California Sales Agreement Requirements

Effective January 1, 2013 employers in California are required to satisfy new regulations associated with Sales Commission Agreements. To be in compliance, employers need to issue agreements with their commission sales representatives that meet the following provisions.

 

Sales Commission Provisions Due to California Law AB 1836

•        Employee must be given a signed copy.

•         Employer must obtain a signed receipt from employee.

•        Clear description of manner of calculating commissions.

•         If based on revenue, is it amount invoiced or amount collected?

•         If based on “profit” on a sale, how is the amount of profit determined; i.e., what charges will be applied against revenue to determine profit?

•        Agreement should define when commission is earned:

ü  Upon “booking” of sale

ü  Upon delivery of product

ü  Upon receipt of payment

•         Agreement should state that only those commissions that have been earned by date of termination will be paid

•        Chargebacks must be in contract if they will be taken.

•         Chargebacks may only be for returns or cancellations relating to sales made by the employee.

•        Agreement should explain how draws will be applied to commissions:

ü   Will draws be forgiven if not met?

ü   Will draws be carried forward?

 

•        Meal and rest break requirements, where applicable (inside salespeople are not exempt from meal and rest break law).

•         Employment at will language.

•         Reference to employee handbook or employer policies.

 Submitted by Michael Salisbury from HRA www.hralliance.biz

 

If You Must Interview, Use The Most Important Question

During my career in HR I was responsible for many interviews and even taught supervisors how to interview. However, I have learned that most people cannot predict very well how one is going to perform, based on an interview. However, I do have one piece of advice, which unfortunately is not fool proof. However, it is what I consider to be the most important interview question of all time.

The question is, “If hired, what are you going to contribute to the company and how are you going to do it?

One drawback with this question is that few positions within an organization allow an employee to make a contribution. In my experience, most jobs are designed to conduct a series of tasks, which are determined by an established process that is not readily subject to change. However, if your firm is willing to think out of the box or the position is intended to make things faster, better, and cheaper, then this is the most important question you can ask.

Furthermore, to gain the most from this question, you should prepare the candidate for this question.  In fact, as part of scheduling the interview, the candidate can be told that this question will be discussed.

Unless you gain satisfaction from trying to surprise candidates and seeing how well they respond under pressure, you may prefer to give the interviewee the opportunity time to develop a legitimate reason for hiring them. Who knows, you might learn that someone has an idea and an approach that is highly beneficial for the company plus they are willing to work to make it happen. Isn’t that the kind of person you’re organization is looking for? If not, then I don’t think any question you ask will make a difference.

From Michael Salisbury with the HRA at www.hralliance.biz  Follow myblog: http://hralliance.blogspot.com/

Why Interviews Don't Work

The author (Brad Hall) decimates the theory behind interviews (which I support by the way) and a solution is offered.

 

NEW YORK (TheStreet) -- The data are overwhelming -- job interviews are a terrible predictor of success. Yet virtually every person reading this article will insist, "That may be true for others, but it's not true for me." You're wrong. You don't know how to interview job candidates either.

Myth 1: We Know Whether We Are Good at Interviewing

A person's belief that he can accurately assess another person is not at all correlated to his actual ability to do so. It seems that we don't let our competence affect our confidence.

Myth 2: Smart People Are Great at Interviewing

Medical school professors are some of the smartest people in society. Yet a study found no correlation between medical school interview scores and success in medical school. The relationship was actually negative, but nonsignificant. One wonders what the professors' reaction was to these data; they are scientists after all. Did they blame themselves?

Myth 3: A Structured Approach Will Improve Selection Accuracy

On my first job at a consulting firm, I was assigned to coordinate the new consultant hiring process. We decided to organize a Saturday session where 10 candidates were each assessed in five competency areas (e.g., quantitative, analytical) by five interviewers, round-robin style.

At the end of the day, we held an interviewer's roundtable to select candidates. As we reviewed the first candidate, the "quantitative skills" interviewer said, "She has no quantitative skills at all!" Another said, "She has a master's degree in math from MIT!" The interviewer replied, "She does? Well ... she has no quantitative skills at all!" And so it went.

Myth 4: Experience Creates Great Interviewers

Being an interview skeptic, I recently advised two sales executives to conduct an outsourced assessment for a new sales director candidate. Both were highly offended. Each said that he had interviewed hundreds of candidates in his career and could accurately differentiate good and poor candidates.

We went ahead as usual. I screened several candidates and recommended a man named Harris. The first executive interviewed Harris and said that he would definitely succeed in the role. The second said Harris would definitely fail. I met with the executives together and said, "There is a truth here. Harris will either fail or not fail. That means one of you is wrong." Both insisted it was not him.

 

 

In 2002, Daniel Kahneman, a psychologist, won a Nobel Prize in economics for his work on judgments and decision-making.

As a young soldier, Kahneman participated in a high potential assessment exercise where a team of assessors observed and rated a group of soldiers in a physical exercise to determine leadership potential. The assessment process was rigorous.

Every few months the assessment team received a new round of performance ratings that made it possible to correlate simulation ratings with actual performance. Kahneman writes, "The story was always the same. Our ability to predict performance was negligible. Our forecasts were better than blind guesses, but not by much."

Their evidence made it clear that their leadership assessment did not work. It should have been scrapped, but it was not. It should have reduced the confidence of the assessors to make accurate decisions, but it did not. They just kept using it.

It is possible to greatly improve the success of new hires by focusing on three areas: 1. technical/professional skill assessment; 2. leadership behavior; and 3. on-boarding.

Technical/professional skills. Technical interviewing skills can be learned, and interviews should be conducted by an in-house panel interview. Panels provide a quality check on the assessment. Use a structured interview where questions are determined up front. For example, "Tell me how you would design a wireless network with the following parameters ..."

Make the technical interview your first step. If the candidate does not have the basic skills for the job, eliminate him or her immediately.

Leadership behavior. Behavior is more difficult to accurately assess than technical skills. But leadership behaviors can be effectively assessed by an expert through a 3- to 4-hour interview.

Some might say that cultural fit must be assessed by an internal manager. But if internal managers can do that so well, then why do several managers come up with different fit assessments? It's because culture is not operationalized. An external firm will help you operationalize your culture and then assess for fit.

For front-line and middle-manager assessments consider Development Dimensions International, Personnel Decisions, Inc. or SHL. For executive selection try ghSmart, Hay Group or Korn Ferry International(KFY_). The experts will assess: leadership style, teamwork, political saavy, influence skills, etc.

Kohlberg Kravis Roberts(KKR_) is the private equity industry pioneer, and its executives are some of the smartest people on Wall Street. Certainly they should know how to assess managers. But KKR knows its limitations and uses ghSmart to assess its new executives. The ghSmart process is a four-hour behavioral interview plus rigorous reference checks. The company provides a 50-page summary report with verbatim quotes.

It is critical to note that the external firm provides relevant data for the manager to make an informed decision. Hiring decisions must never be outsourced. This is similar to strategy consulting. Information collection may be outsourced, but the choice of a strategy is not.

On-boarding. Too often the right person was selected, but fails because of an inability to be integrated into the system of the organization. The "system" is how things get done.  A key part of on-boarding is pre-hire stakeholder interviews. On-boarding begins before the hiring decision. To prepare each stakeholder, present the technical and leadership behavior data before their interview. It is possible that the interviewer may find new data to reject the candidate, but the purpose of these interviews is buy-in more than assessment.

Typical employment interviews are not effective predictors of future job performance. Let's lower our pride and admit that we are the problem. We can do better.

Presented by Michael Salisbury www.hralliance.biz

On the job training

Occasionally I will share a personal business experience that gives me an opportunity to think things through. This is one of those occasions.

One of my clients has a difficult vacancy to fill, from many perspectives, not the least of which is a very tight recruiting budget. However, we were fortunate and able to identify a candidate who met all the criteria, within the limited budget.

 Unfortunately, as we learned later, the interview with the hiring manager did not go well and the candidate developed a story that he did not want the job because of where it was located. Of course, this matter was vetted in the selection process so I knew it was not the reason for their objection and I told the client that the proffered reason was a red herring. Nevertheless, the client was upset because they felt the recruiter had wasted time and money bringing in a prospect that did not what to work where the business was located.

Upon further review, it became apparent that the problem was not the location of the business but, how the hiring manager had handled the interview with the candidate. However, we had only one clear example of the hiring manager’s missteps. So my challenge was to adjust the client’s position about the recruiter and convince the client that the problem lie somewhere else, without throwing the hiring manager under the bus. And to do so, with out appearing to be self-serving.

It is too early to tell if I accomplished my objectives.  However, this experience is a good illustration of how the wrong information delivered at the right time can make things much worse than they need to be. It also illustrates how important it is to be able to persuade and communicate effectively under pressure. Valuable skills that I continue to improve upon.

By Michael Salisbury www.hralliance.biz

Considerations for Evaulating the HR Function

The following piece was initially suggested by a fellow HR practitioner who was questioning the approach we take in evaluating the HR function. Some good food for thought.

 

The Wall Street Journal had an interesting article on 7/30/12 where they identified and ranked the Top Chief Financial Officers of major companies. Their ranking was reported to have been “ ...created using a combination of quantitative and qualitative analysis”.

WSJ’s initial candidate pool for finance was drawn from the S & P 500 for companies with a market cap of $5 billion or more and in their jobs for at least three years. These companies were reviewed for financial performance and interviews were conducted with financial recruiters and analysts to determine who should be in the final list.

Could we do something like this for the chief human resource officers (CHRO) of a similar group of companies? The author of the article states, "My bias is to say that we could not", for the following reasons:

The CFO operates in a field that is dominated by performance data, which may not be the sole result of the CFO”s job, but he does compile and report it, and therefore has a sense of ownership/responsibility for it. The CFO is also the focal person for reviewing a company’s financial results.

 

However, those of us in the HR field deal with what is primarily a set of intangibles that may be crucial to achieving and maintaining an effective organization, but are rarely measured or visible to the outside world, unless there is a terrific calamity.

While it is true, turnover can be measured, safety and health data is quantitative, attitude surveys can give us data on employee views, recruitment data and success rates for job placements can be measured but is this data considerd as of core importance to the organization?

Maybe, the author continues, we can take another tack and identify what functions, activities, or behaviors should be measured in order to get a handle on what is important to the business so that the effctiveness or even the contribution of the HR functon can be evaluated. For starters, the author suggest the following ideas:

1.    The level of meaningful participation in corporate planning

2.  The degree to which contributions are made to the development of new business strategies

3.    How effective is HR in responding to the board on a variety of topics related to the function such as:

     a) social and economic trends that will affect the character and qualities of human assets

     b) how well executive management team operates, achieves objectives, and is prepared for and

          resolves problems 

     c) How well does the firm's reward and recognition program foster and support the organization's

         mission, goals and objectives?

4.  Does HR help the CEO and other members of management spot new and developing talent?

5.   Are there systems and processes for capturing hard and soft data regarding the building of talent for

     management continuity and succession?

6.  Are the HR functions required by the corporation are effective and up to date?

7.   Is the HR function open to new ideas and is it creating cost effective solutions to new issues and

     competitive pressures?

8.  Is there some form of HR Philosophy to help guide managers in discharging their responsibilities to the

     employees?

9.  Does HR demonstrate the courage and the wisdom to tacfully respond where management is taking

     unethical positions, violating the rights of employees, or taking positions that are in conflict with the

     social policies or cultures of the countries within which the company operates?

10.  Does HR effectively represent the organization in various public forums where the interests of the

      enterprise directly or indirectly may be affected by official and unofficial outside bodies?

11. Does HR take a long but balanced view of corporate practices, plans and policies that affect company

     costs and are relevant to will being of all parties.

 

If you can’t measure it, you can’t manage it, and this old saw is the issue for HR. Therefore, it would be interesting to sharpen this list and make it as complete as possible. Then each of these criteria could be evaluated as to whether it can reflect some form of quantitative measurement. On the other hand maybe relevant scales could be developed illustrating performance targets. However, the question remains, would the results have as much stature as the evaluation of the CFOs?

Rising Cost of Health Care

Posted below are two articles on the cost of health care for employers

Bloomberg Article Warns that Health Care Coverage May Not be Affordable

Posted on November 30, 2012 by AHIP Coverage

An article in Bloomberg examines the affordability of health care coverage as the Affordable Care Act (ACA) is implemented. The article warns that the new coverage may “come at a potentially unaffordable cost.” Here are some key highlights from the Bloomberg article:

·        As the administration spells out the details, many uninsured will be surprised at how much they will have to pay. It may involve “very substantial amounts,” and “there still will be a significant number of people who can’t afford health coverage,” said Ron Pollack, head of Families USA, a consumer group that backs the law.

·        “People are often surprised at how expensive health insurance is once they have to pay for their own,” said Karen Pollitz, a senior fellow at Kaiser Family Foundation. “The subsidies will make that better, but they won’t make the cost disappear.”

·        “While we’re only dimly aware of it, we all pay,” said former Congressional Budget Office Director Robert Reischauer. “There shouldn’t be free-riders.”

·        “What’s more, there are provisions in the law capping the financial burden the requirements will impose on the uninsured. If costs exceed 8 percent of their income, they are exempt from the individual mandate to buy insurance. And people can choose to pay a penalty instead of buying insurance. The fine would be $695, or 2.5 percent of a person’s income, whichever is greater.”

·        “In 2019, some families could see their premiums climb four times as quickly as the help they receive from the government, according to CBO. That means they will have to bare a larger share of the burden of purchasing coverage.”

·        “That will be a major challenge,” said John McDonough, a public-health professor at the Harvard School of Public Health. “It makes the affordability picture far worse.”

·        “A November 2009 analysis by CBO of a draft of the program provides a rough indication of how quickly the subsidies will ramp down. It shows the government covering 77 percent of the premium costs for single persons earning about $20,600, 42 percent for those earning around $32,400 and 13 percent of the premium costs for those making about $44,200.

·        That means many with modest incomes will be responsible for covering the bulk of their premium costs. About 5 million people required to buy coverage won’t receive any help from the government because they earn too much, CBO projects.”

·        “There may not be sufficient management of expectations,” said Lynn Quincy, a health-policy analyst at Consumers Union, a Yonkers, New York-based advocacy group. Lawmakers should have been telling the public the law promises “lower-cost” — not “affordable” — coverage, she said. “Everybody interprets ‘affordable’ differently — it’s in the eye of the beholder.”

 ARTICLE FROM WORKFORCE MANAGEMENT ON SPECIALTY DRUGS: THE LATEST SYMPTOM OF POCKETBOOK PAIN

An article in December's edition of Workforce Management examines the cost implications associated with specialty drugs  Here are some key highlights from the article:

• Specialty drugs, also called "biologics" are designed to treat serious and complex conditions such as cancer, make up about 17% of employers drug costs. However, only 1% of the workforce takes these drugs.
• Total costs of these drugs are expected to grow to 40% by 2017.
• Specialty drugs are derived from living organisms and have no substitute which are produced chemically
• Many biologics are administered in a doctor's office and requires extensive monitoring which further drives up costs. Furthermore, the proper medication and treatment compliance protocols are critical when it applying biologics effectively.
• With so many players involved with these drugs, the employer, the health plan, the pharmacy benefits manager among others ; it is unclear who should be in charge of controlling the cost...
• You can have an oral oncology pill that used to be an injection, only it cost $5,000 because it is managed as a speciality drug.
• Were not going to reduce the cost of specialty drugs so employers need a good understanding of how the diseases they treat can impact productivity.

           From Michael Salisbury at www.hralliance.biz 

 

 

 

Employee Engagement Ideas

Emily Manke, is an Outreach Coordinator for Online Human Resources, enjoy her guest blog.

Keeping employees engaged and motivated is an integral part of the HR pro’s experience. So instilling all of the elements necessary to help employees stay content and productive, is key. Here are 6 ways you can help your employees become passionate about your organization.

1. Rewards and recognition.

It’s been indicated in a number of studies, that rewards and recognition programs help keep employees engaged. Any number of programs can do the trick, as long as you research, and follow through. Avoid selecting a rewards program with few winners, because it can be discouraging to those who aren’t selected. It appears the more people are recognized and rewarded for their work, the more motivated and engaged they become.

2.  Find out what’s making them unmotivated.

Instead of focusing on ways to impassion employees, attempt to discover what’s holding them back from loving their job. Open communication between staff members is crucial for so many reasons, and this is one of them. If you can solve a problem that is causing a number of employees to be uninspired and thus unproductive, such as removing a problem manager, that alone will work wonders to make your staff more comfortable. They’ll feel heard, and this is likely to make them more loyal, and you got it, engaged.

3. Schedule time that’s just for fun with the staff.

Having personal ties with co-workers opens them up to a side they may not see at work, and leads to a better relationship all around. Setting up a time during work hours where everyone can relax and get to know each other a little better outside of work, can alleviate stress and frustration, and inspire employees to do better and achieve their goals. Whether it be a trip to the mini-golf course, or simply take-out in a conference room with some nice, not work-related discussion, these kinds of small gestures can work wonders to giving your employees that extra umph.

4. Make sure employees know what’s expected of them.

It’s hard for an employee to go for the gold if they don’t know what that means exactly. Even if you think someone’s job duties are clearly defined, give it some second thought. If you have a hard time describing or articulating exactly what’s expected of an employee, chances are they do too. Set clear cut goals for every position so they know what’s expected of them, and they can aim to do better than that.

5. Train management to lead better.

Even if someone is a natural leader, and has management experience under their belt, that doesn’t necessarily mean they know how to keep their team motivated and engaged. If you’re having a large scale problem with productivity and engagement, take a look at who’s in charge. 65% of respondents to a recent survey, said they’d rather have a new boss, than more money. Proof that management, is a powerful motivator. If a manager seems to lack the ability to praise, and lays the criticism on heavy, or even if he is just too hands-off, he may be the problem. An involved and highly capable manager is necessary to encourage maximum efficiency and engagement, that kind of leadership takes training.

6. Let your employees have lives.

The subject of work life balance has been a hot-topic in HR for years, and for good reason. Companies with flexible schedules, and who support employees in their pursuit of out of work activities and health, tend to have a more engaged, productive workforce. Seems strange, but the more research is done, the more it seems to suggest that loosening your employees reins, in turn ends up reining them in.

Conclusion: Employees are individuals and need to be treated as such. Bad management, a lack of rewards, and poor communication are all contributing factors to why employees become disengaged. By establishing good relationships through recognition programs, good communication, and general respect, we can repair relationships and build an engaged workforce.

From Michael Salisbury www.hralliance.biz