Is 29.5 the Answer?

The long awaited national healthcare program, Obamacare, is finally upon us. Many companies have already made plans to either a.) stay the course b.) reduce the number of full-time employees, or c.) simply calculate the costs associated with providing medical insurance and add that amount to wages as they discontinue offering this through their business.

Let’s think through the options…countdown

Scenario A: Stay the Course
What I’m currently hearing from our larger member companies (anyone with 50+ full-time equivalent employees) is that will stay the course and offer a healthcare insurance plan that meets the federal mandates. However, one member informed me that by staying the course, they would witness a 43% increase on their premiums. On average, it looks like the larger employers are seeing a 10- 12% increase simply because their provider is anticipating increased costs.

My suggestion: If you do plan to stay the course, meet right now with your broker or healthcare provider. Many are offering a rate with only a slight increase as long as you commit early (before the normal renewal period).

Scenario B: Reduce Employees
Many companies are considering cutting existing employee hours to below the threshold of 30 hours per week to stay below the mandates of Obamacare. As a side-note, there are efforts within Congress to change the definition of full-time employees from 30 hours as defined by Obamacare and the Fair Labor Standards Act, to 40 hours per week.. I’ve heard where business owners are thinking about going with permanent part-time accounting, marketing, administrative, clerical, along with other hourly employees. They are weighing that choice against cutting headcount entirely in order to reduce costs associated with the expanded coverage requirements.

My suggestion: Carefully weigh the cost savings against what I believe would be higher turnover in your company. Now it may be that your employees would be ok with fewer hours and no insurance benefits, or it could prompt them to start looking for a full-time job with benefits.

Scenario C: Discontinue Health Benefits
Paying additional wages and having employees find their own insurance makes them feel as if they are being “kicked to the curb.” If and when this trend continues, I expect employees to feel a little bit better about finding health insurance on their own terms. The exchanges could be a great option for small companies looking to keep costs down and let employees decide for themselves how much insurance they need. In this scenario the younger, single employees can opt to carry only catastrophic/major medical plans, whereas the family person would opt for a more comprehensive plan.

My suggestion: If you intend to use this option, make sure you communicate early and often with your staff that this will be happening. You can find ways to offset the perceived loss of benefits with additional compensation and more individual choices for the employees’ healthcare plan. Explain why this is good for the employees and the business – be open and honest with your employees and they will appreciate that loyalty you have shown to them.

In the end this decision seems to come down to what you offer today and how that plan complies with the “metallic” tiered levels mandated in the law. While NSCA can’t tell you what to do, we can tell you what we are hearing from our members, your peers, and the solutions they are finding. But more importantly, we will keep you informed of the latest news of changes, regulations, tax implications and benefits as it relates to your healthcare options. There is a lot of uncertainty out there, and more information will be distributed as issues and concerns are addressed. More importantly, speak with your broker, your tax professionals and to each other to discover the best solutions.

For now, be prepared. While large employers have another year before fines are administered, they need to come up with a plan on how they will manage their benefits. Small businesses will need to evaluate the use of the SHOPs and what, if any credits are available to them.

If you find good solutions, please leave a comment, or contact me. If it works for you, it may very well work for another company in a similar situation. – CW

What Hurts Worse? The Bad Job, or the One That Got Away?

I’ve been involved in systems contracting for over 30 years now, and still hear stories of “the job that never ends.” Even with sophisticated estimating and job costing tools and processes our members end up with that one nasty project. It may have nothing to do with your scope of work or bidding methods, it may be circumstance well beyond your control. The most often described bad project stories I hear about seem to center around payments and cash flow as well as scheduling and delays.

So, how do you avoid even bidding on that job? Look for the signs:

  • Have you ever done work with that client or CM/GC team?
  • Is the project within your “sweet spot” for size and scope?
  • Is someone trying to convince you this job can lead to big things down the road?
  • Is travel required beyond your typical region or area of work?
  • Do the contract terms and conditions push an uncomfortable amount of risk towards your company?
  • Are there unusual contract requirements; fees, required meetings, guarantees, special insurance, representations or warranties?
  • Does the job require you to extend your credit line, move around other projects, bring in extra resources, use a first-time vendor, buy specialized equipment, etc.?

Another trap that systems integrators seem to fall into is a pricing scheme driven only by the fear of not having enough work. On the surface it is interpreted as cash flow that will pay wages and overhead.  The bad jobs often create a false sense of positive cash flow when the payment terms are stretched beyond 90 days. At the risk of sounding like a broken record, we simply have to be disciplined with stored materials and progress billings to avoid this situation.

The one that got away is often described to me as a large prestigious project that was snatched up by an out-of-town integrator who came in and bid at your cost. I contend it’s an ego thing and by setting your “minimum mark” and avoiding the value engineering game you can actually feel like a winner when you drive by and see your competitor’s trucks parked out front.

So how do you keep from losing the job you really want?

  • Be as involved as possible from the early stages
  • Seek clarity on the use of sub-contractors and substitutions
  • Encourage the decision-makers to mandate pre-bids and pre-qualifications
  • Be very proactive on RFI’s and encourage them to respond to all bidders
  • Have full vendor support lined up well ahead of time
  • Prove your “bondability” even when no bond is required
  • Position your company as the safe choice and the most responsible provider

Please know that you can’t control your competitor’s price or understand their logic – you will lose some public works projects where accepting low bid is mandatory. And there will be times when your “approved’ materials are simply higher priced than the competitors “approved” products. In that case you simply move on. If you are the owner or manager, speak openly with your sales team about this and why you can compete on certain projects.

So, back to the original question… what’s worse? Too little work, or having too many resources tied up in a non-profitable job? Well, that’s ultimately up to you, but a friend of my uses a simple pricing philosophy. He says that if he’s going to go broke, he doesn’t want it to be from having too much work. He has learned to control his ego on having to win the bid and he won’t let anyone talk him down below his minimum mark.

Over time you won’t even remember who got the big job you lost because it doesn’t matter.  Get over it quick and move on. In many cases you might be asked to do some follow up business with that client. If it makes sense, swallow your pride and do it…and full rates of course.  CW

Turn That New Tech Into a Long-Term Asset

Chances are pretty good that your technicians and installers didn’t go to charm school. I’m sure many of you can relate to this statement from observing behaviors and communications skills from many of the entry-level installer and technicians. I’ve seen and written plenty about their shortcomings but I’ve also come to develop a new appreciation for these young people that just might change the way you think.

I’ve learned a lot about the millennial generation since writing my book. “Under the Social Influence” and I’ve learned a lot from the feedback I’ve received from the readers. One thing that really stuck with me is that we may be overlooking a segment of the millennial population ready and willing to do the basic installation work and learn the rest. Their desire to work can bring some new energy to your business.

Our industry has an opportunity to employ tech school graduates and turn their new found pride and accomplishments into a job in your integration company – and one they will appreciate. They have real world skills, know basic programming, can do the applied science and math, but most importantly, really want to work.

I’ve also come to learn from these young men and women that their K-12 experience wasn’t the best. In many cases it contributed to a low level of pride and self-esteem with many of them who ended up struggling then attending a technical institute or trade school. What I found is that these students have underperformed in high school and to a large degree generally felt (and most often unintentionally) categorized as not expected to become successful. That being said, I’m pleased to report that our partner tech schools (view a listing at www.espa.org) are becoming a place to rebuild the hope of being successful, and a place that these students can go to do something they love and learn about something they are passionate about.

Flat Certified Color

I’ve learned that high school students are surrounded by future lawyers, doctors, business executives and students who can attend any college they want. But then there is the group of students who have gone through school without any idea that a profession in the world of technology (awaits them. And I would argue if they were placed on a computer science or STEM-based academic pathway early on, they could have a GPA on par with the best students in their high school.

I’ve also learned that parents don’t want their children to grow up to be technicians. Many parents force their students into a curriculum and academic channel that just isn’t right for them. We all know someone who has done this and it’s because we all want the best for our children. Ironically, we have record numbers of students with “undeclared” majors who are entering four year colleges.

My point is that we have a real opportunity here. We have an opportunity to create a working environment where technicians, when properly groomed, can become our best company spokespeople. Some might need a PR makeover, but you might be surprised how many are just shy people, waiting to emerge. When you bring a new employee in who might not have had the best academic experience, yet has a real passion for what they do in the industry, they have great potential to become an ambassador for not only your business but for the industry as a whole.

This year alone we will have approximately 400 students coming out of tech schools in the U.S. as certified electronic systems technicians (ESTs), and only a fraction of those students will have a four year degree. The majority of these students will be eager to work, have a new sense of pride and could be very successful if given the right opportunity. As the market continues to improve and we add more industry jobs, I hope you consider these young, eager students as candidates within your company – CW

CEO Focus: From Talent to Talent Scout

A surprising number of well-established business owners don’t know what to do when they get to work. This may seem odd, but it’s becoming all too common. To set a good example they arrive early, work long hours and then lock up at the end of a long day. Learning a new routine is a problem for more hands-on leaders as what they used to do is no longer all that important or time consuming. For example, you don’t need to go to the bank for deposits, you don’t get as much mail to open and most reports are generated in seconds.

I get calls from our members in executive positions who find themselves wandering about their daily routine looking to tell someone what to do, rather than asking their employees what they need from management to do their jobs better. They feel their job is to boss others – that’s the style they learned from their former boss. The problem is that the technology that was once so familiar to the CEO has now become so foreign to them. I advise them not to boss people around when they have limited information, or are in no position to add real value.

These CEO’s used to be either the technical talent or the rainmaker, but now they need to get out there and find new talent; network within the industry, develop strategies, set goals and manage them. They need to keep their thumb on the pulse of the industry and be in constant contact with the best companies to share ideas with. The role of the CEO can be so vital when operating in this fashion, yet many tend to revert back to where they came from when they were on the front line (i.e. sales, ops, accounting, etc.). It’s often seen by employees as a sign of mistrust or micromanaging, instead of being helpful. To the CEO it seems different as if they are rolling up their sleeves to help or to provide some value.

The key is to know the difference between medaling and managing. My advice is that if you have capable managers then you shouldn’t even attempt to manage their direct reports (lead yes, manage no). If you have capable department heads, then let them tell you first what resources they need before telling them what they should be doing. At some point you can’t, and shouldn’t, make every decision if you’ve surrounded yourself with the right people. That’s the importance of becoming the talent scout for your business.talent scout

The secret is to continuously elevate the role of the CEO to the highest level of strategic thinking for the company and be ready when called upon to be a resource for imparting wisdom, business advice, and industry best practices. For the CEO’s; avoid making routine decisions that should be left to others closer to the situation, yet be more than willing to talk through the situations when asked. Share stories, as many as you can that help them reach the right answer without telling them what to do. Start wrapping your mind around the idea that you are no longer the talent – rather the talent scout – and that’s an awesome role to have in a company. CW

Make Your Quiet Employees a Summer Priority

Each company has a range of employees from those who are very vocal, outspoken, and those who may shy away and not speak up as much if something is wrong or bothering them. As a manager, we make the mistake of assuming the quieter employees are content with their jobs. These overlooked individuals are often the core of your business, the ones who really produce and the stabilizing force in your company. Yet because they seldom speak out about their work, they can be forgotten. These are the same people who resign from their jobs abruptly and without any reasonable explanation whatsoever.

In a recent Business Journal article “How to Tackle U.S. Employees’ Stagnating Engagement,”  data from a Gallup Poll showed that only 30% of the American workforce feels motivated to excel at their jobs and an astounding 18% of the workforce has actively disengaged. The leading theory is that front-line employees have the perception that business owners don’t care about them and that owners only focus on profits. And there we have the problem… and the opportunitymotivation

Throughout the remainder of the summer I encourage you to take some time and spend it talking with your “less vocal” staff members. My guess is you will be surprised what you hear once you get them to talk. I’m guessing you will discover one of two things (and then you have the responsibility to deal with what you’ve discovered).

You might hear some great ideas on improving the services and processes they are directly involved in, and come away with a new appreciation of what they do for the company. In addition, you might hear that they’ve actually mentioned these ideas before, but because of the organizational or managerial structure, their ideas may have never risen to the surface. Most likely you will become frustrated in these employees and their managers for not bringing forward these ideas until now.

  • What To Do: The way you react and handle this is crucial – don’t shoot the messenger or be quick to push the blame. This type of breakdown is generally traced back to company culture which quite possibly falls back in your lap. Remember, employee engagement and motivation is a two-way street. Create a process and method for more open communication that spans the entire organization. Acknowledge and give praise for great ideas regardless of who provided them.

On the other hand, you might hear that some employees have completely disengaged from their job and have unplugged from company communications, self-improvement, promotional consideration, etc. People can get lost in their jobs and go through the day-to-day motions. That behavior is often overlooked because they show up on time and put in the hours with no visible signs of a problem. The opportunity you have is to re-engage and recharge the ambition levels with these individuals and that can be a huge contributor to future success.

  • What To Do: Find ways to reward and recognize those who go about their work in a steady and soft spoken manner before they shut down. Again, put in place a process and method for open communication. Help these individuals to know that they are a valuable member of the team. Consider minimizing current recognition programs that focus on the individual and prioritize more team goals and recognition that is inclusive of the quiet and steady employees.

At a minimum, please give some thought to what I’m suggesting – you might be surprised at what some of your employees have to say! – CW

So many rules, so little profit…

I’m a rule follower…I actually love rules, especially the ones I make.  Most of our members do a great job creating rules of their own to improve efficiencies and be well organized.  The problem I’ve been seeing is that we seldom review the old and obsolete rules before implementing new ones. The end result is far too many rules that rarely all get followed.

We now have so many rules that we tend to forget whose rules they are and where they came from.  Some rules are actually the law.  Others are codes or ordinances.  Some may have been developed by the former business owner years ago and never challenged in recent years.  The best practice would be to have one person responsible for the collection and distribution of company rules and policy and have this be part of the orientation process.  The point I’m making is that we need good and relevant rules and we need to eliminate the bad rules from our businesses to be competitive and maintain profitability goals.

Here are a few examples of company-developed rules that need ongoing evaluation:

  • Meetings; who is required and how often and productive they really are.
  • Reports; are they truly useful and worth the time and effort it takes.
  • Email; can you eliminate the time spent on replying to email by adding new procedures for what needs a reply and what doesn’t.
  • Approval processes; are they meaningful, or simply bottlenecks?

Every company in our industry could benefit from a summer time cleanup of their outdated rules and could improve processes and profits by replacing old rules with fewer and more relevant new ones.  They could also benefit from a review of compliance to the mandated laws and rules handed down by government officials and agencies.

Here are a few examples of external rules that need even greater attention in most of our member companies:

  • Labor and wage classifications; exempt and non-exempt, overtime, prevailing wage adherence, etc.
  • Code compliance; review and adhere to local, state and national code requirements, permits, OSHA, EPA, etc.
  • Use of sub-contractors and contract employees; we still see companies that would absolutely be fined for their interpretation (or indifference) of this requirement.

Both lists could obviously be expanded.  The point I’m illustrating is we already have so many rules to follow that we need to be mindful of not creating even more which might conflict with external mandates and business laws.  It’s our nature to implement new rules in order to improve accountability.  I encourage that of course, unless it comes at the expense of eroding profitability.  Look to only add a new rules if it improves both.  NSCA can provide you with many resources for knowing which mandates you need to follow and developing a policy and procedures manual.

I am very aware of how thick the rule book has become and how the bad rules erode profits.  I recommend you challenge your key employees to read the existing rules and procedures and invite them to bring forward which ones don’t make sense or conflict with others.  By doing this my guess is that for every new rule you add you will be able to remove two bad ones.  Good luck!  CW

 

Giving Back to Your Industry

I am quite impressed at how many people in our industry actively look for ways to invest their time, treasures and talents. In a time where we are all so busy and everyone seems to be doing more with less, we have some great people willing to contribute in various ways to improve and enhance the industry.

Let me point out a few things that each of us can do, some examples of the work that goes on behind the scenes, and how you can contribute and give back to the industry that we love:

Education Foundation ScholarshipseducationLogoBLK_nocolumns
This year the NSCA Education Foundation awarded a young man with a $2,500 scholarship. He recently graduated from the EST program at Lincoln Tech and is seeking employment in the electronic systems industry. As an up-and-coming professional, he will also experience his first InfoComm this June, thanks to the leadership at AMX.
The Drunk Unkles
Industry band, the Drunk Unkles, have contributed over $500,000 for the Education Foundation and other charitable organizations over the last 10 years. The ‘Unks’ put on a great show and know how to have fun, but more importantly, they have helped so many people in areas ranging from recovering from tragedy to financial assistance for education. I greatly appreciate the band, their respective companies, and the friends and family who support their continued efforts to improve their communities. FinalDrunkUnclesLogo
Volunteer
There are hundreds of people who volunteer their time to benefit the industry, and it’s one of the most rewarding ways to give back. Serving on committees, councils and boards can be a great way to help us promote the industry and elevate the professionalism within.
Subject Matter Experts
Industry experts have the opportunity to share their knowledge and experiences in a non-competitive format. The industry is strengthened by research projects, studies, white papers and many other deliverables, supported by subject matter experts.
Educating the Future
Becoming an instructor and using that experience to hone your knowledge and presentation skills. We’ve often heard that this actually becomes a great way to increase your value to your own organization by becoming a more capable presenter.
Support ESPA
NSCA partners with several leading industry associations, including the Electronic Systems Professional Alliance (ESPA), who have developed an academic channel educational outreach organization. They help educate and certify hundreds of young men and women who are at the starting point of their career.
Financial Assistance for first time Business Conference attendees
This year NSCA awarded 10 recipients with a fully paid registration to the Business & Leadership Conference (BLC). Thanks to the generous support of the Foundation, NSCA will increase that number to 20 allowing first time attendees to participate in 2014.

On behalf of all NSCA leaders, staff and member companies, I would simply like to say “Thank You”. We couldn’t possibly do the things we do without the spirit of giving back that so many of you have. CW