Business Process Improvement for Nonprofits - Part 9: Final Step?

Step 9 – Start Again

This is not like the penalty card in some board game that sends you back to the beginning. Instead, see this as closing a loop and taking the opportunity to circle back through the process in a healthy, endless review and improvement of your business processes.

As one process improves, it may help you identify others that need improvement or even pave the way to improve related processes you could not have changed before. As your staff gets on the BPI wagon, they will start spotting opportunities for even minor improvements in isolated processes. Finding ways to improve the work they do makes the work itself more interesting in some ways and certainly focuses their minds where you want them: thinking about the best way to perform their responsibilities at work.

If you collect your project materials in an electronic folder, review and update them to adapt to each new initiative, and document the baselines before and performance results after your changes, you will develop quite a history of progressive improvement for your department or entire organization. It will become a legacy anyone can be proud of.

Here is the final outline of this series of posts:

1. Diagnosis/Assessment: “What is happening now?” “Exactly how do we do everything that we do?”

2. Analyze Workflow: “Is this the best way we can operate?” “Do we need to do any parts of our work better/cheaper/faster/with fewer people?”

3. Identify Options for Improvement: “Where can we work differently?”

4. Design new processes or steps: “What will work for our organization?”

5. Gather feedback: “Is this in line with the organization’s mission?” “Does it actually improve the way we work?”

6. Test the new workflow: “Does it work in the real world?”

7. Monitor the results: “Are we getting the results we sought?”
8. Diagnosis/Assessment: “If no improvement, why?” “If that worked, what else can we improve?”
9. Begin a renewed effort: no process is perfect and no office runs perfectly. There is always room for improvement!

Happy BPI'ing!

Managing Your Reputation Online - Part Two: Protect What You Can

In Part One of this series, I introduced the risks. Here, I want to provide a check-list for small business and nonprofit managers to use as a guide in their efforts to take preventive measures.

1. Register any TMs you want to keep. The United States Patent and Trademark Office has a good page of FAQs to help you determine what type of registration--if any--you need. For most registrations, you do not need an attorney. The PTO has an online Trademark Electronic Application System. For copyrights, no registration is necessary, but some people prefer to do so. The U.S. Copyright Office also has an online registration page.


2. Mark all Copyrights and Marks you claim. Use the "TM" for trademarks and "SM" for service marks for the ones you claim, whether or not you register them. Only after registration can you use the "®" symbol. Copyrights can be publicly proclaimed with a "copyright notice" much like you see in printed materials showing the symbol or word "copyright," the year of first publication and the owner's name (e.g., "©2009 Your Name").


3. Reserve all rights. Although the trademark, service mark and copyright "marks" plainly flag your intellectual property ("IP"), some holders go farther and add--especially on copyrights--words such as "all rights reserved." This tells the world that you have not waived any rights to your IP and want to be contacted for permission before use. It is not necessary and does not really have legal effect, but also does not hurt anything.


4. Provide a process for obtaining permissions and licenses. If you want to help others honor your IP rights and seek permission before using your IP, then avoid the common mistake of failing to provide a way for them to find and ask you. Post contact information in the material, for example. Photographers can register their artwork at sites like Photrade.com. The point is to make it easy to find you so they can ask permission and give you a chance to grant it (with or without payment).


5. File for any patents you want. All the above information is NOT applicable to patents. Patent applications are, well, different. Though it is not required, it is highly advisable to seek legal assistance with any patent application or response to PTO questions or challenges. It also surprises people to find out that the information they submit to the PTO becomes public. That is because the very act of getting a patent is not to keep your secrets, but to keep your rights to the unique product or process.



6. Be Consistent with using and labeling your IP. If you have unregistered TMs, SMs or Copyrights, be sure to always tag them with those little symbols. Once per paragraph or page is enough, but always on any exterior text or artwork. You want everyone to know that you know your rights and are intent on protecting them.


7. Educate your staff. When do they use the TM or the ©? What do they do if someone outside your business asks to use the mark? What can be claimed as a SM? If you have to, bring in an IP lawyer to give a quick training class. Some will do it as part of their business development efforts (especially if you at least provide lunch) and others offer it to clients who use their services.


8. Register with third-party problem-solving organizations like the BBB and BBB Online. You can do everything right and still end up with a dispute that can damage your reputation. Register in advance and be prepared to use the alternative dispute resolution services if you cannot resolve the dispute with a letter or phone call. You are not in the business of litigating over customer or IP issues, so the faster you can resolve minor matters, the faster you can return to your primary mission.


9. Take all customer complaints seriously. These days, it takes very little for a disgruntled customer to proclaim to the world how sorry your product, staff or services are. They can email all their friends, post a very descriptive story on their FaceBook or other social media site or go global with a video diatribe on YouTube. In fact, while sitting on hold or standing in line, they can "Tweet their beef" to the entire world with only a cell phone.


10. Make sure you have good quality control systems. The best problem solving system is a problem prevention system. Take QC seriously and make sure your customers know it. Give them an EASY way to provide feedback and suggestions. Invite them into the dialogue with you on how to improve, then listen to what they have to say. It is much cheaper than cleaning up a mess after the fact.


11. Bolster your reputation with good testimonials BEFORE any bad ones arrive. This is even better than an “ounce of prevention.” Elicit quotable feedback and display the positive comments prominently. It builds your relationship with the quoted customer and helps others see that perhaps their dissatisfaction is not the norm. These must be honest and you must get permission prior to publication, but even customers who decline will be glad you asked.

My next segment in this series will cover monitoring your digital reputation.

Environmental Issues Can Arise In Everyday Life for Small Businesses

How much effort do you put into ensuring compliance with environmental laws? If you think they do not apply to your business or cannot become a risk to your operations, consider this story.

A small business came to me for help with a contract dispute. The business whose assets it was buying filed for bankruptcy before the deal was finished. A party’s bankruptcy can definitely ruin a good deal, but this one took some unusual turns. The bankrupt company had every intention of selling its assets to my client. It was so eager to liquidate, in fact, that the employees essentially loaded everything into trucks in one state and had it all delivered to my client a few states away.

It looked like the only thing left to resolve was payment. That is, until they opened the trucks on the receiving end. To their surprise, there were numerous unmarked barrels of unidentified substances in the trailers and no paperwork to explain them. If you know anything about federal or state laws that regulate hazardous chemicals, you have likely guessed where this is leading.

The RCRA
The Resource Conservation and Recovery Act (42 USC §6901, et seq.) was originally enacted in 1976 to address the growing consequences of municipal and industrial wastes that were causing increasing problems as industry evolved faster than the regulations. Both “hazardous” and “solid” (though not necessarily hazardous) wastes are carefully defined and regulated under different sections of the statute and different regulations.

The key part of RCRA is subtitle C, where Congress fashioned the “cradle to grave” concept to track regulated substances from the creation point until disposal. The Environmental Protection Agency [1] was charged with creating regulations[2] and procedures to accomplish this task.

The federal regulations that applied to those mystery barrels transported across state lines are discussed on the EPA site’s Manifest pages for Transporters. The Hazardous Waste Manifest System is a set of forms, reports, and procedures designed to seamlessly track hazardous waste from the time it leaves the generator facility where it was produced, until it reaches the off-site waste management facility that will store, treat, or dispose of the hazardous waste. The system allows the waste generator to verify that its waste has been properly delivered, and that no waste has been lost or unaccounted for in the process.

The RCRA "Bite"

The teeth in RCRA are in 42 U.S.C. § 6928: violators face civil penalties up to $25,000 per day for violating a compliance order as well as criminal fines of up to $50,000 per day or imprisonment up to two years for the first offense, double for a subsequent offense. If the violator is a person who knows at the time that his actions risk imminent danger of death or serious bodily injury to another person, the fines can go up to $250,000 and the prison sentence to 15 years. For a business so convicted, the fine can be $1 million. Note well that these penalties even apply to used oil that is not regulated under RCRA!

Armed with the information above, my client had a significant bargaining chip to use to bring the matter to a prompt, acceptable result. The seller had either knowingly transported or caused to be transported “without a manifest, any hazardous waste or any used oil not identified or listed as a hazardous waste under this subchapter required by regulations promulgated under this subchapter (or by a State in the case of a State program authorized under this subchapter) to be accompanied by a manifest.” (42 U.S.C. § 6928 (d)(5)) Compliance was simple—label the containers and list them on the truck’s manifest—but had not occurred. In disregarding those steps, the seller had thereby put my client into risk of sanctions had it not reported the incident.[3] Had the seller not violated RCRA, the matter may have been protracted in bankruptcy court for months longer and with uncertain results.

Environmental Law Compliance

So-called “environmental law” conjures images that most small businesses cannot envision for themselves. Yet, there is no minimum quantity rule that exempts those who produce, store, transport or dispose of regulated materials.[4] When in doubt, your business should request a manifest before accepting delivery of any substance that you are not certain is unregulated. If you do not know whether your activities are regulated by the RCRA, you should review widely-available online resources to confirm that any substances or materials you produce, including useable products, or discard are not covered.[5] Even though recycling can remove certain materials from the manifest system requirements, materials such as electronic components require special handling to protect the environment, waste disposal workers and your organization.

Compliance is relatively simple unless you are a hazardous waste disposal company or produce huge amounts of regulated wastes that you do not sell. Non-compliance can put you out of business.

Notes
[1] The EPA’s website has good resources for understanding which wastes are regulated, what to do in case of an accidental spill, and even a public database of documents and guidelines.

[2] The EPA’s Hazardous Waste Regulations page has links to federal regulations that make up the Hazardous Waste Management System. Regulations that govern non-hazardous wastes regulated under RCRA are described on a separate Non-hazardous Waste Regulations page.

[3] Most states with environmental regulations have mechanisms for voluntary reporting of discovered violations that provide a window for penalty-free remediation to regain compliance.

[4] To find RCRA compliance guidance on a state-by-state basis, use tools like the ones in this gateway from the Environmental Compliance Assistance Platform (a project of the National Center for Manufacturing Sciences (NCMS) with support from the U.S. EPA).

[5] For a better understanding of environmental regulations that may apply to your business, try the National Compliance Assistance Centers portal (also supported by EPA).

When Hiring, Consider Firing First

Beginning With the End in Mind

When hiring new staff, few managers think about the possibility they may have to fire or lay off that employee. Yet, as with prenuptial agreements, the best time to prevent problems at separation is when the relationship begins.

Even though you hire someone without an employment contract (known as “at will employment” in many states), you can still have other agreements that are enforceable but do not change the nature of the employment into a contract. Some companies actually go to the extent of having employment contracts with everyone for two-week terms, renewable every two weeks unless and until a violation or termination event occurs. For the purposes of this article, I will use “employee agreement” to mean terms other than length of employment.

Your employee agreement should address issues such as those that may arise before, during or after employment. Make the agreement a condition of hiring, to be clear to everyone how important the terms are. Get existing employees to sign one, such as to continue employment at their anniversary, upon promotion or to receive a raise. That satisfies the need for “consideration” unambiguously.

A Checklist

1. Acknowledgement that employee has received and agreement that the employee will read and adhere to policies and procedures. Can you show an auditor that your employees actually received their policy manuals? This is an annual agreement in many places, coinciding with the delivery of updates to the organization’s written policy manual. Get a signature that establishes the employee received his or her copy and promises to read and abide by them. It is not essential to proving those facts, but it helps.

2. Agreement that the employee will not violate criminal laws while performing job duties or on worksite or using employer property. It seems like this would be unnecessary. Why do you need someone to agree to avoid actions that are already illegal? Yet, as many international businesses know, it is essential that the organization show that illegal behavior was not permitted, condoned, promoted or implicitly rewarded. How would you show that? Start with policies that expressly prohibit illegal behaviors, from outright bribes down to cutting regulatory corners, then continue hammering the message with periodic compliance reviews and training on the rules applicable to their jobs. Together, these will help your organization defend itself should someone go astray.

3. Agreement that the employee will keep employer's and customers' secrets. This provision deserves careful drafting. You may have additional responsibilities to accommodate on confidentiality due to professional standards or customer contracts. “Secrets” is a term that means different things in different contexts. Try to define it anyway. Be specific AND general. Supplement with training and periodic reminders of how easily secrets are leaked and stolen, as well as the potential damages that can result.

4. Agreement regarding ownership of intellectual property rights for works created during the course of and term of employment. It is as old as artistry itself: the debate over who owns works created by someone while in the employ of another. Laws attempt to clarify the matter, but sometimes do the opposite. Even worse, some contracts applicable to the organization may contravene local laws where the employee is working or the organization’s agreements with its staff. Do not limit your concern to patents, for copyright is the most common protection and applies to more work than others, especially in today’s “information age” organizations. And keep in mind the growing blur between work and non-work areas of your employee’s lives. What about ideas or blog posts written at 2 a.m.?

5. Agreement that the employee will cooperate in compliance reviews and investigations of compliance issues during and after employment. Get this one up front and remind every hire how important compliance is to you and your organization. Nothing positive is gained from being unclear here. By stating expectations and values at the beginning of the relationship, you will be more likely to see those values throughout the term.

6. Agreement that the employee will submit to additional screening deemed necessary by employer to perform job duties or enter certain work sites or work on certain projects. More and more employers require pre-hire drug screening. Those in sensitive industries have policies for additional screenings after start date. You generally want everyone on notice that you may require an individual to submit to screening upon ANY indication that his or her performance may be impaired. Whether you ever need to use this or not, put them on notice at the outset and help avoid problems later.

7. Agreement regarding use of company property and facilities. What happens if the employee loses his or her company-provided smart phone? What if client files disappear the last week of employment?

Important Notes

This article is not intended to give legal advice to anyone. It is merely to serve as a discussion-starter. You should consult with qualified legal counsel regarding the specific laws in your area, because they vary extensively from state to state. If your employees have a collective bargaining unit, of course, other rules and limitations will apply, but the guidance above may still be within your reserved management powers if not specifically addressed in the union contract.

For a guide when settling employment law disputes, read this article by Robert B. Fitzpatrick: http://www.robertbfitzpatrick.com/images/settlement.pdf. Although published in 2003, it serves as a good starting point in the event your efforts to prevent employment issues are not completely successful.

Wasting Money With The Wrong Staff

In an earlier post, I posed the question, "Do charitable organizations have a duty to spend their grants and donations the way a reasonably prudent business person would spend his or her own money?" My goal was to prompt discussion on whether not-for-profit managers have a duty to use their resources to the best of their capabilities. I believe that duty is higher for those who manage taxpayer funds than even the duty on those who manage shareholder and investor funds. Based on some questions and stories I received since then, this topic deserves more discussion.

The issue tends to come up only when there is some type of problem: employee performance is substandard, financial resources are squeezed, or the overall economic outlook is exceptionally challenging. That makes sense. In good times, most people are willing to overlook things and put off unpleasant tasks. When times are tough, however, every “minor” matter becomes an aggravating thorn in the organization’s collective neck. But that does not mean managers snap into proper form and deliver.

Take a recent example that is behind the headlines: a public school district in a large U.S. city is cutting teachers because of severe budget problems. All across this large district, experienced, good teachers are getting pink slips. Yet in that very district, other teachers who abusively yell at kids or sneak out during the work day to meet friends for coffee will not lose their jobs.

Another example comes from the nonprofit sector. Even though one particular organization is not facing budget cuts, it never has enough money to hire enough staff to meet the needs placed on it by the communities it serves. Yet within that large organization are staff who have been moved from department to department because they are either incompetent, unmotivated or incapable of performing their jobs adequately.

Both of these situations were created by the same thing: supervisors’ refusal to take the steps necessary to appropriately set expectations and terminate employment for substandard performance (or even outright policy violations).

If you have managed people and been responsible for hiring and firing, you may sympathize. It is not fun. No one likes to do it. Unless the employee is a total jerk or commits a crime, there is no satisfaction in tossing anyone out onto the unemployment rolls even in good times. But making good firing decisions is just as important as making good hiring decisions and when budgets are stretched thinly, it may be even more important.

Here is why: somewhere there is someone more capable who wants that job. In today’s economy, they may even be unemployed and also need it. By leaving an unacceptable employee in his or her position, you not only cheat that very worthy, motivated, qualified prospective employee of the opportunity to do a great job for your organization and its constituents, you also cheat your funders—who do not get all they should for their money, your other employees—who pick up the slack or at least share the strain caused by a weak link in your staff lineup, and the communities you serve—who get BOTH substandard services from these inadequate employees and less total services than they would get if everyone was working at capacity. And when the funders are taxpayers, directly or indirectly, they have every right to want to see heads roll: their money is being misappropriated from its intended purpose and diverted to someone who cannot or will not do the job while too many willing prospects sit idle. It is offensive. It is immoral.

What should an organization do? It is not complicated or difficult and you have probably heard this countless times if you have been in management very long: set expectations and build a file when your staff fails to meet them. You take risks if you are sloppy, and perhaps some managers avoid this process because they think it takes too much effort. However, this is not difficult to do correctly. The reward is great, however, and the effort is generally short.

First, make sure you have clear performance expectations for all employees, from the top to the bottom. Exempt no one. Second, make sure those performance expectations have been communicated to each person. It sounds odd, but it happens more than you would think that job descriptions are buried in HR files and never handed out.

Third, document your training and offers of help for anyone who lacks the skills and knowledge to perform their job duties. Fourth, document every incident where the employee has failed to meet expectations AND your plan of action for helping them avoid future incidents. Finally, take prompt, progressive, appropriate action when failures continue.

Progressive action could follow this type of pattern: oral warning -> written warning -> probation -> suspension -> termination.

Before you hire a replacement, review those performance expectations. You want to hand them to the new hire on day one. Hopefully, you will not have to follow this plan very often. Unfortunately, if you are an employee, you probably have worked or will work for a manager who never does.

“Gotcha!” at Closing: Beware the HOA Inspection Report When Buying a Home

As more and more subdivisions adopt common deed restrictions and covenants, the chances that you will buy a home in one of those neighborhoods increases. While covenants and restrictions are nothing new, there is a trend that can catch the unwary by surprise and add thousands of dollars of unexpected costs above the purchase price. Some due diligence can save you a lot of grief.

Contract terms that apply to the land before the first purchaser buy a lot, are recorded in the public land records and referenced in each subsequent conveyance are said to “run with the land.” Those documents are public records and available for anyone to review before agreeing to purchase property in the subdivision.

However, the covenants typically vest a number of powers in a body of representatives of the entire group of owners. Those powers include the ability to adopt and enforce rules consistent with the spirit of the original covenants. Unlike the deed restrictions, these rules are generally not public record and can only be obtained from a member or officer of the home owners’ association (“HOA”).

HOAs have the unpleasant task of enforcing rules drafted to help keep all property values up by ensuring consistent levels of exterior maintenance, upkeep and accessibility. It is a thankless job but one that benefits all owners in the subdivision. On the flip side, if the HOA turned a blind eye to violations, the entire set of covenants could be declared nullified by failure to enforce them over a period of time.

HOAs have a new trick they use to meet these obligations: the so-called “resale inspection rule.” Here is one example from Maryland. Here is another example from Arizona. These rules can apply to condominiums as well as traditional lots.

Although the rule varies from HOA to HOA, it typically includes a requirement that anyone selling their property obtain an inspection by the HOA architectural representative. If the property passes, everything is great. If the property does not pass HOA inspection completely, then that can become the “gotcha!”

Here is how a good plan can cause trouble even for people who had no intention of violating the HOA rules:
1. HOA inspection is mandatory, but not requested before closing
2. HOA inspection occurs, but report not received prior to closing
3. HOA inspection occurs and report is received prior to closing, but after the purchase contract becomes binding
4. HOA inspection occurs and Seller fails to disclose the non-compliance issues pointed out in the HOA report
In most states, the first and last scenarios likely can lead to legal action by the buyer to either reform or avoid the contract because the Seller has done something intentional and deceptive or negligent. It is the other two that are more likely to occur, and because there is no intentional deception, the remedies available to the buyer can be limited.

For example, let’s say Owner wants to sell House. Owner spruces up the place, gets a Realtor, lists the house for sale and starts preparing for tours. Because Owner knows the rules, she contacts HOA to inform them of the new listing and request the mandatory HOA inspection. HOA takes its normal, customary 8-10 business days to get around to the inspection. HOA finds a few “minor” items of non-compliance, and within a couple of days, mails its report to Seller.

The only problem here is that the market is pretty hot and Buyer makes an offer on the third day the property is on the market and has a closing date scheduled in less than three weeks. Why is that a problem? Seller may honestly have no actual knowledge of any non-compliance items to list on the disclosure statement. Buyer relies on the Seller’s disclosure statement and the train is rolling towards closing. Depending on how quickly the HOA completes and delivers the report, that document may not even show up until after closing. If the cost to remediate is substantial, the sale may be off.

Protect yourself by doing some research before you make an offer. Read the seller’s disclosure statement very carefully (in states where they are required), then ask questions in writing and get the answers in writing. Here are some questions to put in your list when there is a mandatory HOA and there are active covenants and deed restrictions in place:
a. Does the HOA have any requirement for an HOA inspection prior to, after or in connection with the sale of property covered by the deed restrictions?
b. If so, have you complied in all respects with that requirement?
c. Are you as home owner in compliance in all respects with all HOA rules?
d. Is the property in compliance in all respects with the HOA rules and covenants?
e. Has there been an HOA inspection or report related to your property in the past 24 months?
f. Do you expect to receive any report from the HOA prior to, after or in connection with closing?
g. Please provide the names and contact numbers for all current HOA officers.

Most HOA officers see themselves as ambassadors for their neighborhood. They want to paint the environment in the best light and will be helpful. Ask if they have any violation history on the property you want to buy. Ask them what the requirements are on an owner when she wants to sell as well as on a buyer when he completes the purchase. They will typically provide copies of rules, meeting minutes and even HOA financials if you ask, though they may ask you to cover the costs.Buying is stressful enough. Do not let the unexpected get in the way of your new home. Ask questions. Probe. Be prepared. Hopefully, there will be no “gotchas!”

Why Written Policies and Procedures Matter

Over my career, I have worked with a number of organizations. The ones that were the most effective, had highest employee morale and fewest compliance failures had one thing in common: they valued written policies and procedures highly. The organizations and departments that were the most troubled did not. They saw written procedures as inconvenient, unimportant, unnecessary and an annoyance.

If your organization or business receives federal money through grants or contracts, you most likely have a duty regarding effective policies and procedures that carries serious penalties for noncompliance. Even if you do not have the express or implied obligation, there are plenty of examples of situations where the lack of such procedures cost a business, agency or organization.

A Few Examples

The lack of written procedures is frequently named as a primary or contributing cause in product recalls, medical testing failures, allegations of unfair federal regulations, inadequate training programs and government program audits. It is also often determinative in court decisions in favor of employees who file grievances and lawsuits.

These examples show how expensive and embarrassing it can be for the organizations. The cost in lost productivity and distractions from each organization’s primary mission are at least as high as the costs of outside counsel, internal investigations and preparation of an appropriate defense against the accusations. In some cases, the failures held the potential to cost lives. In others, they mean wasted efforts and untold hours by people who most likely wanted to deliver good results.

Reasons or Excuses?

In some businesses, sheer arrogance and a false sense of impunity are behind the lack of written policies and procedures or refusal to follow those in place. (See my earlier post “Too Small to Worry About Compliance?” inspired by a true situation.) In my experience, most of the reasons for inadequate, incomplete or nonexistent procedures are really excuses and have simple answers.

1. “We need flexibility. Written procedures are too constraining.” While some processes in your office may need detailed, step-by-step procedural guides, at least as many only need general guidance. Design your policies so that they provide as much guidance and restrictiveness as is necessary, but no more. Employees do not like to be treated like children. If you can develop criteria for what the output should be, while leaving your talented staff to arrive there using their own solutions, then all you need for the process is a set of guidelines—boundaries of a sort—to communicate the amount of latitude they have.

2. “We trust our staff to do the right thing.” Is it trust, or laziness on the part of management? Jim Collins, in Chapter 3 of his book, Good to Great: Why Some Companies Make the Leap…and Others Don’t, describes how the best leaders of the best companies first got the right people in place, then charted their paths to excellent results. But as judgment after judgment in employment, antitrust and product liability lawsuits prove, most organizations focus on their mission first, then select their staff and really cannot trust everyone to always do the “right” thing. Better to use the “trust but verify” approach, with a solid set of guidelines and quality assurance checklists. Employees generally want to do their jobs correctly. They will reward your efforts if you give them clear, smart, written guidelines so they understand what you expect them to deliver.

3. “There are already too many rules and regulations.” If you have “too many rules,” but still have compliance issues, then you may simply have the wrong rules. An attitude that there are too many rules means that many if not most are ignored. Talk to your staff and middle managers, then develop a way to update your policies and procedures so they are realistic, relevant and referential. The solution is not more policies, but good, sufficient policies. As Elaine Herman wrote in her article, “Less is Really More,”

The impressive length of many nonprofit policy manuals is generally the result of good intentions; leaders believe that adding new policies to an existing manual will add emphasis to key issues. But this encyclopedic practice can be a recipe for disaster.

4. “By the time we finish writing procedures, our processes have changed.” In my series on business process improvement, I outlined a generic strategy for assessing internal processes then designing and testing better ones. Write and amend your procedural guides as you change your procedures. This hand-in-hand approach keeps the written guidelines fresh and relevant. Written procedures are not static. They have to be constantly reviewed and updated, because so many things change in our offices every day. If your procedural guidelines were based on paper-only processes, then update them for your electronic information systems. If your policies only addressed the use of company equipment and email, update them to cover the blending of work and home life that so many employees now have.

Ounces of Prevention In Our Hands

If you have compliance gaps, look first to ensure that you have current, clearly written and adequate written policies and procedures that address the situation. Look next to how those policies and procedures were published and communicated to the staff. Unwritten policies are as ineffective as written policies that are unpublished. When you find gaps in the written materials, fill them. One good resource for personnel policies is the Personnel Policy Service website, where you can read, for example, The Case for Written HR Policies. Other materials guide development of written policies and procedures of a general nature, such as 7 Steps to Better Written Policies and Procedures.

If you have no idea where to even start in terms of drafting procedures, look at this discussion of the most important topics for policies and procedures published by the National CASA Association and the list of “Integrity-Related Written Policies” by the National Institute of Ethics for its Certificate of Integrity Program.

Finally, if you still think that written policies and procedures are for schmucks, wimps and “the other guys,” consider this point well-stated by John Outlaw in his article, “The Case for Compliance: Why You Need an Effective Compliance Program,”

There is another benefit to implementing and maintaining a compliance program, although nobody wants to think about needing it. The Federal Sentencing Guidelines provide relief for any entity convicted of a crime that has an effective compliance program in place. In determining the amount of any fine, the Guidelines require a court to determine a “culpability score” by calculating aggravating and mitigating factors. Having a compliance program doesn’t excuse the crime, but demonstrates that the organization took reasonable efforts to prevent, detect and correct any improper conduct. It may lower the organization’s starting “culpability score” by 60%, and not having a compliance program is actually considered an aggravating factor which increases the culpability score! (Emphasis mine.)

Congress Can Do Better Than the Employee Free Choice Act

Can We Have it Both Ways?

In a recent town hall meeting, President Obama confirmed his general support for labor unions, but called on teachers unions to agree on both merit-based compensation and prompt termination of teachers who do not meet performance standards. In my past experiences as a union negotiator on behalf of employers and as a former union member, national unions fight against those two issues with religious zeal. The unions I have both been in and negotiated against preferred compensation systems based on seniority and longevity that took away all connections between performance and compensation. Is that about to change?

First, A History Lesson

The National Labor Relations Act was passed in 1935 as part of the massive legislative response to the Great Depression. Sometimes called the Wagner Act or Wagner-Connery Act, after its primary sponsors in the Senate and House, the NLRA took away employer’s power to legally fire workers who unionized or withheld labor under certain situations. By the mid-1940s, labor union membership soared to as high as 35% of the total U.S. workforce.[1] Then the Taft-Hartley Act of 1947, a/k/a the Labor-Management Relations Act, sought to add limits to union power and prohibit some types of organized economic activities that employers felt amounted to economic terrorism. It was the first major revision of any New Deal legislation.

Later, with the Landrum-Griffin Act of 1959, Congress had completed the picture: Wagner-Connery protected the union, Taft-Hartley protected the employer and Landrum-Griffin protected the rights of union members.[2]

Now, the Employee Free Choice Act has been introduced once again, though its future looks murky in this Congress. One of its stated goals is to help employees form unions more easily and mandate employer recognition and bargaining immediately. A mandatory, binding arbitration would establish a two-year initial contract if there is no agreement within 90 days. Opponents cite the bill’s “fast track” membership mechanism (where signed intent cards can be used optionally in lieu of secret employee ballots) and the prohibition against employer counter-campaigns as major flaws. Supporters say it is needed because collective labor negotiations are more important now than anytime since the Great Depression.

Everyone is Partly Wrong--and Partly Right

While some employers have over-reached in their efforts to prevent unionization efforts from taking root, some union organizers have also gone too far in their efforts to build support. Both sides have good arguments as well as specious defenses. It is safe to say neither side is entirely in the right or entirely blameless. I think they are both fighting an old fight that ignores the real opportunity to actually improve the entire labor law system in the United States.

Here is a look at some of the issues that labor and management are either afraid to discuss or unable to do so dispassionately with an open mind for long-term reform:

1. Fair and balanced communication.
The NLRA protects the employee’s right to engage in union activities as well as to not engage in them. It also protects employees’ rights to engage in certain activities without even forming a union, such as collectively addressing working condition issues and pay with the employer or discussing their pay or working conditions among themselves. Employers may not interfere with, restrain or coerce employees engaged in unionizing activities and unions may not restrain or coerce employees into doing them. The NLRB decisions over the decades have been generally very strongly worded in finding even subtle comments as violations of the NLRA.

Today, labor groups and employers each accuse the other of intimidating employees. Unions scream about “union free” efforts while employers point to sometimes brutal actions by union members against employees who disagree with them. One thing is common to both camps: each is restrained by what the laws say they can and cannot communicate directly to employees.

So fix it. Clarify the statutes so that both sides are entitled to free, honest communication, subject to scrutiny and oversight by the NLRB. Whether you take a page from the Federal Election Commission’s regulations or the Federal Communication Commission’s, find a way to un-muzzle advocates on both sides. Today’s employees are much more mature and informed than those of the 1930s. They also are quite capable of blogging, Tweeting and YouTubing evidence of deceptive and false communications by one side or the other. Free speech is a fundamental American value and the guidance from Whitney v. California, 274 U.S. 357 (1927) is still sound:

"Fear of serious injury cannot alone justify suppression of free speech and assembly." Id. at 376.

"Those who won our independence by revolution were not cowards. They did not fear political change. They did not exalt order at the cost of liberty. To courageous, selfreliant men, with confidence in the power of free and fearless reasoning applied through the processes of popular government, no danger flowing from speech can be deemed clear and present, unless the incidence of the evil apprehended is so imminent that it may befall before there is opportunity for full discussion. If there be time to expose through discussion the falsehood and fallacies, to avert the evil by the processes of education, the remedy to be applied is more speech, not enforced silence. Only an emergency can justify repression. " Id. at 377.

"Sunlight," Justice Brandeis later wrote in Other People's Money, "is said to be the best of disinfectants; electric light the most efficient policeman."[3]

2. Merit Pay and individual performance incentives.

Just because there is subjectivity in an action does not mean it cannot be fair. Performance-based compensation has tremendous value for the employee and the employer. At least it does for employees who want to get more for doing more. No one should still cling to the old notion that people will simply work harder than they have to for personal reward or satisfaction. Positive reinforcement is valuable, whether in non-profit, for-profit or government jobs.
National union leadership would say they do not attempt to protect incompetent workers. Managers and executives would also say they do not attempt to arbitrarily and capriciously terminate staff. It all happens anyway from time to time.

Tying or maintaining a connection between compensation and performance also means that the rating system is more likely to be fair and consistent AND that employer and employee will use it appropriately. Union and management can work out acceptable systems that meet the goal of (a) identifying areas of exceptional performance, (b) identifying areas of substandard performance, (c) calculating the pay adjustments based on the review and (d) setting performance expectations for the next review (as well as any curative measures the employee needs to take). They can even agree—dare I suggest it?—on guidelines for individualized compensation plans that incentivize excellent results with accountability and realistic criteria. It works in non-unionized businesses and with non-bargaining unit staff every day.

One size does not have to fit all. Most workers today are not employed in mass-production industrial shops. The vast majority are in information and or service sector jobs. It is time to dump the industrial-society labor concepts and craft something fresh and relevant. Workers today are better trained and more knowledgeable than their grandparents. Change the statutes that constrain innovation in the labor-management relationship so labor and management can actually have a modern relationship.

3. Employee participation in TQM-style efforts.

Likewise, unshackle innovation among the ranks of employees. Take off the blinders, folks. We are in a very different world than in the 1930s. American business has to be able to encourage innovation, excellence and ingenuity among the ranks to maintain or regain its competitive edge in the global marketplace without fear of charges alleging an “employer-sponsored union.” Employees want to participate. They like having input and influence over the solutions. Past generations may have preferred to be taken care of by paternalistic bosses, but younger workers want to be involved in finding solutions.

Collective Bargaining Agreements (CBAs) are unique to every situation, but affiliates of national labor organizations tend to get a lot of suggestions and encouragement from the national representatives. Kill off the “hot button” issues and make every CBA a “local” CBA. Union leadership is certainly capable of customization that has the local employees’ best interests first. Employers are likewise capable of localized CBA provisions that take into account the unique needs and goals of work groups in each location.

Just because an employer retains the right to implement, modify or decline an employee's recommendations or suggestions for improving the way work is done or enhancing working conditions, does not mean that such a "quality assurance committee" is a labor group dominated by the employer, and thus violative of the NLRA. Let the CBAs permit joint employer-employee work groups that fit the needs of the local work site as well as address overall business process improvement.

Either Lead, Follow, or Get Out of the Way

It is easy to be against something. You let the other side define the discussion then sit back and tear it apart. It is much more difficult to propose viable alternatives and compromise. A lot of water has gone by under the NLRA bridge since 1935. Many honorable people on both sides have come and gone. There are plenty of scars to go around.

Get over them. We are humans working for humans. Some people are greedy, others lazy. Some are power-hungry and hyper-competitive, others opportunistic profiteers—on both sides. None of those is reason enough to impose communism or socialism and very few really want that for themselves.

What is really broken is the whole “zero-sum” labor-management relationship concept. It is time for a better plan entirely. One with flexibility, collaboration, transparency and fair advocacy on both sides. To get buy-in from both camps, Congress should truly draft a “Free Choice” act that seeks to address the short-comings of the outdated system we now have, not just shift power to labor union leaders who lack vision of a future work force that is so valuable, effective and efficient it cannot be replaced with off-shore competition.

No more "it cannot be done" excuses. This is the "Yes, we can!" generation.


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[1] Kusnet, David, “UNION ADVANTAGE: The Case for Organized Labor and Democracy in the Workplace,” United Professions AFT Vermont Website, http://www.upvaft.org/unions/101_union_advantage_article.php


[2] My research was much easier because so many labor union web sites contain the full text of these statutes. While there may be many employer sites that also display them, I did not find one.


[3] Excerpt from online text at Louis D. Brandeis School of Law, http://www.law.louisville.edu/library/collections/brandeis/node/196; Chapter V: What Publicity Can Do.