Newsflash: Most Northeast Ohio employers have found the workers they need.
Now, if they can just hold onto them.
The once-troubling dearth of qualified workers has eased, but business owners still face a daunting task — keeping these valued employees in the face of a slowing local and national economy.
Employee retention aside, the challenges facing business owners across the region are markedly different than those they faced last year, according to the second annual Workplace Practices Survey conducted by the Employers Resource Council and SBN Magazine. The 92 CEOs, presidents and human resource directors who responded to the survey voiced new concerns about doing business in Northeast Ohio, with results showing a more cautious, almost pessimistic business climate.
But throughout the answers to the 55 questions on employment practices, benefits issues and workplace environment, employers showed their tenacity and preparedness for today’s topsy-turvy economy. The results reflect the euphoria and hangover of the previous 18 months and reveal the stability of a region unruffled by market whims.
Patrick Perry, president of ERC, can see the lighter side of these economic conditions, even though it’s dark in his office.
“We’re having the air-conditioning repaired today, so we’re trying to keep everything as cool as possible,” says Perry on a balmy June morning at the ERC’s Warehouse District offices.
It was fitting that the lights were off. It was a small gesture but one that certainly made the office more comfortable for Perry’s employees. And that’s exactly what employers in the region are trying to do during these tougher times. Employees are acutely aware that the big cash bonuses and trips to the Bahamas will be nixed for a while, but employers and managers are still doing the little things, granting noncash perks and smaller cash perks to make this storm a bit more bearable for everyone.
Above all, Perry says, it is not a time for gloom and doom.
“This is a very, very exciting time,” he says. “People thought it was exciting a year-and-a-half ago how all that money was being made. Well, all that was really masking was that (the) cliff was just getting higher and the fall was going to be significant. Now, we’re rebuilding the cliff, and the exciting part is there are going to be some organizations that are going to utilize this time very well and are not just surviving today but preparing for next year or the year after.
“Those are going to be your winners. Those are going to be the kings of the hill.”
Improve your people
Two challenges frequently mentioned by employers in last year’s survey were growth strategies, which ranked second, and change, ranked third. This year, those issues didn’t even break the top five.
Competition and increasing sales are the second and third largest concerns of employers this year, followed closely by economic conditions. But retaining qualified people topped the list of concerns.
When times are good and orders are flying out the door, it’s easy to take employees for granted. Sometimes you forget they helped in your company’s success. Now is the time to show your appreciation and listen to their concerns, because when the economy revs up again — and it will — you and your work force will be better prepared.
“An organization that has been moderately impacted (by the economy) is looking at ways to enhance the skill sets of their employees, using this slower time as an opportunity to retrain their existing work force,” Perry says. “They’re looking at ways to enhance their ability to retain the great employees they’ve recruited over the last year or so. They’ve worked so hard to find these people, now they want to keep them.
“And they want to keep them during a period where sales might not be so robust.”
Fight the hikes
Cost containment is a perennial challenge for business owners. This year, like last, it was ranked the fourth most crucial issue on the survey. Of those costs, health care is the usually the steepest and the least predictable.
Donna Luby, president of Cleveland-based Self Funded Plans Inc., a third-party administrator of employer health insurance, says several of her clients saw their companies’ health premiums jump 100 percent in one year before they decided to self-fund their health coverage.
“When the economy tightens up, more people look at self-funding their benefits for their employees,” Luby says. “They see it as a way to enhance the choices and keep the costs contained.”
Nationwide, 65 percent of employer-based health plans are self-funded. That number is expected to rise as insurance rates jump again this year. Often, an employer will buy insurance from a major carrier and carry a large deductible — usually $2,000 to $5,000 –then self-fund the difference. That ensures the employer remains covered for major claims, but it can still slash premium costs with a high deductible.
Despite cost increases, employers aren’t passing them on to employees, according to the survey. In fact, there was a slight dip in what the average employee pays toward health insurance coverage, from 23.1 percent last year to 21.7 percent this year. Perry says that means one of two things: Company owners are absorbing the costs, or, more likely, they are jumping from provider to provider, seeking out whichever company offers the best rate that particular year.
“The real crux of this has been the fact that most of these employers get hit with this by surprise,” Perry says. “They get notified two to three to four weeks before their actual renewal. Most of these brokers are not providing a satisfactory explanation as to why to people are getting between 20 and 35 percent increases in their premiums.”
In 1999, Perry started work on a project to alleviate health care pains for employers in the 22 counties that make up Northeast Ohio. Two years later, he delivered ERC Health. The insurance program is geared toward the middle market, companies with 50 to 400 employees that are too big to qualify for small business programs offered by Council of Smaller Enterprises (COSE) and Northern Ohio Area Chamber of Commerce (NOACC) but too small to wield power with big providers.
Leveraging the 400,000 employees that make up the ERC’s 920 member companies, the large insurance carriers took notice. Anthem Blue Cross and Blue Shield is underwriting the ERC Health plan. Perry says it offers low rates, a ceiling on premiums and a unique wellness program to help prevent future claims. Informational meetings leading up to the release of the program were often standing room only.
“In two weeks, nearly 100 of our member companies who have attended the educational briefing were already receiving quotations from us,” Perry says. “That’s in a matter of two weeks, which is unbelievable. It is a reflection of the pent-up demand for product or programs that actually makes sense for this forgotten market and market segment.”
E-mail, Application Service Providers and fax machines make it much easier for those of us who stare at a computer monitor all day to do so in our bedroom slippers with a view of the backyard out the window. It’s a trend that’s catching on. More than half of Northeast Ohio employers who responded to the Workplace Practices Survey reported they have flexible schedule arrangements available for their employees, a slight increase over last year.
“If there are some things that don’t need to be done during business hours, a lot companies are asking, ‘What’s the difference?'” says Joe Vitale Jr., business unit director of finance and accounting for Cleveland-based kforce.com, an online recruiting firm.
One of Vitale’s clients in Cincinnati had its entire corporate accounting team work from home. Even payroll information was sent from the payroll director’s home computer via a secured Internet line to a payroll processing center, where the checks were printed and mailed.
“Really, what did they need to be there for?” Vitale says. “It’s cheaper to keep people at home. People are more happy there and tend to be more productive.”
But it’s not just flexible schedules.
A tempering of the former ironclad corporate rules on vacations, sick days and time off is sweeping the area. Today’s progressive employers are looking at results, not just time spent in the office. Almost 18 percent of employers responding to the survey say they are moving to a time-off bank — with which employees can use days off for whatever reason they choose — instead separating vacation, personal and sick days. They’re even letting employees overdraw their accounts if they deserve it.
“Let’s say your superstar is getting married,” Perry says. “They’ve run out of vacation. They get two weeks, and they need one more day. Are you really going to tell your superstar that they have no vacation time left? But you have to employ a responsible, mature, focused staff who can handle that.”
Regroup and recharge
It’s fun when you’re making a lot of money, but it’s not always conducive to creativity. Sometimes the happiest, most innovative times for companies are when everybody is just trying to rub two nickels together.
When people are using old stationary and both sides of paper, and saving paper clips, there’s much more of a community atmosphere: Us against the bad times. It’s a time when employees realize that they’d better be part of this team because not only will it save their jobs, it also might help save the company.
It looks like business owners won’t have a problem creating a community atmosphere, or at least they won’t have far to go. Almost 20 percent of employers said that everybody in their company was equally as important, just a couple percentage points lower than the number of those who said the CEO or president was the most important position.
So the bottom line is, hang in there together and be patient. This won’t last forever.
“The analogy I heard from one CEO, anyone who has ever broken an ankle, when they’re laid up, that first week or so, they’ve found their life has slowed down because they’ve physically have slowed down,” Perry says. “They’re finding that they’re actually having conversations again, that they’re actually reading their mail, they’re actually taking more time with people on the telephone because they’re slowed down.
“We have a slightly injured ankle right now in corporate America, and we should relish the opportunity to get back in touch with who we are as an organization and get in touch with what made you successful in the first place.”
How to reach: Employers Resource Council, (216) 696-3636; Self Funded Plans, (216) 566-1455; kforce.com, (216) 643-8119