and solid information. 

Almost everyone appreciates how the Internet saves time, and salary surveys found on the Internet are both timely and time-saving. These online sources are usually very current and they update frequently through e-mail or Internet links. Within a matter of seconds, you can browse online and access a number of sources.   

Another source would include those vendors specializing in customized surveys, which can be tailored and conducted specifically for your company. These services are more time-consuming and relatively more expensive. 

• Select the geographic area for which you will gather salary data. Normally, you will want to reference the area that reflects your recruiting area. Most companies want information for the current labor market. So you will think about answering questions such as these: 
  1. Where do my new hires come from?
  2. Where do employees go when they leave?
  3. What recruiting area does that incorporate? 

So for instance, if you have a clerical position or a manual labor position, you will normally search within your local commuting area. On the other hand, if you have an executive position, or one requiring highly skilled individuals, your search will probably include a broader area. You may need to look regionally, nationally, and perhaps, internationally. 

As a final thought, employers should use salary survey information as a tool or an aid. Not all businesses are the same and not all business goals are the same. Evaluate your goals, and keep them clearly in sight when using this data as part of your workforce planning strategy.

“Never confuse motion with action.”

                                    ------Benjamin Franklin 

Businesses and people thrive best during periods of stability and relative calm. Although we hear the word “crisis” used a lot lately, the word still implies a time of extreme instability and difficulty. Even so, when businesses are faced with the unthinkable, they are normally evaluated not only by their actions, but also by how prepared they were to act. 

In a previous HRTools.com Insight, I made the case for why it’s critically important that businesses have a crisis management plan in place. Not only does such a plan give employers peace of mind, but it also helps minimize risks during times of natural or man-made disasters. 

With that said, I want to help you. As I continue with this series, you will learn how you can go about assembling a team and begin developing a crisis management plan. 

Before you begin, you must first assign people who can and will take action. Then, you will designate these individuals as your planning team members. Your selection criteria should include key personnel who represent various business units as explained in the following: 

• You definitely will need a “hands-on” senior executive. This individual’s involvement is imperative to the plan’s success. The senior executive will act as the champion of this initiative.
• Also, you will want to include someone from finance/accounting, security, IT, human resources, benefits and legal counsel—if you have someone in all those areas.
• Finally, you should include a cross-section of employees from all levels; these employees will serve during the planning phase and as members of the crisis response team. Keep in mind that these employees should have experiences and responsibilities associated with the vital areas of your business.

Understandably there are some small businesses without the staffing and the resources to form a sizeable team, such as described above. In those situations, you can identify several key employees—such as team leads or tenured employees—or perhaps you will need to enlist the assistance of all of your employees to take a role in the plan. 

Some smaller organizations also tap into outside resources, such as the local Chambers of Commerce and other professional associations. Even an insurance carrier might be able to provide support and information. There are many local, state and federal governmental resources available; and most of these have Web sites, which, of course, are available 24/7. Here are a few sources that may be helpful:

U.S. Department of Homeland Security

Federal Emergency Management Agency (FEMA)

Occupational Safety and Health Administration (OSHA) 

Once you have your people in place, you should analyze your current needs and your respective responses. 

For instance, what are your vulnerabilities? Your team will need to determine how much responsibility the organization has in protecting its employees. One of the first places you will go to is OSHA. This agency has a general duty clause, which is part of the OSH Act of 1970 and basically states that employers must furnish employees with a place of employment that is free from recognized hazards that can cause, or can likely cause, death or serious physical harm. In addition, several states have expanded the scope of this employer duty, so it is essential that you, or a member of your team, consult your respective state regulations. 

Given the rise of crises, a well-developed crisis management plan is becoming more of a strategic necessity for any size organization. Should the unthinkable happen, you will want the peace of mind in knowing that you can maintain communications and return to normal operations as quickly as possible. 

This is only a start to the process. As you can tell, preparing for and handling a workplace crisis is a complicated and complex topic.  More coverage will follow in future HRTools.com Insights. So check back for details about other related factors and concerns, such as those involving workers’ compensation, evacuation and notification procedures and communication processes.

Need Some Peace of Mind?

Lately it seems as though the word “crisis” is used quite frequently and, everywhere we turn, we learn of another one. We are currently in an economic crisis. We have experienced weather-related crises brought about by the devastating effects of hurricanes—such as Katrina, Ike and Gustav—as well as tornadoes and floods to list a few. Of course, a fire is everyone’s worst nightmare.

For some employers, crisis management planning is an inconvenient truth and a daunting task.
However unpleasant, employers must think about and plan for worst-case scenarios. Unfortunately, we have a global threat of terrorism, and we also experience workplace violence incidences. Cyber-crime, industrial accidents and takeovers also occur, which negatively impact a business and, particularly more so, if that business is ill-prepared to handle them. 

Therefore, in order to cushion the harsh realities that accompany uncertain or disastrous events, a business should develop a crisis management plan. This plan should be one that can be ‘rolled out’ in a moment’s notice.

A comprehensive plan can provide employers with great peace of mind. If your business operations are abruptly interrupted, then it’s a crisis for you. What’s worse, if your management team is unprepared to handle the fallout of an interruption, then your business can suffer additional and unnecessary consequences.

So when the unexpected occurs, sufficient planning and detailed preparations will help businesses and their management teams meet responsibilities and obligations, during and after a crisis. Not only will a plan instill confidence in the event of a disaster or unforeseen event, it will help minimize disruption and keep communications flowing because you have identified vital business processes and have given these important areas advance consideration:  

• Protection---i.e., employee, customer and vendor safety.
• Compliance---i.e., federal, state and local regulations.
• Risk management---i.e., minimal business impact and financial damage, including the potential for civil and criminal liabilities.

And most importantly, a comprehensive crisis management plan increases a company’s capabilities for recovering and resuming normal business operations after a crisis.

Generally, crisis management plans range from the simple to the complex. It’s important that an employer develop a crisis response plan which is based on the specific needs of their employees and their business. Too, some businesses need to adhere to industry regulations, so there cannot be a ‘one-size-fits-all’ type of plan. 

Now that I’ve set the stage for why businesses need crisis management plans, in a future HRTools.com Insight, I will review steps for developing and maintaining one.

Whether you’re overseeing a not-for-profit or a for-profit organization, salary surveys will help establish competitive pay levels. Many factors go into compiling and analyzing salary-survey data, such as cost-of-living and geographic comparisons.

Salary surveys can help employers accomplish a number of objectives: from evaluating a current position’s pay competitiveness (for instance, if someone believes they’re being unpaid) to the development of an entire compensation structure for the company. Employers commonly use salary-survey information as an aid or tool for:  

• developing pay grades for new positions;
• guiding managers in making salary offers or calculating performance pay; and
• forecasting and budgeting purposes.

What mistakes can employers avoid? Certainly employers want to avoid making costly business mistakes, especially in areas relating to employee compensation.

1. First of all, it is important that employers accurately match the salary-survey benchmarks with the position duties. If this step is not properly handled, the consequences can be significant. For example, if you are using an outdated job description, you may end up with salary ranges that are either too high or too low for the position you are benchmarking.  This can create long-term problems to a company’s pay structure and ultimately impact recruiting, retention, and employee morale. Instead, employers should strive to match approximately 70 to 80 percent of the job content from the position’s job description to that contained within the salary-survey job summary. 
2. Using the survey information as an absolute standard is another commonly made mistake.  Salary-survey information should be used as a guideline; not as the final say-so when deciding upon how much to pay people. Survey information is fairly dynamic. Therefore, the information gleaned from the survey is better used as a snapshot of job-pricing practices for the geographic market you have surveyed.
3. Misusing or misapplying salary-survey information is another mistake employers want to avoid. This can happen when companies haven’t clearly defined the reason(s) for needing the information. Employers should also take care to identify their compensation philosophy and the value of the position to the organization, including their ability to financially support changes to pay ranges.

Additional Considerations
Employers need to review internal and external business-environmental factors such as supply and demand for labor. A business should also consider its industry’s financial standing and the region’s cost-of-living factors. If these factors are ignored, the data can be significantly misinterpreted. Even though all factors carry different weights, they all should be considered when analyzing salary data in order to form the entire picture.

Looking Ahead
In a future Insight, I will review the steps that employers can take when preparing to maximize the benefits of using salary-survey information. Meanwhile, the following resources for gathering salary-survey information are available online:

Bureau of Labor Statistics
This government agency has salary survey data for many different positions in various industries, as well as specific geographical locations.

Abbott, Langer & Associates
Abbott, Langer Association Surveys (ALAS) and ERI Salary Surveys provide salary and benefits survey reports to subscribers. ALAS has long focused on the nonprofit and manufacturing sectors.

What You Should Know Before Classifying Positions as Exempt or Nonexempt

In my first Insight, I provided some historical context on how the Fair Labor Standards Act (FLSA) is the law requiring employers to classify employees as either exempt or nonexempt from the overtime pay requirements. We also delved into the FLSA classification process.

Under the FLSA, employees are presumed to be nonexempt, which makes them subject to the overtime pay provisions. Each business has the burden to show that it has correctly classified an employee as exempt (from overtime pay provisions) in accordance with the rules under the FLSA.

This issue is especially important during times like this—when we are experiencing an economic downturn. At times like this, there can be an increase in complaints by employees who have been laid off. They may claim that they were misclassified and, because of that, they are due overtime pay going back for two or even more years, not to mention other damages and penalties recoverable under the FLSA. Employers may also be tempted to treat employees as exempt to avoid paying overtime. This can be a costly mistake. So, it is very important that businesses carefully review their employee classifications on at least an annual basis or when they are considering employment actions such as layoffs.

This review process should begin by determining the primary duties of the employee’s position. For instance, are the duties primarily managerial, professional or related to outside sales? Incidentally, there are specific exemptions that may apply to these types of positions although each position must be carefully evaluated to see if they meet all of the requirements of the exemption tests. You should also note that most exemptions have a salary requirement so that employees paid hourly or making a salary of less than the minimum ($455 per week under federal law but higher under many state laws) are not exempt even if they meet the duties test. Employees must meet both the salary and the duties tests.

Now, here are a few steps that an employer can take to get started, when determining if a position should be classified as exempt or nonexempt:

1. Review the job description in order to help assess the primary duties.  What are the significant duties?  What are the most important duties that the employee performs in their role? Note that, while a job description may be useful in determining whether a position is exempt, it is not determinative. The real question is what the employee’s job duties really are. Some employers make the mistake of thinking that a well drafted job description is all that is needed to show exempt status.
2. Observe employees performing their work. You can also interview the supervisors and managers. Does the job description accurately reflect the duties and position responsibilities that you are observing?
3. Update job descriptions on a regular basis. Companies grow and positions can rapidly change which make some job descriptions become out of date. When the job description is used as a basis for classification and it is not updated, it will not accurately reflect the employee’s day-to-day work.
4. Consult with and reference the U.S. Department of Labor’s (DOL) resources. The DOL assists employers by providing fact sheets and exemption test guidelines on their Web site at http://www.govst.edu/uploadedFiles/flsa.exemption.analysis.guidelines.doc

The DOL also helps companies determine if a job meets the requirements of the classification criteria that were previously mentioned such as the executive, administrative, professional and outside sales positions by providing helpful guidance and tools including tutorials, PowerPoint presentations, checklists, etc. With the resources provided by the DOL, you can learn about exemption criteria and be guided through specific questions to help you reach your decisions. For example, “Does this position pay at least the minimum salary requirement?” and, “Are the primary duties exempt in nature?”

As stated on my previous Insight, it is important to recognize that some states have more stringent labor and overtime laws than those of the federal government. For more information about state and federal labor laws, visit www.dol.gov/esa/contacts/state_of.htm and www.dol.gov/.

All this said—employers are finding it increasingly difficult to keep up with the hundreds of pages of regulations. As a final word of caution—especially because wage and hour litigation is increasing at exponential rates—in order to minimize risks, employers must be very careful when classifying employee positions. It is always best to consult with legal counsel when making decisions relating to employment law. This is an area where a little prevention can go a long way.

Do you wonder why businesses have exempt and nonexempt employee categories?  More than that, do you know how your employee positions should be classified?

These exempt and nonexempt employee categories are set by the Fair Labor Standards Act (FLSA), which is a federal law. The U.S. Department of Labor Wage and Hour Division is responsible for enforcing this Act.

It is important to get this right because failing to comply with the FLSA can lead to costly litigation and the law even provides for civil and, in extreme cases, criminal penalties. You may be interested in this recent news story about Houston-based CEMEX which illustrates how alleged noncompliance and litigation can cost a business.  According to a press release, the U.S. Department of Labor took legal action to secure more than $5 million in alleged overtime wages from CEMEX, charging them with violating the FLSA.

A Little FLSA History

The FLSA was actually passed in 1938 so it’s a very old regulation. The purpose of it was really to ensure that there are, like its name implies, fair labor standards.  The most common stipulation that people know about, other than the minimum wage requirement, is the overtime pay requirement. If you think back to the times of the Great Depression, the Act was passed when the economy was still recovering and it was really meant to fuel employment and to create more jobs.

The thinking behind this law was: if employers were burdened with additional pay requirements for overtime work, the result would be increased jobs. If employers had work available and they weren’t sharing it, but instead making their current employees do double the amount of work, they were going to be discouraged by having to pay those employees overtime since they were not hiring more people to do that work. 

Even though most of the nation’s workforce is covered under the overtime provisions — at least according to the U.S. Department of Labor — only a portion of jobs are considered exempt from the overtime requirements and not required to receive overtime pay. That is why we commonly refer to these employees as “exempt.”

Why do some people perceive that exempt employee positions are valued more than nonexempt employee positions?

While a nonexempt employee is entitled to receive overtime pay, some employees feel like being classified as nonexempt means their position is less important. I believe this viewpoint is a misperception, and I don’t agree with it. Exempt and nonexempt employees alike are integral to a company’s success. Employees are not classified as exempt or nonexempt because of the level of importance of their job, but because of the criteria set by the law.

Similarly, many employers have the misconception that they can save money by classifying a job position as exempt with salary status. Again, the exempt classification is based on whether or not the job position meets the FLSA legal requirements for exempt status, not what the employer may desire. If the position does not meet the exemption requirements and it is misclassified, there can be major and costly consequences for employers. 

One key difference between exempt and nonexempt employees is that, in most cases, when positions are classified as exempt, such classified employees are paid a salary. Understandably, many employers would prefer positions that are classified as exempt because of the consistency of salaried pay which allows for easier administration, planning and recordkeeping. For instance, exempt employees aren’t required to track the time they work. Their salary isn’t based on the number of hours they work; their pay is based on the type of work they’re performing. While that may make it easier to administer pay, it does not change the fact that an employee must meet the exemption test or be paid overtime.  

Also understandably, employers see it as a plus that overtime pay is not required for exempt positions, which may make them want to classify as many positions as they can as exempt.  On the other hand, a nonexempt employee has to be paid for each hour that they work, including an overtime premium for any hours worked over 40 in one work week (and for more than 8 hours a day in a few states). A variety of state laws can also impact this requirement. 

In short, classifying employee positions for overtime exemption purposes is complicated and it can be a risky process because of the legal ramifications. Also, it is important to recognize that some states have more stringent labor and overtime laws than those of the federal government. For more information about state and federal labor laws, visit www.dol.gov/esa/contacts/state_of.htm and www.dol.gov/.