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First Things First.
What Does the HP Scandal Mean for You?
Smart, effective, and ethical employeemonitoring policies are your best defense
by Reed Richardson
As the ongoing scandal over Hewlett Packard’s scheme to obtain and secretly monitor its board of directors’ personal communications plays out over the next several months, it raises an important question for small business owners: How can I protect my small business from unflattering publicity and embarrassing or unscrupulous behavior on the part of my employees while still treating them with respect and fostering an environment of trust and loyalty?
First, as a small business owner you must understand that your employees do not enjoy the same privacy protections as they would at home. Although this is an area of law that is still somewhat in flux, certain monitoring of employee communication to and from office computers and telephones may be permitted in your state. Since the rules that apply vary from state to state, it is advisable to have a lawyer review any monitoring policy prior to its implementation. “Those few hundred dollars in upfront legal costs may seem prohibitively expensive to a small business,” notes Nancy Flynn, executive director of The ePolicy Institute, “but it’s nothing compared to what you’ll end up paying if you’re hit with a lawsuit. Those costs can quickly put a small business out of business.”
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Flynn believes that every business should have a monitoring policy of some kind. “Whether you employ 10,000 workers around the globe or 10 people in a home office, any time you allow employees access to your email system, you put your organization’s assets, future, and reputation at risk,” she notes. And, she adds, “It’s not just inexperienced staff and vengeful employees who are creating electronic liabilities.”
Every small business owner must wrestle with these issues individually, weighing the potential liability from employee misbehavior against the damage a monitoring policy might have on their relationship with their employees. Obviously some companies face more serious risks than others. A legal or medical firm, for example, which deals with sensitive, confidential documents on a daily basis, faces far greater laibility concerns related to employee e-mail than would be the case for the vast majority of small businesses.
Should you choose to go ahead with a monitoring policy, Flynn recommends applying what she calls the three E’s of Erisk management:
1. Establish written email rules for all employees. Your company’s email and phone monitoring policy should be thoroughly explained to all employees and applicable to everyone, from summer interns up to and including you, the small business owner. Likewise, all employees should sign and date a written explanation of the policy to confirm they understand it and agree to comply.
2. Educate employees. By instructing your employees in exactly how the monitoring works and what kinds of conduct is and isn’t allowed, your small business will likely be able to better insulate itself from employee malfeasance, and workplace lawsuits.
3. Enforce your policies to guarantee the integrity of stored messages. Consider installing content filtering software and blocking 1-900 phone numbers to preempt potential violations, but if/when they do occur, you must take action. Failure to discipline your employees or inconsistent enforcement of policies will send the wrong message.
HELP WANTED!
It's official, good people are harder to find and to keep
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If you’re a small business owner who’s tried to add staff recently, you’re probably already well aware that it’s getting tougher and tougher to attract and hire quality job candidates. But if worries that it was only your small business that was suffering had you down, cheer up (a little). An increasing amount of employment data confirms that small business owners in every industry and in every region of the country are struggling through the hiring blues, just like you.
The broadest evidence that the national job candidate pool is shrinking can be found in the national unemployment rate, which dipped to 4.6% in September, its lowest level since July 2001. And this tightening in the labor market extends down to the small business sector as well. According to the NFIB’s Small Business Economic Trends survey from September, 46% of small business owners found few or no qualified applicants for their job openings, marking the fifth straight month the figure stood at over 40%. That figure also fell just shy of the survey’s recent historical high of 47%, set, coincidentally, in July 2001 (see graph).
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Not surprisingly, as hiring quality employees has grown increasingly competitive, small businesses have had to ratchet up their salaries to entice new employees to come on board as well as to keep current employees from bolting. According to SurePayroll’s monthly Small Business Scorecard, which surveys over 17,000 small businesses around the nation, average small business salaries rose for the 13th consecutive month in September and are projected to increase by an annualized 8.4% rate for 2006, far outpacing inflation. And in some regions, like the Northeast and West, these salaries are expected to grow at rates well into the double digits.
“In our survey of small business owners, we discovered that 37% of small business owners say that they now have to pay more for a given employee than they had to pay one year ago,” noted SurePayroll president Michael Alter. Given that wage inflation is a major concern, Alter suggested that the Federal Reserve should continue to leave interest rates unchanged in order to help small businesses keep their salary costs from rising further. “They’ve applied the brakes on salary inflation,” Alter said of the Fed’s recent moves. “But the car hasn’t slowed down much. They need to press down on the brakes a little harder.”
Free Agents on the Senior Circuit
Small businesses short on help should not ignore the over-50 crowd
For small businesses whose very survival often
depends upon every one of its employees coming
in to work each day, arriving on time, and performing
consistently, hiring the right type of
employee in an increasingly tight labor market
becomes that much more critical. Fortunately,
these same highly sought-after work habits— dependability, punctuality, and productivity— are the hallmarks of one segment of the workforce that is often overlooked: workers over the age of 50.
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Unfortunately, some employers continue to stigmatize older workers as too costly and too slow to adapt. But over the next decade, as more than 76 million baby boomers retire and fewer younger Americans take their place in the workforce, small business owners would be foolish to ignore or underestimate such a vast pool of potential talent. Indeed, several studies have shown that even as baby boomers reach their sixties, many of them have no intention of slowing down. And increasing numbers of them are deciding that their retirement from one career simply provides them the opportunity to use their knowledge and experience in starting yet another.
“Today’s older workers are far better educated than older workers just a decade ago,” notes Alicia Munnell, co-author of a July 2006 survey on employer attitudes toward older workers. “They are also more physically fit and the shift from goods-producing to services-producing jobs has reduced the physical demands of work, which should enhance the employment prospects of older workers.”
Munnell, who is the Director of the Center for Retirement Research at Boston College, found in her study that while the small business community as a whole continues to lag behind its mid-size and big business brethren in accepting older workers, more and more appear to be warming up to the idea. For instance, when assessing professional, white-collar employees, 61% of the 100 small businesses surveyed characterized older workers as more productive than younger workers, the highest rate among businesses of any size. Likewise, only 36% of small businesses labeled older, white-collar employees as more costly than younger workers, the lowest rate among all businesses surveyed. In fact, small businesses were two-and-a-half times more likely to deem older, professional workers as more, rather than less, attractive.
For small businesses searching for maturity and experience as well as a good return on investment, older workers just might be that “silver bullet” your small business has been missing.
Giving Away the Store
If your customers find your products or services antiquated, why don’t you?
Earlier this fall, retail giant
Wal-Mart announced it
would end its 46-year-old
layaway service for its customers.
Once a popular way of
buying big-ticket items, layaway
was now costing Wal-Mart more
than it was worth, tying up precious
warehouse space for
months while forcing stores to
track small, often infrequent,
payments. In addition, executive
vice president for Wal-Mart
store operations, Pat Curran,
noted that in an era when nearly
everyone can get approved for a
credit card of some kind,
“demand for layaway service has declined steadily.” In fact, many other retailers long ago abandoned their expensive and under-utilized layaway services. So the real question might be: What took Wal-Mart so long?
To be fair, Wal-Mart is by no means alone. Many businesses, both big and small, often fall victim to a kind of business version of Newton’s First Law: A service or product line on sale tends to stay on sale, no matter what the customer wants. But succumbing to this inertia, either by ignoring flagging sales or by not being attentive to consumers’ evolving habits, can end up costing your small business time, energy, and resources.
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So, instead of waiting until your small business runs off the cliff of obsolescence, consider these five tips to ensure your goods and services don’t fall victim to the blahs.
1. Measure true value. If it’s a product, analyze its production and marketing costs versus its sales revenues to determine if it’s really adding to your bottom line. If it’s a service, include it on a survey to see whether your customers value it, ignore it, or hate it.
For decades, both national and local banks alike took the time to mail back every original check to their customers, despite the fact that many customers saw little value in this service and some even considered it a nuisance. Years after the technology existed to efficiently mail scanned copies of checks or, cheaper yet, electronic copies via email, banks continued to stick with this tradition. It wasn’t until two years ago that banks finally realized that this “service” wasn’t earning much, if any, loyalty from their customers and they stopped it, thus saving an estimated $2 billion a year in sorting and mailing costs.
2. Watch your competition. There’s rarely a good outcome for a business if it is the last in its market segment to accept a significant change. Keep up with industry best practices and any changes in your competitors’ marketing and advertising.
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3. Stay on top of technological changes. If a new product comes on the market that could make yours obsolete or a new service becomes available that could render yours quaint, it might be better to accept the change early on—by either upgrading or phasing out your product or service—rather than cling to an oldfashioned technology that could cause your business to lose market share in more promising areas.
By 2002, DVD players were far outpacing VCRs in U.S. consumer sales and it was evident this new, more versatile technology would supplant the VCR. Despite this, and the fact that the price point on DVD players quickly equaled if not undercut VCRs, companies like Pioneer and Philips continued to build stand-alone VCRs through 2004, selling many of the units at little or no profit and dedicating valuable production time in their factories to a rapidly dying technology.
4. Be attuned to changes in customer behavior. If more of your hotel guests are asking where to find the nearest Wi-Fi connection than the closest shoe shine stand or post office, its time to ditch the old electric shoe buffers and hotel stationery from each room and instead install high-speed Internet access.
5. Send the right message to the right customers. Carefully examine what kinds of signals your products and services are sending to consumers. If they’re geared toward a market or demographic your business is moving away from, you might be better off making a clean break rather than muddying your brand by trying to squeeze out a few more quarters worth of diminishing sales.
Another reason Wal-Mart dropped its layaway program was that the change fit in with its ongoing brand restructuring program. Buffered by claims that its products were of increasingly poor quality and lacked cachet—Wal-Mart shoppers have an average household income of $30,000 to $35,000 a year, while customers from one of its main competitors, Target, have an average household income of between $50,000 to $60,000 a year—the retail giant has begun moving more aggressively to court customers with a higher income and more readily available access to credit.
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