Business Strategies – Page 6 – Setnor Byer Insurance & Risk

The Supreme Court’s Ruling on Health Care Reform: Is it All Good or All Bad?

On the last day before summer recess, the United States Supreme Court handed down its ruling in the much anticipated “ObamaCare” case. Despite being difficult to follow without the assistance of a roadmap, the result of the nearly 200-page ruling is that health care reform will proceed largely as planned. In the aftermath, many are left wondering, what now?

Ordinarily there is little disruption when the Supreme Court upholds a law because the status quo has been preserved. This is far from the case with the Patient Protection and Affordable Care Act (Act). The political excitement and division surrounding the Act left many unsure about whether looming changes to our health care system would ever become a reality.

Consequently, many are now desperately behind in terms of planning and preparing for the (apparently?) inevitable changes. In other words, it is crunch time for those who were expecting the Supreme Court to strike down ObamaCare.

To stay current, employers and individuals must become familiar with the changing landscape. Specifically, it is important to posses a minimum understanding of the current and future changes under the Act, such as:

the requirement that all individuals, with some exceptions, have health insurance;
the prohibition of lifetime benefits limits based on dollar amounts;
the prohibition of coverage rescissions or cancellations, except in cases of fraud or intentional misrepresentation;
the requirement that dependent insurance coverage continue up to the age of 26;
the prohibition of pre-existing condition exclusions for dependent children under the age of 19; and
the limitation on medical expense contributions to flexible spending accounts to $2,500 per year.

For individuals, many of the Act’s provisions require little or no preparation. The same cannot be said for employers, since various requirements under the Act require preparation, such as:

Mandatory Offer of Coverage: Employers with 50 or more employees may be assessed a $2,000 penalty (or tax, according to the Supreme Court) per full-time employee (in excess of 30 employees) if they do not offer coverage and if they have at least one employee who receives a premium credit through an exchange. Such employers offering coverage but having at least one employee receiving a premium credit through an exchange may face a $3,000 penalty for each full-time employee.
Automatic Enrollment: Employers with more than 200 employees are required to automatically enroll their employees into employer-offered health insurance plans; however, employees may be able to opt out of coverage.
Nondiscrimination Requirements: Under the Act, certain non-grandfathered group health plans (other than self-insured plans) cannot discriminate in favor of highly compensated employees in terms of benefits, eligibility or premium subsidies. Violations can result is severe penalties and taxes. (Note: Implementation of the nondiscrimination requirements has been delayed to allow for the issuance of additional guidance.)
Health Insurance Exchanges: Exchanges will provide marketplaces for individuals and small employers with up to 100 employees to directly compare available private health insurance options on the basis of price, quality, and other factors.
Tax Reporting Requirements: The Act requires employers to report the value of health care benefits on employee’s W-2 tax statements.

It is worth noting that not all of the Act’s provisions survived judicial scrutiny. For example, the Supreme Court limited the expansion of Medicaid by giving states some flexibility to not expand their Medicaid programs without paying the same financial penalties set forth in the Act.

Despite the Supreme Court’s landmark ruling, significant questions remain about how various provisions of the Act will be implemented, maintained and enforced. This makes it vitally important for businesses to maneuver through the developing law and stay ahead of the curve.

Those continuing to hold out hope for some kind of legislative or judicial relief from the Act should not delay their preparations any further. The time is now. Those needing to adapt their practices to comply with the Act should begin doing so immediately; otherwise, they may soon find themselves drowning in the coming sea of change.

At Setnor Byer Insurance & Risk, we are committed to guiding you through what is sure to be a bumpy ride. Check back with us periodically for future informational updates. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

Contract Litigation Insurance: Focus on the Principle Rather than the Principal

Unfortunately, the concepts of right and wrong often may not influence the decision to breach a contract. This is particularly true during difficult economic times when parties to a contract often use the threat of litigation to forcibly renegotiate the terms of their agreements. Needles to say, when asking a party to honor their contract, it is unsettling to hear someone respond with “sue me.”

Though litigation may be a necessary evil in today’s business environment, it is disruptive to business itself. Lawsuits often bring about harmful and potentially devastating side effects, such as damage to reputation, increased costs of production, decreased ability to obtain credit, disruption of growth opportunities, and overall uncertainty.

Typically, the greatest burden of litigation involves attorney’s fees. Many contracts contain a provision stating that the prevailing party in a contract dispute is entitled to have its attorney’s fees paid by the losing party. Similar “fee shifting” or “loser pays” provisions are also found in many state and federal statutes.

Though confident litigants often rely on such provisions to justify their decision to litigate, attorney’s fees are only awarded after victory has been declared by judge or jury. Thus, there remains a significant risk of having to pay an opponent’s attorney’s fees.

However, for those seeking some certainty surrounding legal fees associated with engaging in contract litigation, an insurance product offered by Zurich may be the answer.

Zurich’s Contract Litigation Insurance is designed to insure a plaintiff or defendant in a contract-based lawsuit against the risk of paying their adversary’s attorney’s fees if unsuccessful in prosecuting or defending their contract claim.

Zurich’s Plaintiff Contract Litigation Insurance and Defendant Contract Litigation Insurance can offer various benefits to individuals and businesses, such as:

Reducing the financial exposure of litigation;
Increasing settlement negotiation power;
Providing greater budget certainty;
Supporting attorney best practices in litigation;
Tiered pricing that is tied directly to the increased level of risk of a lawsuit; and
Claims handled by former practicing attorneys who understand an insured’s needs and litigation best practices.

As with any insurance policy, it is important to understand the extent and nature of the coverage, as well as any limitations or exclusions from coverage. Consider the following highlights of Zurich’s Contract Litigation Insurance:

For Plaintiff Contract Litigation Insurance, policies must be purchased within 60 days of filing of a contract-based complaint; for Defendant Contract Litigation Insurance, policies must be purchased within 60 days of service of the lawsuit.
Upon being deemed the prevailing party in a contract lawsuit, policies will pay reasonable attorney’s fees, as determined by the court. This may also occur in tort or statutory claims provided the court finds they were intertwined with the contract claims for purposes of any award of attorney’s fees.
Policies are subject to exclusions and non-coverage caveats, including: (1) “bad boy” fraud; (2) no fees awarded if there is a resolution other than a merits-based prevailing party determination; (3) no fees awarded for post-rejection fees incurred after rejection of an offer of judgment (or similar device) under applicable rules of procedure (although pre-offer fees may be covered); and (4) no fees awarded if they are based on discovery sanctions or bad faith conduct sanctions.
The insurance company reserves the right to appoint, at its own expense, counsel to oppose a fee petition or represent the client in an appeal of a fees award.
The insurance will follow if the plaintiff is compelled to arbitration by defendant; however, the insurance coverage will not remain if plaintiff compels arbitration or if the defendant under a Defendant Contract Litigation Insurance policy compels arbitration.

The cost of engaging in litigation is oftentimes the determinative factor in deciding whether to enforce or defend one’s contract rights in court. As a result, a party to a contract may elect not to file a breach of contract lawsuit for purely financial reasons despite having a winning case. Moreover, if the loss resulting from a breach of contract is small compared to the costs of filing suit, a party is vulnerable to abuse simply because the other party to the contract knows it is not worth pursuing in court.

When applicable, Contract Litigation Insurance allows a party to a contract dispute to focus on the merits of the case, rather than the attorney’s fees associated with pursuing the case.

If you would like to learn more about Contract Litigation Insurance, or if you would like to discuss how we can help you in identifying and controlling your business risks, please contact us.

Moving Up: Raising Self-Storage Rents

By Elizabeth Ferrin

Some self-storage managers have adopted a strategy of using sophisticated algorithms and demand analyses designed to maximize revenue when calculating their rents. This means that customers will receive a different rate for storing at the same facility. A customer who calls twice in a single day may receive two different quotes.

Though still limited in use, an increasing number of stores are reviewing and updating their approach to rental rates to maximize the bottom line. “Managers need to provide input,” says Brad North, president of Advantage Consulting & Management. “They need to give their opinion on what sizes should be raised and they need to shop around.

Shopping The Competition

Keeping tabs on the street rates and pricing policies of neighboring facilities is crucial to understanding where your rates fall in the marketplace. “You’ve got to look at the three-mile market surrounding your self-storage facility,” explains Ken Nitzberg, chairman and CEO of Devon Self-Storage.

He adds that in addition to rental rates, it is important to have some idea of the giveaways and move-in incentives being offered at all of the self-storage stores in the area. “Promotions have become almost a requirement to rent space in most markets,” says Nitzberg. “That’s been the most competitive piece in many markets across the country.”

It is also important for self-storage managers to have a good handle on the type of market they serve. “If your site is in a retirement area in Florida, your customers might call 20 different sites looking for the lowest price,” says Nitzberg.

Rental Rate Philosophies

When it comes to raising prices, there are a variety of philosophies that drive rental rates. Some storage businesses roll out an annual rate increase for every customer; while others look at each unit size individually to determine when and where to adjust pricing. Other facilities may reevaluate pricing only sporadically.

Since there is a level of apprehension that often accompanies a rate increase, North explains that he advocates managing rents selectively and adjusting rates only on a size-by-size basis. He uses a unit’s economic occupancy, which takes into account any discounts renters are receiving, as a guide. He uses an economic occupancy rate of 85 percent as a benchmark number to signal the need for a higher rental rate for that specific size. “Don’t think that because the competition increases rates on 10-by-10s that you need to do it as well,” says North. “It all depends on your occupancy.”

Annual Increases

Another strategy involves annually increasing rates across the board. “We raise rents on every unit each year,” says Brenda Scarborough, CEO of Accountable Management. “No one jumps up and down with excitement about it, but we’ve found that if we keep it small enough, everyone expects an increase.” She found that large, irregular increases are less accepted by customers and says she is now committed to yearly increases for all tenants.

On each tenant’s anniversary date, the computer generates a reminder about the new, higher rate that will be assessed going forward. “Unfortunately, many stores have reduced their rates in the economy,” says Scarborough. “However, we still have a small increase every year.”

Adjusting Street Rates

Many operators draw a distinction between street rates and existing customers, preferring to adjust rents only for new customers to keep current tenants from revisiting the necessity of maintaining a storage unit. “You won’t lose many tenants over a $5 to $10 increase,” says Nitzberg. “But, an increase makes customers think, ‘Do I really need this?'” He recalls a Self-Storage Association study which found that the sector’s single biggest competition was the dumpster.

Nitzberg warns against going toe to toe with the dumpster in the name of a small rent increase. “You don’t want to force tenants to make this type of decision based on $5. That’s why we tend to be more aggressive with new customers than existing tenants–new customers don’t know what the old rate was.”

Communicating Rate Changes

The most common way to communicate the increase is with a well written form letter on company letterhead. This keeps correspondence consistent and takes responsibility out of the hands of the manager, who can simply say, “This was a corporate decision. It’s out of my hands.”

It is also important to include a phone number or email address on the letter and invite tenants who are concerned about the new rate to get in touch with the facility. If and when a customer calls, the manager can then go over the new pricing, explaining that the store’s costs are also on the rise and that the higher rates are necessary for the storage business to cover its expenses.

Fearing Negative Feedback

Some managers also worry about potential backlash from customers who will be angry about the new rates. However, it is important to remember that those few angry customers were in the minority as the majority of tenants likely willingly paid the higher rate with no questions asked.

Some managers also worry that a drop in occupancy will accompany a scheduled rent increase, but managers need to remember that keeping a store as full as possible is less crucial than maximizing profits. “Occupancy is important, but revenue and net operating income are very, very important,” says Nitzberg. “I would rather be 85 percent full and have $1 million in gross revenue than 100 percent full and have $750,000 in annual gross revenue.”

Timing Rate Increases

Proper timing of rental rate increases can also make them more palatable for customers. Many suggest implementing higher rates when demand for self-storage tends to be highest. It can also be a good idea to roll out a new rate after the fifteenth of the month rather than the first so the facility is not competing with other monthly bills.

According to North, good communication and understanding is the key to a successful rate increase. When everything is done in order–meaning tenants are sent letters 30 days or more ahead of the rent adjustment explaining the increase–most rate changes are met with very few questions and very little resistance.

It is also important for the manager to understand and concur with the higher rental rates. “It’s the manager’s job to eagerly sell the rates and the manager is the single most important factor in the equation,” says Nitzberg, adding that a successful increase is the result of the combination of the right rental rate and an excellent facility manager leading the way.

From “Moving Up: Raising Self-Storage Rents” by Elizabeth Ferrin, a freelance writer based in Maple Grove, Minnesota, who is a contributing writer for the annual Self-Storage Almanac and other self-storage publications. This article is provided courtesy of Setnor Byer Insurance & Risk with the permission of Mini-Storage Messenger Magazine.© MiniCo, Inc. All Rights Reserved. It is not intended for further reproduction/distribution without the exclusive permission of MiniCo, Inc. http://www.ministoragemessenger.com

A Sales Lesson from American Idol?

Would you think you could learn a profound sales lesson from American Idol? Well, it happened last season.

Here’s the backstory in case you’re not a fan. Pia,the beautiful and seemingly unbeatable contestant, got the axe.

The mentors (music industry bigwigs whose names I don’t know) were advising another contestant, Lauren, about her upcoming performance. After many compliments about Lauren’s talents, one mentor looked her straight in the eye and said, “There are a whole bunch of Pia fans out there. You can steal her votes.”

Lauren looked horrified. She couldn’t possibly steal her friend’s votes.

The mentor continued, “That’s how you have to think in this business.”

A second mentor, understanding Lauren’s discomfort, smiled and perfectly reframed the goal. “Don’t sell them. Invite them.”

Don’t sell them. Invite them. Think about the wisdom in that. He was telling her that instead of going in for the kill, to simply use her gifts- in her own special way – to engage the audience. To invite them to her world.

You can apply the same principal to sales. Don’t set out to steal the business with heavy-handed tactics. Instead, invite your prospects to participate in the opportunity you bring to the table. An invitation implies acceptance and friendship. It’s non-threatening. It’s flattering. It means “I like you enough to join me.” And most importantly, the extension of an invitation puts you in control. Instead of waiting for a prospect to choose you, you were the first to choose by asking them to the party.

By inviting people, you totally change the sales dynamic – in your favor.

There are actually a lot more sales tidbits one can cull from your American Idol viewing. Be authentic. Show up. Do your best. But for today, the concept of inviting people into your world wins my vote.

Don’t sell me detergent when I want a TV!

Most of us think consultative sales techniques need only be applied to big ticket items like large software purchases or luxury cars. Not true.

Unless your business involves asking, “Would you like fries with that?” you probably should be selling consultatively.

Here’s a great example.

A new warehouse membership club opened in my neighborhood. I’d never been to this particular brand of store before so I went in to check it out and get my free 30- day membership. At the customer service counter, I was greeted by a representative who immediately went into a sales spiel. Although memorized, I have to admit it was pretty impressive. Her goal was to get me to forego the free membership and join on the spot. She presented me with offer after offer after offer to do just that. Apparently, my $50 investment on that day would have netted me about a billion dollars in coupons. The sheer length of her pitch and her seasoned delivery almost had me. Almost. Because the second she stopped talking, I had a second to think. I looked at the vast array of coupons and realized I didn’t even use half the stuff. My answer was no.

I can’t fault her. She was doing her job as instructed and she did it well. But what if she had been trained to ask just a couple of questions before her pitch?

1. Are you a regular warehouse shopper?
2. What types of products do you buy most often?

If she had known the answer to these two simple questions, she could have simply tailored her pitch for me – and gotten the deal.

If she had known more about my experience with warehouse clubs and my particular interests (i.e. household products vs. electronics) she could have easily geared her presentation to my needs without the distraction of extraneous information. She might have even cited specific savings opportunities based on my interests. Offering a potential customer many broad choices, especially things that aren’t important to them, can actually kill a deal rather than reinforce it. As customers, we only want to buy what’s valuable to us!

Except for the most mundane of purchases like gas for our cars, transactional sales are a thing of the past. Today, each prospective customer is a target and our job is to shoot the arrow right into the bulls eye in order to get the deal.

One final observation: once I said no to joining, my rep’s attitude did a total reversal. The smile went away and she rushed to process my free card as though she were trying to get rid of me. In sales, it’s important to remember, a “no” might just be a “no, for now.” Just because I don’t buy today, doesn’t mean I might not buy tomorrow or refer a potential customer. Never miss the opportunity to create an ambassador for your company. Often, people who sing your praises may not even be customers – just people who think you’ve got something special to offer.

Bat-tle of the Sexes

In the game of business, I find the bat to be a frequently used and highly ineffective piece of equipment. I know that because I conducted an unscientific survey and in the process, found an amazing difference in the way men and women employ the bat.

At the risk of stirring up some controversy, I’d like to share the results with you. Women are world champions in using the bat to beat themselves over the head; men’s claim to fame is in using it to try to hit home runs.

Neither tactic, in my opinion, is particularly effective.

Let’s start with women. Even the most successful women I know have a profound tendency to take the blame for everything that goes wrong… and I mean everything. Sure, all women, even those highest on the totem pole, have fears and concerns, but why do so many brilliant businesswomen assume that they could have prevented every problem? I know we’re good, but nobody’s that good. So I say to women, take the bat out of your hands! It’s much more productive to take ownership of all the things you actually do right, instead of all the things that went wrong (especially those that are out of your control).

Men, on the other hand, use the bat to swing for the fence. At first, that may sound admirable. Doesn’t everyone want the home run? I equate this trait to choosing the solution before you know the problem. Whether it’s on their own behalf or on behalf of a client, men are more apt to move towards the big win, when often, sustainable success is made up of a series of small victories. It doesn’t matter that they might be great first base hitters or that the team needs a bunt to win the game. If you always shoot for the home run, you might miss small, meaningful steps, the opportunities build relationships and sometimes, a great idea you passed by too fast to notice. Home runs are great, but remember, even when you hit it out of the park, you still have to pass by first, second and third base to score.

So, in the game of business, I suggest both men and women drop the bat and pick up more suitable tools like perspective and common sense. Then, everybody wins.

Did You Know? The U.S. Longshoreman and Harbor Worker’s Compensation Act can Apply to Injuries within the Territorial Waters of Another Country

The U.S. Longshoreman and Harbor Worker’s Compensation Act (Act) was enacted to create a uniform system to compensate longshoremen and harbor workers for workplace injuries that did not depend on the precise site of his or her injury. However, the Act states that such compensation will be provided “only if the disability or death results from an injury occurring upon the navigable waters of the United States.”

Given this apparent territorial limitation, would a longshoremen or harbor worker injured on a foreign shoreline be covered by the Act? Under the right circumstances, the answer is yes.

In one case, for example, a court held that an injury suffered by a citizen of the United States, whose employer was based in the United States, and who was living and working aboard a U.S. flagged barge, was covered by the Act, even though the injury occurred in the territorial waters off Sakhalin Island, Russia.

In this case, the court rejected the employee’s argument that the Act did not apply because his injury did not occur upon the navigable waters of the United States. The court noted that the term “navigable waters of the United States” was not defined in the Act. Importantly, the court found legal precedent supporting the position that the Act’s protection does not stop where the high seas begin, which is generally three miles offshore.

Additionally, the court cited two significant reasons to conclude that the Act applies extraterritorially. First, the court reasoned that the purpose of providing a uniform compensation system would be frustrated by limiting the Act to territorial application. Second, the court noted that the Director of the Office of Workers’ Compensation Programs of the Department of Labor, which is the policymaker designated by the Secretary of Labor to administer the Act, has consistently interpreted the Act to overcome any presumption against extraterritoriality.

Consequently, the court held that in a case which did not involve any choice of law issues, and which involved an employer, an employee and a vessel based in the United States, the employee’s workplace injury meets the Act’s situs requirements for exclusive coverage.

It is important for employers to understand that, in many cases, it is the injured employee who is arguing against the applicability of the Act. Why? Provided an employer does not fail to pay the required compensation, an employer’s liability under the Act replaces all other liability to which the employer may be subject.

If you would like more information about workers’ compensation insurance coverage, including coverage under the U.S. Longshoreman and Harbor Worker’s Compensation Act, please contact us.

The Continued Importance of an Insurer’s Financial Strength

If a coin comes up tails 100 times in a row, is it more likely that the next toss of that same coin will be heads? The answer is no. Since, as they say, “a coin has no memory,” the first 100 tosses do not change the fact that the probability on the 101st toss remains at fifty percent. Though significantly more complex, the insignificance of past events when calculating the probabilities of future events also applies to hurricanes.

In a previous article, we discussed the importance of purchasing insurance from a financially secure insurance company. At that time, the devastating hurricane seasons of the mid-2000’s were fresh in our collective memory, and many homeowners were in a rush to get “their house in order.”

Unfortunately, some homeowners did not properly value the financial strength of their insurance company before purchasing their policy. Rather than consider the financial strength of a prospective insurance company, many homeowners focused on the premium. As a result, many of those who suffered hurricane damage were unable to collect on their insurance policies because their insurance company became insolvent.

Unfortunately, the relative tranquility of the past few hurricane seasons has caused many to drop their guard, particularly in the context of purchasing homeowners’ insurance from financially strong companies. However, as mentioned above, the relative calm of the recent past does not guarantee the absence of hurricane risks in the future. Consequently, as with periods of heightened hurricane activity, insuring with financially strong insurance companies remains critically important.

Although there are no guarantees that a particular insurance company will remain solvent, it is commonly understood that financially strong insurance companies are more likely to meet their ongoing obligations to policyholders than financially weak ones. Unfortunately, for the average consumer, determining financial strength may be difficult. However, there are resources available to assist consumers with this task.

A.M. Best*reg;, a company that evaluates and rates the financial health of insurance companies, conducts independent evaluations to form an opinion regarding an insurance company’s financial strength. Based on an evaluation of an insurance company’s balance sheet, operating performance, and business profile, A.M. Best issues its “Financial Strength Ratings,” which have been recognized as a benchmark for assessing an insurance company’s financial strength. The Financial Strength Ratings assign letters to convey A.M. Best’s opinion for a particular insurance company—from Superior (A++) to In Liquidation (F).

While there are other rating agencies, consumers should understand that each agency may use their own standards, processes, and methods to rate insurance companies. So, it is important to understand that not all “A” ratings are necessarily equal. Consumers should investigate not only the methodology used by their rating agency of choice but also its reputation in the insurance and financial industries. As usual, the more information insurance consumers obtain at this stage of the purchasing process, the better off they will likely be.

Regardless of which system is used, it is important to note that a rating is not intended to be a guarantee of an insurance company’s financial strength. Nevertheless, the wisdom of considering a prospective insurance company’s financial strength should never be dismissed, and at least a cursory review of the insurer’s financial rating should be undertaken.

To understand the significance of an insurance company’s financial strength, one need only note the number of insurer insolvencies over the past few years despite the relative lack of hurricane claims. How would a homeowner have fared with such financially weak insurance companies if there had been a hurricane?

Conceptually, an insurance company’s ability to pay the claims of its policyholders is fundamental to the underlying purpose of insurance. The significance of premiums, deductibles, coverage limits, policy terms, and exclusions virtually vanish when the prospect of insurer insolvency surfaces. After all, what difference does the amount of the deductible make if there is no money to pay a claim?

If you would like more information about the opportunity to insure your home and other property with a financially secure insurance company, please contact us.

There’s something about Mary

“Angel speaking,” I said, my customary phone answering protocol.

“Hi Angel, my name is Mary from XYZ Printing.”

“Who? ” I replied.

“Mary from XYZ Printing. I’m new here,” she continued timidly, “and they gave me a list of people who have done business with us in the past to call.”

“I honestly don’t know your company,” I replied.

“You printed business cards with us in 2008 and I am calling to see if you had anything you needed printed.”

OUCH!

This is a true story. Through my own phone line I received a visit from the ghost of bad business past. My gut reaction was pity. As a business owner, I can only imagine the level of desperation in that print shop that prompted them to think it was a productive idea to call a client who spent $50 with them four years ago in the hopes that I might:

Remember them
Have immediate printing needs

I’m sure Mary is still working that list and when she’s done, will have unearthed approximately zero dollars in business. I will also bet anyone a dollar that the scenario will continue as follows:

Mary’s boss will brand her a bad salesperson and fire her.

He will, from that point on, declare to anyone who will listen, that salespeople have never helped his business.

Ok, let’s put the fact that Mary wasn’t very good at her job aside for now. Her tone, her personality her pitch and her desperation made the impossible situation even more impossible. Had she had the skills to, at minimum, rebuild a relationship with an old customer, this phone calling exercise might have had some long-term payoff.

But new business development isn’t about sales skills. It’s about creating an ongoing process and culture that would have prevented XYZ Printing from ever having to subject Mary (and potential clients) to such humiliating tactics. New business development is about being proactive and communicative.

Let’s rewind back to 2008 when business was better for XYZ Printing. What could they have done to prevent a downturn and actually grow business? Here are 3 ideas that could have saved XYZ Printing – and help your business, too.

COMMUNICATE

Assuming you have a strong database of prospects (if you don’t, you need to stop reading this and create a universe of prospects and influencers using CRM software, immediately!) what are you doing to keep your company top of mind and necessary?

From monthly newsletters to relevant articles, white papers or research, you need to consistently develop and solidify your relationship with clients and prospects. The right type of communication program not only keeps you top of mind, it helps establish you as an expert in your field. Be sure your communication program is consistent and relevant and provides value to the receiver. (An onslaught of self-promoting PR will get you in the trash bin faster than you can press DELETE.)

Had XYZ printing kept in touch with me, I might very well have given them the opportunity to quote on the many printing jobs I’ve had over the years

REWARD LOYALTY

Good customers are hard to come by. How do you reward yours? Discounts? Specials? Gifts? Information? Introductions to potential clients on their behalf? Rewards don’t have to cost a lot but they should have perceived value. You can gear discounts or value-added perks to coincide with slower business cycles or excess inventory or make them unrestricted opportunities. A local Mexican restaurant in my area, for example, does a great job of sending out a charming weekly e-mailer deliciously describing new dishes. The emailer always includes an unrestricted coupon for 20%-30% off the entire check – valid any day of the week. I imagine the menu is priced accordingly, but nonetheless, the restaurant is always packed.

GET WITH THE TIMES

Are you using out-dated marketing models? Times have changed and so have the tools. In the case of XYZ Printing, they are truly outclassed by online printing companies that are savvy about communicating with their customers. How is your competition using social media and the internet to sell? If they are doing a better job, you need to take some lessons and upgrade your program – quickly.

Using these tactics, create your plan, engage your employees to participate and become a memorable force in your industry. Start today and with a minimum of maintenance each week, you will be well on your way to bulletproofing your business and saving yourself from having a Mary in your future.

Workers’ Compensation and Telecommuting: Enjoying the Benefits While Controlling the Risks

Although telecommuting is not a new phenomenon, it has certainly gained traction since the turn of the century. According to the American Community Survey, which is conducted annually by the U.S. Census Bureau, the employee work-at-home, or WAH, population grew 61% from 2005 to 2009. Though the past few years have shown a small decline, which is generally attributed to a decline in the overall labor market, the outlook suggests significant growth over the next five years.

A report prepared by the Telework Research Network identifies various factors that will fuel the projected increase in telecommuting in the coming years, such as:

Forty-five percent of the U.S. workforce has a job that can be performed, at least partially, by telecommuting;
Improving communications and collaboration technologies;
Improved and expanded high-speed broadband internet access and the proliferation of web-based applications;
Increasing sophistication in managing and working with distributed (distance) workers;
Continued pressures on employers to reduce overhead costs, including office space, management, and operations;
Escalating fuel prices and increasing pressure on employers to reduce their carbon footprint; and
Continued emphasis on cost containment and bottom-line performance.

Despite the many benefits, telecommuting does create unique risks, some of which can be significant. What many employers fail to realize, or adequately consider, is that a telecommuting employee’s home will generally be considered that employee’s workplace.

The consequence of this distinction is that many employment-related laws follow a telecommuting employee home. Since a telecommuting employee is still an employee, employers must ensure compliance with all applicable laws governing their entire workforce, including those who telecommute, and each employment-related law presents its own unique challenges.

Consider the Fair Labor Standards Act (FLSA), for example, which is the federal law governing minimum wage and overtime compensation. Since an employee covered by the FLSA does not forfeit his or her rights merely by telecommuting, employers must be prepared to control the manner in which telecommuters perform their work to prevent wage and hour violations.

How, for example, does an employer monitor the number of hours worked, keep track of start- and stop-times, prevent unauthorized overtime, or prevent employees from working off the clock? The number of wage and hour claims filed annually reflects that these tasks pose a challenge for employers dealing with their traditional employees. Needless to say, ensuring FLSA compliance with telecommuting employees can prove even more challenging.

In addition to the FLSA, employers must ensure compliance with various other laws, such as the Americans with Disabilities Act, the Family and Medical Leave Act, and Title VII of the Civil Rights Act. However, one of the more challenging legal obstacles facing those who employ telecommuters involves workers’ compensation.

Workers’ compensation generally provides benefits to employees who have suffered an accidental compensable injury or death arising out of work performed in the course and scope of employment. Despite some statutory variations among the states, an employee who suffers an accidental workplace illness or injury will typically be entitled to workers’ compensation benefits.

This general rule also applies to those employees who telecommute. However, telecommuters create a unique challenge because they are working at home without direct supervision or observation. Consider how difficult it would be for an employer to determine whether a filing cabinet drawer broke an employee’s hand when the employee was filing documents, or whether that same hand was caught in the drier while the employee was doing a load of laundry between work-related telephone tasks.

If a lack of supervision or witnesses makes it difficult, or impossible, to conclusively establish the cause of a workplace injury, then an employer may be unable to detect and defend against false or fraudulent workers’ compensation claims. When dealing with workers’ compensation matters involving telecommuting employees, the vulnerability to fraudulent claims may be the biggest risk faced by employers.

Since it is impossible to prevent all work-related injuries, employers must decrease the likelihood that a telecommuting employee will file a false or fraudulent workers’ compensation claim by eliminating the opportunity to do so. This is typically accomplished by implementing policies and procedures designed to control an employee’s workday in a manner designed to decrease the likelihood of fraud.

Since these policies and procedures must be tailored to accommodate an employer’s specific needs and resources, creating a one-size-fits-all approach is not an option. Nevertheless, those employers currently employing telecommuters, or those who may do so in the future, should consider the following suggestions.

Understand that the applicability of employment-related laws does not change merely because an employee telecommutes. Accordingly, it is necessary to consider each laws requirements, how those requirements are controlled and managed for traditional employees, and how to best go about controlling those requirements for telecommuting employees.
Understand that not all positions or jobs can be accomplished by a telecommuting employee. Appropriate positions generally involve mainly electronic documents, telephone communication, and minimal supervision.
Establish policies and procedures, possibly even a customized employee handbook or agreement that is specifically tailored for telecommuting employees. Given the different dynamics and risks, traditional policies or procedures may not be sufficient to deal with telecommuting employees.
Require telecommuting employees to immediately report any injury or illness they consider work related. Any failures to abide by this policy should raise a red flag. For example, if an employee is unable to reach his or her supervisor to report an injury because the office was closed, this fact could make it easier for an employer to establish that the injury did not arise out of work because it occurred after-hours.
Establish a fixed schedule for work, meals, and breaks. If an injury occurs when the employee was not supposed to be working, it makes it more difficult for an employee to claim the incident was related to work. Various techniques, such as computer/network logins, telephone use monitoring, and video devices, can be used to track an employee’s adherence to schedules.
Provide the necessary training for telecommuting employees to reduce the likelihood of a work-related incident. The training should be tailored to each employee’s specific job functions. Generalized training in ergonomics, back safety, etc. should also be considered.
Confirm that the telecommuting employee has a separate work area to help define, and determine, when the employee is working or “on the job.”
Perform an inspection of the employee’s work area to ensure maximum safety and to deter or eliminate clutter or hazards that are not related to work.
Provide telecommuting employees with the proper equipment to perform their work safely and efficiently. This equipment may include computers, furniture, tools, electronic devices, extension cords, fire extinguishers, smoke detectors, etc.
Develop policies or guidelines regarding the manner and extent to which the telecommuting employee must communicate with his or her supervisor or manager.
Be cautious of letting new or inexperienced employees telecommute.
Be selective when deciding which employees should be permitted to telecommute. Only those employees who have a history of good judgment, responsibility, dedication, motivation, organizational ability, discipline, loyalty, and productivity should be authorized to telecommute.
Employers electing to make telecommuting a part of their organizational profile will likely enjoy numerous benefits. However, for those employers who fail to appreciate the significance of their decision, these benefits may quickly be negated by the risks that accompany an employment relationship that physically separates the employer from the employee.
Since it is likely that the risks associated with a telecommuting workforce will be greater than those associated with a traditional workforce, shouldn’t the employer’s efforts to control those risks be greater too?
If you would like to receive a sample Telecommuting Agreement, please contact us.