Strategic Staffing Alternatives for the Road Ahead Presented February 26, 2009

By: Kim Erhard, Gallagher Benefit Services Michael Homans, Flaster Greenberg John Walp, Converje, LLC Sponsored by: Arts & Business Council Greater Philadelphia Cultural Alliance Nonprofit Finance Fund Philadelphia Cultural Management Initiative

© Copyright 2009, Converje LLC, Flaster Greenberg, Gallagher Benefit Services

1

The Issues that Brought Us Here • • • • •

Non-profit cultural institutions are being squeezed by the economic downturn Many know they have to cut back on personnel costs, but (ouch!) it hurts How to do it best, with the least bleeding Best practices for assessing, planning and implementing changes in personnel Avoiding legal, human resource and benefit landmines

Agenda • • • • • • •

Your Goals for this Session Overview of External Trends Communicating Strategically Understanding all Necessary Facts Building a Plan Implementing the Plan Special Resources

Presentation Style • • •

Seminar format (no “talking heads”) We need your Active participation! Your questions are welcomed throughout

Why This Session? What do YOU want to learn?

What Concerns You? As a working person? What might your employees add? As the leader of an organization? What might your Board members add?

© Copyright 2009, Converje LLC, Flaster Greenberg, Gallagher Benefit Services

2

Key Trends & Why They Matter • • • • •

Planning for Sustainability Staffing Cash Compensation Benefits Legal Compliance & Risk Management – Red flags – Green lights

Today’s Major Themes 1. 2. 3. 4. 5.

Communicate Strategically Understand Key Factors Build a Strong, Adaptable Plan Implement the Plan Special Resources

1. Communicate Strategically Plan and manage your messages carefully from now through the end of the crisis… Reinforce your commitment to your Vision, Mission and Values – and preserve your culture! • Remember to recognize and thank people • Maintain trust (trust = predictability over time) • Make no promises you can’t keep If your culture is participative, engage employees in • Expense management idea cultivation • Revenue generation brainstorming Proactively manage and mitigate stress • Establish and maintain regular pattern of thoughtful, honest communication • Keep messages realistic • Avoid creating an atmosphere of fear - project a sense of “prudence” rather than “panic” Engage Employee Assistance/Referral Plan Services • Valuable, whether or not there will be layoffs • Help employees deal with uncertainty

What are some ways you are keeping your people in the loop on what’s happening?

© Copyright 2009, Converje LLC, Flaster Greenberg, Gallagher Benefit Services

3

2. Understand Key Factors There are a host of elements we need to understand in order to create and implement a successful strategy… It’s important to collect and grasp the following information (we’ll review each in more detail): • Essential services of the organization • Employee-related Costs • Employee-related Revenues • Ways to redesign jobs, schedules and comp & ben • Outstanding obligations and commitments • Your current employees’ needs and expectations Understand, evaluate and control all employee-related costs that you can immediately: • Tightly manage all hiring (consider freezes, delay backfills, issue offers cautiously, screen carefully) • Limit employee travel and associated expenses (explore online alternatives) • Cap or reduce hours and overtime • Substitute attendance at remote training events with other forms of learning (eLearning, web-conferences, report-backs, etc.) - maintain your commitment to learning at a reduced cost What are some ways you are using innovation to redesign jobs, schedules and reward structures? Evaluate existing obligations and commitments contained in the following: • Offer letters, employment contracts, “promises” • Employment handbooks and policies • Collective bargaining agreements • Grant agreements • Current legal obligations (your policies might not be current), employment “at will” • Employee issues that hamstring organization Identify the parameters/flexibility contained in your: • Benefit contracts for active and retiree employees • Defined contribution retirement programs (403b, 401k) to reduce or delay employer-matching and/or safe harbor contributions • Defined benefit retirement programs (standard pensions) “Reacquaint yourself” with your people: • Collect and review job descriptions • Think about employees’ career aspirations • Get performance reviews current if you can • Think about who your key employees are (but hold that list very tightly) • Order a utilization analysis of benefit usage from your benefits consultant • Understand key dates in their lives (comes into play during RIF implementation)

© Copyright 2009, Converje LLC, Flaster Greenberg, Gallagher Benefit Services

4

3. Build a Strong, Adaptable Plan Plans are nothing; planning is everything. -- Dwight D. Eisenhower Realistically evaluate how this economic environment will impact your ability to deliver programming and other services: • Identify issue/crisis you are facing (e.g., 10% shortfall in revenues) • Summarize objectives for your action plan • Begin to think in terms of organizational structures that CAN deliver what’s needed over short and longer-term • Identify “essential functions” of each position (FT?) • Identify skill sets needed in each position • Select a method for determining who will need to fill those roles going forward (methods may vary by type or level of job, and vary according to whether there are multiple incumbents in a given role) • As needed, develop a matrix to evaluate existing employees for positions going forward • Document, document, document Review your options: • Furloughs (voluntary or involuntary) − Days or weeks off − Shift to part-time or fewer hours/week • Reductions in rates of pay (deferred comp?) • Reductions in benefits (or costs of same) • Eliminate an area of service or department • Shift to more volunteers (be careful) • Layoffs: eliminate positions/combine functions If layoffs are necessary, you’ll need to work through the following: • Document your business case for the RIF • Select a method for selecting “in” − Establish criteria (objective & subjective) − Identify decision-makers − Review the file! • Think through how to handle people on leaves, people with other legal issues • Obtain independent review of process, selections Review the impact of your preliminary choices: • “Disparate impact” analysis − Watch for weeding out of only “older” workers − Any racial or gender disparity • Even if decisions pass legal review, do they pass the “smell test”? • Beware of “personal agendas,” “payback” or unexplained “grudges” Touchstone is always “business necessity” • Working through the layoff plan (cont’d.) − Plan for orderly knowledge transfer − Try to avoid “waves” – use “work through dates” − Determine severance formula, whether you will seek releases − Secure appropriate approval − Document your plan & layoff communications • Train notifying managers • What do you tell constituents/members? − What to do with the “connected” employee? − Consider potential public relations fallout

© Copyright 2009, Converje LLC, Flaster Greenberg, Gallagher Benefit Services

5

If you decide to merge with another organization, the complexity dramatically increases: • Don’t go too far down this path without engaging counsel in appropriate areas of expertise • From an HR perspective, there is a host of work to be done, including determination of who the legal employer is, termination of benefit plans, anti-discrimination testing, matching of “cultures,” pay equity, trust agreement revision, etc. (We can talk about this a little bit more at the end, if we have time and you are interested.)

4. Implement the Plan In order to succeed, there are many tactical considerations to work through in advance… For the organization to recover as quickly as possible, we need to make sure that “survivors”: • Have a clear understanding of their own roles moving forward • Believe impacted people were treated fairly and compassionately − They will see how you treated their peers as proof-positive of how they’ll be treated if they have to leave • Feel you are not asking too much of them going forward Before implementing, have a clear vision of the new organization: • Build in a period to effectuate knowledge transfer, if possible • Try to build job descriptions for all the new roles (even if they’re just sketches) so that the survivors will have role clarity and believe you care about them • Identify and protect any key property (intellectual and otherwise) that may be subject to removal, misappropriation or sabotage Swear “in the know” people to secrecy, repeatedly! Identify your “control group,” keep it limited: • All people, including Board members, need to observe strict confidentiality – e-mails, documents and word of mouth • This includes the very fact of the RIF, not to mention the logic behind it, the impacted individuals, the date • Leaks destroy trust & organizational focus overnight • Because trust = predictability over time, it will take years to restore Select an appropriate notification date and time: • Select a day and time when the vast majority of people are present • Be prepared to let impacted people go home early, even if they have “work-through dates” • Allow them to take “ownership” in some decisions • Studies indicate that Thursday tends to be optimal with respect to the survivors, because they have a day in the office to talk about what happened • Mondays are high-depression days • Friday notifications increase the risk of binge drinking Determine how people will first hear the news: • Group Announcements versus Individual Only (pros and cons) • Have a “script” or bullet points of key items • Rehearse the announcement or message • Written & oral messages should be consistent, and consistent across organization • Short & sweet

© Copyright 2009, Converje LLC, Flaster Greenberg, Gallagher Benefit Services

6

Remind staff to be compassionate to one another: • Prevail upon employees to give notifying managers a chance to talk with anyone not at work, so that others will not hear from the rumor mill first • Also, prevail upon them not to contact outsiders for the same reason • Works best if this is stated as an issue of empathy, honor and ethics, rather than a “policy” issue (treat your friends as you would want them to treat you) • They need to respect best interests of organization Have two people present for individual discussions: • If one person delivers the news, the other can “track” the employee and can get help if there’s a problem • Having a second person provides a “witness” with respect to what is said Do: • • Don’t: • • • •

Ensure all managers/leaders on board with decision Have a consistent & uniform message among managers/leaders

Have Board or others undermine decisions “Wing it” Have inconsistent messages, rationales Don’t “pile on” complaints about employee

Do: • • • Don’t: • • • •

Express sympathy & support Offer to assist in transition Encourage feedback

Apologize Express disagreement with decision Make false statements about employee, decision, or organization Threaten retaliation, discourage legal counsel

During the notification, observe and take appropriate care of the notified employee: • Make sure they understand what you’re saying • If they do not, they may need help from a third party counselor (EAP, for example) • By asking a few questions of a person “in shock,” you can help figure this out • Hostile/threatening reactions may warrant protection of computer data, immediate removal Questions to ask anyone who zones out: • Do you understand what we’ve been saying to you? • Do you have anyone at home to support you today? • Are you having trouble coping today? • Do you think you might need some help to avoid causing harm to yourself or anyone else today? If they say no to the first pair or yes to the second, stay with them & direct them to a helpful resource: • EAP, community mental health agency, private therapist or counselor, psychologist, family physician, suicide prevention or crisis center

© Copyright 2009, Converje LLC, Flaster Greenberg, Gallagher Benefit Services

7

Safety – What You Can Do! • Know the signs of potential workplace violence (red flags) • Be compassionate and watchful • Remember: the “quiet person” does not really exist – people in distress usually provide cues • Reaching out at the right time can make all the difference in the world • Raise concerns to HR and remember the EAP! Safety – Potential Red Flags! • History of violent or threatening behavior • Fearful co-worker(s) • Evidence of addiction • Weapons obsession • Policy or rule flouting • Harassment • Destructive behavior • Revenge obsession • Lower involvement with co-workers – becoming a “loner” • Behavior / belief changes • Deteriorating appearance • Unusual interest in violent news and entertainment • Paranoid behavior • Closing all bank accounts • Updating last will & testament • Letters of closure to family Employee Assistance Plans: • May be imbedded in your Medical or Life/Disability Insurance contracts – check and see! • Stand-alone contracts are more robust • May be used for professional & personal issues (credit card debt, mortgage, stress management) • Services are available to employee’s entire family • Now is a great time to consider offering one if you don’t already – they are highly valuable year-round Make sure to have a “packet” of materials ready for the employee containing everything they need: • Separation Agreement (two originals) • Unemployment Compensation materials • COBRA & Conversion forms • EAP contact info • Health coverage resources

5. Special Resources Gallagher Benefit Services, Converje and Flaster Greenberg are available to help you work through this process. In addition, GPCA has some other resources who can help.

Preferred Outplacement Resource: Jane Finkle of Career Visions

Philadelphia Volunteer Lawyers for the Arts: Eileen Cunniffe

Thank you for attending! © Copyright 2009, Converje LLC, Flaster Greenberg, Gallagher Benefit Services

8